Commentary

Blank Check for Mental Health

A few years ago a young woman in Pittsburgh, who had trouble getting to work on time, found a psychiatrist who declared that she suffered from “chronic lateness syndrome.” Now, if the U.S. Senate has its way, every insurance policy in America will be forced to pay for this woman and millions like her.

After less than 30 minutes of debate, the Senate voted to amend the Kennedy-Kassenbaum health care reform bill to require insurance to treat physical and mental disorders identically. The result is likely to be higher insurance premiums and more uninsured Americans.

The Senate action was driven by an understandable appreciation for the tragedy of mental illness. Everyone wants those suffering from mental illness to have access to the treatment they need. By all accounts, the senators were deeply moved by the personal anguish of their colleagues Pete Domenici (R-N.M.) and Paul Wellstone (D-Minn.), who have relatives struggling with mental illness.

However, there is an old legal dictum that hard cases make bad law. This is no exception. The Senate action amounts to a virtual blank check for the mental health industry, going far beyond recognized mental illnesses to include all forms of mental disorders, an open-ended term that could require coverage of every type of care, from people who believe they have been abducted by space aliens to those suffering from seasonal adjustment disorder, otherwise known as the “winter blues.”

Mental disorders differ from physical illnesses in that they are often difficult to diagnose; there are few guidelines for treatment; and no definitive way to prove that a person is cured. Woody Allen, for example, has reportedly been in psychoanalysis for 33 years. As E. Fuller Torrey, himself a psychiatrist and author of Surviving Schizophrenia, warns, “When you start talking about mental disorders that really is a black hole… . If you make it possible to define unhappiness as a medical problem… you could bankrupt the system.”

Current treatment for alcohol and drug abuse provides an unhappy precedent. Studies of the treatment industry have repeatedly found clinics whose treatment protocols amazingly lasted exactly as long as insurance paid the bills. The same is likely to happen with mental health treatment. As one observer put it, “If your employer is willing to pay for 30 visits to a psychiatrist, your psychiatrist will treat you in 30 visits; if your employer will pay for 60, it will take 60 to cure you.”

As a result, it is estimated that the amendment could raise insurance premiums by an additional 8 to 15 percent—in a health care reform bill that may already raise premiums by 3 to 5 percent according to its sponsors. As premiums increase, many small businesses could be forced to cut back on coverage for physical illnesses or to drop coverage altogether. In addition, young and healthy people, faced with higher insurance costs, may decide to forgo insurance.

Moreover, the Senate amendment takes us in precisely the wrong direction for health care reform. Most health care economists understand that one of the primary causes of rising health care prices is our third-party payment system, which insulates consumers from the cost of their health care decisions. Put simply, when consumers believe that something is free, they consume too much of it, driving up prices. Think of it this way: if your food was paid for through insurance that was provided by your employer, you would eat a lot more steak and a lot less hamburger. Countering this problem has been the motivation behind most free-market health care reform proposals such as medical savings accounts (MSAs).

But the Senate rejected MSAs while imposing the mental health mandate. Therefore, instead of dealing with the third-party payment problem, the Senate has extended it to a whole new class of health problems. This will inevitably lead to an increase in health care costs.

Compassion is important, but so too is common sense. In passing this amendment the Senate showed too much of the former and not enough of the latter.

Michael Tanner is director of health and welfare studies at the Cato Institute.