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Managing the mandates Featured

10:48am EDT October 23, 2001

Lynn Olman, a 28-year State Farm agent, employs seven people at his insurance company in Maumee.

You might think, then, that he would join the ranks of other small business owners around the state who, fed up with increasing costs, are opposing any proposed health care mandates that increase costs and apply only to small group and individual policyholders.

Instead, Olman, a state representative, is leading the charge to pass House Bill 33, which would require coverage of mental illness and substance abuse or addiction in sickness and accident insurance policies and private and public employer self-insurance plans.

Known as "equal treatment" or "parity" because of its efforts to prohibit discrimination in coverage provided for mental illness, similar proposals have failed for years. Under the bill, coverage for mental illness and substance abuse or addiction would be provided in the same manner as coverage for physical illnesses.

"If we have a $250 deductible for a brain aneurysm, there would also be $250 for lithium imbalance that creates bipolar disease," Olman says.

Olman joined the cause in 1995 when the Alliance for the Mentally Ill brought to his attention the fact that many patients run out of insurance benefits in the middle of treatment for biologically based mental illnesses.

"It would be as if to say an open heart patient goes in for surgery, and they get the chest cavity opened up and perform the arterial transfer, and the doctor looks up and says, 'I'm sorry, we don't have enough money to close you up.' It would be ridiculous for that to occur, yet that is what occurs every day to the people who suffer from mental illness," he says, noting that 32 other states have mental health parity.

"For me, it's an issue of one, what's fair, and No. 2, it's economically sound public policy," he says, adding that people who suffer from mental health and addiction see their general physician twice as often as those without such problems and use hospital outpatient treatment three times as much.

The costs for those visits, he says, are higher than the results found in an actuarial study he commissioned last year, which determined parity changes would increase premiums by about 3 percent per employee per month. In the study, PricewaterhouseCoopers determined that the cost to employers, on average, would be a little more than $1.50 per member per month for a typical insurance policy to cover both mental health and addiction treatment services, once employers shopped their contract for lower prices and passed some of the cost on to employees.

"So in my case, with seven employees, we're talking about 10 bucks a month on my health care plan, roughly," he says.

However, it's the very cost of health care mandates that has other business owners up in arms against the legislation.

Jenny Baader, vice president of Baader Brown Manufacturing Co. in Springfield, asked for input from her 20 employees before she testified against the bill in March.

"Their comment was, 'If it will increase our premiums by even a dime, we aren't interested,'" she told legislators on the House Insurance Committee.

Roger Geiger, state director of the National Federation of Independent Business - Ohio, says he's seen estimates that this mandate could add anywhere from 5 to 10 percent to health insurance premiums.

"Arguably, it's probably one of the most costly mandate provisions we've seen in a long time," he says.

Such discrepancies are why he's waiting for the Legislative Service Commission's independent actuarial study for objective analysis of what Olman's proposal -- and six other proposed health insurance mandate provisions -- will do to premiums and benefits.

In addition to concerns about the costs, Geiger argues that the parity measure is unfair to small business owners. Companies large enough to self-insure fall under federal guidelines protecting them from mandates, and government programs are exempted.

"It is a terribly inequitable mandate on the backs of small businesses and generally the self-employed who purchase health insurance," Geiger says.

Olman counters that federal and state employees already have equal treatment for mental health and addiction.

Geiger's other arguments against the bill:

  • State legislatures across the country already have enacted more than 1,000 health care mandates; Ohio has 25.

    "The question becomes, 'Where do you draw the line in the sand?'" he says. "We know that for every 1 percent increase in health insurance premiums, 7,000 Ohioans will go into the uninsured rolls. The employer just can't afford it any more."

    However, in testimony for the bill, David Nelson of the National Mental Health Association told legislators opposition to the parity issue has waned across the country in recent years as more evidence surfaces that the costs for such coverage are not significant and that parity, in fact, often results in a decrease in other expenses, such as welfare, social costs and lost time on the job. A Connecticut company, for example, reduced its mental health coverage, only to see a 37 percent increase in medical care and sick leave costs, Nelson says.

  • Employers, he says, already understand providers' "pay me now, pay me later" arguments that suggest rejecting such coverage in health plans will cause more expensive problems later with employees who need help.

    "If they have demographics likely to have a certain type of health condition, they're going to want to make sure they have that kind of coverage -- I guarantee it," Geiger says. "They want to do the best and provide the most comprehensive plan they can possibly afford."

  • Geiger wants legislators to look at the real issue behind the problems prompting their proposals.

    If the issue, for example, is that people can't get such coverage, then make it mandatory for insurance companies to provide it but let employers pick what options they'd like to offer their employees.

    "If a construction company has four single guys (as employees), they'd rather have dental or vision coverage than mammography. When you do this one-size-fits-all approach, you don't account for the unique demographics of each individual company," he says.

    If, on the other hand, the issue is a societal problem, then don't make small business employers pay for the fix, Geiger says. Instead, add the coverage under the public health care system.

Olman hopes to move the bill out of the House of Representatives before adjournment in July.

How to reach: Roger Geiger, NFIB/Ohio, (614) 221-4107; Rep. Lynn Olman, (614) 466-1731. For more details about House Bill 33, visit the 124th General Assembly's Web site at www.legislature.state.oh.us.

Joan Slattery Wall (jwall@sbnnet.com) is an associate editor and statehouse correspondent for SBN Magazine.