Health plan edict won't help all feds

President Clinton has issued an executive order that will ensure that by 2001, federal workers, retirees and others covered by the Federal Employees Health Benefits Program (FEHBP) will have the same coverage for mental health and substance abuse problems as they currently have for physical health problems.

"The goal is to make plan coverage for mental health and substance abuse care identical to traditional medical care with regard to deductibles, coinsurance, co-payments, and day and visit limitations," Clinton said recently.

The Office of Personnel Management had previously issued a letter to all participating FEHBP carriers, telling them that OPM believes mental health and substance abuse parity can be achieved in a way that expands benefits and holds costs to a minimum. But that may be easier said than done.

I have mixed feelings about this executive order. I certainly believe that the government should not discriminate against federal employees who require mental health services. Many health plans currently impose severe limits on mental health benefits. Some have a dollar ceiling on annual and lifetime mental health benefits, and most have a limit on the number of covered treatments by a mental health professional.

These plans have no such limits on regular doctor visits for ordinary aches and pains. You can see as many doctors as you want, and your health plan will pay its share. If you are a hypochondriac (which, ironically, is a mental health disorder) and are always running to the doctor, your plan will foot the bill.

Giving federal employees a free hand to run up as large a bill as they want by visiting doctors for physical ailments but then limiting visits to mental health professionals isn't fair and doesn't make economic sense. At the same time, many plans exacerbate the problem by increasing the co-payment for mental health services.

While the plans may simply be trying to contain costs, their actions have created a two-tier system, with mental health benefits on the bottom rung. That is wrong, and the president is right in wanting to remedy this situation.

But what concerns me is how he is trying to achieve parity. The present set of deductibles, coinsurance, co-payments, and day and visit limitations that apply to nonmental health services was developed over time and reflects a balance among competing forces: utilization, cost and premiums.

Insurers need to strike a careful balance. They must monitor how employees use benefits, and they must use that data to apply the right deductible/co-payment. The co-payment must be calculated so that plan participants will have sufficient access to a particular benefit or care provider but still have to pay enough out of their own pockets to prevent them from going overboard. I am sure many plans have not fully succeeded in striking a happy medium between these two competing forces, but that's the goal they are working toward.

We all would love to have our health insurance plan pay every medical expense we incur, but the cost for such coverage would be prohibitive. A plan that pays for everything would be costly because such a benefit structure would stimulate the excessive use of health care benefits because they would be free.

The point is that the benefit packages currently offered by the various FEHBP participants have been carefully calibrated. They didn't arrive out of thin air. By forcing all FEHBP carriers to have identical deductibles, coinsurance, co-payments, and day and visit limitations for all benefits, the president may be disturbing an equilibrium in a way that could backfire.

This new requirement may result in a sharp reduction in nonmental health benefits to the detriment of all. Why? Because carriers don't know what utilization pattern will emerge if there is no distinction between a hospitalization for a stroke and one for schizophrenia. If a carrier must provide equal benefits for both illnesses and knows that people with mental health disorders who require hospitalization tend to stay in the hospital for extended periods, that carrier may reduce coverage of hospitalization expenses for all illnesses. That's the only way the carrier can protect itself against excessive costs.

If carriers do reduce their hospitalization benefits, will such a benefit curtailment result in the deprivation of needed hospitalization coverage for federal employees? The answer is definitely yes for some employees, although it is hard to say how many.

By applying a "meat ax" approach to the issue of mental health benefit parity, the president is forcing carriers to take measures that may not be in the best interests of all federal employees and retirees. A blanket edict is not the answer.

The president should direct OPM to analyze the potential use of mental health care services and report its findings to him. Then he would be in a position to impose a remedy that is responsive to the needs of all federal employees. I'm afraid a one-size-fits-all approach will backfire to the detriment of all FEHBP participants.

--Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.

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