Timothy's Law: Will it actually hurt those it's designed to help?

George Pataki, in one of his last official acts as Governor of New York, signed into reality a bill called “Timothy’s Law,” which will require private insurance companies to offer mental health coverage on par with coverage for other health services.

Timothy’s Law was named for Timothy O’Clair, a seriously troubled child who committed suicide after years in psychiatric care and in and out of mental health institutions. In his family’s opinion, if not for the limited coverage for mental illness that their insurance policy provided, they would have been able to get Timothy – and other family members – the services that they needed. Instead, the O’Clair’s only alternative, when their in- and outpatient visits ran out and they could no longer afford to pay out-of-pocket, was to have Timothy placed in foster care. This would allow him to become eligible for New York’s Medicaid program, giving Timothy access to the mental health services that his family’s private insurance would no longer cover. Separated from his family unit, Timothy’s condition only worsened and three weeks shy of his thirteenth birthday, he hanged himself in his bedroom closet.

It took ten years for the O’Clair family to get this bill through a skeptical state assembly, because of the potential costs involved: increases in state allocated funds, or increases in private insurance premiums, already prohibitively high for so many individuals and families.

But with a small compromise (the bill originally asked for parity coverage for mental illnesses, substance abuse and eating disorders, but the final version eliminated coverage for substance abuse), Pataki signed the bill on December 22, leaving the financing yet to be determined.

The bill is much welcome news for individuals and families living with mental illness. Currently, many private insurance companies, such as MVP and CDPHP in New York, only offer a limited number of outpatient and inpatient visits per calendar year per family. After just a few of these visits, the copays increase, and when the family has used up their allotment, they are responsible for 100% of the cost. This can be ruinous if more than one family member needs mental health services, which is often the case because mental illness affects the entire family. Timothy’s Law would force insurance companies to provide at least 20 outpatient visits and 30 inpatient visits per calendar year.

Many small businesses and some larger ones have enthusiastically backed this bill on its trip through the state legislature. A representative from one small business said that it would cost their company less to pay for the increase in insurance premiums (1.26 per employee per month according to the sponsors of the bill) than it would cost them in absenteeism and decreased productivity when an employee either has a mental illness or has to take time off to take care of a family member who does. But small businesses need not worry about any increase in premiums. For businesses with less than 50 employees, the state will subsidize the increase.

Larger companies will be on their own. And most large companies, as you know if you work for one, pass the bulk of any increase in insurance premiums on to their employees, if not the entire amount.

Which poses a conundrum: will this bill, written and urged all the way up to the Governor’s pen with such good intentions, actually hurt those it’s designed to help? Yes, the bill requires that the costs for small businesses will be subsidized (somehow) by the state. But cash-strapped New York is now in the hands of Eliot Spitzer, who has already vowed to cut spending wherever possible. And as for large companies, the increase in insurance premiums (on top of an already hefty increase announced last October for many New York private insurance companies) might cause some employers to look for less expensive, less comprehensive alternatives, such as companies with high deductibles, or programs like Pataki’s “Healthy New York,” which does not provide mental health coverage at all. Or they could simply, once again, pass the increase on to their employees, leaving them with less disposable income when the curtain comes down on their covered mental health visits.

The O’Clairs (and many, many other families) have already suffered enough.