6 Ways Obamacare Is Changing Mental Health Coverage
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The Fiscal Times
November 26, 2013

America’s inadequate mental health care was thrust into the spotlight again last week, following the stabbing of Virginia State Sen. Creigh Deeds by his mentally ill son. 

The younger Deeds, who committed suicide after the attack, had undergone a psychiatric evaluation but was turned away by a local hospital due to a lack of space. Mental health experts say that a dearth of adequate services, as well as historically poor coverage by private insurers, has left millions of mentally ill individuals without the resources they need.

Americans spend $2.6 trillion a year on health care, but only a small fraction of that currently goes to treating those who suffer from psychological and mental health problems or from drug and alcohol addiction. Meanwhile, need is growing, as Americans deal with the emotional fallout of the Great Recession, veterans and their families struggle with their return to civilian life, and older Americans confront growing rates of depression.

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Suicide claims the lives of nearly 30,000 Americans each year. Still, the majority of people who need services don’t get treatment. More than 60 percent of adults with a diagnosable disorder and 70 percent of children do not receive mental health services, according to a 2011 analysis by the Kaiser Family Foundation.

The passage of Obamacare has brought sweeping changes that will make coverage of mental health and drug treatment one of the “10 essential health benefits” that all insurers must offer. Insurers, patient advocates and state regulators are still hammering out specifics, but critics contend it will lead to an even greater shortage of services and that it doesn’t do enough to address issues specific to treating the mentally ill. Many industry experts also aren’t sure what changes in the field of mental health will even be needed as new challenges arise.  

“The reality is that the Affordable Care Act is not going to solve all of our health care problems, either for physical or mental health,” said Ron Honberg, the national director for policy and legal affairs at the National Alliance on Mental Illness. “People are still going to struggle to get everything covered that they need to, but the inclusion of mental health care in this law is a huge step forward.”

Related: Does Obamacare Hold the Key to Mental Wellness?

Here are six ways mental health coverage is changing under Obamacare:

1. Pre-existing conditions are now covered. Just as cancer survivors and diabetics are now guaranteed coverage under the new law, so, too, are those who have previously been diagnosed with chronic mental illnesses like depression or schizophrenia. One in four Americans suffers from a diagnosable mental disorder, with about 10 percent having a more serious mood disorder, according to the National Institute of Mental Health. 

2. Insurance plans must offer parity of mental and physical health coverage. It’s been more than five years since President George W. Bush passed the Mental Health Parity and Addiction Equality Act, requiring insurers to provide mental health care coverage comparable to their physical health care coverage. But experts say the law went largely unenforced until passage of the Affordable Care Act.

Now, if an insurer covers a certain number of visits to the doctor and a certain length of in-patient treatment for physical health, it must offer the same for mental health care. “Where the law doesn’t go far enough is in support service and ‘wrap around’ services that are needed in the treatment of mental health,” said Carolyn Wolf, senior partner and director of the mental health law practice at Abrams Fensterman in New York. “There’s no coverage for residential housing, or case management needed for certain treatment.”

3. There are limits on out-of-pocket spending. Even with insurance coverage, the out-of-pocket costs of in-house treatment can add up: The cost of in-patient treatment for the most severely ill mental health patients can quickly reach thousands of dollars. However, the Affordable Care Act limits total out-of-pocket spending at $6,350 for individuals and $12,700 for families starting in 2014 for “medically necessary treatment.” Currently, a third of plans available on the individual market have out-of-pocket costs exceeding that limit, according to a study by HealthPocket.

Related: Obamacare Premiums Are the Tip of Consumer Costs

4. Insurers must cover prescription drugs. Just as with mental health care, prescription drug coverage is an essential health benefit required under Obamacare. However, the specifics of such coverage vary by plan, with some insurers offering different types of coverage for “preferred” drugs, generics, or “specialty” drugs. For patients who regularly take a prescription medication to treat mental illness, it’s important to check the insurer’s formulary to find out exactly what’s covered. “As with a health condition, switching among branded drugs, as well as switching among generic drugs, may or may not be effective, and that’s a decision that should be made in consultation with a physician,” said Judith Bentkover, a professor of health services, policy and practice at Brown University.

5. More people are getting treatment. Insurers began guaranteeing mental health and substance abuse treatment in 2011, and the number of people seeking such coverage skyrocketed. Substance abuse admissions increased 20 percent in 2011 among people younger than 65, and mental health admissions increased 6 percent, according to the Healthcare Cost Institute. (By comparison, medical/surgical admissions fell 2.3 percent.)

Such usage is expected to grow even further as more consumers have access to insurance under Obamacare and learn that mental health treatment is covered. More than 32 million Americans will gain access to mental health and addition coverage under the law, and another 30 million who currently have coverage will gain parity protection, according to the Department of Health and Human Services.

6. The already strained system isn’t keeping up. As the Deeds case shows, there’s already a shortage of psychiatric hospitals and psychiatric services to meet the country’s needs, due to years of government cutbacks in mental health spending. There are only enough psychiatrists available to meet the needs of 53 percent of those who need services, with many more severe shortages in rural areas, according to an analysis by the Kaiser Foundation. Experts fear that as more people enter the system seeking help for mental health and substance abuse issues, the relative scarcity of providers will only get worse.

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Life + Money Editor Beth Braverman covers all things personal finance. Formerly a senior reporter and social media editor at MONEY magazine, she’s also held gigs as a newspaper reporter and trade magazine editor.