Time for Parity in Medicare

Despite the growing momentum behind the idea of mental health parity in private insurance and the widespread public support for some form of a Patients’ Bill of Rights, both policy reforms are vulnerable to criticisms that a weak economy is no time to start raising employers’ costs of private insurance by mandating new standards of coverage. This is why the time may be right to resurrect a vital piece of legislation that has languished in committee for more than a year: the Medicare Mental Health Modernization Act.

The Medicare Mental Health Modernization Act, introduced by the late Sen. Paul Wellstone (D-Minn.) and Rep. Pete Stark (D-Calif.), seeks to solve a problem that has its roots in the 1960s and the founding of the Medicare system. At that time, mental illnesses were thought by many to result from moral defects or character flaws. Therefore, it should come as little surprise that when the Medicare program was created, it made a distinction between mental and physical illnesses. In recent years, however, the stigma associated with mental illnesses has begun to lessen. Advances in treatment and a developing understanding of the biological basis of mental illnesses have, moreover, led to an awareness that the distinction between mental and physical illnesses is arbitrary. Unfortunately, the antiquated Medicare program has not kept up with these changes, and what exists today is a program that still systematically discriminates against people with mental illness.

While the Medicare system usually pays the lion’s share of an outpatient visit, it pays only half if the patient is seeing a psychiatrist. More specifically, Medicare Part B (which covers outpatient care) generally requires that beneficiaries contribute a 20 percent copay. But Medicare recipients who seek treatment for a mental disorder owe a 50 percent copay.

The distinction made by Medicare between mental and all other health problems does not end there, however. There is a 190-day lifetime limit for inpatient hospitalization at a psychiatric facility. No such cap exists for hospitalization for “physical” disorders. And, furthermore, Medicare does not cover many categories of outpatient mental health care at all.

The unfairness of a system that discriminates against patients who suffer from mental disease no doubt leads to inadequate treatment of mental illnesses and an overall increase in health care costs. The more patients of limited means must pay out of pocket, the less likely they will seek out the care that they need. This could mean more frequent visits to a primary care physician and greater reliance on emergency rooms. Moreover, not getting appropriate and timely mental health care may make other health ailments more severe, lead to costly misdiagnoses, and necessitate more hospital admissions.

As more and more of the baby-boomer generation reaches the age of 65, the magnitude of this problem increases. But it should not be forgotten that Medicare covers not only the elderly but also approximately 5 million disabled people who receive Medicare coverage through the Social Security Disability Insurance (SSDI) program. These individuals are also subject to the discriminatory policy. In the case of SSDI recipients, this discriminatory treatment is particularly disturbing because about 20 percent to 30 percent of them are disabled because of a severe mental illness.

This ironic predicament causes perverse incentives that I have seen firsthand as a psychiatry resident in New York City. Because Medicaid, which provides health care coverage to the poor, does not similarly differentiate between mental and other types of illnesses, I have seen social work staff encourage disabled patients to “spend down,” or impoverish, themselves so that they can obtain coverage under Medicaid. (Of course, patients also have incentives to move to Medicaid because it includes coverage for prescription drugs.)

The Medicare Mental Health Modernization Act is a simple answer to the damaging distinction that Medicare makes for outpatient mental health services. The bill would end the discriminatory practice by requiring only a 20 percent copay for mental health services—the same as the copay required for other types of outpatient care. The bill also would end the lifetime limit on inpatient psychiatric hospitalization and expand Medicare coverage to include some categories of care that are currently ignored.

It is significant that the Medicare Mental Health Modernization Act was one of multiple pieces of mental health legislation sponsored by the late Sen. Paul Wellstone—one of the most vocal and passionate advocates whom the mentally ill and their families have ever had in Congress. Perhaps the most fitting memorial to this man would be to make real his dream that elderly and disabled people with mental illness would be treated no differently from others on Medicare. ▪