NAMI North Carolina Disputing NFIB’s ‘Facts’ About Mental Health Insurance Parity

Position Statement

Disputing NFIB’s ‘Facts’ About Mental Health Insurance Parity

The National Federation of Independent Business (NFIB) contends the cost of health insurance for small employers will “soar” as a result of Senate Bill 400. In fact, in the 18 states already with some form of parity, premiums have increased only slightly—typically, by about one percent. Some states-including North Carolina, which introduced parity to the State Employees Health Plan in 1992, have actually seen their costs for mental health care decrease as a result of parity.

NFIB correctly notes large employers covered by federal ERISA laws are exempt from the provisions of Senate Bill 400. However, their contention that the bill would place “the entire cost of mental health care on North Carolina’s small employers” is false. In fact, employers of all sizes will continue to share with the public sector and families the costs of mental health care for North Carolinians. Many of the state’s largest employers—including the State of North Carolina—already offer a mental health parity benefit, and more are expected to follow. The state’s smallest companies—firms with fewer than five employees-are exempt from the provisions of Senate Bill 400.

NFIB charges Senate Bill 400 “strips away employers’ ability to design affordable health benefit plans by imposing yet another unfunded legislative mandate.” The affordability of any type of insurance plan is based on spreading risks among large populations so that no organization, individual or family faces financial ruin in the event of a loss. Mental health insurance parity will effectively spread risks across much larger populations, keeping premium costs for all types of health care affordable.

NFIB suggests with the “high cost of premiums” they allege will come with parity, employers may stop providing health benefits altogether. In fact, in the 18 states with some form of mental health parity, premiums have typically increased by only a single percentage point or less, and in some cases, have decreased. A recent review of the impact of mental health parity legislation by the U.S. Department of Health and Human Services concluded, “the low costs of adopting parity allow employers to keep employee health care contributions at the same level they were before parity.” A study of the impact of mental health parity in New Hampshire by The Lewin Group, an actuarial firm, concluded that no company had dropped coverage due to mental health parity. Based on well-documented, real-world experience, the “high cost of premiums” NFIB associates with parity simply does not exist.

NFIB contends, “We already have mental health parity,” because of federal legislation that became effective January 1, 1998. In fact, the federal law requires parity only for annual and lifetime spending limits for mental health care. It does not address the continuing discrimination in deductibles, co-payments or other cost sharing arrangements Senate Bill 400 is designed to equalize.

NFIB notes the federal parity law exempts businesses with cost increases greater than one percent, while Senate Bill 400 sets the exemption at two percent, and maintains “The proposed law would be more costly.” Again, real-world experience has consistently shown premium increases well below two percent and, in some cases, premium decreases as a result of parity.

NFIB warns Senate Bill 400 “forces ‘all or nothing’ choices.” The federal law allows employers to drop mental health coverage while continuing to provide other health benefits. According to NFIB, businesses “may be forced to drop all health insurance for their employees because of this mandate.” In fact, actual experience proves this claim false. Parity has never forced businesses to make this choice. In states where parity has been introduced, employers have typically continued offering a full range of benefits while using managed care to contain costs. The federal study found that cost increases have been minimal in systems with managed care and generous baseline benefits.

Noting rising health care costs, NFIB tells its members parity “prices small business out of the marketplace,” adding, “Under SB 400, small businesses will be forced to provide better health insurance than large businesses, and at a much greater cost.” As with NFIB’s other contentions, this one is based on a false assumption that parity will result in significant premium cost increases. Since parity became part of the North Carolina State Employees Health Plan in 1992, mental health care claims as a percentage of total claims have decreased by 47 percent. Medical costs are rising, but not because of mental health care costs, and it is highly misleading to suggest, as NFIB does, that businesses will fail because of parity.