NJ Parity Battle Bolstered by Cost Study

Advocates for addiction and mental-health parity were making good progress in New Jersey's last legislative session when opponents successfully threw up a potential stumbling block: a call for a study on the costs of the proposal. But while the legislative push was delayed by the report, the end result was positive for parity advocates: the government study found that the cost of requiring insurers to cover addiction and mental health was quite low, and parity supporters now have a new tool to use in making their case to lawmakers.

The New Jersey Mandated Health Benefits Advisory Commission, in its analysis of Assembly Bill A-333, concluded that mandating full parity for alcohol and other drug treatment would raise insurance premiums by 0.1-0.2 percent, while full addiction and mental health parity would increase premiums by between 0.3 percent and 0.7 percent. Those figures even startled Don Sico, president of HealthSense, Inc., a coalition of 1,300 small business owners and benefits managers that has opposed adding any new insurance mandates.

"I was surprised," Sico told Join Together. "I'm still going to oppose the mandate, but if the costs are lower than expected, then that's good."

The commission report prompted some grumbling among the business community, although Sico took pains not to undermine the panel's conclusions. Assemblywoman Loretta Weinberg, who sponsored A-333, noted, "We did what business and industry wanted us to do, and this was the result, so they really shouldn't complain too much." Weinberg said the report should provide ample impetus to moving the bill forward in the spring legislative session, although she declined to predict its chances of passage.

John Hulick, public policy director of the National Council on Alcohol and Drug Dependence of New Jersey, called the commission report "the unintended consequence of the opposition to parity."

"The idea of running the gauntlet of the advisory commission was a way of stopping our momentum in the previous legislature," he told Join Together. Initially, Hulick recalled, the makeup of the commission had a more pro-business slant. But as the enabling legislation moved through the Assembly, it was amended to give health advocates more of a say.

Still, said Hulick, such panels convened in the past to examine laws pertaining to pensions, for example, tended to be conservative in their cost estimates and cast a less-than-favorable light on proposed changes. But when insurers were asked to submit actuarial figures to the commission on the costs of parity, the numbers came back close to those cited by parity advocates, Hulick said.

"We're really pleased" with the report, he said. "It gives us more ammunition as we move forward."

That's not to say that the report was a slam-dunk for parity advocates: Hulick noted, for instance, that while the conclusions will be valuable in making empirical arguments with policymakers, the commission failed to embrace some of the cost-benefit and cost-offset arguments made by Hulick and others. "We briefed the commission and they addressed [these issues] a bit, but they didn't bear-hug us as much as we'd have liked," said Hulick.

Sico, a former state legislative leader, remains unconvinced of the cost-offset arguments, saying that if such projections were really accurate, "in 25 years government would be free."

"We really have to think about next year and the year after," he said, arguing that any additional mandates will move some employers to drop coverage, leaving workers with no insurance.

Part of the reason that parity was making headway in the last legislative session was that addiction and mental-health advocates joined forces to fight for the bill. Adding to the momentum is that fact that New Jersey's acting governor, Richard Codey, used his first executive order to create a mental-health parity task force that includes addiction under its purview.

"These two documents recognize substance-abuse parity and are tools for the legislative battles to come," said Hulick. "If parity is going to get done, this is probably the most favorable legislature to see it happen."