The goal of the civil rights movement in the U.S. and around the world was to abolish all forms of discrimination. While the Civil Rights Act of 1964 addressed several different forms of discrimination, it was not until years later that protections against other forms of discrimination were added by the Age Discrimination in Employment Act and the Americans with Disabilities Act (ADA). However, one glaring weakness in the ADA is that it did not explicitly apply to discrimination in insurance coverage. As a result, even after the ADA’s passage, insurance policies could lawfully provide unequal benefits for physical and behavioral and mental health conditions. However, in 2008, Congress passed the Mental Health Parity and Addiction Equity Act (MHPAEA), which took a large step toward ending longstanding stigmatization of individuals who suffer from psychiatric illness. The MHPAEA law mandated that health insurers offer equal benefits for treatment of behavioral health conditions and medical or surgical treatment.
Disability Insurance and Mental Health
The MHPAEA applies only to health insurance, though. Consequently, discrimination against mental illness has persisted in group disability insurance and has even expanded in recent years in individual disability income insurance. While most policies pay benefits for physical conditions until the insured reaches retirement age, those same policies limit coverage for disabilities due to behavioral health conditions to 24 months; and in the case of policies issued by Lloyd’s of London, no benefits at all are payable for psychiatric disabilities.
Besides being discriminatory, a recent report issued by a ‘Disability Income Insurance and Parity for Behavioral Health Conditions Task Force’ in Illinois recounted testimony heard by the body revealing that there exists no legitimate medical or actuarial reason for offering inferior disability benefits to claimants who suffer from mental illness. Improvements in diagnosis, evaluation, and treatment of behavioral health disorders has significantly improved the health outcomes of the majority of those afflicted with most forms of mental illness. Consequently, when appropriately treated, work absences due to psychiatric conditions has shortened; and insurers’ fear of potential claim fraud has significantly lessened due to better and more comprehensive testing that can screen out non-meritorious claims.
Yet when disability occurs, its financial impact often leads to extended joblessness, bankruptcy, and increased reliance on public assistance. Such financial consequences due to disability are no less severe for those who have psychiatric conditions; and often trigger a vicious cycle where illness goes untreated or inadequately treated due to a lack of comprehensive medical insurance.
Permitting disability insurers to discriminate against mental illness may also result in questionable practices, especially if the underlying condition causing disability is difficult to diagnose, which may happen when claimants suffer from conditions such as Long Covid, which remains poorly understood. Claimants face a risk in such situations that their benefits may be terminated prematurely if disability insurers maintain that the disability is due to a psychiatric condition.
The Need to End Discrimination in Disability Insurance Against Mental Health Conditions
Given changes in the legal landscape that has made the prohibition of discrimination against mental illness a matter of recognized public policy, the insurance industry has fallen behind the times in their effort to maintain their right to discriminate. The Social Security Administration has always treated mental and physical disabilities equally. Other countries such as Canada, the United Kingdom, and European Union member countries have made it a violation of their human rights laws to discriminate against mental illness in any form, including disability insurance coverage. The State of Vermont has also led the nation in banning disparate treatment of behavioral health claims in disability insurance since 2008. The rationale for Vermont’s action was its reliance on existing laws that allow their state insurance department to protecting consumers against unfair and unconscionable practices, as well as the authority granted to the state insurance director to prohibit unjust and unfair policy terms.
Although taking away disability insurers’ right to continue selling policies with disparate coverage for behavioral health conditions may raise premiums, Vermont did not experience any increase after it banned mental health discrimination; and the MHPAEA has not significantly affected the cost of health insurance. The task force report cited above also cites evidence that any premium increases are likely to be modest. The same report also casts doubt on insurers’ claims that they would sell fewer policies.
While eliminating limitations on disability insurance coverage for mental illness might reduce insurers’ profits, eliminating invidious discrimination against psychiatric illness in order to maintain consistent public policy on this issue is a far more important objective. The time has therefore arrived to end discrimination against mental illness in disability insurance and to expand existing mental health parity laws to outlaw such discrimination.