Mental Health Parity Law: The Biden Administration New Rules Explained

Biden Administration on Monday announced it had completed new regulations designed to ensure that the 175 million Americans with private health insurance can access affordable mental health services.

The 2008 Mental Health Parity and Addiction Equity Act mandates that insurers and employer-sponsored health plans offer mental health care services with the same coverage and payment structures as other medical services.

However, in practice, this requirement often falls short. Studies referenced by the administration show that in 2020, fewer than half of U.S. adults with mental illness were able to access care, and nearly 70 percent of children were unable to receive treatment.

Biden Administration to overcome inadequate mental health services

This problem is partly due to the inadequate coverage of mental health providers by insurance plans, which forces patients to incur high out-of-pocket expenses or forgo care altogether.

The newly finalized rule, which was proposed last summer, seeks to address these gaps by mandating that health insurers assess the coverage of mental health providers’ services, the compensation those providers receive, and the frequency with which prior authorizations for coverage are required or denied.

According to a senior administration official, these requirements could lead health plans to include more mental health providers in their networks. Most of the new regulations are set to take effect in 2026.

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High spend on mental health insurance

White House Domestic Policy Advisor Neera Tanden noted in a briefing that individuals with private health insurance typically spend an average of $1,500 per year out of pocket for mental health care, which is double the amount spent by those without mental health conditions. She attributed this partly to patients seeking care from out-of-network providers.

Lisa Gomez, Assistant Secretary at the U.S. Department of Labor, commented that it should not be more challenging to find a provider for an eating disorder than it is to find one for an ulcer.

The Department of Labor oversees corporate-sponsored health plans under the 1974 Employee Retirement Income Security Act (ERISA).

In October, the ERISA Industry Committee, which represents U.S. employers with large health plans, submitted feedback to the Department of Labor. The committee argued that the new rule would impose additional cost burdens on employer-sponsored health plans and raise healthcare costs for enrollees.

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