How the Government Grants Insurers Far Too Much Control Over People’s Mental Health Decisions
How the Government Grants Insurers Far Too Much Control Over People’s Mental Health Decisions
It is far too popular for talking heads, politicians, and other members of the chattering class to immediately jump to government intervention whenever a problem with our healthcare system presents itself.
Such is the case with a recent ProPublica article explaining how insurance companies dictate what type of mental healthcare can receive. But the reality is that government intervention is what creates and exacerbates these problems in the first place.
ProPublica recently published a detailed investigation titled “What Mental Health Care Protections Exist in Your State?” shedding light on the challenges that Americans face when accessing mental health care.
The report explores the limited legal protections available to patients against insurance companies that often impede access to necessary mental health treatments. It underscores the growing tension between insurers' profit motives and the needs of patients, revealing that even in states with more robust laws, enforcement remains a significant hurdle.
The ProPublica report rightly identifies the problem, highlighting how insurers often determine what constitutes “medically necessary” care based on their internal standards rather than on evidence-based guidelines from professional societies. This practice allows insurance companies to reject or limit coverage for mental health treatments, even when such care is essential.
Federal law requires parity between mental health and physical health care, but it doesn’t dictate how insurers should define medical necessity. This loophole has allowed insurers to use financial motives to shape their coverage decisions, often to the detriment of patients.
As Tim Clement, vice president of federal government affairs at Mental Health America, noted, “They’re not going to just cover unlimited care, so they have to do something to limit utilization.” This approach has led to a system where insurers conduct utilization reviews to determine the necessity of treatment, often leading to denials of care that can have devastating consequences.
The article also points out that some states are pioneering stronger laws to protect mental health patients. For instance, California’s law requires insurers to follow generally accepted standards of care for mental health conditions, relying on evidence-based sources rather than internal guidelines.
This move was a significant step forward, with Bendat emphasizing, “Knowing the profit motive that insurers have, it’s really shocking that federal law doesn’t define medical necessity and require the use of nonprofit guidelines to make decisions.”
ProPublica's investigation shows that the effectiveness of state laws in protecting mental health patients varies widely. States like California have led the way by enforcing stringent standards, but even in these states, implementation can be uneven.
For example, California fined Kaiser Permanente $50 million for violating state law and required the company to invest $150 million in behavioral health care improvements. However, such enforcement actions are the exception rather than the rule.
Despite these efforts, the patchwork nature of state laws means that many Americans still struggle to get the mental health care they need. In states with weaker protections, insurers continue to wield considerable power over treatment decisions, often at the expense of patient well-being. However, government involvement has only given them this power instead of tempering it.
While ProPublica's report highlights the challenges within the current system, it also opens the door to discussing potential solutions that go beyond government intervention. The solution is to empower patients by embracing free market principles.
Rather than relying on government regulations, which can be slow to implement while stifling competition and innovation, a free market approach would involve increasing competition among insurers and providers, thereby driving down costs and improving the quality of care.
A key component of this solution is transparency. Insurers should be required to clearly disclose the criteria they use to determine medical necessity, as some states like Massachusetts and Illinois have begun to do.
By making this information readily available, patients and providers can make more informed decisions and challenge unjust denials of care. This will also prevent fraud and systems aimed at deceiving consumers by keeping them in the dark about the cost of the care they are receiving.
Moreover, expanding the availability of Health Savings Accounts (HSAs) and other consumer-driven health plans could give patients more control over their healthcare dollars. By allowing patients to shop around for the best care at the best price, these tools could introduce much-needed competition into the mental health care market. This approach aligns with the principles of a free market, where informed consumers have the power to drive demand for higher quality, more affordable care.
Finally, the government needs to roll back most of the onerous regulations it places on healthcare companies. These restrictions make it more difficult for smaller operations to compete with the big boys, giving them supremacy over the market. Regulations is the state’s way of choosing winners and losers while ensuring that major corporations remain in bed with the government.
In addition, deregulating the healthcare industry to allow more providers to enter the market could increase access to mental health care, especially in underserved areas. This could involve relaxing licensing requirements for mental health professionals or allowing more telehealth options, which have become increasingly popular since the COVID-19 pandemic.
A more effective approach involves embracing free market principles that empower patients, increase competition, and drive improvements in care quality and affordability.