How much coverage is enough?
Mental health advocates want a better deal, but businesses fear more costs

by Joan Hennessy
for Virginia Business
May 2006

Dr. James R. Dageforde is a physician, but it was his wife, Kathy, who detected a problem with their daughter seven years ago. “Did you notice Laura’s losing weight?” she asked.

Doctors later nailed down the diagnosis. Thirteen-year-old Laura had anorexia nervosa, the sometimes-fatal eating disorder. The situation quickly turned serious. Laura’s hands and feet were cold, and her fingers sometimes blue. She restricted fluids, exercised compulsively and wouldn’t eat.

“The first three years,” says Jim Dageforde, “were a matter of keeping her alive, literally.”
Dageforde had health insurance, but it wasn’t enough. In the worst year, the Richmond family paid $40,000 for health care bills not covered by insurance.

The Dagefordes’ situation prompted a failed effort two years ago to expand the state’s insurance parity law. The current law attempts to put coverage for a number of mental illnesses on the same footing as physical ailments, but the statute does not apply to eating disorders.

Efforts also are under way to reform a federal parity law. But while the bill has attracted many sponsors, it has languished in Congress for several years largely because of businesses’ fears of runaway costs.

Despite setbacks, mental health advocates have not given up hope of eventually achieving full parity in health insurance coverage. “There should not be any discrimination between mental illness and any other illness,” says Diane Kelly, executive director of the Mental Health Association of Roanoke Valley.

But the bottom line of this long-running debate is: How much coverage do employees need, and what can businesses afford to pay?

Businesses fear a state mandate requiring expanded mental health coverage could come at a price they cannot pay. Many struggle to provide their employees basic health coverage because of steadily rising costs. (The issue is not confined to business. Individuals who buy health insurance on the open market also have faced sharp increases in premiums.)

Many believe that employer-sponsored health care is reaching a crisis. Only three in five companies nationally — 60 percent — offered their employees health care last year, down from 69 percent in 2000 and 66 percent in 2003, according to the Kaiser Family Foundation and Health Research and Educational Trust.

Doug Gray, executive director of the Virginia Association of Health Plans, notes that Virginia’s parity law mostly affects small businesses, which typically have the toughest time finding affordable health care. While the law exempts firms with 25 or fewer employees, it also does not apply to self-insured companies, which tend to be large corporations.

Gordon Dixon, state director of the National Federation of Independent Business in Virginia, says the rising cost of health insurance is the top concern of his membership. “…Our members are saying the straws that keep being dumped on their backs are going to break their backs,” he says.

In fact, insurance costs can make a difference in how a business estimates its costs in bidding for a contract. “It’s extremely difficult when you take [insurance premium increases] into consideration in bidding federal contracts,” says Roger Bromen, executive vice president and chief operating officer for Tessada & Associates, a federal contractor based in Northern Virginia. “The only thing we can hope for is that every firm is experiencing the same increases, and therefore their costs are going up also.”

Recent study suggests a cure
But a recent study published in the New England Journal of Medicine argues that equitable mental health care can be affordable if the benefit is well managed.

The study reported on coverage in the Federal Employees Health Benefits Program, which in 2001 offered mental health and substance abuse benefits comparable to medical benefits. Researchers compared health plans in the federal program with plans that did not offer mental health parity. The study concluded that, when coupled with managed care, mental health parity “can improve insurance protection without increasing total costs.”

Nonetheless, a Virginia lobbyist for mental health care issues does not see the study providing much ammunition in the fight to win parity. “I remember a 5- or 6-year-old study that said the same,” says Leslie Herdegen, legislative consultant for the Richmond-based law firm Macaulay and Burtch PC. “HMO-type managed care restrictions can be every bit as restrictive as a firm cap on benefits.”
Dixon, on the other hand, questions the study’s conclusions. “I’ve never seen that you were able to get anything for nothing.” Small businesses, he points out, can’t negotiate the discounts available to large employers like the federal government.

Whatever their position on parity, no one appears to argue against the need for solid mental health care. Mental disorders are the leading cause of disability in the United States and Canada for people ages 15 to 44, according to the National Institute of Mental Health. Researchers have established a connection between increased worker productivity and treatment for depression and anxiety.

In fact, many health-care plans for larger companies go beyond basic requirements for mental health coverage. Tom Warburton, vice president for marketing and communications at ValueOptions in Norfolk, a managed care company specializing in mental health and chemical dependency programs, says many companies are increasingly aware of the link between mental and physical health. Counseling offered through employee assistance programs, for example, can serve as a preventative measure, detecting and correcting problems before they become debilitating. “[Companies] are looking out for their employees, and they are looking out for themselves,” Warburton says.

Beauty queen becomes advocate
State mental health advocates gained a new face in 2004 when Mariah Rice was crowned Miss Virginia. Rice, now 25, is a survivor of depression and the eating disorder bulimia. She overcame her disorder through a combination of pluck and counseling, paid for by her mother’s insurance.

During her tenure as Miss Virginia, she crisscrossed the state, making public appearances and sharing the story of her mental health struggle. And she listened to other’s stories, too. “I started to meet so many people who had that financial burden,” of paying for treatment out of pocket, she says.
Most workers with health insurance had mental health benefits as well in 2004, according to the Kaiser Foundation. But insurers usually capped outpatient visits and hospital stays.

Health insurers, however, offer a different view. “In my personal experience, stays can be extended as long as there’s an authorization,” says Scott Golden, spokesman for Richmond-based Anthem Blue Cross and Blue Shield in Virginia. “So I think there are checks and balances. If the need for care is still there, we’re going to do everything we can to make sure our member gets the care they need.”

The parity law
With some degree of success and failure, federal and state laws have taken aim at ensuring consumers get equitable mental health coverage.

Virginia law mandates equal treatment, or parity, for “biologically-based” mental illness. The law specifies “schizophrenia, schizoaffective disorder, bipolar disorder, major depressive disorder, panic disorder, obsessive-compulsive disorder, attention deficit hyperactivity disorder, autism, and drug and alcohol addiction.”

Other mental health disorders, including eating disorders, typically are covered by insurance but are not on parity with physical ailments.

In Laura Dageforde’s case, medical bills mounted as a result of weekly visits to psychiatrists and nutritionists, as well as frequent family counseling. “So there are three things going on constantly,” Jim Dageforde says. “My current insurance will not pay for nutritional counseling for anorexia.”
Laura also was hospitalized six times. The Dagefordes could find no eating-disorders center in Virginia, so they traveled to the Center for Eating Disorders at St. Joseph Medical Center in the Baltimore area.

There, Laura was an inpatient at the hospital for a week. “But after that, she’s a day patient for three more weeks,” Jim Dageforde remembers. During that time, Laura stayed with her mother at a Maryland hotel.

Ultimately, the Dagefordes sent their daughter to an eating-disorder facility in Arizona, the Remuda Ranch Treatment Center. At the time, an eight-week stay was $80,000, Dageforde recalls. “They give you some break, [and] our insurance paid for some, because, and only because, I have always gotten out-of-network benefits.”

His share, ultimately, was $20,000. That was the year that his expenses, beyond insurance, came to $40,000. The experience prompted Dageforde to seek a change in the Virginia parity law.
Moved by the story, Del. Lee Ware (R-Powhatan) championed a proposal to add eating disorders to the law. “I’ve met people deeply affected by those [eating disorders] maladies. …They weren’t able to get the coverage they needed.”

Ultimately, the proposal didn’t get beyond the Special Advisory Commission on Mandated Health Insurance Benefits.

The effect of mandates
Health plan officials say mandates, such as Ware’s proposal, are a key driver of insurance cost. A mandate dictates that health insurance must cover a specific illness or condition. For example, insurers were required to cover additional hemophilia treatment expenses in 1998 after a heated legislative battle. “Virginia has the third largest number of mandates in the country says Anna Healy, policy director for Virginia Association of Health Plans. “Mental health is just one of the 30 mandates. Every year, somebody tries to put in more mandates.”

She says that employers are left asking: Why are our premiums going up? “Every new mandate adds cost.”

Government mandates and regulations account for 15 percent of every new health care dollar, according to a 2002 study commissioned by the American Association of Health Plans. Other slices of the pie include factors such as general inflation, the cost of drugs, the effects of hospital consolidation, the aging population and the impact of litigation.

In the crosshairs of the health-care debate, lawmakers must strike a balance between the health of the public and a healthy economy. It’s a Solomonic dilemma, Ware observes. “And it requires a Solomon to find an answer.”

But even in an imperfect situation, healing can take place. Now recovered from her eating disorder, Laura Dageforde is a 20-year-old junior at James Madison University, where she majors in psychology and Spanish.

Her interest in psychology, she acknowledges, is an outgrowth of her own journey. “I would honestly say my turning point was in the last year — or maybe coming to college. …I’m not sure what changed.”
But she can see now how much anorexia hurt her. “I can see the irony of using that to make me feel better. It does nothing for me. It was a waste of precious life.”