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On the surface, the word “insurance” doesn’t require a whole lot of research.

It is, after all, something in which every American invests, whether the policies purchased cover homes, automobiles, boats or lives. The first insurance policies date back to the mid-1300s in Italy, when Italian merchants began to protect the goods and services from the risks associated with transportation of those things through lawless and dangerous stretches of road and sea.

From Italy, those ideas began to spread, and by the 18th century, Lloyd’s Coffeehouse was an internationally known marine insurance marketplace based in London. It would be another century, however, before such practices gave rise to the practice that causes so much consternation on the American political stage these days: health insurance.

Risk vs. reward

As the Industrial Revolution catapulted the modern world into a new age of innovation and achievement, modern man began to take greater risks in his pursuit of capital. To protect workers against injuries caused by railroad and steamboat mishaps, the Franklin Health Assurance Company of Massachusetts began to offer the first such policies, dubbed “accident insurance,” which worked in much the same way as modern-day disability insurance does.

By 1866, some 60 organizations offered similar policies around the country, which gave rise to a cottage industry that coalesced by the turn of the century, when the Progressive era dawned under President Theodore Roosevelt. Company-provided healthcare grew out of worker reforms of those days: employers could push back against negligence claims by declaring that injured workers either assumed risk as part of their employment or were partially at fault.

Workers’ rights advocates, according to the American College of Healthcare Executives, sought to shift responsibility to employers, and “between 1910 and 1915, 32 states enacted workers’ compensation insurance … organized medicine supported the workers’ compensation legislation apparently under the view that injured workers would go to their family doctor for care, and the doctor would be paid by the workers’ compensation fund. Instead, however, employers began to directly retain and sometimes employ physicians to provide care.”

Around the same time, the traditional payment-for-services-rendered model of obtaining care from a physician began to change. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, which led to the development of the ancestors of today’s Health Maintenance Organizations (HMOs).

Although mental illness slowly began to be recognized as a health care problem — “in 1946, Harry Truman passed the National Mental Health Act, which created the National Institute of Mental Health and allocated government funds towards research into the causes of and treatments for mental illness,” the Unite for Sight website states — mental health care was often overlooked, at least until President John F. Kennedy took office.

The beginning of behavioral health

“In 1961, President Kennedy called on the U.S. Civil Services Commission (the predecessor to the U.S. Office of Personnel Management) to require the Federal Employees Health Benefits Program (FEHBP), the health insurer for federal employees, to cover psychiatric illnesses at a level equivalent to general medical care,” according to a 1985 article in the American Journal of Psychiatry.

Previously, health plans taking part in the FEHBP followed the benefit guidelines as private plans, which generally limited coverage, if providing any at all, for mental health care. Kennedy’s order didn’t last long, however, and in 1975, participating plans were allowed to scale back their behavioral health coverage. At the time, “the Blue Cross Blue Shield High Option Plan was the only plan remaining that provided parity-level psychiatric coverage, and so for a number of years, it attracted higher-cost beneficiaries until 1981 when it was permitted to cut its coverage significantly,” according to a 1986 Health Services Research publication.

Most efforts to improve private behavioral health benefits in the 1970s and ’80s took place at the state level, with several states passing laws that mandated minimum benefit levels for certain types of behavioral health treatment: alcoholism (38 states), addiction (25 states) and mental health (18 states), according to a 2000 Survey of Plans report by Blue Cross Blue Shield. One example: the state of Massachusetts, which required that state insurance companies pay for $500 of outpatient treatment annually, 60 days of inpatient treatment at a psychiatric hospital and inpatient mental health care in general hospitals at the same level as for other illnesses, according to a 1982 report in the Journal of Health Politics.

In pursuit of parity

By the 1990s, advocates for insurance parity — covering behavioral health benefits at the same level as physical health care benefits — tried a different approach, framing the conversation as one of bias. The mentally ill deserved equal treatment, they argued, and while early efforts — a 1992 bill by Sen. Pete Domenici and Sen. John Danforth, followed by its inclusion in President Clinton’s proposed health care system overhaul — fell short, the issue didn’t go away.

If anything, according to the publication “Significant Events in the History of Addiction Treatment and Recovery in America,” it only got worse: “Following an erosion of alcoholism treatment reimbursement benefits by insurance carriers, an aggressive system of managed care all but eliminates the 28-day inpatient treatment program in hospitals and private, free-standing centers. The downsizing and closure of hospital-based treatment units sparks a trend toward the integration of many psychiatric and addiction treatment units and a renewed community trend of incorporating addiction treatment services under the umbrella of mental health or ‘behavioral health’ services. Most inpatient treatment programs shift their emphasis toward outpatient and intensive outpatient services.”

In 1995, Domenici and Sen. Paul Wellstone pushed for a comprehensive parity bill that was originally attached as a provision to the Health Insurance Portability and Accountability Act (HIPAA) but later dropped. In 1996, they put forth another bill, this one a much more modest proposal: “this legislation focused on only one aspect of the difference in mental health insurance coverage — catastrophic benefits,” according to a 2004 report to the U.S. Department of Health and Human Services. “It prohibited using lifetime and annual limits on coverage for mental health care that were different from general medical care.”

The legislation did not, however, cover drug and alcohol treatment, and health insurance providers pushed back by tightening restrictions on the number of hospital stays and outpatient visits for mental health services, according to a 2000 report by the U.S. General Accountability Office.

Substance abuse benefit equality

Three years later, according to Mental Health America, “President Clinton directed the Office of Personnel Management to implement comprehensive MH/SA (mental health/substance abuse) parity in FEHBP beginning in 2001 affecting, 8.5 million insured lives. The 1999 directive covered all diagnoses listed in the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders and all aspects of in-network MH/SA benefits.” Even those benefits had their limits, however: “For example, 9 percent of FEHB plans placed annual dollar limits ranging from $3,000 to $50,000 on substance abuse coverage, and 15 percent of plans used lifetime limits most often in the form of two 28-day inpatient stays,” according to a 2004 report by the U.S. Department of Health and Human Services.

Things slowly began to improve. In 2003, then-President Bush’s final report of his New Freedom Commission on Mental Health recommended parity as well, and by 2006, 37 states had parity laws on the books. However, it was a patchwork of mental health and substance abuse coverage mandates, according to MHA, and only “a handful of states” covered treatment for substance use disorders. But in 2008, Wellstone and Domenici again teamed up for additional legislation.

The Mental Health Parity and Addiction Equity (MHPAE) Act passed in 2008 as part of President Bush’s Emergency Economic Stabilization Act, and the law’s intent was true parity: “eliminating historical differences in group health insurance coverage for mental health and substance abuse (MH/SA) benefits and medical/surgical benefits,” according to A Political History of Federal Mental Health and Addiction Insurance Parity,” a 2010 article in The Milbank Quarterly. It was estimated that the new law would improve coverage for 140 million Americans who held employer-sponsored and state and local government plans.

The MHPAE Act included the following regulations:

  • If an employer offered behavioral health coverage, all financial requirements (deductibles, copays, etc.) and treatment limits (the number of inpatient and outpatient days) for mental health/substance abuse benefits “must be equal to those for medical/surgical benefits.”
  • The 1996 MHPA, which prohibited the use of annual and lifetime dollar limits for mental health benefits, was expanded to include addiction treatment benefits.
  • Health plans that provide out-of-network coverage for medical and surgical benefits had to also provide equal out-of-network coverage for MH/SA benefits.

However, there were a number of coverage gaps that allowed insurance companies to circumvent such requirements. The biggest: Employers were not, under the law, required to provide MH/SA benefits. The law applied only to American companies with more than 50 employees, meaning individual plans did not fall under the purview, and the law allowed the individual health plans to define for themselves the services for mental health and substance abuse that would be covered — meaning, in other words, that specific coverage was not required. In addition, according to that 2010 report, “If a health plan's total costs increase by 1 percent and are attributable to parity (2 percent in the first year after implementation), the plan can file for a one-year exemption from this law.”

The Affordable Care Act's impact

March 23, 2010: President Obama signs the Affordable Care Act into law, a groundbreaking piece of legislation in terms of behavioral health benefits. The act “eliminated medical underwriting in the individual and small group markets starting in 2014, so medical history — including mental health history —no longer results in enrollment denials or higher premiums,” according to the website HealthInsurance.org. In other words, addiction could no longer be labeled as a pre-existing condition. In addition, the ACA expanded MHPAEA to include individual plans, small group plans and Medicaid, meaning that since 2014, all new individual and small-group plans have covered addiction treatment and are required to do so with benefits on par with those for medical and surgical care.

In addition, behavioral health services — which include mental health and addiction treatment — are considered one of the 10 essential pillars of health care under the ACA, meaning there are no annual or lifetime dollar limits applied to plans managed by the legislation. However, there still remain gaps in coverage: large group plans aren’t required to cover those 10 essential benefits, and they’re not even required to offer behavioral health benefits at all.

If they so choose, they must meet certain federal guidelines — no annual or lifetime dollar limits, parity with medical coverage — and it’s generally agreed upon that while the ACA doesn’t cover large group plans, those plans have moved in the direction of more generous benefits than before its passage. And while the ACA — colloquially known as “Obamacare” — continues to be a hot-button topic among Republican lawmakers now in control of Washington, almost every state has some form of law on the books mandating parity in one form or another between medical and mental health benefits.

An uncertain, often tenuous, future

So what does the future hold? Health care costs continue to rise, and insurance companies are forced to either cut where they can or pass those costs on to their customers. Over the past several years, the length of residential inpatient stays have been dramatically shortened, and many insurance plans have begun to funnel patients from medical detox programs directly into an Intensive Outpatient setting.

Whether your addiction treatment will be covered by your health insurance depends entirely on the specifics laid out by your plan’s provider. At treatment centers like Cornerstone of Recovery, we have specially trained staff members in our Utilization Review Department whose sole purpose is to navigate the red tape and the bureaucratic fine print of health insurance policies so that we can determine the extent of coverage for potential patients who call us for help.

Of course, we encourage anyone to make inquiries directly to their respective insurance companies. Contact information can usually be found on the insurance card your provider gives out as proof of membership, and you’ll certainly need the group and policy numbers on that card for any phone calls you make to treatment facilities like Cornerstone. Have that handy when you call your insurance company directly, and it helps to have a list of specific questions, such as:

  • What are the different phases of drug rehab that my plans covers — medical detox? Residential inpatient? Intensive outpatient?
  • How is the length of my stay determined?
  • Does my insurance plan cover the medications prescribed to me during my rehab stay?
  • What addiction treatment facilities are covered by my specific plan?
  • What will my co-pay and/or deductible be under my existing policy?

At Cornerstone of Recovery, we understand that sometimes these sorts of conversations leave you with more questions than answers. That’s where our Utilization Review and Admissions staff members can assist you. Chances are good that if you have a commercial health insurance plan, the evolution of behavioral health coverage has groomed your policy to offer you the assistance you need. Addiction treatment is as important as medical treatment, and if you find yourself lost, alone and desperate, you can and should take full advantage of the benefits that will help you get better.