04/02/2010 05:12 am ET | Updated May 25, 2011

Mental Health Parity: Obama Style

This week's papers are going to be full of headlines, like this one in the New York Times: "New Rules Promise Better Mental Health Coverage."

The new announcement of new rules was a holier than thou attempt by government to end discrimination by group insurers against the mentally ill. It was big government telling big insurers to do what the Federal Government itself refuses to do: provide parity in mental health coverage to the mentally ill.

But the new fanfare-announced rules only apply to large insurers insuring groups of employees. In other words, the rules only apply to those well enough to work, and their covered family members.

It leaves out many of the most seriously mentally ill: those who were never well enough to work or be 'covered' by an employer. Those who aren't covered under another policy. And these are the very ones we should be helping: the most seriously ill.

For these individuals, Medicaid is the only one they can turn to. But it won't do any good.

An obscure provision of Medicaid law call the "Institutes for Mental Disease" Exclusion (IMD Exclusion) specifically permits Medicaid to not cover the cost of long-term inpatient care for people who have a serious mental illness. As long as your illness is not in your cranium, Medicaid will cover you. But if the disease is in your cranium, Medicaid says sayonara.

So if you're a state director of mental health, and DC says to you, "We won't pay for patients in hospitals", what would you do? The states do the same thing. They kick the patient's out of hospitals so they can 'return' to the community. Why? Because then Medicaid will pick up 50% of the cost of their care.

llene Wells had a brother, Paul who was killed by this policy.

Many mentally ill need hospitals. When released, they deteriorate. If they don't die, like Paul did, many get arrested. As a result of Medicaid discrimination against the mentally ill, states now have approximately 231,000 individuals with severe psychiatric disorders incarcerated. But there's no more room in the jails than there is in the closed hospitals. So what are states doing? Turning psychiatric hospitals they kicked the mentally ill out of, into jails they can put them into. Right now Virginia is considering turning one of theirs into a prison.

I wish I were making this up.

In spite of what Candidate Obama said, President Obama is MIA.

So I think -- I've been a strong believer in mental health parity, recognizing that those are serious illnesses. (Applause.) And I would like to see a mental health component as part of a package that people are covered under, under our plan. Okay? (Applause.)

But Obama's now-dead health care reform did not include elimination of the IMD Exclusion; it only included a token pilot test program.

I'm happy the Obama Administration is telling group insurers to stop discrimination against the mentally ill. Now I wish they were listening to what they are saying.

UPDATE: As a result of IMD Exclusion a Hosp. in NJ is closing. Advocates will be organizing to save it.