AGREEMENT REACHED ON BILLS TO EXPAND HEALTH-CARE COVERAGE.

Byline: Robert Pear The New York Times

House and Senate leaders announced agreement Thursday on two major health insurance proposals, directing insurance companies to offer comparable coverage for mental and physical illnesses and to guarantee new mothers coverage for at least 48 hours of hospital care after childbirth.

President Clinton strongly supports both proposals, so it is highly likely they will become law. The changes would take effect in January 1998.

Consumer groups, doctors and advocates for the mentally ill rejoiced at Thursday's agreement.

Sen. Pete Domenici, R-N.M., who wrote the mental health proposal, said: ``This is a historic step, a breakthrough, for the severely mentally ill. Congress is going to take one step to get rid of the terrible stigma and discrimination that's based on mystique, mystery and Dark Age concepts.''

Dr. Ralph W. Hale, executive director of the American College of Obstetricians and Gynecologists, welcomed the agreement on maternity coverage, saying:

``We are very pleased that Congress has seen fit to pass this bill. It shows their responsibility to the women of America. Our members tell us that women are being pressured to leave the hospital early, sometimes in eight hours or less, and physicians are being pressured to discharge their patients before they feel they should go home. If health maintenance organizations had done this voluntarily, we would not have to have new laws.''

But employer groups expressed disappointment. Paul R. Huard, senior vice president of the National Association of Manufacturers, said: ``This is a lousy policy, and it sets an awful precedent. The government is not qualified to specify the design of health plans, and we don't like government-mandated benefits whether they come in tiny increments or in one huge chunk, as in President Clinton's original health plan.''

Republicans acknowledged that they were imposing new mandates on employers. But they said they were being more selective and judicious than Clinton had been with his proposal to guarantee a standard package of health benefits for every American.

``This is probably as good a mandate as we could dream up,'' said Domenici, who worked closely with Tipper Gore, the wife of Vice President Al Gore. She has long championed the rights of the mentally ill.

Under current law, it is common for employers, insurers and health plans to set annual and lifetime limits on what they will spend for a person's medical care. Often the limits for mental health care are lower than the limits for treatment of physical ailments like cancer, diabetes and heart disease.

The new measure prohibits such disparities in lifetime or annual limits. But health plans still may set higher deductibles and co-payments for mental health health services, and they do not have to offer mental health benefits at all. If benefits become too expensive, Huard said, employers will simply drop them.

In practice, aides to Domenici said, most employers probably will set an overall limit for coverage of mental and physical conditions, without distinguishing between the two. Thus, for example, a health plan that now has a lifetime limit of $700,000 on treatment of physical illness and $50,000 for mental illness might set a new aggregate lifetime limit of $710,000.

Last month Clinton signed a bill to make health insurance more readily available to millions of Americans. In debate on that bill, Domenici had proposed complete equivalence, or parity, in coverage for mental and physical illnesses.

Domenici, who has an adult daughter who is mentally ill, and Sen. Paul Wellstone, D-Minn., whose brother has struggled with mental illness, kept pushing for a more modest version of the original proposal.

Critics of the mental health proposal said it would increase the cost of health benefits for employers and employees. Supporters denied that. Under the bill, a group health plan may obtain an exemption from the mental health requirements if it can show that they caused an increase of at least 1 percent in its costs.

The requirements for comparable mental health coverage do not apply to businesses with 50 or fewer employees. ``Mental health benefits,'' as defined, do not include the treatment for drug abuse or alcoholism.

Under the other agreement reached Thursday, if a health plan provides maternity benefits, then women and their newborns are entitled to hospital coverage for at least 48 hours after normal vaginal deliveries and 96 hours after Caesarean sections. A doctor could, ``in consultation with the mother,'' decide on an earlier discharge.

Karen M. Ignagni, president of the American Association of Health Plans, which represents HMOs, had criticized an earlier version of the maternity bill as ``a well-intentioned but ultimately misguided attempt to mandate standards of medical practice.''

She said Thursday that the final version was better because the government was not trying to dictate ``standards of clinical practice'' in great detail.

The mental health guarantees do not apply directly to Medicaid and Medicare, the health programs for people who are poor, disabled or elderly. So the legislation is not expected to increase the costs of those programs.

But the federal government expects to lose a small amount of revenue because businesses will incur slightly higher costs for employee benefits, reducing their taxable income.

Michael M. Faenza, president of the National Mental Health Association, which lobbies for people with mental disorders, said he was thrilled to see the insurance proposal resurrected Thursday. ``This is an incredible victory,'' he said.