On March 5, the House passed Mental Health Parity (MHP) legislation 268-148. Introduced by Reps. Patrick Kennedy (D-R.I.) and Jim Ramstad (R-Minn.), the Paul Wellstone Mental Health and Addiction Equity Act (H.R. 1424) is a more expansive bill than the one passed last year in the Senate, and has garnered the opposition of the business community, insurers, and the administration. Although the White House’s Statement of Administration Policy on the bill expressed opposition, it came short of issuing a veto threat.

The Senate has already passed its more scaled-back version, the Mental Health Parity Act of 2007 (S. 558), introduced by Senate Health, Education, Labor and Pensions Committee Chair Edward Kennedy (D-Mass.), Ranking Member Michael Enzi (R-Wyo.) and Sen. Pete Domenici (R-N.M.).

The two competing bills, H.R. 1424 and S. 558 have key differences that continue to be sticking points for lawmakers. The biggest of those is the House language that mandates employers to provide coverage on all illnesses listed in the Diagnostic and Statistical Manual of Mental Disorders, 4th Edition (DSM-IV), published by the American Psychiatric Association. The Senate bill is less proscriptive, however, and only requires employers that offer mental health coverage to provide the same financial level of coverage they offer on medical and surgical benefits.

Both bills exempt companies with fewer than 50 employees from having to comply, and provide a cost exemption for businesses whose health plans that are projected to incur increased exceeding 2 percent of the total plan cost during the first year, or 1 percent each subsequent year. The high number of part-time employees in certain industries that typically are not eligible for insurance vs. the insurance industry definition of a small-group as 50 or fewer individuals (not necessarily eligible employees) is likely to cause confusion.

The recent House vote, and pending retirements of Domenici and Ramstad after the 110th Congress has reinvigorated the MHP debate, making enactment this year more likely than the past several years. Although there is a renewed sense of optimism for MHP advocates, the negotiations will surely be tenuous.

Of the key issues to be addressed in ongoing negotiations, is the House’s inclusion of the requirement that plans cover all illnesses listed in the DSM-IV, which creates broad benefit mandates for employers. Another key issue is Senate language that would allow health plans to use their own medical management and review criteria, something popular with employers but absent from the House bill. Additionally problematic is language in the House bill that would require out-of-network benefits for mental health coverage if out-of-network benefits are offered for other surgical and medical conditions. Provisions in the House bill that could force multi-state employers to deal with different MHP rules will also be an issue for negotiators to work out.

Beyond the MHP-related debates negotiators will have, is the issue of how to pay for the bill—which could prove to be the most difficult negotiation of all given the current pay-go rules. The estimated cost of the House bill is $4.3 billion, to be paid for by a combination of spending reductions in Medicare and Medicaid. Offsets for the costs of the Senate bill have not yet been specified, creating an added hurdle to enactment.