Vermont's Legislation Offers a Model for Comprehensive Parity

The following article was originally published in the Academy for Health Services Research and Health Policy's October 2001 newsletter called "Connection."

Vermont's Legislation Offers a Model for Comprehensive Parity

By Ken Libertoff, Ph.D., Vermont Association for Mental Health

There is a time and a place for everything. Now is the time and the United States is the place to establish parity in health care insurance for alcohol and drug abuse coverage. A majority of states have some type of expanded mental health insurance coverage.

Most of these gains, however, do not amount to full parity, and without that, stigma and discrimination against people who suffer from addictive disorders and mental illness will continue. On a more positive note, a small handful of states in recent years have passed comprehensive parity bills that include coverage for substance abuse and addictive disorders in addition to mental health.

The strongest of these bills is Vermont's Mental Health and Substance Abuse Parity legislation of 1997. This law is considered the national model for putting coverage of behavioral health care on equal footing with coverage of physical health care. Under this legislation, all policies sold to Vermonters as of 1998 must include parity for all substance abuse and mental health conditions. The legislation eliminates all traditional discriminatory practices such as special lifetime and annual limits, high co-payments, and high deductibles, and it contains no exemptions other than for self-insured companies.

Much can be learned from the Vermont experience since its implementation in January 1998. In truth, there was little support for the inclusion of addictive disorders and substance abuse when the bill was first considered. Yet research studies, clinical observations, and common sense from people in the field all confirmed the close interrelationship between mental illness and substance abuse (leading to the now popular term "co-existing disorders"). To advocates of the Vermont bill, the decision to add substance abuse was simply the right thing to do.

In order to defuse the strong opposition to this concept, proponents mounted a major campaign to confront the stigma, misinformation, and negative attitudes associated with alcohol and drug abuse and the people who suffer from these diseases. It was also strategically important to define the projected cost of coverage for addictive disorders and to provide information and research on the treatment effectiveness.

The most poignant and difficult political barrier to the inclusion of addictive disorders stemmed from misconceptions, negative perceptions, and strong stigma associated with what is both a social and a health problem. Over a period of six months, proponents were able to confront and change attitudes while creating a broader understanding of the nature of addictive diseases through public testimony and through personal conversations with legislators.

Importantly, many -- if not most --legislators knew of someone among their families, friends, or work acquaintances who had been affected by this problem. At key moments during Vermont's parity debate, several lawmakers came forward publicly to provide personal testimony about the nature of the problem and its devastating impact B not only on the people afflicted with it but on entire families. Most importantly, they spoke of the power of treatment and recovery.

Research Influenced Debate

Myths and misunderstanding about treatment and its effectiveness were difficult to overcome. Here, too, testimony about recovery was a powerful tool, especially when the discussion included recent national studies that offered coherent assessments of effective interventions, treatment models, and outcomes.

Prior to the 1997 debate, there was little clear and reliable information concerning the probable costs of parity for addictive disorders as well as for mental health. This did not stop opponents of the bill, primarily insurance companies, from suggesting that extending parity to include substance abuse could increase premiums by 10 percent or higher. Their arguments were greatly diminished by a Coopers & Lybrand actuarial study that projected the probable cost impact of comprehensive parity on insurance premiums at closer to 3.4 percent. As it turned out, the actual cost impact of the bill in 1999 was lower than projected; comprehensive parity in Vermont increased premiums by 1 to 2 percent.

Advocates for comprehensive parity in Vermont anticipated the need to regulate certain managed care practices, and in 1994, the legislature approved a bill to rein in potential misuses of utilization review. More recently, Vermont passed legislation mandating the annual release of a performance report card on each of the five largest insurance companies offering policies with substance abuse and mental health coverage. These efforts are viewed as essential companion legislation to parity.

In partnership with the federal Substance Abuse and Mental Health Services Administration, Mathematica Policy Research Corp. is conducting a two-year evaluation of Vermont's comprehensive parity experiment that will be completed by year's end . This study will analyze cost data, treatment patterns, and consumer satisfaction. It will also report on the experience of the business community.

The Vermont parity campaign is an unfolding story of successful incremental health care reform. With its passage in 1997, Vermont became a leader in the fight against decades of discriminatory practice by insurance companies against people who suffer from mental illness and addictive disorders. By passing this comprehensive parity bill, the state confirmed its intention to consider alcohol and drug abuse a health problem and to create parity in insurance coverage with other medical conditions. This concept, simple and precise, was the cornerstone of Vermont's fight for parity and hopefully the foundation for future state and federal initiatives.