Trump Administration Walks Back Mental Health Parity in Insurance Coverage

The Trump administration has walked back the scope of the Mental Health Parity and Addiction Equity Act, which required that all insurance cover mental health and substance abuse treatments comparably to physical ailments.1 Updated regulations that were signed under the Biden administration came under fire in January, and the applicability of the mandate was questioned.2,3

The Mental Health Parity and Addiction Equity Act, first signed into law in 2008, aimed to establish equity in the ways that insurance covered mental health and addiction treatment compared with medical care.3 Although this law was signed nearly 2 decades ago, there have been struggles to ensure that this law was being enacted practically. Updated regulations were signed by the Biden administration in September 2024, with provisions that included requiring insurers to provide meaningful benefits for mental health conditions if they were also provided for physical conditions, and that insurers go beyond what was written to meet the demand in the real world.4

While the Employee Benefits Security Administration (EBSA), US Department of Labor, was working on updating the parity provisions last Spring, then-Principal Deputy Assistant Secretary Ali Khawar explained to The American Journal of Managed Care® (AJMC®) that the process incorporated public feedback.5

The final parity rule aimed at more efficient enforcement and to "reframe what it means to be in compliance with this parity law, which we think will be a benefit to employers and health plans that are trying to do the right thing and offer robust mental health benefits or substance use benefits," Khawar said. "It will be a benefit to the insurance community, because it will clarify really what our expectations are. And it will be a benefit to us because it will be easier for us to enforce it in a variety of circumstances."

However, these updated regulations were met with pushback from the ERISA Industry Committee, which represents Fortune 500 companies.2 The lawsuit alleged that the new regulations were not in line with the administration’s authority. The trade association also argued that patients would have reduced quality of care with these changes, along with increased costs. The Biden administration insisted that these rules were instead a means of combating any noncompliance, due to reports of insurers not providing equitable coverage.

The Trump administration is suspending the federal rule from the Biden administration that clarified aspects of the Mental Health Parity and Addiction Equity Act | Image credit: melita - stock.adobe.com

According to the AMA,3 lives are saved when health plans cover treatment for mental health and substance abuse. Experts also emphasize that the mandate from 2024 is not a new mandate but simply reiterates and clarifies the law that was passed in 2008. The lawsuit had the potential to undermine the original 2008 law and leave many people without coverage for needed treatment.

The US Justice Department announced on Friday that the HHS, the Department of the Treasury, and the Department of Labor would be reconsidering the rule that was passed under the Biden administration.1 The ERISA lawsuit is now on hold indefinitely, giving the administration enough time to make a more permanent decision. However, the lawsuit could be taken up again at any point. According to Reuters, the Trump administration provided ERISA with a plan to stop enforcing the rule that reinforced the Mental Health Parity and Addiction Equity Act, with the ability to either completely rescind the rule or modify it. The rule will not be enforced until these departments make a definitive decision.

Lisa M. Gomez, former assistant secretary of EBSA, US Department of Labor, who worked closely with Khawar on the parity provisions, told AJMC she's "not surprised that the Trump Administration has asked the court to put a 'pause' on the lawsuit for the time being so that the Administration can take some time to look at the final parity rule itself and make a decision how it wants to proceed not only with the litigation, but with the regulation and mental health parity itself."

"In fact, I think that putting a pause on the litigation is the right move for this moment, particularly since the Administration has not yet been clear on its position with respect to mental health care, it is a bipartisan issue, and the political leadership within the Employee Benefits Security Administration (EBSA) at the DOL is not yet in place," she continued.

However, Gomez, now a founding member of LMB Collaborative Consulting Solutions, expressed concern that there is a non-enforcement policy that was introduced alongside that decision, which could affect access to mental health care.

"If the Administration goes too far with a non-enforcement policy, we will be moving backwards, rather than considering all of the tens of thousands of comments received on the rule and the time spent putting a regulation together to move towards removing barriers to mental health care. I hope that the Administration will take the time to listen to all voices and perspectives before taking action that could result in people not only losing access to care, but also losing their lives," she concluded.

This news comes amidst multiple actions taken by the Trump administration to undermine access to mental health treatment. The Trump administration has announced potential cuts to LGBTQ specialists on the suicide hotline,6 terminated 128 NIH grants for the National Institute of Mental Health,7 and proposed budget cuts to the HHS primarily centered on mental health and addiction treatment services.8 Should the Trump administration rescind the rule, the equity of mental health and addiction coverage could be weakened, with the possibility of insurance companies not agreeing to cover certain mental health services as they would physical treatment.

References

1. Jones DN. Trump administration may rescind mental health parity rule, filing says. Reuters. May 12, 2025. Accessed May 12, 2025. https://www.reuters.com/legal/government/trump-administration-may-rescind-mental-health-parity-rule-filing-says-2025-05-12/
2. Pattani A. Trump team faces key legal decision that could put mental health parity in peril. KFF Health News. May 9, 2025. Accessed May 12, 2025. https://kffhealthnews.org/news/article/trump-biden-mental-health-parity-insurance-law-coverage-deadline/ 
3. Garvey G. Stick up for mental health parity rules in court. American Medical Association. May 7, 2025. Accessed May 12, 2025. https://www.ama-assn.org/delivering-care/public-health/stick-mental-health-parity-rules-court#
4. Grossi G. Biden-Harris Administration expands mental health coverage protections nationwide. AJMC®. September 10, 2024. Accessed May 12, 2025. https://www.ajmc.com/view/biden-harris-administration-expands-mental-health-coverage-protections-nationwide
5. Grossi. G. Ali Khawar on addressing the mental health crisis through parity law. AJMC. June 13, 2024. Accessed May 12, 2025. https://www.ajmc.com/view/ali-khawar-on-addressing-the-mental-health-crisis-through-parity-law
6. Bonavitacola J. Cutting specialists from suicide hotline threatens LGBTQ+ youth, experts say. AJMC®. May 5, 2025. Accessed May 12, 2025. https://www.ajmc.com/view/cutting-specialists-from-suicide-hotline-threatens-lgbtq-youth-experts-say
7. Santoro C. NIH grants terminated amid Trump administration, raising concerns for US research, minority health disparities. AJMC. May 8, 2025. Accessed May 12, 2025. https://www.ajmc.com/view/nih-grants-terminated-amid-trump-administration-raising-concerns-for-us-research-minority-health-disparities
8. Mandavilli A, Sanger-Katz M, Hoffman J. Trump administration abruptly cuts billions from state health services. New York Times. March 26, 2025. Accessed May 12, 2025. https://www.nytimes.com/2025/03/26/health/trump-state-health-grants-cuts.html