Wilson Vetoes Mental Illness Coverage Bill

Gov. Pete Wilson has vetoed a bill that would have required insurers to cover severe, biologically based mental illness on par with their coverage of other organic diseases.

The action was decried by mental health advocates in California and nationally, who had hoped the nation’s most populous state would join 19 others in adopting a law that creates some degree of parity.

But Wilson, in a lengthy veto message to the Legislature, said he was rejecting the bill (AB 1100) because it was too broad and, together with other mandates on health plans, too costly. He said it would lead to higher premiums, causing workers to opt out of employer-based plans entirely.

“California’s working families should have access to affordable mental health insurance coverage,” he wrote. He suggested that his office would have been amenable to a less sweeping approach.

Instead, the bill’s authors, Assembly members Helen Thomson and Don Perata, “engaged in a shortsighted ‘all or nothing’ strategy that would impose on employers coverage beyond what other states require and, in the case of many small employers, unaffordable cost increases. The unintended net effect could well be a loss of access to any coverage.”

Mental health advocates countered that they had worked closely with the Wilson administration, agreeing to limit coverage to six severe, biologically based illnesses and to limit hospitalizations and day treatment.

The bill would have applied to patients with schizophrenia, schizo-affective disorder, bipolar disorder, major depressive disorders, panic disorder and obsessive compulsive disorder. Most of these disorders can be treated with prescription medications.

“We started out with what [Wilson spokesman] Sean Walsh called a Christmas tree,” said bill co-author Thomson (D-Davis), referring to the scope of the bill. “We ended up being the Charlie Brown Christmas tree. We took children out, we took autism out, we took a whole bunch of stuff out. . . . He is spouting the mantra of the insurance companies. . . . I think this is tragic.”

Mental health advocates pledged to make the veto an issue if Wilson pursues the presidency. They say paying for treatment for severe disorders can bankrupt families and force patients into the public sector, where taxpayers foot the bill. Many patients go without treatment and end up in jail, they say.

“There have been several studies that convincingly document coverage for serious illness does not break the bank and in fact saves money by restoring people to productivity,” said Laurie Flynn, executive director of the National Alliance for the Mentally Ill, which is leading a national campaign for parity.

“Given he is in the last two months of office, we thought he would have found some political courage to do the right thing here. [Gov. George W.] Bush set a standard [by signing a parity bill in Texas]; other Republican governors have also signed it. This has been a bipartisan push for equal coverage.”

Wilson went out of his way in his veto message to distinguish California’s proposed legislation from bills signed into law in other states, including Texas’ 1997 law.

“Texas exempted small employers with 50 or less employees. Even so, several Texas health plans are already projecting premium increases of 4% to 8% as a result of the mandate,” he said.

Several health plans were neutral on the California bill, but it was opposed by some major insurers, including Kaiser Permanente and Blue Cross.

Kaiser would rather see this issue dealt with on the federal level, so companies that operate in several states are not forced to deal with a patchwork of laws, a spokesman said Tuesday. Kaiser also is worried that the bill would cause some employers to drop coverage and would result in a 1% increase in premiums, he said.

A federal bill outlawing caps on annual and lifetime mental health benefits took effect in January but was limited in scope, exempting small employers and those whose health care costs rise more than 1% in a year.

Thomson vowed to bring a larger version of the state parity bill back for consideration under a new governor. Republican gubernatorial candidate Dan Lungren has said he would want to study cost issues before taking a position on parity. Democratic contender Gray Davis has said he supports parity in concept.