A trade group for major employers has filed a lawsuit against a Biden administration-backed federal rule designed to expand mental health and substance abuse coverage for 175 million Americans with private insurance.
The lawsuit, filed by the ERISA Industry Committee in the U.S. District Court for the District of Columbia, claims that the Departments of Health and Human Services, Labor, and Treasury exceeded their authority in adopting the parity rule finalized in September 2024.
This rule mandates that group health plans provide “meaningful benefits” for mental health and substance abuse disorders, equating them with benefits for physical health and surgery.
Key Allegations
The trade group argues that the rule imposes an arbitrary and excessive “benefits mandate,” potentially forcing some employers to exclude mental health and substance abuse coverage altogether.
According to the complaint, the regulation hinders employers’ ability to offer affordable, tailored health plans for their workforce.
“While we support the goal of parity in mental health benefits, this rule exemplifies regulatory overreach, jeopardizing access to affordable, high-quality care,” the lawsuit states.
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Biden Administration’s Parity Push
The parity rule aims to address long-standing gaps in mental health care access. Despite the 2008 Mental Health Parity and Addiction Equity Act, the Biden administration reports that over 50% of U.S. adults and nearly 70% of children with mental illnesses remain untreated.
Outgoing President Joe Biden championed the rule as a step toward equitable healthcare access. However, incoming President Donald Trump’s administration may reconsider or repeal the regulation, as Trump has consistently advocated for reduced federal oversight.
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Industry Impact
The case—ERISA Industry Committee v. U.S. Department of Health and Human Services et al. (No. 25-00136)—raises concerns about the cost of healthcare in the U.S., which has faced sharp criticism.
Eugene Scalia, the trade group’s attorney, emphasized that the agencies behind the rule “lost sight of the practicalities of creating a workable mental health care system.”
As the legal battle unfolds, the decision could have significant implications for employee health benefits, mental health parity enforcement, and the broader healthcare landscape.