Mental Health Parity: What It Is and Why It Still Matters

Anxiety, depression, the opioid epidemic, suicide, loneliness: The U.S. mental health crisis has dominated the headlines in recent years. Yet ensuring that individuals struggling with these issues get access to the help they need still seems out of reach.

What Is Mental Health Parity?

Public and private health insurance companies alike have historically provided coverage for physical health benefits that fails to be on equal footing with coverage for mental health and substance abuse benefits.

People coping with mental illness or substance abuse disorder often face significant barriers to getting the treatment they need. For behavioral health advocates, this issue of “parity” hinges on fair and equitable access to care and preventing discrimination.

For one, the stigma society associates with behavioral health issues can impact how likely a person is to seek care. Individuals also may have more trouble finding behavioral health care providers who will accept their insurance. (After all, insurers did not even cover mental health services until after World War II, when they started including some hospital psychiatric care.)

Patients seeking mental health services often must wait longer for appointments. They may contend with higher co-payments as well as outright denials of treatment for their condition.

The Passage of the Mental Health Parity and Addiction Equity Act

Substantive movement on any laws regarding mental health parity on a federal level endured a yearslong political impasse. Finally, in 2008, Congress passed the Mental Health Parity and Addiction Equity Act (MHPAEA). Its formal title is the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.

Wellstone was a Democratic senator from Minnesota. He had for years championed legislation to end discrimination against people suffering from mental illness. Domenici, a Republican senator from New Mexico, had also been a staunch supporter of mental health parity legislation. One of his daughters has a mental health disorder.

The MHPAEA, which went into effect in 2010, contained strict mandates requiring that health insurance plans cover mental health care benefits to the same extent they cover physical health care benefits. Advocacy groups hailed the legislation as a "great civil rights victory." Many were hopeful that the new law would dramatically improve the way people with mental illness received and paid for treatment.

MHPAEA: Mental Health Care and Substance Abuse Treatment

When enacted, the MHPAEA applied to group health plans covering more than 50 employees. Under the Act, insurers could no longer charge higher co-pays for visits to mental health professionals than they would for visits to medical doctors. Health care reform law eventually extended mental health parity to all insurance plans, regardless of the number of participants. It also went one step further by including mental health care as "essential" care that plans must cover.

Insurers could limit coverage to specific mental conditions of their own choosing. Yet they still had to ensure that all mental health coverage it did provide was on an equal level with coverage for other ailments. This requirement included out-of-network coverage. In other words, if a plan let enrollees see non-network providers for medical care, it had to do the same for those seeking treatment options for mental illness.

The federal legislation also mandated parity for many substance abuse disorders, something not covered by many state parity laws. 

One Kaiser Family Foundation article at the time discussed some of the pluses and minuses of the new law. It featured the story of a 50-year-old woman, Denise Camp, who had previously paid $50 to visit a social worker and $75 for her psychiatrist. Under the new regulations, she had to cover only a $10 co-payment for visits to any of her doctors.

However, the article also reported that several companies across the country had already dropped coverage and switched to plans that offered no coverage for mental illness at all.

Unfortunately, the pursuit for mental health parity has continued to face significant obstacles.

Where Mental Health Parity Is Failing

In the years since the passage of the MHPAEA, many Americans who need mental health services are still not receiving them.

Five years after the law went into effect, a 60 Minutes segment revealed that many insurance companies were still routinely denying doctor requests that patients receive coverage for inpatient psychiatric treatment. Insurers were also requiring higher premiums and co-payments for mental health treatment programs and psychiatric drugs than for treatments for physical ailments.

Fast forward to 2020, when an article in Psychiatric Times highlighted several studies demonstrating persistent issues with access to mental health care as well as disparities between physical health care coverage and behavioral health care coverage.

Meanwhile, federal agencies have been working to educate people with behavioral health issues and substance use disorders about their rights under mental health parity laws. These efforts have included releasing free online resources.

Yet as recently as last year, the White House stated that less than half of people with a mental health condition were receiving care. Meanwhile, fewer than one in 10 of people with a substance abuse disorder received care. A fact sheet outlined further government proposals to tackle the enduring mental health crisis.

Most recently, a 2024 report showed that the Centers for Medicare & Medicaid Services failed to ensure that states were actually complying with Medicare managed plan requirements for mental health parity.

Additional Resources

Regulations regarding this issue continue to evolve. State and federal agencies are proposing additional rules to enforce compliance with federal parity laws. Lawmakers and advocates also are pushing for greater clarity around the rules. Several lawsuits related to insurers allegedly denying patients mental health care are ongoing.

If you or a loved one is experiencing problems obtaining mental health care, talk to a qualified special needs planning attorney about your options.