Sara Nadim

Abstract

This note examines the 2008 Mental Health Parity and Addiction Equity Act and argues that although the Act represents a landmark improvement in mental illness parity coverage, it should be amended to define explicitly what constitutes a mental illness or substance use disorder. The first part explores the history of federal mental health parity efforts. The second part discusses the Act’s specific provisions, emphasizing that it does not provide explicit definitions of covered conditions. The third part reviews state definitions of mental illness, while the fourth highlights recent developments supporting the biological basis of mental illness. The fifth part evaluates the societal cost reductions that would result from expanding mental health insurance parity. The note concludes that certain severe biologically based mental illnesses should be expressly listed in the statutory definition and required, at minimum, to be covered by insurers. It supports this position by showing that the cost impact on employer group health plans would be minimal, whereas societal costs—such as homelessness and reduced workplace productivity—would decrease substantially when mental illness and substance use disorders receive adequate treatment.

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