In 11  states, laws require that individuals with mental disorders or other health  conditions be guaranteed access to coverage, regardless of health status. In the remaining  3 states only certain carriers, such as health maintenance organizations  (HMO) or Blue Cross and Blue Shield plans, guarantee access to coverage  to all applicants. In 9 of the 11 states in which carriers are required to guarantee access to  individual market coverage, carriers must also limit the extent to which  premium rates vary between healthy and unhealthy applicants and thereby  improve the affordability of coverage for high-risk individuals. In Other States, Applicants with Mental Disorders May be More Likely to be Denied Coverage

In the 34 states where individual market carriers are not required to  guarantee access to coverage, carriers may deny coverage to any high-risk  applicant, but may be more likely to deny coverage to those with mental  disorders than other chronic health problems. In addition, carriers’ underwriting practices relating to applicants with a  history of treatment for mental disorders can vary considerably. For  52 percent of the 42 underwriting decisions related to applicants with the  selected mental disorders, the carriers in our study indicated that they  would likely decline the applicants. High-risk pool coverage  typically costs 125 to 200 percent of standard rates for healthy individuals,  and the risk pools’ mental health benefits are generally comparable to  those available in the individual market, including more restrictions on  mental health benefits than other benefits. Health benefits contained in state high-risk pool plans are generally  comparable to those available in the individual market; however, benefits  for mental disorders or other health conditions are not permanently  excluded as they can be in the individual insurance market. States  generally subsidize their pools through various funding sources, including  surcharges on private health insurance premiums (individual and group)  and state general revenue funds.
What GAO Found

Five percent of adults suffer from serious mental disorders. Although health insurance carriers in a few states guarantee coverage for mental health treatment, in most states individuals with mental disorders face restrictions in purchasing private health insurance for themselves and their families. Eleven states require carriers to accept all applicants regardless of health status, but coverage options vary. Eight of these 11 states require all carriers to guarantee access to coverage sold in this market. In three states, laws apply only to some carriers, such as Blue Cross and Blue Shield, or certain periods of the year. Carriers in nine of the 11 states are also required to limit the extent to which premium rates vary between healthy and unhealthy individuals. In states without guaranteed coverage in the individual market, the seven carriers GAO reviewed would likely deny coverage more frequently for applicants with mental disorders than for applicants with other chronic health conditions. Specifically, for six mental disorders of generally moderate severity, carriers said that they would likely decline applicants 52 percent of the time. State-sponsored high-risk pools are the primary coverage option available to rejected applicants in most states. In 27 of the 34 states where carriers may deny coverage to applicants with mental disorders or other health conditions, high-risk pools offer coverage to applicants denied individual market coverage. The pools are subsidized--generally through assessments on carriers or state tax revenues--and premium rates are generally capped at 125 to 200 percent of standard rates for healthy individuals. Health benefits available under the pools are generally comparable to those available in the individual market, including similar restrictions on mental health benefits; however, benefits for mental disorders or other health conditions are not permanently excluded as they may be in the individual insurance market.