Members of the Screen Actors Guild recently read in their health plan’s newsletter that, beginning in January, almost 12,000 of its participants will lose access to treatment for mental-health and substance-abuse issues.
The guild’s health plan represents one of a small number of unions, employers and insurers that are scrapping such benefits for their enrollees because of a 2008 law that requires that mental-health and substance-abuse benefits, if offered, be as robust as medical or surgical benefits. By dropping such coverage, providers can circumvent the requirements.
Others that have made the same move include the Plumbers Welfare Fund, representing about 3,500 members in the Chicago area, and Woodman’s Food Market, a chain in Wisconsin with 13 stores and about 2,200 employees. United Security Life and Health Insurance Co., of Bedford Park, Ill., dropped mental-health coverage in individual policies it sells in Indiana and Nebraska this year because it saw costs rising and some competitors dropping coverage, said chief compliance officer Robert Dial.
According to the Kaiser Family Foundation’s 2010 Employer Health Benefits survey, about one-third of firms with more than 50 workers said they made changes in the benefits they offer in response to the law, and 5% of those said they dropped mental-health coverage.
Bruce Dow, the chief executive of SAG’s Producers Pension and Health Plans, said actuaries consulted by the plan determined that equalizing mental-health and substance-abuse coverage would double costs, to north of $3 million annually. That’s on top of a deficit expected to be in the tens of millions of dollars in 2011, the plan’s board of trustees has told participants.
“We’re not in a position to afford it,” Mr. Dow said. “This is unfortunate because we would have liked to have retained our existing programs.”
The Mental Health Parity and Addiction Equity Act was signed into law in 2008. It prohibited large health plans from setting higher copayments or limiting doctor visits for mental-health care, among other things. Federal regulations on implementing the legislation weren’t issued until earlier this year, so the new requirements go into effect for many plans starting in 2011.
Those decisions are hitting home now, since plans’ open enrollment periods tend to run before the end of the year. Insurers and consultants say few plans are dropping the coverage, but many companies have expressed concerns about how to comply.
Cigna Corp., an insurer that specializes in large corporate accounts, has been running webinars to counsel employers on the changes. The National Business Group on Health surveyed large corporations and found that 89% reported having to make some changes to their plan to be compliant with the law, and 18% increased deductibles to cover the new costs.
“The big issue with employers is, ‘Well, how much is this going to cost?”‘ said Doug Nemecek, Cigna’s senior medical director for behavioral health. They also want to know what limits they can have, if any, on mental-health benefits.
Mental-health and addiction advocates say the relatively small number of plans opting out reinforces projections by the Congressional Budget Office that the law would have a minimal impact on insurance premiums. The CBO estimated premiums for group health insurance would increase by an average of 0.4%.
Steve Melek, a behavioral health-care expert for the consulting and actuarial firm Milliman Inc., said there is “ample” evidence suggesting that not providing benefits for mental health and addiction leads to higher costs down the road.
In coming years, plans that drop coverage might pick it back up because of the federal health overhaul. That law requires that plans selling insurance through online marketplaces known as health exchanges meet a certain minimum level of benefits. Regulations detailing what those are haven’t been written, but likely will include some form of mental-health coverage.
Terry Musto, administrator of the Plumbers Welfare Fund, said actuaries examined the fund’s options for more than a year and determined that rolling back coverage, along with doubling deductibles and a few other moves, was the best course for a group facing about 40% unemployment.
“You either cut them [the workers] out or you cut out something like mental health,” Mr. Musto said, adding the fund hopes to add such coverage back when the economy recovers.
Woodman’s dropped the coverage for 2010, said vice president Clint Woodman, who declined to elaborate on the decision.
SAG’s decision is reverberating particularly loudly among its members. The entertainment industry ranks in the top three business segments in rates of illicit drug use and heavy alcohol use, according to the federal Substance Abuse and Mental Health Services Administration.
“It was shocking to me,” said Christopher Lawford, a SAG member. “Like everyone else in this country, I expected that when the U.S. Congress passed parity legislation and the president pushed through his health-care reform, we would have cooperation on the part of providers and the insurance industry to actually deliver on some of this stuff. I think that was naive. It’s always about money.”
The SAG plan that is dropping benefits covered 11,644 participants and dependents as of the middle of this year, and is available to participants who earn enough to qualify for coverage but less than about $30,000 a year. Higher earners qualify for a more comprehensive plan. A large chunk of SAG’s more than 100,000 members don’t earn enough to quality for the two health plans.
Mr. Dow, the chief executive of the SAG plans, said that strict application of the law is the most difficult part to swallow: Plans have to eliminate prescription-drug coverage for mental health or substance abuse as well. As a result, SAG members won’t be able to go to their primary physician and get a prescription for an antidepressant, for example. He said the plan will begin working with its members to help refer them to community-treatment options..
Write to Russell Adams at russell.adams@wsj.com and Avery Johnson at avery.johnson@WSJ.com
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To contact to the Plumbers Welfare Fund:
Plumbers Welfare Fund, Local 130, U.A
1340 West Washington Boulevard
Chicago, IL. 60607-1986
Phone: (312) 226-4200
Fax: (312) 226-7285
To contact United Security Life and Health Insurance Co:
United Security Life and Health
6640 S Cicero Ave.
Bedford Park, IL 60638
Phone:(800) USL-H422 (800) 875-4422
Fax:(708) 475-6120
To contact the Screen Actors Guild- Chicago/Midwest SAG Office:
Screen Actors Guild Chicago/Midwest SAG Office
1 East Erie, Suite #650
Chicago, IL 60611
Tel. (312) 573-8081 or (800) 724-0767
Fax (312) 573-0318 or (800) 599-1675
Hotline (312) 867-3710
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