WASHINGTON—For the first time since the drive to expand a federal mental health care benefits parity law began several years ago, Congress is likely to pass comprehensive expansion legislation, Washington observers say.

Last week, federal lawmakers took the first step when a Senate panel overwhelmingly approved a bipartisan parity measure.

The bill--passed by the Senate Health, Education, Labor and Pensions Committee on an 18-3 vote--would force most employers to increase their coverage for treatment of mental health conditions.

The measure would require employers to provide the same financial cost-sharing requirements for mental health coverage as they do for other medical conditions.

For example, if a group health care plan covered 80% of medical treatment expenses, it would have to do the same for mental health care expenses.

Additionally, discriminatory treatment limitations would be banned. That would mean an end to common plan designs in which a maximum of 20 or 30 annual visits to mental health care therapists are covered, with no limits imposed on the number of visits to physicians treating other medical conditions.

Similarly, health care plans could not impose a limit on the number of inpatient days for treatment of mental disorders if they did not impose the same limit for other medical conditions.

The legislation, sponsored by HELP Committee Chairman Edward Kennedy, D-Mass., ranking minority member Sen. Mike Enzi, R-Wyo., and long-time parity advocate Sen. Pete Domenici, R-N.M., would be a big change from a 1996 federal law that bans discriminatory annual and lifetime dollar limits for coverage of mental health care expenses, but permits other discriminatory cost designs.

In the wake of the 1996 law, many employers scrapped those dollar limits and imposed new discriminatory provisions, such as covering 50% of a claim for mental health care services, but paying 80% of other medical claims' costs.

Before the ink was even dry on the 1996 law, advocates said it would be a starting point for a more expansive parity statute. Indeed, since the 1996 legislation was passed, several efforts were made to expand the law. But those efforts failed amid staunch opposition from the House Republican leadership, who prevented Senate-passed bills from being considered by the full House, and by opposition from business groups.

Many believe the wheel may have turned. With the Democrats regaining control of the House, Republican opponents no longer are in a position to block a bill.

At the same time, several business groups that for years fought against enactment of the legislation now are supporting the bill, whose official title is the Mental Health Parity Act of 2007. Recognizing that Congress eventually was likely to pass a bill, they decided to work with advocates to try to make the legislation more to their liking.

"We saw this coming. We recognized that we would have to get involved to seek a better outcome," said Neil Trautwein, vp and employee benefits policy counsel with the National Retail Federation in Washington.

Business groups said they found an open door at the offices of Senate supporters of parity legislation, who listened and responded to employers' concerns.

"We had open, candid discussions. We are very encouraged with the way the bill was put together and hope the process can be a model for other issues," said Paul Dennett, vp-health policy with the American Benefits Council in Washington.

Business involvement clearly shaped the bill. For example, business groups successfully fought to alter a provision in earlier bills that would have required group plans to cover any diagnosis listed in the psychiatric industry's compendium of mental health disorders. By contrast, the HELP bill leaves it to employers to decide which mental health disorders they will cover.

"The employer purchaser of services retains control," Mr. Dennett said.

"They have addressed the major concerns we have had with parity legislation introduced in prior sessions," said Katie Mahoney, director of health care policy at the U.S. Chamber of Commerce in Washington.

With political roadblocks in Congress removed and business groups no longer united in opposition, the likelihood of passage of a parity bill is high.

"This issue has been around for nearly a decade and now its time has come," said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington.

Still, obstacles remain. The biggest obstacle, for example, is the possibility that the House could pass a broader bill, turning business support into opposition.

But many believe the House eventually will go along with the Senate effort, noting that one of the leaders of the House effort, Rep. Patrick Kennedy, D-R.I., is Sen. Kennedy's son. "It is a top priority for Senator Kennedy and it is unlikely" that he won't be able to reach an agreement with his son, said James Gelfand, manager of health policy for the ERISA Industry Committee in Washington, which opposes parity legislation.

If the parity legislation does pass, most employers will have to improve their mental health care benefits to achieve parity with the coverage they provide for other medical conditions, said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

Indeed, a survey of more than 600 employers by Mercer Health & Benefits L.L.C. found that 64% imposed benefit limitations--such as a capping the number of visits to mental health therapists or inpatient days, but not imposing comparable limitations on other medical conditions.

For example, while Chicago-based Aon Corp. provides the same deductible and coinsurance for mental health care services as it does for other medical conditions, it places a 30-day annual limit on outpatient sessions and a 60-day limit on impatient days, said John Reschke, vp-corporate employee benefits.

If employers have to improve mental health care benefits, the cost of that upgrade might be offset by greater employee productivity, some say.

If financial barriers are removed and employees receive the appropriate care, they will be more likely to return to work sooner, be healthier and be more productive, said Barbara McMahon, a Hewitt Associates consultant in Norwalk, Conn.