Before the Affordable Care Act (ACA, often referred to as Obamacare), mental health and substance use coverage was often lacking from health plans sold in the individual market.1
Fortunately, the ACA implemented various reforms that have significantly improved access to mental health and substance use treatment, especially for people who don’t have access to employer-sponsored health coverage. The changes include extensive reforms to individual/family health insurance, including essential health benefit requirements and the elimination of medical underwriting. They also include Medicaid expansion – a cornerstone of the ACA – which has allowed millions of low-income Americans to access comprehensive health benefits, including coverage for mental health and substance use treatment.
Pre-ACA mental health coverage challenges
In 2013, a person with a bipolar diagnosis was unable to obtain private individual health insurance in most states. The same was true for people with schizophrenia and other psychotic disorders, eating disorders, alcohol use disorder, and a variety of other serious mental or behavioral illnesses.2
Even for people with relatively minor mental health diagnoses, health plans were allowed to increase premiums during the initial underwriting process, and some would still reject these applicants.
The underwriting rules that applied to mental health treatment often trapped people in the health plan they had when they were diagnosed, with no realistic opportunity to shop around when annual rate increases were announced. And for people who were uninsured at the time of their diagnosis, securing coverage was challenging and expensive – or impossible, depending on where they lived.
For those who had insurance, it often didn’t cover mental health care. In 2013, more than a third of non-group health plans didn’t provide any mental health benefits, and almost half did not cover treatment for substance use disorders.[efn_ note]”Analysis: Before ACA Benefits Rules, Care for Maternity, Mental Health, Substance Abuse Most Often Uncovered by Non-Group Health Plans” KFF.org. June 14, 2017[/efn_note] (Coverage was better among employer-sponsored plans.)
Parity laws – a good first step
In 1996, and again in 2008, Congress passed mental health parity laws, requiring large-group health plans that cover mental health treatment to do so with benefits that are no less favorable than the benefits provided for medical/surgical care. The 2008 Mental Health Parity and Addiction Equity Act (MHPAEA) incorporated coverage for addiction treatment as well as general mental health care.
But the mental health parity laws don’t require large-group plans to cover mental health and addiction treatment. They only require the plans to provide parity if such coverage is provided. And parity laws didn’t apply to plans sold in the individual and small group markets.
The Affordable Care Act filled in the gaps
The Affordable Care Act was a turning point in terms of access to behavioral health coverage. The ACA eliminated medical underwriting in the individual and small group markets starting in 2014, so medical history – including mental health and substance use history – no longer results in enrollment denials or higher premiums.
And under the ACA, all individual and small-group plans with effective dates of January 2014 or later are required to cover ten essential health benefits with no annual or lifetime dollar limits. Mental health and addiction treatment (collectively referred to as behavioral health services) are among the essential health benefits.
The ACA also extended the MHPAEA to include individual and small-group plans, as well as Medicaid, in addition to the large group plans to which it originally applied. Since 2014, all new individual and small-group plans have covered mental health and addiction treatment, and have been required to do so with benefits that are no less favorable than benefits for medical/surgical care.
Large-group plans are not required to cover the ACA’s essential health benefits (although if they do, they must do so without annual or lifetime dollar limits), but they are governed by MHPAEA. So if they provide coverage for mental health and addiction treatment, they must do so with parity to medical/surgical benefits. Large-group plans already tended to provide relatively generous benefits for mental health and addiction treatment before the ACA, and that’s still largely the case today (large-group plans, in general, tended to provide more generous benefits across the board; this is why the ACA’s essential health benefits requirements were written to apply to the individual and small group markets).
Prescription drugs are also an essential health benefit under the ACA. Some non-group plans didn’t cover prescription drugs pre-ACA, or only provided limited prescription coverage.1 But thanks to the ACA, all new individual and small-group plans are required to cover prescriptions, including medications to treat behavioral health problems.
(Note that plans still set their own covered drug lists – formularies – within guidelines established by state and federal regulators. So certain drugs will be covered by some plans and not others. But compared with pre-2014 when health plans could opt to not cover medications at all – or to only cover generic drugs – the ACA has made prescriptions much more accessible.)
Preventive care includes behavioral health screening
The ACA also requires all non-grandfathered health plans – including large-group plans – to cover a range of preventive care at no cost to the patient. Among the benefits included are depression and alcohol misuse screening for adults and adolescents, as well as autism screening and behavioral assessments for children.
Young adults get insured
In 2010, the ACA began allowing young adults to remain on their parents’ health plans until age 26. This provision – along with the expansion of Medicaid and premium subsidies in the health insurance exchanges – has resulted in a sharp decline in the number of young adults without health insurance. According to US Census data, 22.1% of people aged 19-25 were uninsured in 2013, and that had fallen to 14% by 2022.3
Johanna Jarcho, Ph.D, is a postdoctoral fellow at the National Institute of Mental Health. She explains that “the vast majority of mental health disorders do emerge during one’s adolescence or early 20s.” With the drop in the uninsured rate for young adults, treatment for mental health and addiction problems is much more within reach for this demographic than it was before the ACA.
But it’s not just young adults who have gained health insurance as a result of the ACA. In 2013, there were more than 45 million uninsured people in the U.S., and that had dropped to about 26 million by 2022.4 The ACA’s success in decreasing the uninsured rate means that a significant number of previously uninsured people with mental health problems have been able to obtain health insurance that covers mental health care.
Medicaid expansion
It’s no secret that poverty and addiction are correlated. And World Health Organization data indicate that the prevalence of common mental illnesses among the poor is about twice as high as among the rich.
The prevalence of behavioral health problems among low-income Americans highlights the importance of the ACA’s Medicaid expansion in making treatment available to this demographic.
Even before the ACA expanded Medicaid to millions of low-income, non-disabled Americans, Medicaid was covering more behavioral health treatment in the U.S. than any other payer. And from late 2013 to mid-2024, total Medicaid and CHIP enrollment grew by more than 24 million people,5 increasing Medicaid’s reach in covering mental health care in the US.
An estimated 1.2 million people with substance use disorders gained health coverage as a result of Medicaid expansion in its first few years. This is beneficial not only to the patients, but also to the hospitals and health care providers who care for people with serious mental health issues. A Commonwealth Fund analysis found that in states where Medicaid has been expanded, 13.4% of opioid-related hospitalizations were for uninsured patients in 2013, and that had fallen to just 2.9% by 2015. In states that hadn’t expanded Medicaid, the drop was only from 17.3% to 16.4% in that same time frame.
By 2020, up to 32 million people have gained access for the first time to mental health and addiction treatment coverage as a result of Medicaid expansion. And according to a 2015 Kaiser Family Foundation analysis, Medicaid benefits for behavioral health services tend to be more comprehensive than the benefits provided by private plans available in the ACA exchanges.
But 10 states still haven’t expanded Medicaid, and there are almost 1.5 million low-income adults – many of whom suffer from behavioral health problems – in those states who have no realistic access to health insurance without Medicaid expansion.
A 2014 report by the American Mental Health Counselors Association shows how pervasive mental health problems are among people with household income under 138% of the poverty level (the upper limit to qualify for Medicaid expansion), and highlights the importance of ongoing legislative and advocacy work to expand Medicaid in every state.
Still work to be done
The ACA has dramatically increased coverage for behavioral health treatment. But the National Alliance on Mental Illness continues to bring attention to the challenges people face in obtaining mental health care, despite the changes that the ACA imposed.
Although insurance coverage – with behavioral health benefits – is much more widespread than it used to be, access to care is still limited in some circumstances. In many states, there’s a shortage of mental health providers, which is magnified in rural areas.
A 2017 Milliman study found that mental health care is much more likely than other medical care to be provided out-of-network, and insurers tend to reimburse mental health providers less than they reimburse primary care providers. Largely as a result of what the providers see as low reimbursement rates, nearly half of private psychiatrists in the US don’t accept any health insurance at all – they’re out-of-network no matter what insurance the patient has. When Milliman revisited this issue in 2019, they found that the out-of-network problem was persisting, and appeared to be worse than ever.
The mental illness with the highest mortality rate is anorexia nervosa. And yet patients continue to face insurance-related barriers that prevent them from receiving residential treatment for anorexia.
Clearly, there is still work to be done. But without the ACA, we’d still have 45 million people without health insurance, including a significant number of people with behavioral health problems. And health plans would still be able to deny applications based on medical history, and sell plans that didn’t cover behavioral health treatment at all.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
- ”Analysis: Before ACA Benefits Rules, Care for Maternity, Mental Health, Substance Abuse Most Often Uncovered by Non-Group Health Plans” KFF.org. June 14, 2017 ⤶ ⤶
- ”Pre-Existing Condition Prevalence for Individuals and Families” KFF.org. Oct. 4, 2019 ⤶
- ”Health Insurance Coverage in the United States: 2022” U.S. Census Bureau. September 2023 ⤶
- ”Entering Their Second Decade, Affordable Care Act Coverage Expansions Have Helped Millions, Provide the Basis for Further Progress” Center on Budget and Policy Priorities. Mar. 25, 2024 ⤶
- ”Total Monthly Medicaid & CHIP Enrollment and Pre-ACA Enrollment” KFF. June 2024. Accessed Oct. 11, 2024 ⤶
