Policy Goal: This bill brings fairness and equality (parity) to insurance coverage for mental health services, alcohol and drug addiction. It is a key reform that allows alcohol and drug addiction to be treated as the disease it is and requires the private insurance carriers to include this coverage in their plans
Under existing California law, a health care service plan contract and a health insurance policy are required to provide coverage for the diagnosis and treatment of “severe mental illnesses” of a person of any age. Existing law does not define "severe mental illnesses" for purposes of the mental health parity requirement. AB 244 would define mental illness for this purpose, with certain exceptions, as a mental disorder defined in the Diagnostic and Statistical Manual IV.
Problems: Currently, millions of people in the United States find that their health plans place strict limits on both inpatient and outpatient coverage for addiction treatment services. By failing to appropriately cover substance abuse insurance companies have pushed the costs of untreated substance abuse onto the public. In 1998, California spent almost $11 billion to deal with substance abuse and addiction.[1] Nearly half of all Americans report knowing someone with an addiction problem.[2] As many as twenty million Americans each year experience alcohol or drug addiction.[3]
Argument: Addressing substance use disorders is essential to reducing the economic burden on California of untreated substance abuse. It would allow many more people to access treatment, reducing costs to taxpayers and businesses. The millions of people in recovery from addiction are living proof that treatment works. Yet less than half the people who need treatment can get it, and only 20% of adolescents can obtain treatment.[4] Parity will allow more people to get treatment when they need it.
Evidence: Economic data shows that every dollar spent on alcohol and drug treatment saves seven dollars in medical and other social costs.[5]
Adding full and equal coverage for alcohol and drug addiction only increases premiums by 0.2 percent, or about $1 per month for most families.[6]
A RAND study found that addiction treatment services could be made available to employees for $5.11, or 43 cents per month.[7]
Chevron reports that it saves $10 for every dollar spent on coverage for addiction services.[8]
Solution: AB 244 -- It's fair, it's equal, and it's cost effective.
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[1] Shoveling Up: The Impact of Substance Abuse on State Budgets; The National Center on Addiction and Substance Abuse at Columbia University
[2] Hazelden National Overnight Poll. Center City, MN: The Hazelden Foundation. February 1999.
[3] U.S. Department of Justice, Bureau of Justice Statistics, A National Report: Drugs, Crime and Justice System, 1992.
[4] National Coalition of State Alcohol and Drug Treatment and Prevention Associations fact sheet. New York: Legal Action Center, 1998.
[5] Gerstein,D.R.,et al. Evaluation Recovery Services: The California Drug and Alcohol Treatment Assessment. General Report. Submitted to the State of California Dept. of Alcohol and Drug Programs. Chicago: National Opinion Research Center, 1994.
[6] Substance Abuse and Mental Health Services Administration Study, March 1998
[7] The Journal of Behavioral Health Services & Research, May 1999. How Expensive Are Unlimited Substance Abuse Benefits Under Managed Care? By Roland Sturm, Ph.D.
[8] Cummings, C.R. (1996), Testimony before the subcommittee on national security, international affairs and criminal justice of the committee on government reform and oversight of the U.S. House of Representatives
