No Room for Autism Treatment in Self-Funded Health Plans

Eight years ago, Shannon Penrod and her husband were struggling to raise their 2-year-old son, Jem. The toddler threw frequent tantrums, bit and kicked people, lost the vocabulary he had built up since he was 9 months old, banged his head on the kitchen floor, flapped his arms and ran around in circles, and swiped things off the dining table.

When his pediatrician told the parents that the boy was autistic they decided it wasn’t true. “We were in denial,” Penrod acknowledged, until people started saying, “‘O my god, what’s wrong with your child?’”

But Jem’s parents did eventually seek treatment for him, enrolling him at age three in a regional center in the Los Angeles area to begin Applied Behavioral Analysis (ABA) therapy. 

ABA therapy is a highly structured one-on-one coaching by trained teachers, and has become the most widely used autism treatment in the United States. In California, 21 regional centers – state-funded non-profit agencies that function as case managers – provide the bulk of the treatment, with some school districts providing some basic therapy.

But ABA therapy is expensive, and treatment could cost upwards of $60,000 per year per person. The lifetime costs of treating one person with autism could be about $3 million, according to a Harvard School of Public Health study. Jem’s regional center spent nearly $100,000 on him in the first year, but a lot less in the subsequent four years of his treatment.

It has helped him considerably, said his mother. Today, the 10-year-old is at the top of his fifth-grade class, and only occasionally has some language problems. 

The parents would like him to continue with a little more ABA therapy. They feel it would better prepare him for his teen years. But Jem’s father’s employer-sponsored health plan will not cover it.

Jem’s father works for Whole Foods Market, a supermarket chain with more than 360 stores in the United States and the United Kingdom. The company has a self-funded health plan for its U.S. “team members,” as its employees are called. But the plan offers no ABA therapy for autism. 

Like Whole Foods, a number of large corporations that self-fund are excluding ABA therapy from their health plans, putting hundreds of their employees under a great deal of stress because they simply cannot afford to spend for the therapy themselves. Penrod said that before her son was enrolled in the regional center, she and her husband had to skimp on their own medical care so their son could get his mental health care.

Bypassing traditional insurance arrangements

In self-funded employee health benefit plans, employers bypass traditional insurance arrangements and tailor their own plans. Employers also simply pay for the cost of employees’ medical claims. In other words, employers decide to be their own “insurance company” by paying their own claims, administrative costs and creating financial safeguards against huge unexpected claims. They do that by purchasing a stop-loss policy from an insurance company.

Self-funded plans fall under the 1974 Employee Retirement Income Security Act (ERISA), administered by the U.S. Department of Labor and are exempt from state insurance regulations, such as mandated benefits, making it an attractive alternative to traditional insurance coverage. 

“It’s not as punitive or micro-managing as fully funded plans. It does not get into such stuff as you have to cover this or that,” pointed out Fred Hunt, active past president of the Maryland-based Society of Professional Benefit Administrators.

That factor, plus the runaway cost of insurance premiums in recent years, is perhaps why the number of companies offering it has increased by 6,000 percent in the last 12 years, according to Hunt. 

At a time when Obamacare is being touted as guaranteeing health care to people who need it most, the majority with employer-sponsored health plans may not benefit fully from it. Currently, two-thirds of all U.S. employers of all sizes self-fund their employees’ health plans. 

In California, though, “only 36 percent of workers work for employers that self-fund,” said Richard Figueroa, program manager for health and human services with The California Endowment. 

But “there’s definitely a movement toward self-insuring, particularly in smaller companies, even those with under 100 employees,” noted Garen Corbett, director of the California Health Benefits Program.

“More small employers, even those with 25 to 30 employees, now are doing it,” he said. 

The only Obamacare provisions self-funded insurance has to comply with is eliminating the annual and lifetime caps on coverage, according to TCE’s Figueroa.

A widespread problem that is getting wider

According to a 2008 study by the Centers for Disease Control and Services, one in 68 children in the United States had an Autism Spectrum Disorder (ASD). That number has now gone up by 30 percent, according to Kristin Jacobson, president and co-founder of Autism Deserves Equal Coverage.

Approximately 60,000 individuals in California who have autism receive services through the regional centers. Given the prevalence of the disorder, it is likely that approximately 132,000 children have autism in the state, according to Julie Kornack of the Southern California-based Center for Autism and Related Disorders. Less than half of them receive treatment through the regional centers, she said.

Working for companies that offer no ABA therapy puts a lot of stress on parents and makes them less productive, Jacobson said. As Penrod put it, companies need to understand that providing ABA therapy “is no less important than providing coverage from juvenile diabetes or pediatric cancer. ” 

To compound the problem for parents, Medi-Cal, the state’s health insurance program for low-income people (known as Medicaid in the rest of the nation), does not cover the therapy, leaving hundreds of children with autism out in the cold.

Parents are understandably angry.

“Giving them no therapy could cause irreparable harm to the children,” asserted Jacobson. “The kids could end up being institutionalized.”

A coalition of parents, advocates and health care workers will be rallying on the Capitol Wednesday, which is the conclusion of Autism Awareness Month. They will be asking lawmakers, among other things, for Medi-Cal to expand ABA therapy through Obamacare.

In recent years, a handful of states have begun offering ABA therapy in their Medicaid plans, some after being sued.

Some corporations that self-fund offer ABA therapy

Even though companies that self-fund are not required to offer the therapy in their health care plans, a number of them do.

Two of the country's major technology companies – Microsoft and Intel – led the way about a decade ago, by including ABA therapy in their self-funded health plans. 

The past two years have seen other employers following suit. Earlier this year, the leading global financial firm, JPMorgan Chase & Co., added autism benefits in its self-funded health plan.

Last week, one major corporation found itself in the hot seat for excluding ABA therapy in its self-funded health plan. Two Boeing employees sued the aerospace giant in federal court, claiming that the company violated the federal mental health parity law. The suit is seeking certification as a class action on behalf of Boeing’s 81,000 Washington-based employees.

Jem’s mother, Penrod, said she was glad that the lawsuit was filed, and that “it’s only a matter of time before other corporations are sued.”

Called for a comment on why Whole Foods has excluded ABA therapy from its health plan, company spokeswoman Robin Rehfield Kelly said by e-mail: “Our [80,000-strong] Team Members actually have a say in the benefits we offer – we hold a companywide vote every three years. In the last vote, over 80 percent of our Team Members voted on what benefits they wanted the company to elect.”

But Penrod asserted that team members were only given the option to choose one of three plans, none of which had included ABA therapy.

Given the Size of Whole Foods’s staff, she said, “It’s statistically impossible to not have a large number of team members who have children with autism spectrum disorder.”

And, she added: “To be fair, Whole Foods gives a lot of benefits but this is a black mark on its records.”

This story was originally published on New America Media