August 22, 2001, S. 543, Mental Health Equitable Treatment Act of 2001

The Mental Health Equitable Treatment Act of 2001 would prohibit group health plans and group health insurance issuers that provide both medical and surgical benefits and mental health benefits from imposing treatment limitations or financial requirements for coverage of mental health benefits that are different from those used for medical and surgical benefits.

The bill would affect the federal budget because it would result in higher premiums for employer-sponsored health benefits. Higher premiums, in turn, would result in more of an employees compensation being received in the form of nontaxable employer-paid premiums, and less in the form of taxable wages. As a result of this shift, federal income and payroll tax revenues would decline. The Congressional Budget Office (CBO) estimates that the proposal would reduce federal tax revenues by $230 million in 2002 and by $5.4 billion over the 2002-2011 period. Because S. 543 would affect receipts, pay-as-you-go procedures would apply to the bill.

S. 543 would preempt state laws that have less stringent requirements for mental health coverage than those in this bill. That preemption would be an intergovernmental mandate as defined in the Unfunded Mandates Reform Act (UMRA). However, because the preemption only would prohibit the application of state regulatory law, CBO estimates that the costs of the mandate would not be significant and thus would not exceed the threshold established by UMRA ($56 million in 2001, adjusted annually for inflation). As a result of this legislation, some state, local, and tribal governments would pay higher health insurance premiums for their employees. However, these costs would not result from intergovernmental mandates, but would be costs passed on to them by private insurers who would face a private-sector mandate to comply with the requirements of the bill.