South Carolinians may soon be able to get mental health coverage through their employers thanks to a compromise Tuesday on a bill that would require insurers to pay for the treatment of psychological disorders in the same way they do physical ailments.

The proposal, years in the making, doesn't go as far as mental health advocates had hoped, exempting small businesses and limiting the illnesses covered under the mandate. But they believe the compromise represents the best chance for legislation to be passed this session that would enable more of the nearly 170,000 South Carolinians with a serious mental illness to get adequate levels of insurance coverage.

"I think the deal we reached today gives the bill the best chance possible," said Dave Almeida, director of the state chapter of the National Alliance for the Mentally Ill. "There's no reason this bill shouldn't pass this session."

Larry Marchant, executive director of the South Carolina Association of Health Plans, said insurers wanted a bill that required mental health coverage but wouldn't cost too much and potentially drive some employers out of the insurance market.

"We thought it was the right thing to do, to take a slow approach to it," said Marchant, who helped negotiate the compromise. "If three years go by and medium and large employers are successfully implementing this mandate, then we can go back and see if there are opportunities to increase coverage levels."

South Carolina remains one of 16 states that do not require insurers to cover treatments for mental illness.

While the compromises reached Tuesday are aimed at improving the bill's chances for passage, it's uncertain whether Gov. Mark Sanford would support a new government mandate.

"Typically, new government mandates are viewed with extreme caution by this administration," said Will Folks, a spokesman for the governor. "Obviously, we want to see this make its way through the legislative process."

One particular concern Folks noted is a provision requiring the state to track whether the mandate results in higher premiums. "Ideally, we'd like to have that information on the front end, before a law is passed," he said.

Advocates have long pushed for equal coverage of mental health issues, a concept called parity. This year, they come armed with figures from the state's health insurance program, showing that increased coverage caused only a modest increase in premiums during a recent two-year experiment.

Many insurers discriminate against people with mental illnesses, advocates say, by capping coverage or not offering coverage at all. They say this keeps some people from getting the treatment they need.

Many of the mentally ill end up on Medicaid. "The single best health insurance somebody could find for mental health has been Medicaid," Almeida said. "It means they have to destitute themselves (to get coverage). It also means that taxpayers bear the brunt of the burden."

The legislation faced stiff opposition from insurers and business groups worried that it would lead to higher costs.

They also had trouble with specific elements of the original bill. For instance, they worried that mental health was defined so broadly as to mandate coverage for learning disabilities. If that were the case, an insurer would be liable for the costs associated with putting a child with a learning disability into a special school.

The compromise instead limits coverage to nine biologically-based problems, including bipolar disorder, major depression and anxiety.

"We concentrated on trying to help the folks who are really in a situation where their mental illness is debilitating to them and has the potential to really cost them a lot in out-of-pocket expenses," Marchant said.

The biggest question in the legislation was its impact on small companies. The compromise would exempt employers with 50 or fewer workers.

Those companies employ some 650,000 of the 1.5 million people who work for private employers in South Carolina, according to the most recent figures available from the U.S. Bureau of Labor Statistics.

A number of large employers, meanwhile, self-insure, meaning they would be exempt from such mandates under federal law. The result: medium-sized companies would be most affected by the bill.

Advocates felt the small-business exemption was unavoidable. Skyrocketing health care costs have forced many small companies to stop providing health coverage altogether, and business groups believed that another mandate, even if the costs were modest, would drive more of them out of the market.

According to the Department of Insurance, more than half of companies with 10 or fewer employees provide no health coverage at all, while 39 percent of those with 11 to 20 workers don't provide coverage.

"We're pleased they recognized that this is a segment of the population that can't afford this mandate," said Michael Fields, president of the South Carolina chapter of the National Federation of Independent Business. "I hope folks with more than 50 workers can handle this."

Although the bill's scope is now narrower than initially envisioned, Almeida noted many larger companies like Michelin and BMW already cover mental illness. He also believes that the coverage could spread to other companies not covered by the mandate because medium-sized businesses will want to upgrade the health benefits they offer to workers to stay competitive.

GETTING TO PARITY

The mental health parity bill goes before the Senate Banking and Insurance Committee today.

What would be covered? For the first time, employers would be required to cover mental illnesses. The compromise limits that coverage to nine illnesses: bipolar disorder; major depression; obsessive-compulsive disorder; paranoid and other psychotic disorders; schizoaffective disorder; schizophrenia; anxiety disorder; post-traumatic stress disorder, and childhood depression. Insurers would be required to cover those illnesses at the same level as physical problems.

How big is the problem? According to federal figures, about 170,000 South Carolinians have a serious mental illness.

What are the exemptions? The bill exempts companies with 50 or fewer workers. Larger companies that self-insure also would be exempt under federal law, meaning that the bill would mostly affect mid-sized companies.