abstract. Ten years after the passage of the Mental Health Parity and Addiction Equity Act (MHPAEA), parity between mental health/substance use disorders and medical/surgical benefits remains elusive. This Note describes the statute’s cooperative federalist framework and analyzes enforcement data and settlement documents demonstrating the role of states in prospective enforcement. In comparing the MHPAEA to other cooperative statutes, it concludes that MHPAEA compliance could be improved by expanding private rights of action, promoting stakeholder collaboration, utilizing conditional spending, and allowing for waivers. The Note also renews calls for consumer education, clarifying regulations, and proactive enforcement by federal agencies and states.

author. Both authors contributed equally to this work and are listed alphabetically. Caroline V. Lawrence: Yale Law School, J.D., 2021. Blake N. Shultz: Yale Law School, J.D., 2021; Yale School of Medicine, M.D., 2022. The authors would like to thank Professors Abbe Gluck and Kevin Cremin for their invaluable feedback and the editors of the Yale Law Journal, particularly Edward Pickup, Lawrence McMahon, and Caroline Wallace, for their assistance in developing the piece. Special thanks are due to Lisa Gaulin and the attorneys at the Massachusetts Attorney General’s Office for their tireless work on the subject and for their guidance.

Introduction

John1 was a bright, hardworking student who earned admission to an Ivy League college in early 2010.2 Over the course of his first year, he developed a severe mental illness and, after he attempted suicide, was forced to withdraw. Twice in the next year, he was hospitalized for acute psychotic episodes. With his insurance covering multiple therapy sessions each week, John was diagnosed with bipolar disorder and began to recover.

His progress halted, however, when his insurance company retracted his benefits, claiming that his frequent visits were no longer medically necessary.3 Though his father argued that the company had illegally applied a more stringent medical-necessity determination for mental-health benefits than they used for medical or surgical benefits, the company remained resolute. Because John’s family could not afford the unreimbursed cost of frequent treatments, his condition deteriorated until he was forced to withdraw from his dream school.

For decades, consumers like John have found that medical insurance coverage for mental-health conditions remains systematically inferior to that for non-mental-health conditions.4 In 1997, 86% of health insurance plans imposed stricter limits for inpatient mental-health care than for inpatient medical or surgical care, and 96% dictated stricter limits for outpatient mental-health care than for equivalent medical or surgical care.5 Similarly, among health-maintenance organizations (HMOs), only 24% covered inpatient alcohol detoxication treatment without restrictions, as opposed to 59% for inpatient medical/surgical treatments.6

To address glaring disparities in insurance coverage, the first state mental-health-parity laws—which require equality in insurance coverage for mental health and medical or surgical care—were passed in the 1970s.7 Early conceptions of parity varied widely among states, and advocates lobbied aggressively for comprehensive federal legislation.8 Years of lobbying efforts and state experimentation yielded the first federal law in 1996: the Mental Health Parity Act (MHPA).9 The MHPA required that insurers covering mental-health benefits offer the same annual and lifetime spending limitations for mental health as they did for medical care.10 Although the MHPA made valuable strides in achieving mental-health parity, it fell short in various respects—namely, it allowed employers to opt out of mental-health coverage altogether, neglected substance-use disorders (SUDs), and in some instances exempted employers from the new parity requirements altogether.11

The Mental Health Parity and Addiction Equity Act (MHPAEA), passed in 2008 and taking effect in early 2010, marked a sea change in mental-health parity and the federal regulation of health insurance more generally.12 The MHPAEA mandated that insurance plans treat mental-health (MH) benefits the same as medical/surgical (M/S) benefits, and it extended these comprehensive parity requirements to SUDs.13 Specifically, it required that MH/SUD benefits be granted no less freely than the “predominant” rules that governed “substantially all” M/S benefits.14 It also stipulated that MH/SUD benefits should not have separate cost-sharing requirements or treatment limitations from M/S benefits.15 The MHPAEA enjoyed broad bipartisan support and its legislative history is replete with sentimental moments, as congressional leaders shared personal experiences with mental illness.16 Its passage was hailed not just as effective policy, but also expressive of the indignity caused by treating mental conditions as what Congressman Patrick Kennedy called “second-class illnesses.”17

The MHPAEA also reflected a school of thought that state and federal governments should cooperate to administer programs rather than occupy “separate spheres.”18 Known as cooperative federalism, this theory formed the basis of many statutes passed after the 1960s, including many involving health insurance.19

Despite the promise of the MHPAEA and the cooperative federalist principles along which it was designed, stories like John’s remain common nearly a decade later. Insurance coverage for MH/SUD benefits continues to be more expensive and more limited than for comparable M/S benefits.20Those seeking MH/SUD treatment are between five and ten times more likely to utilize out-of-network care, thereby greatly expanding their out-of-pocket costs.21 For in-network services, significant disparities remain in reimbursement rates, with primary-care reimbursements 23.8% higher than behavioral reimbursements.22 Disparities in reimbursement rates have increased steadily since the passage of the MHPAEA.23

Unequal access to MH/SUD benefits is ever more pressing as our society’s mental-health crisis continues to grow. One study based on World Health Organization survey data estimates that nearly fifty percent of Americans will be diagnosed with a mental illness at some point in their lifetime, even without accounting for underdiagnosis due to disparities in access to care, insurance coverage, and stigma.24 In any given year, one in five adult Americans experiences mental illness,25 and for one in twenty-five the mental illness is seriously debilitating.26 Over twenty million people aged twelve or older have a substance-use disorder.27

Although the MHPAEA regulates the insurance coverage of hundreds of millions of individuals, scholarly analysis of the law has typically focused on a single aspect of enforcement or the protections afforded for a single mental illness.28 Kathleen Noonan and Stephen Boraske characterize the MHPAEA as an exemplar of “concurrent enforcement” (another term for cooperative federalism) in which the federal and state governments share responsibility for enforcing national policy.29 Aviv Shamash notes the interaction between the Employee Retirement Income Security Act of 1974 (ERISA) and certain portions of state parity laws.30 Many critics have called for more robust enforcement of the MHPAEA at both the state and federal levels, but there has been scant scholarly attention to the Act’s convoluted enforcement structure or its lackluster outcomes.31 Furthermore, scholars have not comprehensively considered landmark state parity settlements, such as those in Massachusetts and New York.32 Finally, though authors have described the cooperative-federalist theory underpinning Medicaid and the ACA at length, there has been little effort to situate the MHPAEA within the continuum of cooperative health-insurance statutes.33

To address this gap and render suggestions for future comprehensive federal health-insurance legislation, this Note explores the ways in which developing federal preemption doctrine and a fragmented health-insurance system have undermined the MHPAEA’s potential. To do so, this Note presents detailed state and federal enforcement data from the first full decade under the MHPAEA. Throughout, we examine the MHPAEA and its attendant enforcement problems through the lens of cooperative federalism.

Part I of this Note explores the MHPAEA’s structure and history as a primer to its unique brand of cooperative federalism. It first defines the law’s structure and how it allocates enforcement responsibility among several federal agencies and states. It then discusses the theory underpinning this structure, including its payoffs and pitfalls for enforcement. We next describe the MHPAEA’s enforcement history before and after the ACA and the 21st Century Cures Act (Cures Act)—both of which significantly affected the parity landscape.

Part II of this Note will delve into the MHPAEA’s enforcement at both the federal and state levels. It focuses on case studies of two states that reached landmark parity settlements. Together, these case studies suggest that state enforcement has significant potential to increase compliance.

Finally, Part III considers possible reforms to the MHPAEA and discusses lessons for understanding cooperative federalist statutes more generally. It first identifies successful elements of other cooperative federalist statutes, such as enhanced public participation and private rights of action. It then recommends a set of reforms for the MHPAEA, including encouraging coordinated federal activity, expanding state enforcement, clarifying regulations and improving consumer education, and refocusing on outcomes.