The Parity Paradox: America’s fight for mental health coverage
By Lauren DeSouza- Master of Public Health, Simon Fraser Public Research University – Canada
https://www.qbhinc.com/our-team/
Staff Research and Content Writer
© Copyright – SUD RECOVERY CENTERS – A Division of Genesis Behavioral Services, Inc., Milwaukee, Wisconsin – January 2025 – All rights reserved.
America has made tremendous progress toward recognizing and treating mental illnesses and mental health conditions over the past several decades. Our understanding of mental health and mental illness has improved tremendously, as have the treatments for mental health conditions. Progress in reducing barriers to care for people with mental illness remains slow, however. Compounded by climate change and the COVID-19 pandemic, mental health and mental illness are top concerns for Americans nationwide. 9 in 10 Americans, as well as Mental Health America and the US Surgeon General, believe that the US is currently facing a mental health crisis, according to a 2022 survey by KFF/CNN.
Despite mental health being top of mind for most Americans and widespread recognition that mental health is as important as physical health, significant gaps remain in access to mental health care. Nowhere are these gaps more prominent than in health insurance coverage.
Health insurance coverage for physical conditions has expanded steadily in the US. However, progress toward health coverage parity has been slow. Health coverage parity reflects that mental health conditions should be covered as comprehensively as physical health conditions. Laws such as the Mental Health Parity and Addiction Equity Act (MHPAEA) were enacted to promote insurance coverage for mental health conditions. Yet, significant barriers remain for patients trying to access mental health coverage. Moreover, investigations by the Milwaukee Journal Sentinel, among other sources, suggest that the insurance system actively works against patients and evades the protections enshrined in the MHPAEA.
What is health coverage parity?
Health coverage parity is the concept that health insurance companies should provide the same coverage for mental health services as physical health services. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), hereafter the Parity Act, is a federal law that requires health insurance providers to offer equally valuable benefits for mental health conditions as they do for physical health conditions. The following are examples of health coverage parity required by MHPAEA:
- Health insurance plans must apply comparable copays for mental and physical healthcare.
- If there are no limits to the number of visits for outpatient physical healthcare, there can be no limits imposed on outpatient mental health care.
- Insurance providers cannot impose annual or lifetime dollar limits on mental health benefits that are less favorable than any such limits on medical or surgical benefits.
The Parity Act has been updated several times. In September 2024, the Biden Administration issued a ruling to close several notable loopholes in the Parity Act, including high out-of-pocket costs that insurance providers often levy onto patients and prior authorization requirements that limit the scope or duration of mental health care benefits. These changes came into effect on January 1, 2025.
Why is it more difficult to access mental health coverage?
While the US has made significant progress over the past decade in recognizing and treating mental illness, coverage for mental health services remains more restrictive than other medical services. In many cases, health insurance providers have designed managed care practices to create barriers for patients to access mental health services.
For example:
- Medically necessary and clinically appropriate treatments for mental health and substance use are excluded from coverage more frequently than treatments for other medical conditions.
- Prior authorization and other types of utilization review are performed more stringently for mental health care than other medical care.
- People with mental or behavioral health conditions can only be covered for up to 24 months, but coverage for physical conditions can extend until retirement.
Mental health and substance use provider networks (the providers covered by health insurance plans) are not comparable to the networks for other medical providers.
Photo by Mikhail Nilov on Pexels
A report from RTI International analyzed national data between 2019 and 2021 and found that insured patients who seek mental health care often go out of network to find it. Health insurance companies do not reimburse mental health professionals appropriately, discouraging them from participating in health plans. Between 2019 and 2021, patients went out of network 3.5 times more often to see a behavioral health professional than to see a medical or surgical professional. Patients went out of network 8.9 times more often to see a psychiatrist than another specialty physician. Seeking care out of network can cost the patient a great deal out-of-pocket, creating yet another situation where the financial burden falls on the patient instead of the insurance provider.
Limited mental health insurance coverage often stems from fears of fraudulent claims. Health insurance companies and employers fear that employees will fake symptoms of a mental or behavioral health condition to avoid working or to “cheat the system” for a payout. However, neuropsychiatrists and other experts agree that fraudulent claims are rare. Unfortunately, the stigma persists, creating barriers for the many Americans desperate for support in navigating a mental health condition that impedes their ability to work.
Moreover, as investigations by the Milwaukee Journal Sentinel show, insurance companies have erected insurmountable barriers to having claims recognized as valid and to avoid paying patients for long-term disability and other claims.
A lack of parity in mental health insurance claims
The Milwaukee Journal Sentinel conducted a deep dive into mental health insurance claims to understand better the gaps and unfair treatment that Wisconsin residents face in trying to access equal coverage for mental health conditions. Their analysis found that mental health claims are far more likely to be denied by health insurance companies than physical health claims.
To understand the disparity, the Journal Sentinel analyzed five years of lawsuits filed between 2019 and 2023 in Wisconsin federal district courts over the denial of long-term disability claims. More than a third of denied claims involved workers with mental health conditions. In contrast, it is estimated that overall, only 7-8% of health insurance claims in the state are mental health-related, making the number of claim denials for mental health disproportionately high.
The Journal Sentinel analysis showed that the physicians hired by insurance companies to review a claimant’s medical file often make conclusions about the patient’s health that contradict what the claimant’s team of healthcare providers recommended. These conclusions are based on chart notes and medical records, not on meetings with the claimant. Most medical reviewers working on mental health claims never meet face-to-face with claimants.
Healthcare providers do not write chart notes with a medical reviewer in mind; most notes are made to aid the treating physician’s own memory or to send to a supervisor or other member of the patient’s care team. Chart notes are usually sufficient for approving claims for physical illness; for example, a broken arm is visible in an X-ray and a tumor on an MRI. But without speaking with the patient, how can a physician accurately assess their mental state?
Photo by Timur Weber via Pexels
Moreover, the Journal Sentinel’s analysis of court records suggests that physicians hired by insurance companies are often incentivized to recommend denying the patient’s claim. Health insurance companies hire in-house physicians or work with third-party providers to source medical reviewers.Often, companies cherry-pick physicians whose controversial opinions have been challenged or even thrown out in court for previous cases; in other words, physicians whose opinions are deemed untrustworthy. In some instances, physicians may assess cases in medical fields lacking proper training or in states where they are not licensed to practice. These physicians help insurance companies save money by preventing claims from being paid out, ultimately prolonging patients’ suffering. One third-party reviewer, PsyBar (owned by the IMA Group), marketed their services by claiming it could reduce insurance claim liability by 70%– in other words, bragging that it would help save insurance companies money by denying claims.
Wisconsin claimants are not alone in facing this hurdle. In every state, an insurance company’s hired physician has overruled a provider actively treating the patient. This is primarily due to a 2003 Supreme Court ruling that permits insurance companies to give equal weight to the opinions of their privately hired physician reviewers as they do to those of treating physicians. In practice, the views of the doctors who treat the patient are overruled by those of physicians who have never even met the patient.
Differences in claims for physical health conditions
Claims for physical health conditions are assessed in a manner similar to that of mental health conditions. A medical reviewer reads through case notes from the patient’s care team, oftentimes not meeting with the patient face-to-face, and comes to a conclusion about the claim. However, physical health conditions have the advantage of being clear-cut. Mental health conditions and disabilities are not always visible, and psychological pain is deemed subjective. It is a lot more difficult to deny a claim for a broken leg or a stroke based on medical notes than it is to deny that a patient has depression.
Additionally, the medical review process is also much more taxing for mental health claims than for physical health claims. In a physical health claim review, the reviewer will physically assess the patient and have them sit for tests, including X-rays or bloodwork. In contrast, the review process for evaluating a mental health condition includes rigorous questioning and cognitive tests that risk retraumatizing the patient.
Finally, a key difference between mental and physical health claims is the “discretionary clause.” When patients appeal the denial of their claims, as is the case for many mental health claims, insurers have the upper hand because of discretionary clauses. Legally, insurance companies are allowed to determine eligibility as they see fit. A federal court reviewing the decision must defer to the insurance company’s decision, despite the conflict of interest wherein an insurance company is financially motivated to deny claims to avoid paying out employees. Such discretionary clauses are banned in 20 states but not in Wisconsin.
Beyond the numbers
The Milwaukee Journal Sentinel spoke to several patients whose claims for long-term disability due to mental health conditions were denied by insurers. These stories depict the very real mental, physical, and financial toll that claim denials have on patients who are already struggling with their health.
Erick Vertein
Erick Vertein, 35, filed for long-term disability after developing depression and anxiety due to several work-related incidents. Vertein’s claim was denied after the medical reviewer read the notes from his care team, despite his treating physician and psychiatrist recommending he take a medical leave. The medical reviewer claimed that key details were missing from his psychiatrist’s case notes that disproved his condition; for example, that if Vertein were as sleep-deprived and exhausted as he said, his provider would have described him as having dark circles or eye bags and yawning frequently. The reviewer argued that showing up on time to doctor appointments indicated that Vertein could show up for work. Similarly, being able to articulate his depression and anxiety symptoms demonstrated that he did not have problems concentrating or communicating. Speaking with the Journal Sentinel, Vertein lamented that medical reviewers “pick and choose the things they want to use against you.”
When his disability claim was denied and he was unable to work, Vertein and his wife were unable to afford to continue living in their dream house. They now live in a refurbished schoolhouse over an hour away from Madison, where Vertein’s wife still works. The process of filing for disability and unsuccessfully appealing the denial has left the couple mentally and financially drained.
Naomi Hayes
Naomi Hayes, 37, paid $400 a month for optional short-and long-term disability coverage through her employer’s health insurance plan. Unfortunately, when she filed for long-term disability after experiencing a traumatic work event, she learned that had been a complete waste of money. Hayes’ psychiatrist diagnosed her with Post-Traumatic Stress Disorder (PTSD) after she experienced a traumatic incident in the workplace and recommended medical leave. Despite going through all the proper channels, the medical reviewer denied her claim under the notion that her conditions were pre-existing. Now, Hayes is left in debt, unemployed, and without the financial protections she paid out of pocket to secure.
Image via Freepik
Jessa Victor is an attorney who has represented hundreds of clients pursuing disability lawsuits against their insurance companies for denying valid claims. She has seen firsthand the impacts these denials have on employees, many of whom are forced to file for bankruptcy, move in with family members, or lose their homes. The mental, physical, and financial toll of these denials compounds the effects of patients’ mental health conditions, making it nearly impossible for them to recover. Insurance companies gaslight patients about their own symptoms and experiences, disregarding the professional opinions of their healthcare teams and concluding that patients are not as sick as they claim to be. This medical gaslighting causes excess stress and anxiety, compounding the guilt and shame that patients with conditions like depression and anxiety already face from having to step away from work.
Growing discontent with America’s health insurance system
The shooting of UnitedHealthcare CEO Brian Thompson in late 2024 reflects widespread frustration and anger with the health insurance system in America. While we can never condone violence, the incidents described highlight how the healthcare industry preys on vulnerable and sick individuals, revealing the fundamental flaws in the system. This tragic event has brought to light long-standing public resentment towards insurance companies. A criminologist remarked that Thompson’s killer seemed to be trying to “get even with a system that hurts many people.”
In an op-ed published in The New York Times, Andrew Witty, CEO of UnitedHealth Group, the parent company of UnitedHealthcare, acknowledged the public’s frustrations with the healthcare system. Americans are paying more than ever for health insurance, as illustrated in Naomi Hayes’ case, while insurers continue to deny more than one in five claims. According to a 2024 KFF survey, most American adults are concerned about their ability to afford health services or manage unexpected medical bills.
Moving forward
The changes implemented by the Biden Administration last year aim to improve efforts to achieve health coverage parity. However, these new changes do not address the biases of medical reviewers or the legal systems that reinforce the power of insurance companies over claimants. Mental health continues to be viewed as a gray area, often seen as easier to manipulate than physical health. Discretionary clauses and the 2003 Supreme Court ruling still favor health insurance companies, which have a vested interest in denying claims.
The current process for filing for disability is both mentally and financially taxing. This process deters individuals who are already struggling with cognitive challenges from pursuing or following up on their claims. There is growing frustration with America’s deeply flawed health insurance system, which leaves patients unsupported while enriching company executives.
In conclusion, while America has made commendable strides in raising awareness and understanding of mental health issues, significant challenges remain in ensuring equitable access to mental health care. The disparities in coverage for mental health services compared to physical health care perpetuate a system that is fraught with barriers for individuals seeking help. Despite legislative efforts like the Mental Health Parity and Addiction Equity Act, many Americans still face obstacles that prevent them from receiving the necessary support for their mental health conditions.
References
Centers for Medicare & Medicaid Services. (n.d.). Mental health parity and addiction equity. https://www.cms.gov/marketplace/private-health-insurance/mental-health-parity-addiction-equity
Kaminsky, M. (2024, September 9). Biden administration issues rules making mental health care more accessible. U.S. News & World Report. https://www.usnews.com/news/health-news/articles/2024-09-09/biden-administration-issues-rules-making-mental-health-care-more-accessible
Meier, K. (2024, December 19). Why can your insurer overrule your mental health doctor? Milwaukee Journal Sentinel. https://www.jsonline.com/story/news/health/2024/12/19/why-can-your-insurer-overrule-your-mental-health-doctor/75571038007/
Meier, K. (2024, October 2). Should coverage be the same for physical, mental health, and disabilities? Milwaukee Journal Sentinel. https://www.jsonline.com/story/news/health/2024/10/02/should-coverage-be-the-same-for-physical-mental-health-disabilities/74917531007/
Meier, K. (2024, October 2). Workers with mental illness face daunting odds for disability coverage. Milwaukee Journal Sentinel. https://www.jsonline.com/story/news/health/2024/10/02/workers-with-mental-illness-face-daunting-odds-for-disability-coverage/75274753007/
Okunola, F., & Mangione, L. (2024, December 13). UnitedHealth is failing its members. The New York Times. https://www.nytimes.com/2024/12/13/opinion/united-health-care-brian-thompson-luigi-mangione.html
Psychiatric News. (2024). Supreme Court weighs in on parity regulations. https://psychiatryonline.org/doi/10.1176/appi.pn.2024.06.6.5