Mandating unlimited insurance coverage for mental health and drug abuse treatment for policies sold in New Jersey’s regulated market would add to already soaring health insurance costs, impacting small businesses the hardest, according to the New Jersey Business & Industry Association (NJBIA). 

The Assembly Appropriations Committee is scheduled to vote on such a mandate—A-2512 (Gordon, Johnson)/S-807 (Vitale, Buono)—on Thursday, May 10.

Christine Stearns, vice president of health affairs for NJBIA, said employers are already stretched to the breaking point when it comes to health insurance costs.  According to the Association’s 2007 Health Benefits Survey, health insurance costs rose by an average of 11.3 percent for NJBIA members in 2006 and have increased 80 percent over the last five years. 

What’s more, the survey found that these skyrocketing costs have forced many small businesses to drop health insurance coverage altogether.  The survey showed that 82 percent of companies with two to 19 employees provided health insurance coverage in 2006, compared with 92 percent three years earlier.

“New Jersey employers are facing a crisis, and not only is the Legislature doing little to help them, it’s actually making the situation worse,” Stearns said.  “Legislators would do well to remember Hippocrates, who urged physicians ‘to help, or at least do no harm.’”

Stearns pointed out that for small employers and individuals in New Jersey’s regulated market, mental health and drug addiction treatment is already covered with reasonable limits to keep insurance more affordable.

A 2004 study of a similar bill by the State’s Mandated Health Benefits Advisory Commission found that imposing an unlimited mental health mandate would increase premium costs by as much as 0.8 percent.  This could result in up to 5,000 people losing their health insurance altogether.  

“Cost and coverage go hand in hand,” Stearns said.  “The cost of this mandate will force thousands of people to lose their insurance.  They will have no coverage for mental illness treatment, no coverage for drug addiction treatment, no coverage for hospitalization, doctor visits, prescription drugs or anything else.  Is this really what legislators want?”

Other reasons to oppose the bill:

• Small businesses will bear the biggest cost increases.  By law, State legislation that mandates insurance coverage can only apply to insurance plans sold in New Jersey’s regulated market.  Nearly all small businesses (those with between two and 50 employees) that provide health insurance purchase their plans through the regulated market.  Many large companies are either self-insured or covered by federal law, so they are exempt from State mandates.

• S-807/A-2512 would go well beyond mental health mandates in other states.  Most states limit their coverage mandate to severe mental illness.  Only three states (Minnesota, Oregon and Vermont) have mandates that approach the broad language of this bill.  However, they permit the use of widely accepted utilization management tools.  None authorize the unlimited coverage that is in this bill.

• S-807/A-2512 would go well beyond what Congress would require of large companies.  Federal legislation under consideration in the US Senate would require insurance plans for large companies covered by federal law to provide mental health coverage, but provides them with an opt-out if their insurance costs rise by 2 percent as a result.