by Ron E. Bachman, FSA, MAAA, President and CEO, Healthcare VisionsMental illness causes more days of work loss and work impairment than many other chronic conditions such as diabetes, asthma, and arthritis. Approximately 217 million days of work are lost annually due to productivity decline related to mental illness and substance abuse disorders, costing Unites States employers $17 billion each year. In total, estimates of the indirect costs associated with mental illness and substance abuse disorders range from $79 billion to $105 billion per year (both figures based on 1990 dollars).
The importance of implementing “The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act” (MHPAEA) cannot be overlooked, but employers can maximize the corporate value and beneficial impacts of the required changes. However, many plans do not have the internal expertise or outside counsel to fully understand the clinical diagnoses. They may not know what it means to have schizophrenia, a somatoform disorder, a factitious disorder, or get a multi-axial assessment.
What employers do care about is running a productive, profitable, successful business that delivers products and services their customers want. The maintenance of an employee’s mental health is a critical ingredient in achieving those business results.
Mental health parity has been misunderstood as long as it has been debated. The cost concerns expressed for many years have been eliminated, with years of experience showing the beneficial corporate and improved health effects of recognizing the mind-body relationship. A consensus federal solution became law on Jan. 1. MHPAEA, passed as a part of the 2008 “Trouble Asset Relief Program,” is a bipartisan multistakeholder agreement that recognizes new medication and cognitive therapies, breakthroughs in brain science, employer interests, and the 15 years of positive experiences with more than 35 state parity initiatives. It is now up to employer plans and benefit managers to implement the legislation.
Applicable to groups with more than 50 employees, the MHPAEA is more than a federal benefit requirement. Mental health advocates may say it is about eliminating stigma and discrimination. For businesses it is about improving the bottom line, greater productivity, and increasing the value of human capital.
The high cost of general health care has encouraged greater analyses of chronic and persistent conditions. It is now evident that one cannot successfully (and cost effectively) treat illnesses such as diabetes, asthma, congestive heart failure and other conditions without dealing with related (or co-morbid) stress and depression.
For human resource and benefit managers, three specific areas have opened the door to better awareness of mental health in the workplace:
1. The scientific evidence proves that depression is not a character weakness; it is a chemical imbalance and is treatable.
Medical, clinical, and medication therapies have advanced such that clinical depression and other mental health conditions have cure rates equal to and greater than many medical conditions. Clinical depression can be cured. Treatments work. Medications are effective. No company, large or small, can avoid the issues and potential costs of untreated mental and emotional illnesses. Divorce, disability, and violence in the workplace can hit a business at any time. According to the Institute of Medicine, 30,000 people each year commit suicide—90% of whom have diagnosed treatable depression.
2. The developing recognition that mental and physical conditions are interrelated.
Without treating underlying clinical depression, patients tend to be non-compliant with taking medications and making office appointments, and are not able to deal rationally with other medical symptoms. Untreated depression is also the cause behind many payments made by health plans for interrelated treatment of digestive disorders, musculoskeletal, and cardiovascular diagnoses.
3. There are real bottom-line financial and productivity benefits of maintaining and improving an individual’s mental health.
A study of the Dow Chemical Co. with Cornell University and the University of Pennsylvania developed an approach that models the financial impact of investing in a worker’s health. The study used return-on-investment business (ROI) modeling to measure the direct and indirect costs of nine major medical conditions. By nearly 2 to 1 over the next rated condition, clinical diagnosed depression topped the list of corporate costs. Clinical depression was not the highest direct cost, but it was by far the highest total health cost per worker (direct and indirect costs). For clinical depression total costs were more than double the per worker cost of diabetes.
Businesses offer the security of health care coverage because they want their employees on the job, productive, and not distracted by health concerns for themselves or their family members. They offer benefits to attract and retain good employees, thus keeping down turnover costs of hiring, training, and replacing staff. Small and large companies offer health coverage to their employees and families because they expect a return on their investment. Even emotional disorders not rising to the level of clinical depression can affect corporate efficiency. Those more esoteric mental health conditions can devastate an organization’s effectiveness. If untreated with no prevention or early intervention, conditions can progress to higher direct costs, more serious impacts on indirect corporate costs, and loss to bottom-line profits. The chart above shows the spectrum of potential corporate impacts from minor and more major mental and emotional conditions.
In the business world, the term human capital is used to reflect the value each employee brings to work—skills, knowledge, and health (mental and physical). Without health the other values are dramatically compromised. It is up to the individual to seek care and comply with health and health care treatments if he or she is to maximize work potential. It is the role of employers to provide comprehensive quality coverage and access to services that keep the organization healthy and productive through healthy and productive employees.
Tom Johnson, ex-CEO of CNN News, uses the business analogy:
"If computers crashed and corporate production ground to a halt, the CEO would demand immediate action from the CIO to re-establish the “corporate brains.” In developing a “knowledge-based” workforce, it is just as important for CEOs to expect the HR VP to take care of the brain, which is the “central computer” within each employee."
Mental illnesses are treatable, but an effective parity implementation is not about treating depression or other mental illnesses as separate conditions. Studies show many employees cannot effectively recover from or stabilize chronic and persistent conditions such as diabetes, asthma, heart conditions, hypertension, or cancer because of a coexisting level of depression.
During the past few years employers have focused on general health quality and benefit design improvements to better engage plan members. Many employers have shown the way to better health with mental health. Now is the time to recognize the science, experience, and the legislative standard to equalize mind and body treatments and financial support in a comprehensive approach to providing improved worker health status and optimize the corporate value of its human capital.
Many benefit managers are highly analytical and have skills for technical research. They can do all the studies, develop actuarial analysis, and present economic return on investment (ROI). But never forget that underneath all of that, it’s about employees, their families, and saving lives. The 2008 MHPAEA requires the elimination of benefit plan differences that discriminate against those seeking mental health as well as physical health treatments. It’s time to implement parity as required by federal law, not just to be compliant but to fully recognize that mental health means corporate “wellth.”
Ronald E. Bachman FSA, MAAA is president and CEO of Healthcare Visions. The firm’s major goals are to advance consumer-based solutions to lower the number of uninsureds, improve mental health coverage, develop the concept of consumer-centric Medicare and Medicaid, and advance employer introductions of health care consumerism. Ron, who chairs the CDHC Solutions Editorial Advisory Board, can be reached at ronbachman[at]healthcarevisions.net.