Most private and public health insurance policies and programs discriminate against persons with mental illnesses by providing more restrictive coverage for their treatments than the coverage provided for treatments of other medical conditions. Insurance parity legislation requires health insurance plans to provide treatment for mental illnesses equal and commensurate with that provided for other major physical illnesses. The North Carolina State Employees Health Plan has required a mental health parity benefit since 1991. Substance abuse parity was added in 1997. The plan experienced cost decreases subsequent to implementation of parity. Legislation to require mental health parity for group policies in North Carolina was first introduced in 1993 and every subsequent session of the General Assembly. The NC Senate approved a Mental Health Parity bill in 1997. The NC House has never allowed a committee vote on a parity bill.

The powerful business and insurance lobbies have been successful blocking legislation in the House. Their arguments against the legislation have changed over the years. Opponents have raised concerns about the reliability of diagnosis, the effectiveness of treatment, and cost of parity coverage. In each instance, research and actual experience in both North Carolina and other states have disputed these claims. Opponents now cite opposition to any type of mandate for coverage, stating that the cumulative effect will be to drive insurance costs up. Supporters of parity counter that without a mandate, only those needing coverage will buy it, creating a situation called adverse selection, which drives costs prohibitively high. Mandated coverage allows the cost of insurance to be spread out and remain affordable.

In 1999 the North Carolina General Assembly established a Legislative Research Committee to review the evidence and make recommendations. The Committee found "that mandated parity for mental illness and chemical dependency benefits is affordable…The Committee recommends all group health plans…provide coverage of mental illness and chemical dependency". The bill developed by this Committee was never even discussed in the House Insurance Committee.

Companion insurance parity bills have been introduced into the General Assembly by Rep. Martha Alexander (H808) and Sen. Bill Martin (S788). The bills are similar to the bills introduced in 1999. They require that group policies offer mental health and chemical dependency benefits and require that those benefits to equal to those of physical illnesses. Senate leadership have indicated that, having passed parity in the Senate in 1997, they will not consider the issue again until the House has passed a parity bill. Rep. Alexander is working with the House leadership to ensure that the bill is heard. She also is developing an amendment that would not require policies to cover mental health and chemical dependency but if a policy covers mental health and chemical dependency benefits would be required to be the same level as for physical illness. This language is similar to legislation currently being considered at the federal level.