[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE PAUL WELLSTONE MENTAL HEALTH AND ADDICTION EQUITY ACT OF 2007
(H.R. 1424)
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR AND PENSIONS
COMMITTEE ON
EDUCATION AND LABOR
U.S. House of Representatives
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, JULY 10, 2007
__________
Serial No. 110-53
__________
Printed for the use of the Committee on Education and Labor
Available on the Internet:
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COMMITTEE ON EDUCATION AND LABOR
GEORGE MILLER, California, Chairman
Dale E. Kildee, Michigan, Vice Howard P. ``Buck'' McKeon,
Chairman California,
Donald M. Payne, New Jersey Senior Republican Member
Robert E. Andrews, New Jersey Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia Peter Hoekstra, Michigan
Lynn C. Woolsey, California Michael N. Castle, Delaware
Ruben Hinojosa, Texas Mark E. Souder, Indiana
Carolyn McCarthy, New York Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts Judy Biggert, Illinois
Dennis J. Kucinich, Ohio Todd Russell Platts, Pennsylvania
David Wu, Oregon Ric Keller, Florida
Rush D. Holt, New Jersey Joe Wilson, South Carolina
Susan A. Davis, California John Kline, Minnesota
Danny K. Davis, Illinois Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona Kenny Marchant, Texas
Timothy H. Bishop, New York Tom Price, Georgia
Linda T. Sanchez, California Luis G. Fortuno, Puerto Rico
John P. Sarbanes, Maryland Charles W. Boustany, Jr.,
Joe Sestak, Pennsylvania Louisiana
David Loebsack, Iowa Virginia Foxx, North Carolina
Mazie Hirono, Hawaii John R. ``Randy'' Kuhl, Jr., New
Jason Altmire, Pennsylvania York
John A. Yarmuth, Kentucky Rob Bishop, Utah
Phil Hare, Illinois David Davis, Tennessee
Yvette D. Clarke, New York Timothy Walberg, Michigan
Joe Courtney, Connecticut Deal Heller, Nevada
Carol Shea-Porter, New Hampshire
Mark Zuckerman, Staff Director
Vic Klatt, Minority Staff Director
------
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS
ROBERT E. ANDREWS, New Jersey, Chairman
George Miller, California John Kline, Minnesota,
Dale E. Kildee, Michigan Ranking Minority Member
Carolyn McCarthy, New York Howard P. ``Buck'' McKeon,
John F. Tierney, Massachusetts California
David Wu, Oregon Kenny Marchant, Texas
Rush D. Holt, New Jersey Charles W. Boustany, Jr.,
Linda T. Sanchez, California Louisiana
Joe Sestak, Pennsylvania David Davis, Tennessee
David Loebsack, Iowa Peter Hoekstra, Michigan
Phil Hare, Illinois Cathy McMorris Rodgers, Washington
Yvette D. Clarke, New York Tom Price, Georgia
Joe Courtney, Connecticut Virginia Foxx, North Carolina
Timothy Walberg, Michigan
C O N T E N T S
----------
Page
Hearing held on July 10, 2007.................................... 1
Statement of Members:
Andrews, Hon. Robert E., Chairman, Subcommittee on Health,
Employment, Labor and Pensions............................. 1
Prepared statement of.................................... 3
Additional materials submitted for the record:
Statement of Raymond F. Anton, M.D., president, the
Research Society on Alcoholism..................... 106
Letter from Mila Kofman, associate research
professor, Georgetown University................... 69
Letter from Gregory B. Heller........................ 74
Letters from Connecticut and Maryland attorneys
general............................................ 100
Letter from the National Association of Insurance
Commissioners...................................... 106
Kline, Hon. John, Senior Republican Member, Subcommittee on
Health, Employment, Labor and Pensions..................... 4
Prepared statement of.................................... 5
Additional materials submitted for the record:
Letter from Sara Rosenbaum, J.D., George Washington
University......................................... 83
Letter from various organizations.................... 109
Letter from the U.S. Chamber of Commerce............. 110
Wu, Hon. David, a Representative in Congress from the State
of Oregon, statement of the American Occupational Therapy
Association (AOTA)......................................... 113
Statement of Witnesses:
Breyfogle, Jon W., Groom Law Group, Chartered, on Behalf of
the American Benefits Council.............................. 35
Prepared statement of.................................... 37
Carter, Rosalynn, former First Lady, Chair, Mental Health
Task Force, the Carter Center.............................. 17
Prepared statement of.................................... 19
Dilweg, Sean, Wisconsin Insurance Commissioner............... 54
Prepared statement of.................................... 56
Additional submissions:
Memorandum, dated May 23, 2007....................... 60
Letter from Washington State Insurance Commissioner
to Senator Cantwell................................ 64
Letter from Vermont State Insurance, Securities, and
Health Care Administrator to Senator Leahy......... 65
Letter from Connecticut State Insurance Commissioner
to Senator Dodd.................................... 67
Kennedy, Hon. Patrick J., a Representative in Congress from
the State of Rhode Island.................................. 6
Prepared statement of.................................... 9
Additional materials submitted for the record:
Letter from the American Academy of Pediatrics....... 12
Letter from Parity NOW Coalition..................... 12
Melek, Stephen P., actuary, Milliman, Inc.................... 42
Prepared statement of.................................... 44
Ramstad, Hon. Jim, a Representative in Congress from the
State of Minnesota......................................... 80
Prepared statement of.................................... 81
Smith, Amy, vice president, Mental Health Association of
Colorado................................................... 28
Prepared statement of.................................... 29
Trautwein, E. Neil, vice president and employee benefits
policy counsel, National Retail Federation................. 31
Prepared statement of.................................... 32
Wellstone, Paul David, Jr., chairman, Wellstone Action
Advisory Board............................................. 20
Prepared statement of.................................... 23
Congressional Research Service report, ``The Mental
Health Parity Act: A Legislative History,'' committee
Internet address....................................... 27
THE PAUL WELLSTONE MENTAL HEALTH AND
ADDICTION EQUITY ACT OF 2007 (H.R. 1424)
----------
Tuesday, July 10, 2007
U.S. House of Representatives
Subcommittee on Health, Employment, Labor and Pensions
Committee on Education and Labor
Washington, DC
----------
The subcommittee met, pursuant to call, at 3:02 p.m., in
room 2175, Rayburn House Office Building, Hon. Robert Andrews
[chairman of the subcommittee] presiding.
Present: Representatives Andrews, Kildee, McCarthy,
Loebsack, Hare, Courtney, Kline, McKeon, and Boustany.
Staff present: Aaron Albright, Press Secretary; Tylease
Alli, Hearing Clerk; Jody Calemine, Labor Policy Deputy
Director; Fran-Victoria Cox, Documents Clerk; Carlos Fenwick,
Policy Advisor for Subcommittee on Health, Employment, Labor
and Pensions; Michael Gaffin, Staff Assistant, Labor; Jeffrey
Hancuff, Staff Assistant, Labor; Brian Kennedy, General
Counsel; Thomas Kiley, Communications Director; Ann-Frances
Lambert, Administrative Assistant to Director of Education
Policy; Sara Lonardo, Staff Assistant; Joe Novotny, Chief
Clerk; Megan O'Reilly, Labor Policy Advisor; Michele Varnhagen,
Labor Policy Director; Cameron Coursen, Minority Assistant
Communications Director; Steve Forde, Minority Communications
Director; Ed Gilroy, Minority Director of Workforce Policy; Rob
Gregg, Minority Legislative Assistant; Richard Hoar, Minority
Professional Staff Member; Victor Klatt, Minority Staff
Director; Jim Paretti, Minority Workforce Policy Counsel; Molly
McLaughlin Salmi, Minority Deputy Director of Workforce Policy;
Ken Serafin, Minority Professional Staff Member; and Linda
Stevens, Minority Chief Clerk/Assistant to the General Counsel.
Chairman Andrews [presiding]. The subcommittee will be in
order. I would ask if our guests could take seats.
Ladies and gentlemen, good afternoon, and welcome to what
we hope will be an edifying and enlightening discussion this
afternoon of some very significant legislation that has been
introduced by our friend and colleague Congressman Kennedy from
Rhode Island and our friend and colleague Congressman Ramstad
from Minnesota.
The legislation bears the distinguished name of the late
Senator Paul Wellstone of the state of Minnesota, who worked
very hard for the issue of mental health parity. And that is
going to be the issue that we have in front of the subcommittee
this afternoon.
There are 44 million Americans who are dealing with some
kind of mental health issue in their lives. But only about one-
third of those Americans are receiving care from a qualified,
trained, prepared mental health professional for their issues.
When asked why the other nearly 30 million did not receive
care, an overwhelming majority of those individuals indicated
that their problem was related either to insurance or the cost
of insurance.
Eighty-seven percent of those who are not receiving mental
health services but who need them indicated that there were
issues with their insurance policy which precluded them from
getting that care.
Eighty-one percent of those who did not receive care
indicated that cost was a major consideration in their failure
to access the care that they need.
Now, 42 states have understood the problems with our
present insurance system, and the problem, I think, succinctly
can be summarized this way.
It is presently acceptable under the law in many cases for
an insurance policy to distinguish between a mental health
issue and a physical health issue.
So for example, a person who injures her knee may have a
$500 deductible toward dealing with the knee injury, and then
after that, the insurance kicks in and pays a substantial part
or all of what is yet to come.
And typically, the number of visits the person would need
to get their knee fit and trim is either unlimited or doesn't
have much of a limitation on it, so as many trips to the
surgeon as you need, as many trips to physical therapists as
you need. You get those trips until your knee is sound.
On the other hand, if a person suffers from clinical
depression, and he or she needs the care of a psychiatrist,
that person may find that there is a $5,000 deductible before
the insurance policy begins to pay most or all of the cost of
that psychiatric care.
A person may also find that if they are fortunate enough to
have the psychiatric care, there may be a very low limitation
on the number of visits that he or she is permitted to make in
a given year.
So instead of as many visits as you need, you may find that
you only get three or four or five of them, whether you are
fully healed and prepared to deal with the rest of your life or
not.
I think these distinctions are arbitrary and unwise, and
this is a view that has gained great currency around the
country. Forty-two states have enacted some form of mental
health parity law.
Now, these are a mixed bag. Some of these state laws
require specific mental health services. Others require a sort
of parity between the care of physical and mental health
issues.
And still others will deal with requirements that insurers
and employers must offer mental health coverage without any
requirement that the coverage actually be provided.
These are noble efforts by the states, and we are going to
hear from a distinguished state insurance commissioner from
Wisconsin later on the second panel about a very excellent
effort in his state.
I don't think they are sufficient, for three very important
reasons. The first important reason is that members of our
society who are part of ERISA plans--that is, health insurance
plans governed by the federal statute over which we have
jurisdiction--are not affected by or protected by these state
statutes.
So the 52 percent of our workforce that works for an
employer that is covered by an ERISA plan does not have the
benefit of the state law statutes in these 42 states.
Second, many of these statutes are limited in their reach.
They don't solve all the problems that we set out to solve.
And third, I believe that many of these statutes don't
particularly fit together well with other federal efforts to
deal with this problem.
So it is my view that we do need a strong and well-thought-
out federal standard to guarantee mental health parity. And I
am a supporter of the efforts of Congressman Kennedy and
Congressman Ramstad.
I understand there are issues, and we want to hear those
issues fully vetted today. But this effort by Congressman
Kennedy and Congressman Ramstad has very broad bipartisan
support.
It is by no means the initiative of the majority party. It
is the initiative of many like-minded members on both sides of
the aisle from around the country. And I believe that it takes
us in a direction where we can be successful.
The final point that I want to make before I yield to my
friend from Minnesota--very often when we try to expand
insurance coverage, we get into a debate about whether the cost
is worth it. And that is a debate we absolutely ought to have.
We are going to hear this afternoon from an actuarial
expert who will provide some compelling evidence that the
results from the field show that the cost of extending true
parity, which is what the Kennedy-Ramstad bill does--the cost
of extending true parity is very low.
The testimony will indicate that it is 0.6 percent, which
is quite a low number. And I would point out that that is a
gross number.
That is a number of the projected increase in the insurance
premium before one takes into account productivity gains,
reductions in absenteeism, other physical health gains that
would take place as a result of the implementation of such a
policy.
So I am very pleased that we are here this afternoon. We
are going to hear first from Congressman Kennedy.
I would note for the record that Congressman Ramstad, of
course, has been invited to appear to speak about his bill. His
plane is evidently delayed because of bad weather conditions.
But some people from Minnesota were able to soldier on and get
here nevertheless.
So I will at this point yield to my friend, the ranking
member.
[The statement of Mr. Andrews follows:]
Prepared Statement of Hon. Robert E. Andrews, Chairman, Subcommittee on
Health, Employment, Labor and Pensions
I welcome you to the HELP Subcommittee's hearing on the ``Paul
Wellstone Mental Health and Addiction Act of 2007.'' Today, we will
consider whether a federal law to provide mental health parity is
necessary to close the gap in coverage for individuals who live without
adequate coverage. The federal legislation we will focus our attention
on today is known as the ``Paul Wellstone Mental Health and Addiction
Equity Act'' (HR 1424), which was introduced by Congressmen Patrick
Kennedy and Jim Ramstad. This legislation is named in honor of the late
former Senator Paul Wellstone, who vigorously fought for mental health
parity.
I applaud both Patrick and Jim for their tireless efforts to help
individuals and families who struggle with mental illness everyday. I
also would like to take this opportunity to thank the former First Lady
Rosalynn Carter and David Wellstone, son of the late Senator for taking
time out to testify before our subcommittee today. Mrs. Carter and
David Wellstone have continuously served as a public voice for those
with mental illness.
Mental illness is serious and sometimes life-threatening and should
be treated just like a debilitating disease. Although having a mental
illness can be as serious as having a stroke, many private health
insurers often provide less coverage for mental illnesses than for
other medical conditions. Furthermore, health plans tend to impose
lower annual or lifetime dollar limits on mental health coverage, limit
the treatment of mental health illnesses by covering fewer hospital
days and outpatient office visits, and increase cost sharing for mental
health care by raising deductibles and co-payments.
With only one-third of the 44 million Americans who suffer from a
mental health disorder receiving treatment, it is imperative that
Congress act to provide adequate mental health coverage to these
individuals. Congressional action must produce legislation that is
cost-effective for our economy, will increase access to mental illness
treatment, provide meaningful benefits by defining the scope of the
benefits to be covered under a health plan, pose a nominal cost to
those employers who currently offer mental health coverage and that
will not preempt stronger state mental health parity laws.
I thank all the witnesses for contributing their time to today's
hearing and we look forward to hearing their testimony.
______
Mr. Kline. I thank you, Mr. Chairman. Some of us soldiered
on last night, so we were ahead of the weather.
I am sorry that my Minnesota colleague, Mr. Ramstad, isn't
here. I hope that he will be able to come sliding in from
Dulles or wherever his plane safely landed.
I want to thank you, Mr. Chairman, for holding this hearing
to hear about, learn about and discuss the Paul Wellstone
Mental Health and Addiction Equity Act of 2007, named, I would
point out, after the much-admired and beloved late senator from
Minnesota.
I am very pleased to see his son is here and will, in fact,
be a witness in the second panel. And I will just take this
opportunity to say what a great panel it is, and we will, of
course, include Mr. Kennedy sitting there all alone, waiting
for Jim to show up.
But the second panel--particularly distinguished witnesses
from the minority and majority side. And of course, we are
honored to have the former first lady with us here today.
Legislation which provides greater parity between the
health insurance coverage of mental and physical illness I
think has reached the point where most members of Congress
agree we need to go.
We are looking for ways to achieve that parity, and
tremendous strides have been made, I think, in the last months
and years in addressing the stigmas which sometimes have been
attached to mental illness and its treatment. Clearly, more
needs to be done.
However, there remains significant differences in how we
should approach this. The chairman mentioned some of those and
we will hear some of it today.
Although it is well-intentioned, this bill, and I would say
very well-intentioned, I have many concerns with the
legislation as it is in front of us today.
Initially, this bill constitutes an employer mandate. It
seems ironic that at the time many of my colleagues in the
majority profess to offer solutions to decrease the number of
uninsured--it is the number one item, I believe, on their
health care agenda--they are proposing issuing coverage
mandates that appear to do the exact opposite by making
coverage more costly and leading to less availability.
And I don't think we want to do that. So we want to explore
that here today.
Secondly, the legislation does not preempt state laws that
would provide greater consumer protections than those contained
in the federal legislation.
This means employers and plans could be subjected to
multiple state laws, thus defeating the purpose of federal
preemption of state laws and increasing plan complexity and
cost.
Other problems include the bill's broad definition of
mental health or substance-related disorders and its failure to
specifically protect a plan's ability to manage mental health
benefits and control costs.
Some of my colleagues in the Senate have introduced a
mental health parity bill. Senate Bill 558 takes a little bit
different approach.
It is a product of lengthy bipartisan negotiations between
patient advocates, mental health providers, business
organizations and insurers, and we will receive some
information about that bill today from one of our witnesses.
Under the circumstances, regardless of whether you think
the best answer is the Senate bill, the House bill or no bill,
today's testimony should prove helpful.
I urge my colleagues to seriously consider the testimony
provided today by all those, and certainly pay attention to the
testimony from those talking about the Senate bill.
And again, I want to thank the chairman for holding the
hearing and for our distinguished witnesses for joining us
today, and I look forward to the discussion.
[The statement of Mr. Kline follows:]
Prepared Statement of Hon. John Kline, Ranking Republican Member,
Subcommittee on Health, Employment, Labor, and Pensions
Good afternoon.
I'd like to thank Chairman Andrews for convening this afternoon's
hearing to discuss a House bill the affects the entire behavioral
health care system in this country.
I think legislation which provides greater parity between the
health insurance coverage of mental and physical illnesses is a point
on which all Members can agree. Tremendous strides have been made in
addressing stigmas attached to mental illness and its treatment, and
more needs to be done. However, there remain significant differences in
the approach over how to improve health insurance for mental health.
We are here today to examine H.R. 1424, the Paul Wellstone Mental
Health and Addiction Equity Act of 2007. Although it is well-
intentioned, I have many concerns with this legislation, as introduced.
Initially, this bill constitutes an employer mandate. It seems ironic
that, at the same time my colleagues in the majority profess to offer
solutions to decrease the number of the uninsured, which is the number
one item on their health care agenda, they also propose issuing
coverage mandates that appear to do the exact opposite by making
coverage more costly and leading to less availability.
Secondly, the legislation does not preempt state laws that would
provide greater consumer protections than those contained in the
federal legislation. This means employers and plans could be subjected
to multiple state laws, thus defeating the purpose of federal
preemption of state laws and increasing plan complexity and cost. Other
problems include the bill's broad definition of mental health or
substance-related disorders and its failure to specifically protect a
plan's ability to manage mental health benefits and control costs.
Some of my colleagues in the Senate have introduced a mental health
parity bill, Senate Bill 558. That bill is the product of lengthy
bipartisan negotiations between patient advocates, mental health
providers, business organizations, and insurers, and we will receive
detailed testimony regarding that bill.
Under the circumstances, regardless of whether you think the best
answer is the Senate bill, the House bill, or no bill, today's
testimony should prove helpful. I urge my colleagues to seriously
consider the testimony provided today, especially from those witnesses
who support the parity approach set forth in Senate bill 558, which
would reflect a more balanced approach to addressing this serious
issue.
I'd like to welcome our distinguished witnesses today, including
two of my colleagues, Patrick Kennedy and Jim Ramstad, who are here to
discuss their bill, The Paul Wellstone Mental Health and Addiction
Equity Act of 2007. I look forward to everyone's testimony.
______
Chairman Andrews. Thank you.
By unanimous consent, the statement of any other member who
wishes to have an opening statement will be entered into the
record, present or absent.
We will begin with our first panel, and it is a pleasure to
welcome, hopefully soon, both of our colleagues, but certainly
one of our colleagues.
Congressman Patrick J. Kennedy is serving his seventh term
in Congress as representative of the 1st District of Rhode
Island. Mr. Kennedy has received numerous awards for his
advocacy on behalf of the mentally ill, including the Society
for Neuroscience Public Service Award, the American
Psychoanalytic Association President's Award, the American
Psychiatric Association's Alliance Award, and the Depression
and Bipolar Support Alliance Paul Wellstone Mental Health
Award.
It is a pleasure to serve with you, Patrick, as a
colleague. We welcome you today, and we look forward to your
statement.
STATEMENT OF HON. PATRICK KENNEDY, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF RHODE ISLAND
Mr. Kennedy. Thank you, Chairman Andrews and Ranking Member
Kline. And to my distinguished colleagues, thank you all for
the opportunity to invite me to testify today.
And thank you for your commitment to ending insurance
coverage discrimination against those with mental illness like
myself.
Let me begin by saying I suffer from the disease of
alcoholism and addiction. I also suffer from bipolar disorder.
I have, through the course of my life, had periods of time
where I have had a mental obsession and physical compulsion to
drink and use drugs in order to cope with a mental anguish that
I had felt that today I no longer have to deal with through
drinking and drugging because I am a member of Congress and
have access to the Federal Employees Health Benefit Plan, which
has parity.
And what is before you today is a bill that will extend the
same treatment coverage that I have had as a member of Congress
to the rest of the American people.
So that as a member of Congress, the reason that I am able
to be here today as a fully productive citizen, as opposed to
someone who is still out in the society drinking and drugging
and unproductive, as opposed to someone who is at work, living
a full and productive life--the different is that I have
treatment.
And the difference between me and some other American who
doesn't have that treatment is that they don't have that
access.
And what we need to do today is have parity in this country
so that millions of Americans who are still out there suffering
from that same disease that I have, that physical illness--that
they can get the same coverage that I have and that we all have
as members of Congress, and so that they can live productive
lives.
And if they live productive lives, they can be contributing
members of society as I hope that I am a contributing member of
society.
I know I could never have imagined myself when I first ran
for office coming up here and saying I was an alcoholic and
addict.
I remember very clearly growing up in my family, whispering
in my household as my mother suffered tremendously from this
disease of alcoholism. It was a shame growing up to have this
disease because of the scourge and stigma in this country that
this disease has been.
But I think that it is coming out of the shadows now and
that this country has finally come to a reckoning that this is
no longer an issue of a moral failing.
No one can convince me, from looking at what this disease
has done to my mother, or what this disease has done to
millions of Americans like her that I have witnesses, let alone
what I have witnessed in my own personal life, that people have
chosen this life voluntarily.
No one voluntarily chooses to live the kind of sordid,
painful, destructive life that people who are alcoholics and
addicts or people who are depressed or people who are suffering
from schizophrenia or bipolar disorder--any number of mental
illnesses--obsessive-compulsive disorder--any one of those
illnesses--no one could convince me that that is a voluntary
choice on their part.
And essentially, that is what those on the other side of
this debate would have you believe, that this is a non-illness,
that this is something that is non-physical because if it were
non-physical, then they could control it.
And that is essentially what they would have you suppose,
because if you were to believe that, then there wouldn't be any
need for there to be insurance.
But we know otherwise. The insurance system cannot hide the
fact that brain science tells us otherwise. We have pictures.
Modern science shows us, these pictures that are clear as a
bell, that the brain is a physical organ.
And you cannot take a picture of the brain and look and say
that the insurance companies can cover brain diseases like
Parkinson's that affect the motor cortex and the basal ganglia
and the sensory cortex and the thalamus, and then other brain
diseases like depression, which affected the limbic cortex and
the hypothalamus and the frontal cortex and the hippocampus--
and they don't get covered.
And yet they are two centimeters or three centimeters away.
How can you justify 80 percent insurance coverage for one part
of the brain and 20 percent insurance coverage for two
centimeters away or zero insurance coverage for two centimeters
away? How in the world can you explain that?
Or you can say, ``Well, no, sorry,'' as Mr. Kline said,
``We want to have the Senate language for the second part of
the brain but we want the current system of health insurance of
the first part of the brain.'' It doesn't work. It is totally
unjustifiable.
Would you say the same to someone with cancer? Are you
going to play with someone's life who has cancer that way?
You take someone from your family who has the disease of
cancer or diabetes, and you exchange that person's life and put
in place mental illness and say that you are ready to bargain
their life away.
And answer that question. Then I will be happy to sit back
and let you move on with your argument. But until you can
honestly look me in the face and say that you are willing to
put in place and substitute a person with cancer for that
argument or diabetes with that argument or cardiovascular
disease with that argument, that argument is specious, because
otherwise it doesn't wash, frankly.
This is a civil rights issue at its core. No one asks to
have this disease. You are born with it. You have certain
triggers through your environment that set it off.
We are going to find all these things out in the years to
come through genomics and personal health medicine, and we are
going to have great revolutionary science help to solve many of
these problems.
But, Mr. Chairman and Ranking Member Kline, if we don't
move now, we are going to cost millions of Americans their
lives.
Thirty-four thousand Americans take their lives every year
to suicide. That is twice the rate of homicide.
Think of all the people that are killed by murder in this
country and think the fact that you multiply that two times,
and that is how many people successfully take their own lives.
That is a disgrace to this country.
Think about the fact that the largest mental health
institution in this country is our jail system. What an
indictment on this country.
And think about the fact that millions of Americans are not
living up to their full potential all because we have a
discriminatory insurance system that continues to say that
people are not living up to their full potential because we are
not acknowledging this illness.
I will say but for the work of Paul Wellstone and Rosalyn
Carter, the former first lady, who has been working on this
issue for decades, and for Jim Ramstad, we would not have come
as far as we have.
And I just want to say today I am standing on the shoulders
of giants. And Jim Ramstad is with us in spirit. He has been
absolutely--no better champion for this cause than Jim Ramstad.
And I am so honored to be his partner in this effort and a
fellow on the road to recovery.
And I also want to say to David Wellstone, who is here on
behalf of his father's legacy, what an honor it is to be
joining him. He has done such a fantastic job in carrying on
his dad's legacy.
And to the former first lady, she has dedicated her life to
this issue. And the fact that she has done so with such
compassion has been so moving to all of us. And I want to thank
her personally for all of her great work on this issue.
And for everybody today who is working on this issue I want
to thank them as well.
And thank you, Mr. Chairman, for the time.
[The statement of Mr. Kennedy follows:]
Prepared Statement of Hon. Patrick J. Kennedy, a Representative in
Congress From the State of Rhode Island
Chairman Andrews, Ranking Member Kline, and my distinguished
colleagues, thank you for inviting me to testify today, and,
especially, for your commitment to ending insurance discrimination.
And of course, I must single out my great friend and the strongest
champion for Americans with mental illnesses and addictions, Jim
Ramstad. For years he has led this fight, leaning into the stiff wind
of his own leadership without regard for the political consequences,
speaking up for what he knows is right. We all owe him a debt of
gratitude, nobody more than I. Jim, it has been an honor to stand with
you in these efforts, and a greater privilege to be your friend.
This issue is first and foremost one of fundamental fairness. Let
me tell you about Anna Westin. Anna Westin paid her health insurance
premiums just like everyone else. But when she got sick with anorexia
and needed her insurance coverage, she didn't get it. That is just not
fair. And it tragically cost Anna her life.
Why did Anna's insurance fail to pay for her care? Because of
stereotypes and stigma. There is no medical or policy rationale for
discriminating against mental health diagnoses.
In the attached exhibits, you can see the visual evidence that
these diseases are physiological brain disorders, diminishing the
brain's function just as heart disease diminishes the heart's function.
Some brain diseases, like Parkinson's, affect the motor cortex, the
basal ganglia, the sensory cortex, and the thalamus. Other brain
diseases, like depression, affect the limbic cortex, hypothalamus,
frontal cortex, and hippocampus.
We provide full coverage to treat certain structures of the brain,
but erect barriers to the treatment of other structures.
This discrimination is not only unjustifiable, it is enormously
costly. Representative Ramstad and I have traveled across this country
holding informal field hearings on this subject--fourteen in total.
We've heard from chiefs of police, like Sheriff Baca in Los Angeles
who says he runs the largest mental health provider in the United
States: the L.A. County Jail. According to the Justice Department, more
than half of inmates in jails and prisons in this country have symptoms
of a mental health problem. Two-thirds of arrestees test positive for
one of five illegal drugs at the time of arrest, according to the
National Institutes of Health.
That's a cost of our insurance discrimination.
We've heard from hospital presidents and emergency room doctors,
like Dr. Victor Pincus. He said that 80% of the trauma admissions at
Rhode Island Hospital, a level-one trauma center, were alcohol and drug
related. Eighty percent.
The physical health care costs go beyond the emergency room.
Research shows, for example, that a person with depression is four
times more likely to have a heart attack than a person with no history
of depression. Health care use and health care costs are up to twice as
high among diabetes and heart disease patients with co-morbid
depression, compared to those without depression, even when accounting
for other factors such as age, gender, and other illnesses. Not
surprisingly then, one study found that limiting employer-sponsored
specialty behavioral health services increased the direct medical costs
of beneficiaries who used behavioral healthcare services by as much as
37%.
These are costs of our insurance discrimination.
In our field hearings, we've heard from enlightened business
leaders and insurance executives who understand that skimping on mental
health and addiction treatment only winds up driving up other costs.
That's why Bob Hulsey from the Williams Companies in Tulsa, Rep.
Sullivan's district, said of parity, ``I absolutely believe that it
helps the business.''
Rick Calhoun, an executive in the Denver office of CB Richard
Ellis, a Fortune 500 company, made a similar point. Mr. Calhoun said
that the cost of treating mental illness is 50% of the cost of not
treating it. As he said, ``This is a no-brainer. How could we not cover
it?''
Untreated mental health and addiction cost employers and society
hundreds of billions of dollars in lost productivity. The World Health
Organization has found that these diseases are far and away the most
disabling diseases, accounting for more than a fifth of all lost days
of productive life. Depressed workers miss 5.6 hours per week of
productivity due to absenteeism and presenteeism, compared to 1.5 hours
for non-depressed workers. Alcohol-related illness and premature death
cost over $129.5 billion in lost productivity per year.
These are costs of our insurance discrimination.
All of these costs are preventable, and wasteful. But none are as
tragic as the individual costs. We heard testimony from anguished
parents like Kitty Westin and Tom O'Clair, who had to bury their
children whose mental illnesses and addictions went untreated.
We heard testimony from Steve Winter. He described eating breakfast
as a teenager, getting a funny feeling in his chest, and looking up
seeing his mother holding a gun. ``I shot you, and I'm going to shoot
your sister and myself so we can all be in heaven together,'' she said.
Steve's mother was off her anti-psychotic medications at that time
due to insurance problems, and now Steve is spending the rest of his
life in a wheelchair as a result, having endured a million dollars
worth of surgeries, treatments, and medical equipment.
So many Americans have lost their dreams, lost years, and even lost
their lives--unnecessarily. You'll hear Amy Smith's powerful testimony
in a few moments about the difference treatment can make.
In Palo Alto we met Kevin Hines. He is a gregarious, outgoing
person and is engaged to be married this summer. In 2001 he jumped off
the Golden Gate Bridge, one of very few to survive that fall. Thirty-
thousand people succeed where Kevin fortunately failed, and take their
own lives each year. How many of them would, like Kevin, be starting
families, contributing to their communities, holding jobs, and
realizing their potential--if only they had access to treatment?
Mr. Chairman, I'm happy to provide the transcripts from the field
hearings I have referenced to be included in the record of this
hearing, as well as our report, ``Ending Insurance Discrimination:
Fairness and Equality for Americans with Mental Health and Addictive
Disorders.''
We will hear arguments that, even if worthwhile, equalizing
benefits is just too costly. The truth, however, is that the cost of
doing the right thing and equalizing benefits between mental health and
addiction care on the one hand and other physical illnesses on the
other hand is negligible. This is not speculation.
In 2001, we brought equity to mental health and addiction care in
the Federal Employees Health Benefits Program (FEHBP), which covers 9
million lives, including ours as Members of Congress. A detailed, peer-
reviewed analysis found that implementing parity did not raise mental
health and addiction treatment costs in the FEHBP. Since our bill
specifically references the FEHBP to define the scope of our bill, this
analysis provides strong evidence that our legislation will similarly
have negligible impact on costs. This finding is consistent with
virtually every study of state parity laws as well.
But frankly, the very fact that we need to debate how much it costs
to end insurance discrimination is offensive. Nobody is asked to
justify the cost-effectiveness of care for diabetes or heart disease or
cancer. Tell Kitty Westin, Tom O'Clair, Steve Winter, Amy Smith, or
Kevin Hines, or the millions of others who live with these diseases
that to keep health care costs down for everyone else, they will not
have to pay with their lives. Why them?
People might say that there is a component of personal
responsibility here, especially with addiction. That's true. I'm
working hard every day at my recovery, and it's reasonable to ask of
me. But it's also true that we don't deny insurance coverage to people
who are genetically predisposed to high cholesterol and eat fatty
foods. We don't deny insurance coverage to diabetics who fail to
control their blood sugar.
At the end of the day, this is about human dignity and whether we
deliver on the promise of equal opportunity that is at the heart of
what it means to be American. Nobody chooses to be born with particular
genetics and anatomy, any more than they choose to be born with a
particular skin color or gender. And nobody should be denied
opportunities on the basis of such immutable characteristics. Anybody
who pays their health insurance premiums is entitled to expect their
plan to be there when they get sick, whether the disease is in their
heart, their kidneys, or their brain.
Mr. Chairman, we just celebrated July 4th and our nation's
Declaration of Independence. Unlike any other country in the world,
this one was founded on principles--the ideas of equality and freedom
and opportunity. The history of America is the history of a country
striving to live up to those self-evident truths. In pursuit of those
values we've fought a civil war, chipped away at glass ceilings,
expanded the vote, renounced immigration exclusion laws, and recognized
that disabilities need not be barriers. Led by one of our own
colleagues, a generation of peaceful warriors forced America to look in
a mirror and ask itself whether its actions matched its promise, and
they changed history.
It is time, once again, to ask that question: are our actions
matching our promises? And once asked, the answer is clear. Jim and I
know, personally, the power of treatment and recovery. We are able to
serve in Congress because we have been given the opportunity to manage
our chronic diseases. Every American deserves the same chance to
succeed or fail on the basis of talent and industriousness. That's the
American Dream, and it shouldn't be rationed by diagnosis.
Thank you.
______
[Additional material submitted by Mr. Kennedy follows:]
American Academy of Pediatrics,
July 3, 2007.
Hon. Patrick Kennedy and Hon. Jim Ramstad,
U.S. House of Representatives, Washington, DC.
Dear Representatives Kennedy and Ramstad: On behalf of the 60,000
primary care pediatricians, pediatric medical subspecialists, and
pediatric surgical specialists of the American Academy of Pediatrics, I
write today to express our support for H.R. 1424, the Paul Wellstone
Mental Health and Addiction Equity Act of 2007. This bill will take a
significant step towards eliminating obstacles to mental health and
substance abuse services for children.
The mental health needs of children and adolescents are increasing.
At least 13 million children in American are in need of mental or
substance abuse care. Yet while growing evidence is demonstrating the
effectiveness of specific mental health services, benefit packages that
offer limited mental health care are decreasing access to this vital
care. Early mental health intervention and care puts children on a firm
footing for adulthood and reduces the need for more expensive care
later in life.
H.R. 1424 builds on the goal of parity legislation passed in 1996
by closing loopholes that allow employers to offer unequal mental
health coverage in terms of various out-of-pocket expenses, co-
payments, and treatment frequency limitations. The legislation also
appropriately requires parity in terms of substance abuse treatment.
H.R. 1424 will ensure that mental health care is recognized as an
essential component of child health.
Thank you for your strong commitment to the mental health of
children and all Americans. We look forward to working with you to pass
this crucial legislation.
Sincerely,
Jay E. Berkelhamer, M.D.,
FAAP President.
______
Parity NOW Coalition,
July 6, 2007.
Hon. Patrick Kennedy and Hon. Jim Ramstad,
U.S. House of Representatives, Washington, DC.
Dear Representative Kennedy and Representative Ramstad: The
undersigned organizations applaud you for your commitment to mental
health and addiction parity legislation. We wish to thank you and your
staffs for the countless hours you have dedicated to this bill thus far
and look forward to working with you towards enacting the Paul
Wellstone Mental Health and Addiction Equity Act of 2007 into law.
We hereby lend our formal support to this invaluable piece of
legislation.
NATIONAL ORGANIZATIONS
AIDs Action Council
American Academy of Child and Adolescent Psychiatry
American Academy of Neurology
American Academy of Pediatrics
American Association for Geriatric Psychiatry
American Association for Marriage and Family Therapy
American Association for the Treatment of Opioid Dependence
American Association of Children's Residential Centers
American Association of Pastoral Counselors
American Association of Suicidology
American Counseling Association
American Federation of Teachers
American Foundation for Suicide Prevention
American Group Psychotherapy Association
American Hospital Association
American Medical Association
American Mental Health Counselors Association
American Music Therapy Association
American Occupational Therapy Association
American Psychoanalytic Association
American Probation and Parole Association
American Public Health Association
American School Health Association
American Society of Addiction Medicine
Anna Westin Foundation
Anxiety Disorders Association of America
Association for the Advancement of Psychology
Association for Ambulatory Behavioral Healthcare
Association of Jewish Family & Children's Agencies
Association of Recovery Schools
Association of University Centers on Disabilities
Bazelon Center for Mental Health Law
Betty Ford Center
Bradford Health Services
Caron Treatment Centers
Center for Clinical Social Work
Center for Science in the Public Interest
Children and Adults with Attention-Deficit/Hyperactivity Disorder
Child Welfare League of America
Clinical Social Work Association
Clinical Social Work Guild 49, OPEIU
Community Anti-Drug Coalitions of America (CADCA)
Depression and Bipolar Support Alliance
Easter Seals
Eating Disorders Coalition for Research, Policy and Action
Faces and Voices of Recovery
Families USA
Family Voices
Hazelden Foundation
Institute for the Advancement of Social Work Research
Johnson Institute
Kids Project
Legal Action Center
Mental Health America
NAADAC--The Association for Addiction Professionals
National Alliance of Methadone Advocates
National Alliance to End Homelessness
National Association for Children of Alcoholics
National Association of Addiction Treatment Providers (NAATP)
National Association of Anorexia Nervosa and Associated Disorders--ANAD
National Association of County and City Health Officials
National Association of Mental Health Planning & Advisory Councils
National Association of School Psychologists
National Association of Social Workers
National Association of State Directors of Special Education
National Association on Alcohol, Drugs and Disability, Inc.
National Council for Community Behavioral Healthcare
National Council on Alcoholism and Drug Dependence (NCADD)
National Development and Research Institutes, Inc. (NDRI)
National Educational Alliance for Borderline Personality Disorder
National Education Association
National Mental Health Awareness Campaign
National Recreation and Park Association
National Research Center for Women & Families
Obsessive Compulsive Foundation
Partnership for a Drug-Free America
School Social Work Association of America
Society for Research on Child Development
Suicide Prevention Action Network USA
State Associations of Addiction Services (SAAS)
Therapeutic Communities of America
United Jewish Community
United Methodist Church--General Board of Church and Society
U.S. Psychiatric Rehabilitation Association
Wellstone Action
LOCAL AND STATE ORGANIZATIONS
622 Communities Partnership, Inc., Minnesota Affiliate of the National
Council on Alcoholism and Drug Dependence, Inc
Addiction Recovery Institute
Addiction Resource Council
Advocates for Recovery
Alabama Voices for Recovery & Drug Education Council
Alcohol and Addictions Resource Center
Alcohol and Drug Council of North Carolina
Alcoholism Council of New York
Alcoholism Council of the Cincinnati Area, NCADD
Alliance for Recovery
Alliance for Substance Abuse Prevention, Inc.
Arizona Council of Human Service Providers
Aspire of Western New York, Inc.
Barbara Schneider Foundation
BRiDGEs, Madison County Council on Alcoholism and Substance Abuse, Inc.
Bucks County Council on Alcoholism and Drug Dependence
California Association of Addiction Recovery Resources
California Association of Alcohol and Drug Program Executives
Chautauqua Alcoholism & Substance Abuse Council (CASAC)
Colorado Association of Alcohol & Drug Service Providers
Connecticut Association of Non-Profits
Council on Addictions of New York State (CANYS) Inc.
Council on Alcohol and Drug Abuse for Greater New Orleans
Council on Alcoholism and Drug Abuse of Sullivan County, Inc.
Council on Substance Abuse--NCADD
County Alcohol and Drug Program Administrators Association of
California
DePaul's National Council on Alcoholism and Drug Dependence--Rochester
Area
Detroit Recovery Project
Dora Weiner Foundation
Drug and Alcohol Service Providers Organization of Pennsylvania
Employee & Family Resources, Inc.
Erie County Council for the Prevention of Alcohol and Substance Abuse,
Inc.
Exponents
Feeling Blue Suicide Prevention Center
Focus on Community
Faces and Voices of Recovery--Westchester
Friends of Delaware and Otsego Counties, Inc.
Friends of Recovery--Monroe County
Friends of Recovery--Vermont
Gateway Foundation
Georgia Council on Substance Abuse
GLAD House, Inc.
Greater Flint Project Vox
Greater Macomb Project Vox
Harbor Hall, Inc.
Hope4you
Illinois Alcoholism and Drug Dependence Association
Iowa Substance Abuse Program Directors' Association
Kingdom Recovery Center
Long Island Council on Alcoholism and Drug Dependence, Inc.
Maine Alliance for Addiction Recovery (MAAR)
Maine Association of Substance Abuse Programs
Maryland Chapter of the National Council on Alcoholism and Drug
Dependence
McHenry County Mental Health Board (IL)
McShin Foundation
Methadone Support Org.
Michigan Association of License Substance Abuse Organizations
Missouri Recovery Network
M-Power, Inc.
Nantucket Alliance for Substance Abuse Prevention, Inc.
Nantucket Behavioral Health
National Council on Alcoholism and Drug Dependence of the San Fernando
Valley
National Council on Alcoholism and Drug Abuse--St. Louis Area
National Council on Alcoholism and Drug Dependence of Greater Kansas
City
National Council on Alcoholism and Drug Dependence of Northwest Florida
National Council on Alcoholism and Drug Dependence of the South Bay
National Council on Alcoholism and Drug Dependence, Greater Detroit
Area
National Council on Alcoholism and Drug Dependence, New Jersey
National Council on Alcoholism and Drug Dependence, Sacramento Region
Affiliate
National Council on Alcoholism and Drug Dependence--Phoenix
National Council on Alcoholism/Lansing Regional Area, Inc
NCADD in the Silicon Valley
NCADD of Middlesex County, Inc.
NCADD Tulare County, Inc.
Nebraska Association of Behavioral Health Organizations
New England National Alliance of Methadone Advocates
New Hampshire Alcohol & Other Drug Service Providers Association
NJ Advocates--NJ Chapter of NAMA
Northern California Chapter of the National Alliance of Methadone
Advocates
Northern Michigan Project Vox
Ohio Citizen Advocates for Chemical Dependency Prevention & Treatment
Ohio Council of Behavioral Healthcare Providers
Oklahoma Faces and Voices of Recovery
PAR--People Advocating Recovery
Parent-To-Parent, Inc.
Pennsylvania Recovery Organization--Achieving Community Together (PRO-
ACT)
Recovery Center
Recovery Consultants of Atlanta, Inc.
Recovery Resources
Rockland Council on Alcoholism and Other Drug Dependence
Samaritan Village
Substance Abuse and Addiction Recovery Alliance (SAARA) of Virginia
Suicide Awareness Voice of Education
The Council on Substance Abuse & Mental Health
The Maine Association of Substance Abuse Programs
The Maine Substance Abuse Foundation
The RASE Project/Buprenorphine Coordinator Program
The Second Road, Inc.
The Transformation Center
Turning Point Recovery Center
Upstate Cerebral Palsy (NY)
Virginia Association of Alcohol and Drug Counselors
Virginia Association of Drug and Alcohol Programs
Volunteers of America Alaska
______
Chairman Andrews. Thank you very much, Mr. Kennedy.
I think the members of the panel have agreed that we want
to get to the second panel of witnesses. If anyone would like
to ask Mr. Kennedy a question, they are welcome.
Mr. Loebsack?
Mr. Loebsack. I just want to make a quick comment. I
thanked Patrick personally in the cloakroom after he was on
Larry King for what he has been doing.
And I have some personal experience with mental illness,
especially with my mother.
And I want to thank you again publicly for all you are
doing. Thank you, Patrick.
Chairman Andrews. Thank you.
Patrick, what I would also like to add to that--most of us,
all of us are privileged to have the opportunity to serve our
country as legislators, to do what we think is right for our
country by virtue of the office we hold.
It is a rare gift to be able to help because of your
personal experience and your personal commitment, and you are
certainly doing that today. We admire you for it. We respect
you for it. And we thank you for being with us today. Thank
you.
We are going to move on to the second panel. If Mr. Ramstad
is able to make it, we will certainly have his testimony when
he arrives.
I would ask if the second panel could come forward. I am
going to begin reading their biographies as they come forward
so that we can get started as they are settled.
We are deeply honored to have with us the former first lady
of the United States, Ms. Rosalyn Carter. In addition to her
exemplary service as our nation's first lady, Mrs. Carter
created and chairs the Carter Center's Mental Health Task
Force, an advisory board of experts, consumers and advocates
promoting positive change in the mental health field. Each
year, Mrs. Carter hosts the Rosalyn Carter Symposium on Mental
Health Policy, bringing together leaders of the nation's mental
health organizations to address critical issues. During the
Carter administration, Mrs. Carter became active honorary chair
of the President's Commission on Mental Health, which resulted
in the passage of the Mental Health Systems Act of 1980.
Welcome, Mrs. Carter. It is a great privilege to have you
with us today.
Paul David Wellstone, Jr., is the son of the late Senator
Paul Wellstone. He is the co-chair of the Wellstone Action
Advisory Board and contributes to advocacy efforts on behalf of
mental health and domestic violence. He is the co-founder of
Wellstone Action, a national center for training and leadership
development, as well as the founding partner of Family Place
Home Builders, a business dedicated to building affordable
housing. David graduated from Hamline University in 1987.
It is great to have you with us, David.
Amy Smith, welcome.
Amy is the vice president of recovery programs for Mental
Health America of Colorado and is the director of Wellness and
Education Coalition and Advocacy Network of Colorado, which
acts as a consumer network and conducts the Colorado Leadership
Academy, a week-long advocacy training for consumers. Ms. Smith
has been with WECAN since its inception in 2003.
Welcome, Ms. Smith. It is great to have you with us.
Neil Trautwein is the vice president and employee benefits
policy counsel for the National Retail Federation. He currently
chairs the Coalition on Catastrophic and Chronic Health Care
Costs and co-chairs the Consumer Directed Health Care
Conference. He received his B.A. in political science from the
University of Louisville and his J.D. from the George
Washington University.
Welcome, Mr. Trautwein.
Jon Breyfogle is currently executive principal of the Groom
Law Group, where he has worked since 1992. And Jon has been a
frequent witness before our committee, both this subcommittee
and the full committee. Previously, he served as senior
legislative officer at the Department of Labor and as special
assistant to the executive director of the Pension Benefit
Guaranty Corporation. He received his bachelor's from the
University of Cincinnati, a master's in public affairs from
Indiana University, and a J.D. from the George Mason
University.
Jon, welcome back. It is great to have you with us.
Steven Melek has been a principal and consulting actuary
with Milliman since 1990. He has worked extensively in the
behavioral health care field and specializes in health care
product development, management, and financial analyses. He has
chaired and served on various Societies of Actuaries and the
American Academy of Actuaries task forces and working groups,
most of which have been focused on behavioral health care
issues. He has a B.A. in mathematics from the Illinois
Institute of Technology.
Welcome, Mr. Melek.
And finally, Sean Dilweg is the commissioner of insurance
for the state of Wisconsin. Prior to his appointment in 2007,
Mr. Dilweg served as the executive assistant to the secretary
of the Wisconsin Department of Administration, from 2003 to
2006. Previously, he worked as director of policy analysis at
Essie Consulting Group, a major Madison consulting and lobbying
firm, from 2000 to 2003. He holds a master's in public
administration from the University of Wisconsin and a
bachelor's in English from Lawrence University in Appleton.
This is a very distinguished panel, and we are pleased that
everyone gave us their time.
For the record, the written statements that each of you has
prepared will be submitted by unanimous consent to the hearing
record and will be there in its entirety.
We do ask that people try to summarize their oral statement
in about 5 minutes. There is a light box in front of you. When
the green light is on, you are in your 5-minute period. When
the yellow light goes on, it means you have a minute left. And
when the red light goes on, we would ask you to sum up and stop
so we can get to questions.
There is, however, a narrowly drawn exception for former
first ladies of the United States of America. And so if Mrs.
Reagan or Mrs. Ford or Senator Clinton--I suppose she would
also fit the exception--are welcome.
And, Mrs. Carter, please take as much time as you would
need so you can--you have graced us with your presence. We
would welcome you. We would start with you.
STATEMENT OF ROSALYNN CARTER, FORMER FIRST LADY AND CHAIR OF
THE MENTAL HEALTH TASK FORCE, THE CARTER CENTER
Mrs. Carter. Thank you for saying that. I was worried about
my remarks.
Mr. Chairman and members of the subcommittee, thank you for
the opportunity to speak to you this afternoon about this
legislation that is so important to so many people, millions in
our country, parity in insurance.
I have been working in the mental health field for--I don't
like to say it because it ages me, but for over 35 years. That
is a long time.
When I began, no one understood the brain or how to treat
mental illnesses. Today, everything has changed, everything
except the stigma, which still holds back progress in the
field.
But today, because of research and our new knowledge of the
brain, mental illnesses can be diagnosed. They can be treated
effectively. And the overwhelming majority of people living
with these diseases can lead normal lives, being contributing
citizens in our communities.
Today I join many individuals and hundreds of national
organizations calling for an end to the fundamental
stigmatizing inequity of providing far more limited insurance
coverage for mental health care than for treatment of any other
illnesses.
And again, I join forces with my friend Betty Ford in
urging prompt action on this important issue. Betty and I have
lobbied many times for this legislation and for care.
I have now a very good mental health program at the Carter
Center. Annually, we bring together leaders to take action on a
major mental health issue. We have focused many times on stigma
and discrimination and the importance of ensuring adequate
equitable coverage for people with mental illnesses.
To me, it is unconscionable in our country and morally
unacceptable to treat at least 20 percent of our population as
though they were not worthy of care.
We preach human rights and civil rights and yet we let
people suffer because of an illness they did not ask for and
for which there is treatment.
Then we pay the price for this folly in homelessness, lives
lost, families torn apart, loss of productivity, the cost of
treatment in our prisons and jails. And I could go on.
I have always believed that if insurance covered mental
illnesses it would be all right to have them. This may be the
reason stigma has remained so pervasive, because these
illnesses are treated differently from other health conditions.
All mental illnesses are potentially devastating. In my 35
years, I have seen so many advances in knowledge about the
brain and improvements in treatment.
I urge the subcommittee and sponsors to ensure coverage of
all mental illnesses as defined by the DSM-IV, instead of
treating some conditions as higher priority over others.
We had an intern at the Carter Center, for instance, this
past spring who suffered from obsessive-compulsive disorder and
depression. And when she was in high school, she once spent 2
solid weeks in her house, not able to leave or to be with her
friends.
I am happy to say that she received treatment, is a college
graduate with Phi Beta Kappa honors and just got a job here in
Washington with the Ad Council.
Without resources and support, she could still be sick and
shut in her home, which is what happens to so many who do not
get the help they need, because they can't afford to pay for
services. Our country loses all the many contributions of these
wonderful people.
Through the research of people like Howard Goldman and
Richard Frank, we know that parity in insurance benefits for
behavioral health care has no significant increase in total
cost when coupled with management of care.
We also know this from a number of enlightened companies
such as AT&T, Delta Air Lines, Eastman Kodak, General Motors
and IBM, and others, which have provided comprehensive coverage
for their employees.
Tom Johnson is one of my good friends. He is the former
publisher of the Los Angeles Times and former CEO of CNN, and
he has struggled with depression.
He and two other prominent CEOs in the Atlanta community
who have experienced depression have had an enormous impact on
mental health benefits offered by businesses in the Atlanta
area. I am really so pleased about that.
In the last few years, there have been several major
reports released--the first ever surgeon general's report on
mental health, President Bush's new Freedom Commission on
Mental Health, and the Institute of Medicine, including mental
and substance-use conditions, in a series of reports on the
quality of American health care.
All of the reports reinforce the statement that effective
treatments are available but that most people who need them do
not get them.
The nation has learned a lot about the importance of mental
health issues through Hurricane Katrina and the needs of our
returning soldiers and National Guard troops.
We support our troops in the field, and it is critical that
we continue to support them when they come home.
One other issue: Many states have moved ahead with parity.
These have been long-fought battles, with some states managing
wonderful successes. It is so important that any federal
legislation not preempt any of these gains while we finally
have mental health parity legislation in sight.
This committee has worked long and hard to bring this
legislation forward. It is an example of what can be
accomplished with strong bipartisan support.
When this legislation is passed, our citizens will be
healthier and our nation will be stronger, more resilient and
more productive.
On behalf of the millions of people affected by mental
illness and substance-use disorders, I applaud your efforts.
The benefits to our nation will be enormous. Thank you.
[The statement of Mrs. Carter follows:]
Prepared Statement of Rosalynn Carter, Former First Lady, Chair, Mental
Health Task Force, the Carter Center
Mr. Chairman and members of the subcommittee, thank you for the
opportunity to speak to you regarding legislation that will profoundly
impact the lives of so many Americans.
I have been working on mental health issues for more than 35 years.
When I began no one understood the brain or how to treat mental
illnesses. Today everything has changed--except stigma, of course,
which holds back progress in the field.
Today because of research and our new knowledge of the brain,
mental illnesses can be diagnosed and treated effectively, and the
overwhelming majority of those affected can lead normal lives--being
contributing citizens in our communities.
I am here today, joining many individuals and hundreds of national
organizations calling for an end to the fundamental, stigmatizing
inequity of providing far more limited insurance coverage for mental
health care than for treatment of any other illnesses. Again I join
forces with my friend Betty Ford in urging action on this important
issue.
Jimmy and I founded The Carter Center 25 years ago, and I have a
very good Mental Health Program there. Annually we bring together
leaders to take action on major mental health issues of concern to the
nation. We have focused many times on stigma and discrimination and the
importance of ensuring adequate, equitable coverage for people with
mental illnesses.
To me, it is unconscionable in our country and morally unacceptable
to treat 20 percent of our population (1 in every 5 people in our
country will experience a mental illness this year) as though they were
not worthy of care. We preach human rights and civil rights and yet we
let people suffer because of an illness they didn't ask for and for
which there is sound treatment. Then we pay the price for this folly in
homelessness, lives lost, families torn apart, loss of productivity,
and the costs of treatment in our prisons and jails.
I have always believed that if insurance covered mental illnesses,
it would be all right to have them. This may be why the stigma has
remained so pervasive--Because these illnesses are treated differently
from other health conditions.
All mental illnesses are potentially devastating. During these 35
years, I have seen so many advances in our knowledge about the brain
and improvements in treatment. I urge the subcommittee and sponsors to
insure coverage of ALL mental illnesses as defined by the DSM-IV
(Diagnostic and Statistical Manual of Mental Disorders Fourth Edition),
instead of treating some conditions as a higher priority over others.
We had an intern at The Carter Center this spring, for example, who
has Obsessive Compulsive Disorder and depression. While she was in high
school, she once spent two solid weeks in her house, unable to leave or
be with her friends. I am happy to say that she received treatment, is
a college graduate with Phi Beta Kappa honors, and just got a job here
in Washington, DC. Without resources and support, she could still be
sick and shut in her home, which is what happens to so many who do not
get the help they need because they lack the ability to pay for
services. We as a country lose all the many contributions of these
wonderful people.
Through the research of people like Howard Goldman and Richard
Frank, we know that parity in insurance benefits for behavioral health
care has no significant increase in total costs when coupled with
management of care. We also know that a number of enlightened companies
such as AT&T, Delta Air Lines, Eastman Kodak, General Motors, and IBM
have provided comprehensive coverage for their employees. (Report to
the Office of Personnel Management by the Washington Business Group on
Health)
I have the pleasure of being friends with Tom Johnson, the former
publisher of the Los Angeles Times and former CEO of CNN and a person
who has struggled with depression. He has been interested in the mental
health benefits offered by employers in Atlanta. He and two other
prominent CEOs in the Atlanta community have had an enormous impact on
businesses in the area.
Since the mental health commission we held during Jimmy's
presidency, there have been several major reports released including
the first ever Surgeon General's Report on Mental Health, President
Bush's New Freedom Commission on Mental Health, and The Institute of
Medicine's inclusion of mental and substance use conditions in its
series of reports on the quality of American health care. All of the
reports reinforce the statement that effective treatments are
available, but most people who need them do not get them.
The whole nation has learned a lot about the importance of mental
health issues through the events of Hurricane Katrina and the needs of
our returning soldiers and National Guard troops. We support our troops
in the field, and it is critical that we continue to support them when
they come home.
Finally, I would like to comment on the number of states that have
moved ahead with parity. These have been long-fought battles with some
states managing wonderful successes. It is so important that any
federal legislation not preempt any of these gains.
After waiting for 15 years, we finally have mental health parity
legislation in sight. This subcommittee has worked long and hard to
bring forward this legislation, and it is an example of what we can
accomplish together with strong bipartisan support. If this legislation
is passed, many of our citizens will be healthier, and our nation will
be stronger, more resilient, and more productive.
On behalf of the millions of people affected by mental illnesses, I
applaud your efforts to pass the mental health parity legislation. I
know the work has been hard, but the benefits to our nation will be
enormous.
______
Chairman Andrews. Mrs. Carter, thank you very much for your
statement and for your presence here today.
Mr. Wellstone, welcome.
STATEMENT OF PAUL DAVID WELLSTONE, JR., CHAIRMAN, WELLSTONE
ACTION ADVISORY BOARD
Mr. Wellstone. Thank you very much.
Mr. Chairman and members of the subcommittee, I want to
thank you for the opportunity to speak this afternoon on
legislation that addresses an extremely critical health issue
facing millions of Americans, parity for the treatment of
mental illness and addiction.
This legislation is very close to my heart, and I want to
thank Congressman Kennedy and Congressman Ramstad, my good
friend who is not here, for honoring my father's legacy in
naming this bill.
My brother and I founded Wellstone Action to carry on my
father's work. And through the Wellstone Action organization,
thousands of people are being trained each year to develop
grassroots skills in organizing and leadership.
But nothing represents my father's passion and commitment
more than his work to end the discrimination against those who
suffer from mental illness and addiction.
Please accept the gratitude of my family and that of
Wellstone Action for this tribute to my father.
I also want to thank Mrs. Carter for her many years of
leadership on this issue and many others related to mental
illness.
You and my father often worked together, and he was always,
always very grateful for your support and leadership.
I have been coming to Washington frequently to speak in
support of this legislation, but my father started this work
years ago.
Many of you are familiar with the milestones in the long
history of the fight for parity--the 1996 federal law, the 1999
executive order that gave federal employees mental health and
addiction parity benefits, the many successes of grassroots
advocates to strengthen state parity laws, the times that
Congress came very close to passing the expansion of the
federal law, and the endorsement by President Bush in 2002.
For my father, these milestones were very, very personal.
His dedication began when he witnessed the terrible conditions
in psychiatric institutions where his own brother, my uncle,
was hospitalized in the 1950s.
These conditions and the eventual catastrophic financial
toll endured by my grandparents inspired my father to do
everything he could to make things right for those in similar
circumstances.
The legislation that my father and Senator Domenici passed
in 1996 was groundbreaking, for it established in law an
important first principle of parity, that those with mental
illness should not be discriminated against in insurance
coverage.
But my father knew that that was not enough, and he was
never satisfied with the compromises that were made at that
time.
That is why he immediately began the fight for a more
comprehensive federal parity law, one that would include
addiction parity and that would close the loophole that the
insurance industry had immediately started using to reduce
benefits.
His efforts over the years came close to success several
times, including once during his last term in office. But
despite promises then and promises made after he died, the
federal parity law has not yet passed.
This law is long overdue, and that is why we are here
today. The bill has been negotiated for years, and important
and fair compromises and protections are in place in the
proposed health legislation that is the subject of this hearing
today.
It is time to move forward, for while we wait, people are
suffering and dying from lack of care.
The House bill has critically important provisions that
will improve care, and I want to take just a couple of minutes
to mention them.
The House legislation recognizes the essential role of
scientific and medical knowledge in ensuring high-quality
diagnosis and treatment by requiring the widely accepted DSM as
the basis for coverage.
Without this requirement, insurers and employers could
decide, without the benefit of science of medical expertise,
which mental illness or addiction diagnosis should be covered.
I applaud the efforts of the House sponsors to stand firm
in its effort to be clear about this requirement. It is
important to close this potential loophole, one that could
allow discrimination by diagnoses, something that has no place
anywhere, but least of all in a parity bill.
The House bill has important protections for state parity
laws. In contrast to a current effort to preempt stronger state
parity laws, my father advocated for the inclusion of
protective language to prevent this preemption in bills he
sponsored.
In keeping with the principle of protecting state law, the
House legislation includes important language, and I urge you
to maintain those protections.
We know from numerous reports, including one today, that
the cost for parity is low, and we are going to hear that. Once
cost is set aside as a reason for denial of parity, what is
left is stigma and discrimination.
Fortunately for our country, there are courageous people
who fight against this discrimination, people like my friend
Kitty Westin, who lost her daughter Anna to an eating disorder.
Kitty's family faced this kind of discrimination but went
on to help change the health care system in Minnesota and is
now helping change the federal law.
My father fought hard for those who had no voice, and he
had a strong personal commitment to help those with mental
illness and addiction.
Congressional members honored his memory by promising to
name this parity bill after my dad, and for that I am grateful.
But I do know the kind of man my father was and the kind of
parity bill he would have wanted finally passed into law.
The protections for patients that have been included in the
House bill, such as protection for stronger state laws, full
diagnosis coverage and transparency of medical necessity, are
essential to the kind of strong law that he fought for, and I
urge you to include them in your final markup and passage.
In the end, I am involved because this is the right thing
to do. I want to do my part. This Congress has the opportunity
to play a major role in history, and I urge you to do your part
to finally enact a strong parity law.
Thank you for your courage and your commitment to do the
right thing, and know that I will be there by your side with
your efforts to pass this legislation. Thank you very much.
[The statement of Mr. Wellstone follows:]
Prepared Statement of Paul David Wellstone, Jr., Chairman, Wellstone
Action Advisory Board
Mr. Chairman and members of the subcommittee, I want to thank you
for the opportunity to speak to you this morning on legislation that
addresses an extremely critical health issue facing millions of
Americans: parity for the treatment of mental illness and substance use
disorders.
This legislation is very close to my heart, and I want to thank
you, and Cong. Patrick Kennedy and Cong. Jim Ramstad, for honoring my
father's legacy by naming this bill in his honor. My brother and I
founded Wellstone Action to carry on his work, and through the
Wellstone Action organization, hundreds of people are being trained
each year to run for office, and to develop grassroots skills in
organizing and leadership. But nothing represents my father's passion
and commitment more than his work to pass legislation that would end
the discrimination against those who suffer from mental illness and
substance use disorders. Please accept the gratitude of my family and
that of Wellstone Action, for this tribute to my father and our family.
I also want to thank Mrs. Carter for her many years of leadership
on this issue and many other issues related to mental illness. She and
my father worked closely together on this issue and he was always
grateful for her support and leadership.
I have been coming to Washington frequently to speak on behalf of
this legislation and a strong mental health and addiction parity bill.
But my father started this work years ago.
History
Parity has a long history. Many of you are familiar with its
milestones: the 1996 federal law; the 1999 Executive Order that gave
federal employees mental health and addiction parity benefits; the many
successes at the state level to strengthen their parity laws; the times
that Congress came very close to passing the expansion of the federal
law; and the endorsement by President Bush in 2002. For my father,
these milestones were very personal. His dedication stemmed from his
personal observations of the terrible conditions in psychiatric
institutions when his own brother, my uncle, was hospitalized in the
1950s. These conditions, and the eventual catastrophic financial toll
that my grandparents had to bear, inspired my father to do everything
he could to make things right for those in similar circumstances. The
legislation that my father and Sen. Domenici passed in 1996 was
groundbreaking and important, for it established in law an important
first principle of parity--that those with mental illness should not be
discriminated against in insurance coverage. But my father knew that it
was not enough, and he was never satisfied with the compromises that
were made at the time. That is why he immediately began the fight for a
more comprehensive federal parity law, one that would include substance
use disorders and that would close the loopholes that the insurance
industry had immediately started using.
His efforts over the years came close to success several times,
including once during his last term in office. But despite promises
then, and promises made after he died, the federal parity law has not
yet passed. This law is long overdue, and that is why we are here
today. The bill has been negotiated for years, and important
compromises and protections have been put in place in the proposed
House legislation that is the subject of this hearing today. It is time
to move forward, and to recognize that while we delay, people are
suffering and dying from lack of care.
This bill is the critically important next step toward ending the
persistent discrimination against people who suffer from mental illness
and addiction. In the past, some opponents have been satisfied with the
reauthorization of the 1996 law, and there is the danger that this
could happen again. It is my view that to merely reauthorize the 1996
law is worse than simply allowing the law to lapse. Why? Because we
know that the discrimination against the mentally ill and addiction has
worsened. As was reported in a GAO report in 2000 (GAO-HEHS-00-95),
despite the limited objectives of the 1996 law, there were numerous
examples of violations of not only the spirit, but even the letter of
the law. GAO found that although most employers complied with the Act,
they expanded other discriminatory coverage limits. Eighty-seven
percent of the surveyed employers had a limit on mental health benefits
lower than what is offered for other medical/surgical benefits, and
several states were noncompliant. In a recent study of employer
provided benefits, reported in Health Affairs (2007), the cost-sharing
for addiction benefits was 46% higher for addiction benefits than for
medical or surgical benefits and there were no out of pocket spending
caps for addiction spending in 44 % of the plans studied. It is clear
from these reports that the gains intended by the 1996 law have not yet
been attained and that further federal legislation strengthening and
expanding the 1996 law is still badly needed.
Many of you knew my dad, and so you would be aware of how often he
expressed his outrage at the injustice that is rampant throughout the
health care system in its failure to adequately cover mental illness
and addiction care. Over the years, the opposition to the many
legislative efforts focused on whatever they could to prevent the bill
from going forward, including misinformation, scare tactics, and
stalling. Today, although we have made progress, we expect increased
opposition as we move forward to ensure patient protections that are in
the House bill. I urge you all to stay strong, to fight for the patient
protections are in the House bill, to do the right thing, and make this
bill the law of the land.
I especially want to commend House and Senate sponsors for their
inclusion of substance use disorders in the parity bills. My dad always
worked closely with Cong. Ramstad to push for parity for treatment of
substance use disorders throughout his Senate terms. This inclusion is
long overdue. In recent years, we know that spending for addiction
treatment has been drastically shifted from the private sector to the
federal government. Private insurance accounts for just 9% of substance
use disorders expenditures (Levit et al, 2006). It is past time for the
private sector to do its fair share. As my friend, William Moyers, Vice
President of the Hazelden Foundation said at the parity field hearing
in Minnesota, many individuals who seek addiction treatment also suffer
from mental illnesses, and that it is ``folly to treat one illness and
not the other.'' I would add that it is also folly to allow insurers
and employers to determine in advance, outside of medical
considerations, which diagnoses they deem worthy of coverage. And so I
am pleased to see that HR 1424 includes substance use disorders, and
that it requires that the standard diagnostic manual--the one used by
physicians, researchers, government agencies, and insurance companies
themselves as the standard for diagnosis, treatment, and
reimbursement--be the standard for mental health and addiction coverage
in this bill.
Need
Many of you know the disturbing statistics concerning mental
illness and addiction for adults and children with these diseases. The
current estimate from the National Institute of Mental Health is that
about 26 percent of the U.S. adult population--over 78 million
Americans--suffer from a diagnosable mental disorder in a given year.
Twenty-there million people and their families struggle to recover from
the shattered lives that result from untreated addiction. Although the
research on children is not as well-documented, the percentage of
children affected by mental or emotional disorders is very similar, at
20 percent, with 9 percent severely affected.
We know that mental illness is a real, painful, and sometimes fatal
disease. It is also a treatable disease. My father used to say,
acknowledging the wisdom of his friend, Dr. Kay Redfield Jamison, that
the gap between what we know and what we do is lethal. Available
medications and psychological treatments, alone or in combination, can
help most people who suffer from mental illness and addiction. But
without adequate treatment, these illnesses can continue or worsen in
severity. Suicide is the third leading cause of death of young people
in the U.S. Each year, 30,000 Americans take their lives, hundreds of
thousands attempt to do so, and in 90% of these situations, the cause
is untreated mental illness. This is one of the true costs of delaying
this legislation: Every 16 minutes, a child or adult takes their lives
because of the unmitigated, searing pain of depression or another
mental illness.
HR 1424--Important Provisions
The House bill has other very important provisions that will
improve care for mental health and addiction patients.
DSM
I have mentioned the diagnostic manual that has long been used to
guide diagnostic and treatment decisions. Much debate has occurred
around this manual, the Diagnostic and Statistical Manual (DSM), a
handbook and codebook that lists mental illness disorders and the
diagnostic criteria for each based on current research. The DSM is the
coding manual that is used by many government agencies, researchers,
physicians, and the public and private insurance industry to code
mandatory health data, understand and diagnose illness, frame research,
and develop treatment guidelines. The House legislation recognizes the
essential role of the DSM in ensuring high quality treatment and
diagnostic decision-making by requiring the DSM as the basis for
coverage. Without this clarity, insurers and employers could decide,
without the benefit of science or medical expertise, what kinds of
mental or addictive disorders should be covered. I applaud the efforts
of the House sponsors to stand firm in its effort to ensure that mental
illness and addiction are treated no differently than medical/surgical
conditions. The DSM is part of the International Classification of
Disease (ICD), a similar manual that includes codes for over 12,000
medical and surgical conditions. The DSM, by contrast, has a few
hundred codes. It is essential that the scientific and research
findings that developed the DSM, and contribute to high quality care,
be the basis for mental health and addiction treatment. When it became
clear in past negotiations that the insurers may undermine the parity
legislation by restricting coverage by diagnosis, my father fought hard
against these weakening amendments that could turn into a dangerous
loophole. I urge you to stand firm on this principle and prevent any
effort to allow discrimination by diagnosis. The way to do so is to
keep the standard of the science as the standard in this bill.
State Protections
HR 1424 also has important protections for parity laws in the
states. One positive outcome of the 1996 law was a major surge in the
passage of parity-related laws in a majority of the states. These laws
reflect the positive efforts of grass-roots advocacy whereby those in
need can seek democratic change with their local elected
representatives. Though not all of these laws are stronger than the
proposed federal law, many of them are. Unfortunately, in the current
debate, there is an effort underway to have the federal parity law
preempt stronger state laws. Contrary to this view, my father
vehemently opposed any effort to preempt stronger state laws, and even
advocated for the inclusion of such protective language to prevent this
in earlier versions of the bills he sponsored. Such preemption would
severely undermine the benefits of health coverage for those for whom
the federal law would not apply, as attested to in recent analysis by
Mila Kaufman of Georgetown University. In keeping with this principle
of protecting state law, the House legislation includes important
language, and I would urge you to keep those protections. I ask you to
consider what kind of federal parity law it would be if it were to
change decades of health care protections in the states, and do so on
the backs of those with mental illness and substance use disorders.
Medical necessity
With this legislation, the devil is always in the details and that
is why the details in HR 1424 are so important. The more I have talked
with people about the need for this legislation, the more I have
understood that the problems go beyond just parity, as critically
important as this is. Decisions around so-called ``medical necessity''
are often the basis for denial of care, and while these problems may
continue even after a strong parity bill is enacted, I want to applaud
the sponsors of this bill for recognizing that patients have a right to
know on what basis their care is being denied, and that this
information should be transparent and made quickly available to
patients. When Kitty Westin's daughter Anna's daughter was in the
hospital, critically ill, she was denied care and sent home while the
insurer determined whether it was `medically necessary' to treat her
severe eating disorder. This kind of callous disregard for her disease
and her life contributed to enormous suffering for her and her family,
and in the end, Anna died from her disease, leaving behind a grieving
family to endure this loss and this injustice.
I have had the honor to get to know Kitty, one of my father's
closest friends. She is a fellow Minnesotan, the founder of the Anna
Westin Foundation, the President of the Eating Disorders Coalition, and
most importantly, the mother of Anna. Kitty and I have met with many of
you, and you have heard about the tragedy that her family endured, when
Anna was repeatedly denied insurance coverage for her eating disorder.
What happened to Anna and her family, and millions of others, embodies
the outrage my father spoke about so often. Kitty spoke at the recent
House Ways and Means subcommittee hearing on this bill, and despite her
tragic loss, she spoke about hope. She talked about her hope that the
system can and will change, hope that those in need will finally have
access to care, and hope that the voices of those who are suffering
will be heard. The passage of this bill is a life or death issue for
millions of Americans. This is fact that we can understand in our
minds. Kitty and her family live with that tragic reality every day. As
a country, we owe Kitty and her family a debt of gratitude for coming
forward with their story and their grief, in order to make positive
changes in Minnesota, and to make positive changes in the federal law.
Cost
Another issue we often hear about in relation to this bill is cost.
Today, you will hear powerful testimony about how badly this treatment
coverage is needed, how mental illness and substance use disorder have
affected the lives of so many Americans throughout our country, and how
the costs for such treatment are very low. Numerous past reports have
shown that fair and equitable mental health treatment can be offered as
part of a health benefit package without escalating costs. Today, we
have even more compelling evidence that this is so. There should be no
further doubt that treatment for mental illness and substance use
disorder is a health care benefit that our country can afford, and even
more important, it is one that the our country should and must provide
for the millions of Americans covered by private insurance. It is time
to lay the issue of cost to rest, for we know that with the appropriate
medical oversight, costs are low. It is no longer a question of can we
afford it, but rather, can we afford not to provide health care for the
millions who suffer from mental illness and addiction?
Many employers already do recognize this basic fact. A series of
articles published in the Wall Street Journal in 2001 recounted the
growing recognition of employers that mental illness is a reality in
the workplace and can be documented as a workplace cost. At the same
time, the articles noted that when employees are given access and
benefits to receive proper treatment, companies are able to retain
highly able and productive employees. The articles noted that the
stigma associated with mental illness can lead to untreated illnesses
that turn up as other healthcare costs, lost productivity, or
absenteeism, so that attempts to reduce overall health care costs by
targeting those with mental illness may in fact lead to other workplace
costs, in addition to greater suffering. I have provided citation
information for these articles below.
In terms of cost, parity legislation has already been tested for
years. Testimony by Dr. Howard Goldman in the House Energy and Commerce
subcommittee on June 15, 2007, attested to the low cost of the federal
employee parity provision, the fact that no plans dropped out of the
federal program, and that there was a significant decline in out of
pocket spending on the part of patients.
The opponents who still cite cost issues do not recognize these low
treatment costs, nor do they acknowledge that proper treatment of
mental illness actually saves money. They fail to recognize that
untreated mental illness and addiction costs over $100 billion per
year, and that our country picks up the cost of untreated mental
illness and addiction in any case, for untreated illnesses don't just
go away. Children with mental illness and addiction disorders often end
up in public institutions, foster care, or jail because their parents
cannot afford their care. Adults who have private insurance are often
forced into public health care systems financed through State
governments, Medicare, and Medicaid. These systems are then forced to
take scarce resources from those who have no insurance. Families are
forced into bankruptcy; lives are broken; and lives are lost.
Stigma
When cost is set aside as the reason for denial of parity, what is
left is stigma and discrimination. In our country, mental illness and
substance use disorder continue to be stigmatized as diseases for which
one should feel shame. People are made to feel that they are lucky or
should feel grateful when they get any coverage, even when they are
routinely denied adequate treatment. Why? The stigma associated with
the illness is one reason, for it not only doubly burdens the person
who suffers from this illness, but it makes it easier for insurance
companies to deny treatment, knowing that the person may not want to or
be able to file public appeals or bring this matter to their employer.
A cloak of secrecy has surrounded this disease, and people with mental
illness and addiction are often ashamed and afraid to seek treatment.
They fear that they may lose their jobs or even their friends and
family. For those ``lucky'' enough to obtain care, the benefit is
discriminatory--with co-payments, deductibles and day and visit limits
that are both higher and more restrictive than for any other illness.
When more care is needed, the cost is borne by others, i.e., families,
taxpayers, or the generosity of donors, as John Schwarzlose from the
Betty Ford Center recently testified. This is, plain and simple, unjust
and unfair. And sometimes, it is lethal. People die when care is
denied, as in the case of Kitty Westin's daughter, Anna.
Historic Opportunity
Congress has a chance with this legislation to play an important
historic role. The movement for parity for treatment for mental illness
and substance use disorders is growing. Over these past years, the
principle of parity in insurance coverage for mental health and
addiction treatment has received the strong support of numerous
administrations, including President Bush and his New Freedom
Commission on Mental Health, the Surgeon General, and many leading
figures in medicine, business, government, journalism, and
entertainment who have suffered from mental illness and addiction and
have been successfully treated. Federal employees, including members of
Congress, receive full mental health and substance abuse treatment
parity. Many states have stronger state laws or are moving toward
enacting them. Mental health and addiction hearings on the Hill have
frequently highlighted recent major advances in scientific information
about the diseases, the biological causes or consequences of mental
illness and addiction, the effectiveness and low cost of treatment, as
well as many painful, personal stories of people, including children,
who have been denied treatment. Changes are being made or proposed in
mental health and addiction coverage in other systems of health care,
such as the military, the VA, Medicare, and children's health
insurance. We do not discriminate against other illnesses where the
brain is affected. Why do we continue to discriminate against mental
illness and addiction? It is time for the federal government to enact
legislation that will help move us toward full treatment parity for
mental illness and addiction. This Congress has the chance to be
remembered as the one that had the courage and leadership to complete
this effort.
Conclusion
People have asked me while I'm here in Washington why I am so
involved in this issue. I am involved because of my father, of course.
I loved him and I miss him, and I have learned that many others here in
Washington and throughout the country miss him too, especially his
courage and his compassion. He fought hard for those who had no voice,
and he had a strong personal commitment to helping those with mental
illness and addiction. Congressional members honored him and my family
by promising to name the parity bill after my dad, and I am grateful.
But I do know the kind of man my father was, and the kind of parity
bill he would have wanted finally passed into law, and I wanted to help
ensure that the final bill is one worthy of his name. The protections
for patients that have been included in HR 1424, such as protections of
stronger state laws, full diagnosis coverage, and transparency of
medical necessity, are essential to a strong law and I urge you to
include them in your final markup and passage.
I, along with millions of Americans, look forward to the day when
people with mental illness and substance use disorder receive decent,
humane, and timely care for mental illness and substance use disorders.
Thank you for your courage and commitment to do the right thing, and
know that I will be by your side throughout your efforts to pass this
legislation.
Thank you.
citations
Tanouye, E. (June 13, 2001). Mental illness: A rising workplace cost--
One form, depression, takes $70 billion toll annually; Bank one
intervenes early. Wall Street Journal, NY, NY.
Tanouye, E. (June 13, 2001). Mental illness: A rising workplace cost--
What happens when it's the boss who's suffering?--Paul
Gottleib's story shows upper ranks get hit too; Screaming atop
the cliffs. Wall Street Journal, NY, NY.
Tanouye, E. (June 13, 2001). Mental illness: A rising workplace cost--
New medicines, protective laws cut dismissals. Wall Street
Journal, NY, NY.
GAO Report, May 10, 2000, Mental Health Parity Act: Despite New Federal
Standards, Mental Health Benefits Remain Limited. (GAO-HEHS-00-
95).
Levit, K.R., et al. (2006). Projections of National Expenditures for
Mental Health Services and Substance Abuse Treatment, 2004-
2014. SAMHSA Publication. Rockville, MD.
Gabel, J.R., Whitmore, H., Pickreign, J.D., Levit, K.R., Coffey, R.M.,
and Vandivort-Warren, R. (2007). Substance abuse benefits:
Still limited after all these years. Health Affairs, 26 (4),
pg. 474-482.
______
[The Congressional Research Service report, ``The Mental
Health Parity Act: A Legislative History,'' is available on the
committee website at the following Internet address:]
http://edlabor.house.gov/testimony/
071007MentalHealthParityCRSReport.pdf
______
Chairman Andrews. David, thank you very, very much for your
statement.
You know, your father was kind of shy and retiring. It was
hard to get him worked up to speak for something, but I sure
did hear him speak with great passion and commitment about this
issue. We miss him very much. But I think we can honor the
legacy of his life by moving forward. We are glad that you are
here.
Ms. Smith, I know you have had a long journey to get here
today, in more ways than one. We are very happy to have you
with us, and welcome.
STATEMENT OF AMY SMITH, VICE PRESIDENT, MENTAL HEALTH
ASSOCIATION OF COLORADO
Ms. Smith. Thank you. Chairman Andrews, Ranking Member
Kline and distinguished members of the committee, thank you
very, very much for this opportunity to tell my story.
My name is Amy Smith, and I have lived my life with a
serious psychiatric disorder. Most of my life was spent in a
murky, confusing ocean of extreme emotions. I cycled in and out
of mental hospitals, jail and rather desperate attempts to lead
a so-called life. Looking back on my childhood, I realize that
I was already under the influence of mental illness.
I remember a time when I was afraid to leave my bed in the
morning to go to school because I was convinced there was an
evil woman clad in flowing black robes and riding a black horse
right outside my door that was going to get me. I did not
relate to my peers, and I led a very lonely young life.
As a young adult, my disorder, schizoaffective disorder,
really blossomed. I had no idea what was happening to me as I
became increasingly out of touch with reality and began a dark
descent into profound depression.
I quickly discovered that drugs and alcohol alleviated some
of my symptoms. My solution to my difficulties was to stay high
and drunk all the time, from the moment I woke up in the
morning until I fell asleep at night.
I found it increasingly difficult to attend my college
classes and consequently lost my grants, scholarships and
loans. I became a drug dealer to support myself.
And after I was arrested, I became homeless for the first
time, living in an abandoned trailer that had no doors or
windows in the middle of a large field.
As homeless shelters went, it was pretty luxurious. I was
able to keep a small amount of possessions, and I didn't have
to worry about other homeless people stealing my stuff or
attacking me.
One of the characteristics of severe mental illness is it
is a very cyclical disorder, and I would experience brief
windows of lucidity and clarity from time to time.
When I was a young person, when that happened, I would
experience momentous surges of hope and, thinking that all the
darkness was lifted at last, I would craft extravagant plans
for my life, not realizing that my schemes were grandiose and
unachievable.
As I became a more seasoned player in life, I would give
myself over to my addictions in these times and just quit
trying.
The worst product of a severe mental illness, in my
opinion, is the debilitating loneliness. Even as a very young
child, I could not connect with the people around me, and it
only got worse as I aged.
I tried and tried to build a network of people around me,
to no avail. I remember one time I was attending a potluck and
I had managed to wear some reasonable clothes and I brought a
dish to share. I was so proud of myself.
I was in this crowded room filled with prospective friends,
and I went to sit on the couch with a plate of food. As I was
sitting down, I glanced down at the couch and saw that it was
covered with hundreds of naked, squirming babies.
I made a horrible sound and leapt up, my food flying. It
was humiliating beyond belief, but fairly typical of my stabs
at making friendships.
I did, however, manage to have a child, and I did attempt
to build a family around me. As life went on, my condition
became worse and worse. I clearly looked like someone to avoid
at all costs.
I had dreams about what to wear, and if I didn't have a
dream, I would wear the same outlandish outfits over and over
again, sometimes for weeks at a time, so I had hygiene issues.
I would either shuffle or stride up and down the street,
depending on my mood, muttering to myself and occasionally
verbally attacking passers-by.
My son, who turned out to be a person with a psychiatric
disorder himself, was living in mental hospitals and
residential treatment centers. I could not keep him safe and
lost partial custody of him to social services. My situation
was pretty bleak.
Finally, I had just had enough. I made a plan to kill both
myself and my son. Fortunately, I told someone of my plan, and
I was whisked away to a community mental health hospital.
As I was on Medicaid, I entered into the Colorado community
mental health system and immediately started receiving
excellent care. I was determined to turn my life around.
Working with my doctors and therapists, I started taking
care of myself, sleeping appropriately and eating decent food.
It took a long time, but we found the cocktail of
psychotropic medications that worked for me, alleviating my
symptoms with very few side effects. I regained full custody of
my son and started working.
Today, I am a vice president at Mental Health America of
Colorado. As happy as I am today, I am heartbroken that 45
years of my life were lost.
The jobs I managed to hold down had no mental health
insurance and certainly no substance abuse care available. I
had to go on welfare to get the care I needed.
Things that people take for granted, like getting married,
holding down a real job, driving a car, volunteering in the
community, were beyond me most of my life. I was nothing but a
drain on society.
Today I am a taxpaying citizen with private insurance. I am
no longer ashamed to be the person who I am. We are very lucky
in Colorado because we just passed a mental health and
addiction parity bill.
You have the same opportunity to do the same here so
people's lives are not wasted as mine was. Thank you.
[The statement of Ms. Smith follows:]
Prepared Statement of Amy Smith, Vice President, Mental Health
Association of Colorado
Chairman Andrews, Ranking Member Kline, and distinguished Members
of the Committee, my name is Amy Smith and I have lived my life with a
serious psychiatric disorder. Most of my life was spent in a murky,
confusing ocean of extreme emotions. I cycled in and out of mental
hospitals, jail and rather desperate attempts to live a so-called
``life''.
Looking back to my childhood, I realize now I was already under the
influence of mental illness. I remember a time when I was afraid to
leave my bed in the morning because I was convinced there was an evil
woman clad in flowing black robes and riding a black horse right
outside my door that was out to get me. I did not relate to my peers
and lived a lonely young life.
As a young adult my disorder, schizoaffective disorder, really
blossomed. I had no idea what was happening to me as I became
increasingly out of touch with reality and began a dark descent into
profound depression. I quickly discovered drugs and alcohol alleviated
some of my symptoms. My solution to my difficulties was to stay high
and drunk all the time, from the minute I woke up in the morning till I
fell asleep at night. I found it increasingly difficult to attend my
college classes and consequentially lost my grants, scholarships and
loans. I became a drug dealer to support myself, and after I was
arrested I became homeless for the first time, living in an abandoned
trailer that had no doors or windows in the middle of a large field. As
homeless shelters went, it was pretty luxurious. I was able to keep a
small amount of possessions and didn't have to worry about other
homeless people stealing my stuff or attacking me.
One of the characteristics of severe mental illness is it's a very
cyclical disorder, and I would experience brief windows of lucidity and
clarity from time to time. When I was a young person, I would
experience momentous surges of hope, and thinking that all that
darkness was lifted at last, I would craft extravagant plans for my
life, not realizing that my schemes were grandiose and unachievable. As
I became a more seasoned player in life, I would give myself over to my
additions in these times, and just quit trying.
The worst by-product of a severe mental illness, in my opinion, is
the debilitating loneliness. Even as a very young child, I could not
connect with the people around me and it only got worse as I aged. I
tried and tried to build a network of people around me to no avail. I
remember one time I was attending a potluck and I had managed to wear
some reasonable clothes and brought a dish to share. (I was so proud of
myself!) So I'm in this crowded living room, filled with prospective
friends, and I went to sit on the couch with a plate of food. As I was
sitting down I glanced down at the couch and saw it was covered with
hundreds of naked, squirming, silent babies. I made a horrible sound
and leapt up, my food flying. It was humiliating beyond belief but
fairly typical of my stabs at making friendships. I did manage to have
a child in an attempt to build a family around me.
As life went on, my condition became worse and worse. I clearly
looked like someone to avoid at all costs. I had dreams about what to
wear, and if I didn't have a dream, I would wear the same outlandish
outfits over and over, sometimes for weeks at a time. So I had hygiene
issues. I would either shuffle or stride up and down the street,
depending on my mood, muttering to myself and occasionally verbally
attacking passers-by. My son, who turned out to be a person with a
psychiatric disorder himself, was living in mental hospitals and
residential treatment centers. I could not keep him safe and lost
partial custody of him to social services. My situation was pretty
bleak.
Finally I had just had enough. I made a plan to kill both myself
and my son. Fortunately I told someone of my plan and I was whisked
away to a community mental health hospital. As I was on Medicaid, I
entered into the Colorado community mental health system and
immediately started receiving excellent care. I was determined to turn
my life around. Working with my doctors and therapists, I started
taking care of myself, sleeping appropriately and eating decent food.
It took a long time, but we found a cocktail of psychotropic
medications that worked for me, alleviating my symptoms with very few
side effects. I regained full custody of my son and started working.
Today, I am a Vice-President at Mental Health America of Colorado!
As happy as I am today, I am heartbroken that 45 years of my life
were lost. The jobs I managed to hold down had no mental health
insurance and certainly no substance abuse care available. I had to go
on welfare to get the care I needed. Things that people take for
granted--like getting married, holding down a real job, driving a car,
volunteering in the community--were beyond me most of my life. I was
nothing but a drain on society.
Today I am a tax-paying citizen with private insurance! I am no
longer to be ashamed to be the person I am. Thank you.
______
Chairman Andrews. Ms. Smith, thank you very, very much. As
I said, you have had quite a journey to get here, and we are
inspired by your testimony. I have great, profound admiration
for you. We are very happy you are with us today. Thank you.
Ms. Smith. Thank you.
Chairman Andrews. Mr. Trautwein, thank you for being with
us, and we look forward to your statement.
STATEMENT OF NEIL TRAUTWEIN, VICE PRESIDENT, NATIONAL RETAIL
FEDERATION
Mr. Trautwein. Thank you, Mr. Chairman and Ranking Member
Kline and members of the committee.
I appreciate the opportunity to appear before you today. By
way of introduction, the National Retail Federation is the
world's largest retail organization.
We have a membership that comprises all different lines of
distribution, all retail formats. I think there is a good
chance you or your families know our members well.
We are an industry with more than 1.6 million retail
establishments across the country, more than 24 million
employees, about one in five workers.
As a labor-intensive industry, we are very concerned about
good quality health care, keeping our workers healthy and
productive and in place.
As a labor-intensive industry that unfortunately endures
wafer-thin profit margins from time to time, we are also well-
acquainted with the need to manage the collective cost of labor
in as cost-effective a manner as possible.
Maintaining the balance between these two different
imperatives is not the easiest job. In fact, sometimes it is
darn near impossible.
Mandated coverage for benefits tends to disrupt that
balance and makes it more difficult for our members to provide
jobs and benefits both, so we have tended to oppose benefit
mandates.
Indeed, we oppose the legislation before you today, H.R.
1424. But our opposition to this bill doesn't mean we oppose
all mental health parity legislation.
In fact, we are supporters of the Senate bill, and
specifically the manager's amendment to S. 588, the bipartisan
Mental Health Parity Act.
We think the Senate bill would make the better law by far
and would support that law being enacted and support that bill
being enacted into law.
We feel that the House bill is similar in many respects to
the previous bills that we have opposed on both the House and
the Senate side. In some ways, it is a little bit worse than
the bills that we have worked on in the past.
We oppose H.R. 1424 primarily because of its broad benefit
mandate, its lack of protection for medical management,
provisions allowing the states to enact more extensive
provisions and provisions mandating out-of-network coverage.
In the interest of time, I am going to concentrate on the
first issue and then discuss why I think the collaborative
Senate process has developed a better bill and one that has
gotten us working arm in arm with the mental health community.
Again, as noted, it is fairly confusing, as the House bill
doesn't specifically address the DSM but instead links to the
most widely subscribed Federal Employees Health Benefit Plan
program. That, in turn, references the DSM, so it is really a
circular process.
Although advocates of the House bill tend to point to the
fact that the FEHB Plans have been able to deal with the cost
of coverage without great cost impact, I would point out that
the FEHB Plans enjoy the ability to medically manage that
benefit and do so fairly aggressively.
And that is why we are particularly troubled by the lack of
a specific protection for medical management in the House bill.
In addition, I would note that no other profession has had
its professional manual enshrined into benefit coverage in the
way that the House bill would, by indirection, enshrine the
DSM.
Typically, insurance plans tend to work the opposite
direction, by exclusion of specific conditions rather than
inclusion of conditions. So it is really out of place in
benefit coverage today.
We think the better approach has been taken by the Senate
because it allows plans to define the scope of coverage. It
also allows the states to continue to define coverage for state
regulated insurance plans.
This debate has been long and fierce. It has lasted through
many, many years. I worked with Mr. Wellstone's father in the
past on this issue. Certainly, the rhetoric has been tough. I
have contributed my share of that.
It is really a shame, because it has obscured what has been
really a shared purpose to help people get the kind of coverage
that they need in the process.
That shared objective has really encouraged the dialogue
between the different sides and with the Senate sponsors.
I would particularly like to give thanks to Senator
Kennedy, Senator Domenici and Senator Enzi for being good
negotiating partners and fair advocates for both sides of this
debate.
The balanced Senate compromise I have highlighted through
this testimony has been the product of those negotiations.
What is particularly interesting--and to try to sum up--has
been that it is not only typical allies like the American
Benefits Council, like the chamber, like the NAM, but we are
also working with the National Alliance of Mental Illness, the
American Psychiatric and Psychological Associations, the
hospitals and many others.
And you will find a copy of our joint letter together at
the end of my written testimony.
Again, I appreciate the opportunity to appear before you
today and hope we can continue to make progress on this. And
hopefully, we would like to work with you to see the Senate
bill enacted.
Thank you, Mr. Chairman.
[The statement of Mr. Trautwein follows:]
Prepared Statement of E. Neil Trautwein, Vice President and Employee
Benefits Policy Counsel, National Retail Federation
Mr. Chairman and members of the Health, Employment, Labor and
Pensions Subcommittee, I thank you for the opportunity to appear before
you today and to share our views regarding the Paul Wellstone Mental
Health and Addiction Equity Act of 2007. My name is Neil Trautwein and
I am Vice President and Employee Benefits Policy Counsel of the
National Retail Federation (NRF).
The National Retail Federation is the world's largest retail trade
association, with membership that comprises all retail formats and
channels of distribution including department, specialty, discount,
catalog, Internet, independent stores, chain restaurants, drug stores
and grocery stores as well as the industry's key trading partners of
retail goods and services. NRF represents an industry with more than
1.6 million U.S. retail establishments, more than 24 million
employees--about one in five American workers--and 2006 sales of $4.7
trillion. As the industry umbrella group, NRF also represents more than
100 state, national and international retail associations.
As a labor-intensive industry, retailers are strong advocates of
quality health coverage for both physical and behavioral needs in order
to help keep our employees healthy and productive. As an industry that
frequently endures wafer-thin profit margins, we are also well
acquainted with the need to manage the collective cost of labor in as
cost-effective a manner as is possible. Maintaining balance between
these two imperatives is not always easy--it's borderline impossible.
Mandated coverage for benefits and other government interventions
disrupts this balance and increases the cost of health coverage for
retailer and employee alike. Thus we have tended to resist benefit
mandates both generally and specifically. Indeed, we strongly oppose
H.R. 1424, the Paul Wellstone Mental Health and Addiction Equity Act of
2007.
However, our opposition to mental health parity legislation is not
simply reflexive. We support the manager's amendment to the Senate
bipartisan Mental Health Parity Act of 2007, S. 558. Our first
preference always is for no governmental intervention into benefit
design. But, should Congress determine to act, then the Senate bill
would make the better law by far--an outcome we could support. I will
discuss our views on these competing approaches in greater depth below.
NRF Opposes House Parity Bill
The House bill [H.R. 1424, the Paul Wellstone Mental Health and
Addiction Equity Act of 2007, introduced by Representatives Patrick
Kennedy (D-RI) and Jim Ramstad (RMN)] is similar in many respects to
the bills we have opposed in the past. In some respects, it is worse.
We strongly oppose H.R. 1424, principally because of its broad benefit
mandate, its lack of protection for medical management, provisions
allowing the states to enact more extensive provisions and provisions
mandating out-of-network coverage.
Broad Coverage Mandate
H.R. 1424 appears on the surface to be less expansive of coverage
than previous bills, but that appearance is deceiving. Previous mental
health parity bills have tied coverage to the Diagnostic and
Statistical Manual of Mental Disorders (DSM-IV). Under H.R. 1424, no
coverage for behavioral needs must be offered, but if any coverage is
offered, then coverage must match all that offered under the most
heavily subscribed plan under the Federal Employee Health Benefit
Program (FEHB). All FEHB plans must cover all the conditions listed in
DSM-IV. Thus, H.R. 1424 still ties coverage to DSM-IV. Although
advocates of the House bill will point to FEHB's low cost impact
implementation of DSM-IV, I will also note that FEHB plans are allowed
to medically manage covered benefits--a significant failing of H.R.
1424, which does not meet the FEHB standard.
My purpose today is not to make sport of any specific category or
condition under DSM IV. Employer-sponsored plans cover conditions
broadly but target to the needs of specific employee populations to
help keep employees healthy and productive. But, this blanket DSM-IV
coverage mandate is out of place in a bill addressing parity in covered
days and reimbursement. It is also out of place in both the benefits
world and the insurance world. To my knowledge, no other professional
manual is enshrined as mandated coverage. I suspect other professions
would quickly beat a path to your door to secure similar treatment if
H.R. 1424 were to be enacted.
The better approach is taken by the manager's amendment to S. 558.
This bill continues to allow employer plans to define the scope of
covered benefits in their plan. In keeping with the states' traditional
role in regulating insurance, individual states can define the coverage
regulated insurers must offer. We favor this status quo approach
because it works in practice today.
No Protection for Medical Management
We are troubled by the lack of specific protection for the medical
management of benefits in H.R. 1424. Previous House and Senate bills
have included such protections; indeed, such protection was at the
heart of proponents' arguments that parity legislation would not
greatly increase health coverage costs. Surely the sponsors of H.R.
1424 are not advocating unfettered access to coverage and
reimbursement, are they?
Medical management is at the heart of coverage for millions of
retail employees today: a process of matching the type and level of
coverage to individual need. Most of the states and the FEHB explicitly
allow for the medical management of benefits. Medical management is
critical to the provision of good quality and affordable benefits. We
urge that H.R. 1424 be amended to specifically protect the medical
management of covered benefits.
Role of the States
We are also worried by provisions of H.R. 1424 that would allow the
states to provide ``greater consumer protections, benefits, methods of
access to benefits, rights or remedies'' than those in the bill. H.R.
1424 would create an uneven patchwork between the states that could
ultimately undermine the federal ERISA law which serves as the backbone
of employer-sponsored coverage.
Relatively few members of the broad retail community represented by
NRF are confined to a single state. The ability to maintain common
benefit designs in stores located in several states is critical to the
retail community's ability to compete in today's demanding economy. We
strongly oppose the ``federal floor/state ceiling'' approach taken by
H.R. 1424 as inherently unworkable.
Our first preference would be for a completely preemptive federal
standard covering all plans in all markets. But, good faith
negotiations brought us to this balanced outcome. We support the final
negotiated compromise on preemption outlined in the manager's amendment
to S. 558 that essentially preserves the status quo between federal
standards for employee benefits and state regulated insurance products.
Anything that seeks to alter this negotiated compromise would be
unacceptable to us.
Out-of-Network Coverage
Finally, I would like to join in drawing attention to the provision
of H.R. 1424 that mandates out-of-network coverage. As noted by others,
this provision exceeds that required of FEHB plans and would greatly
undercut employers' ability to manage networks of providers and thus
would result in increased costs to everyone, including patients and
employees. Our shared preference would be for H.R. 1424 to either
conform to the FEHB standard (parity required only for in-network
services) or to the manager's amendment to S. 558 (out-of-network
coverage not required, but parity coverage in financial requirements
and treatment limitations required if so).
Collaborative Senate Process
The mental health parity debate has been both long and fierce. I
have been an advocate in this debate for a number of years, both before
and after the 1996 law addressing parity in annual and lifetime limits.
We all have contributed heated rhetoric to this debate. Unfortunately,
it has really obscured our shared objective of helping individuals get
the coverage and care they needed.
It is this last point that has encouraged a running dialogue
between the advocates and Senate sponsors. I have been privileged to
have participated over a number of years as a principal representative
of the employer community in intense discussions and negotiations with
both the Senate sponsors as well as advocates for the mental health and
addiction communities. I would like to give special thanks to Senators
Ted Kennedy (D-MA), Michael Enzi (R-WY) and Pete Domenici (R-NM) for
their longstanding advocacy on this legislation as well as for their
willing ear and fair and responsive negotiations through the years.
The Senate compromise that I have highlighted throughout this
testimony is the product of those negotiations. It has also created a
broad coalition among erstwhile opponents--surely somewhat of a
distinction.
NRF is joined in this coalition not only by traditional allies like
the American Benefits Council, Aetna, the U.S. Chamber of Commerce and
the National Association of Manufacturers (among others) but also by
the National Alliance on Mental Illness, the American Psychiatric and
the American Psychological Associations and the American Hospital
Association and the Federation of American Hospitals (among others). I
have attached a copy of our joint letter at the conclusion of my
testimony. I respectfully ask that it be made part of the hearing
record.
Conclusion
Again, NRF greatly appreciates the opportunity to appear before you
today. Though we oppose the legislation before you (H.R. 1424), we are
not opposed to all parity legislation. We support the balanced Senate
compromise legislation and would gladly work with you to see it enacted
into law this year.
We would also welcome an opportunity to work with you and the House
sponsors of H.R. 1424 on similar issues in the future. In fact, it is
our hope that our collaborative work in the Senate will be a model for
future debates and issues. Who knows--perhaps there is a collaborative
federal cure for common gridlock after all. We hope so! I thank you and
will look forward to your questions.
attachment
June 14, 2007.
Hon. Edward M. Kennedy; Hon. Michael B. Enzi; Hon. Pete V. Domenici;
U.S. Senate, Washington, DC.
Dear Chairman Kennedy and Senators Enzi and Domenici: We write in
joint and strong support of prompt Senate action on the manager's
amendment to the bipartisan Mental Health Parity Act of 2007, S. 558.
We support enactment of your balanced legislation into law this year.
Organizations representing consumers, family members, health
professionals, and health care systems and administrators, business
associations and insurance organizations negotiated in good faith with
you and your staff over an extended period to produce this bill. We
believe that it is a strong bill that will advance the interests of the
greater mental health community while balancing the interests of
employers who voluntarily sponsor benefit coverage. This bill also
respects the role of the states in the regulation of insurance.
We urge its prompt adoption by the full Senate and will join you in
opposing unacceptable or weakening amendments during the Senate debate
and will remain committed to this bipartisan approach as this
legislation moves forward. Thank you again for your joint leadership on
this important issue.
Sincerely,
National Retail Federation.
American Psychological Association.
National Association of Wholesaler-Distributors.
Association for Behavioral Health and Wellness.
National Association of Health Underwriters.
Federation of American Hospitals.
National Alliance on Mental Illness.
Society for Human Resource Management.
National Association of Psychiatric Health Systems.
National Association of Manufacturers.
National Federation of Independent Business.
Aetna.
U.S. Chamber of Commerce.
BlueCross BlueShield Association.
CIGNA.
American Hospital Association.
American Psychiatric Association.
______
Chairman Andrews. Mr. Trautwein, thank you for your very
thoughtful and comprehensive statement. We appreciate it.
And, Mr. Breyfogle, welcome back to the committee. We are
happy to have you with us.
STATEMENT OF JON BREYFOGLE, EXECUTIVE PRINCIPAL, GROOM LAW
GROUP
Mr. Breyfogle. Thank you, Mr. Chairman, Mr. Kline, members
of the committee. It is really an honor to be on this panel
with such a distinguished group, people with a long history in
this subject. It is an important subject. It is something that
employers view as important.
The American Benefits Council represents predominantly
large employers and people who provide services to employer
plans. The plans that the American Benefits Council represents
cover over 100 million Americans.
The vast majority of employers and virtually all large
employers cover mental health in their health plan.
At the outset, I would like to say that we have been
privileged to be part of the same negotiation process in the
Senate in the Senate bill that is being supported by this
coalition. It is a substantial expansion of the parity
requirements.
Current law only requires parity for annual limits and
lifetime limits. We are supporting a bill that would extend
parity requirements to virtually all treatment limits and
financial requirements.
It is also a bill that would expand the definition of
mental health to include substance abuse. It is also a bill
that would substantially narrow the cost exception.
So under any measure against current law, it is a large
expansion. It is a large expansion against many state laws.
Very few state laws measure up to this kind of parity rule.
There are some basic principles that the council has in
evaluating this legislation. They are basically the following.
We need to have some flexibility in how we design our
health plans in terms of what is covered and what is not.
We need to have the flexibility to manage health benefits
so that if we are going to cover something we can attempt to
control the cost and maintain quality.
We would like to have uniform federal rules where there is
a comprehensive federal standard, like the parity rule would be
in the Senate, while protecting the roles of the states in the
insurance world where they want to mandate mental health
benefits and the like.
Another basic principle is we want to avoid expansions of
new, special purpose remedies, new lawsuits, new damages
provisions.
When we look at the Senate bill, it basically meets our
requirements. It is not everything that the employer community
wants. It goes, frankly, much farther than the employer
community has been over time.
And I think under any measure it would be a major victory
for mental health advocates and it would benefit from the
consensus approach.
The things that the Senate bill doesn't do that we
appreciate is that it doesn't have effectively a benefit
mandate, because it leaves it up to employers to define what
their health plans cover, so it doesn't follow the DSM-IV rule.
I read a study. I think only 12 of the states that have
parity rules follow DSM-IV. So it is not as widely accepted as
you might think.
The Senate bill makes clear that medical management
principles are preserved, at least for self-insured plans. It
does have a narrow and targeted preemption rule, but just for
the parity requirements.
So there are special rules in the Senate that protect state
authority, traditional state insurance authority, in many, many
respects.
I would like to mention there was a pretty comprehensive
analysis of the Senate's preemption rules done by Professor
Rosenbaum of G.W.'s School of Public Health, which is, I think,
reflective of the same analysis that we are providing.
And she and, I think, we concluded the following, that
mental health mandates are clearly preserved in the Senate
bill. Where there are parity requirements coupled with
mandates, the mandates would be preserved.
Individual and small group market parity laws are preserved
from preemption. State authority to define mental health
benefits for insured plans are preempted.
State laws that would mandate insurers offer out-of-network
coverage for mental health would be preempted. So state laws
that limit the ability of insurers to manage mental health
benefits would not be preempted.
So there is this whole body of state insurance law that is
not preempted under the Senate bill.
So in terms of the House bill, I think our concerns are
pretty much mirror-image points. The House bill would limit the
ability of employers to define what benefits are covered by
reference to the DSM-IV, through the methodology that Neil
pointed out.
It also has no specific protection for medical management.
It actually shares the same treatment financial limits rules.
It shares the same cost exemption. So it has many of the same
basic rules in it.
There is another major concern we have with the House bill,
which is that there is a provision in it that specifically
excepts from preemption remedies, greater consumer protections
benefits, methods of access to benefits, rights or remedies.
That is very different than current law. That is not the
sort of floor-ceiling HIPAA rule, for the technicians in the
audience.
The House bill is amending an ERISA provision that already
preserves state insurance laws, but this provision would
arguably allow for state lawsuits and remedies just with
respect to mental health benefits.
And that is very different from the current rule under
ERISA, where ERISA provides the exclusive set of remedies as a
federal statute.
Thank you for your time. I look forward to the questions.
[The statement of Mr. Breyfogle follows:]
Prepared Statement of Jon W. Breyfogle, Groom Law Group, Chartered, on
Behalf of the American Benefits Council
abstract
The American Benefits Council's members have long recognized the
importance of effective health coverage for the treatment of both
physical and behavioral disorders. Employers understand the importance
of quality mental health coverage for their employees and to
maintaining a productive, healthy workforce.
Because of the importance our members place on these services, we
have repeatedly urged Congress not to expand the current federal parity
requirements in a way that would add to plan costs or increase the
complexity of plan administration. Doing so could unintentionally risk
a reduction in coverage for these or other benefits provided to
employees and their families.
The American Benefits Council strongly prefers S. 558 over other
parity measures that have been considered by the Senate, as well as
H.R. 1424, the parity bill that is the subject of this hearing. Unlike
H.R. 1424, the Senate proposal does not mandate that health plans cover
specific mental health benefits. It leaves those decisions up to
employers and in the case of fully insured health plans, permits States
to continue to determine whether to require any particular benefits.
The Senate bill makes clear that medical management of mental health
benefits is not prohibited and preserves flexibility for employers and
health plans in the formation of networks of health care providers who
deliver these services. These provisions are vitally important because
they allow employers to appropriately design and manage the health
coverage they offer to meet their employees' needs.
Finally, the Senate bill provides for a very targeted and narrow
preemption of State insurance law (applicable to fully insured plans,
as well as to self-insured plans) that assures a uniform federal rule
for the specific parity requirements of S. 558 (e.g., treatment limits,
financial requirements, cost exemption), while preserving the
traditional role of the States to regulate mental health benefits
provided under insurance policies in all other respects.
Unfortunately, the House parity bill does not address the issues of
key concern to employers in the same balanced fashion as the Senate
bill. The American Benefits Council has played a constructive and
active role in the multi-stakeholder negotiations that have helped
shape the Senate mental health parity bill and are prepared to do the
same with the House bill to make the changes we believe are necessary
to achieve a more balanced approach to expansion of federal mental
health parity requirements.
prepared statement
Mr. Chairman and members of the Subcommittee, thank you for the
opportunity to share the views of the American Benefits Council on the
Paul Wellstone Mental Health and Addiction Equity Act of 2007. My name
is Jon Breyfogle. I am the Executive Principal of the Groom Law Group.
Groom Law Group is a Washington DC based law firm that specializes
exclusively in employee benefits law. In my practice, I represent a
wide range of large employers and insurers on the legal issues
surrounding sponsoring health plans and offering services to health
plans. I am a member of the Board of Directors of the American Benefits
Council and am testifying on behalf of the Council.
The American Benefits Council's members are primarily major
employers and other organizations that collectively sponsor or
administer health and retirement benefits covering more than 100
million Americans. Most of our members are very large companies that
have employees in most or all 50 states and provide extensive health
coverage to active employees and retirees. The Council's membership
also includes organizations that provide benefits services to employers
of all sizes, including small employers who often face the greatest
challenges in providing health coverage for their workers.
Employers Recognize the Importance of Behavioral Health Care
The American Benefits Council's members have long recognized the
importance of effective health coverage for the treatment of both
physical and behavioral disorders. Because of the importance our
members place on these services, we have repeatedly urged Congress not
to expand the current federal parity requirements in a way that would
add to plan costs or increase the complexity of plan administration.
Doing so could unintentionally risk a reduction in coverage for these
or other benefits provided to employees and their families.
We also recognize that much has changed in the behavioral health
care field over the past decade since the enactment of the current
federal mental health parity requirements in 1996. Better medical
evidence on behavioral health conditions has become available and
better treatment options have advanced during this period. In many
cases, the way in which behavioral health conditions are covered by
health plans has also changed, particularly with the emergence of
health plan administrators that specialize in the management of
behavioral health care services in a wide range of outpatient and
inpatient settings.
As the field of behavioral health care has changed during this
time, it has become increasingly clear that the ability of employers to
provide access to affordable and appropriate health care services,
including for behavioral health conditions, depends on the ability of
health plans to do an effective job in the medical management of health
benefits. This often involves challenging tasks to try to ensure that
plan participants get the right care and effective care under the terms
of their plans and for the health conditions they have. Employers have
a strong interest and an enormous stake in seeing that these tasks are
performed well, not only because employers are the primary payers for
the health care coverage for millions of American workers, but also
because of the importance they place in maintaining a healthy and
productive workforce.
Senate Parity Legislation
Before I address the concerns we have with the House of
Representatives mental health parity bill, H.R. 1424, I want to
emphasize that employers understand and appreciate how vitally
important effective behavioral health care is for millions of
Americans. Employers spend considerable sums of money providing
behavioral health care coverage and are not irrevocably opposed to any
legislation enhancing parity requirements.
Over the past several months, three Senate sponsors of mental
health parity legislation (Mental Health Parity Act of 2007--S. 558)--
Senate HELP Committee Chairman Kennedy, HELP Committee ranking member
Senator Enzi and Senator Domenici--have tried to resolve the difficult
and important issue of changing the current federal parity
requirements. Their bill has been developed through an inclusive and
thorough process that has given all the major stakeholders on this
issue--employers, health plans, behavioral health care providers and
patient advocates--the opportunity to have their concerns heard and
addressed.
The American Benefits Council has been privileged to have
participated in this process as a representative of employer interests.
While these discussions have been demanding and have required much give
and take on all sides, we also think that it has resulted in a bill
that balances the interests of a divergent set of stakeholders. We
believe the process employed could serve as a model for how Congress
might be able to tackle other similarly challenging health policy
issues.
S. 558 is not perfect from our perspective, but no true compromise
proposal ever is. That said, the Senate parity measure has gained the
support of mental health parity proponents and a broad range of
organizations representing employers and insurers. In that regard, the
Senate bill is unique. We hope this good faith effort sends an
important message that employers will support legislation where their
priority concerns are addressed in a thoughtful manner and with careful
attention to details, even when our preferred outcome would be no new
legislation or an even better bill.
Here are the key reasons why the American Benefits Council strongly
prefers the Senate bill over other parity measures that have been
considered by the Senate, as well as H.R. 1424, the parity bill that is
the subject of this hearing.
First, the Senate proposal does not mandate that health plans cover
specific mental health benefits. It leaves those decisions up to
employers. In the case of fully insured health plans, however, the
Senate bill permits States to continue to determine whether to require
any particular benefits.
Second, the Senate bill includes a provision making clear that
medical management of mental health benefits is not prohibited and
preserves flexibility for employers and health plans in the formation
of networks of health care providers who deliver these services. These
provisions are vitally important because they allow employers to
appropriately design and manage the health coverage they offer to meet
their employees' needs.
Finally, the Senate bill provides for a very targeted and narrow
preemption of State insurance law (applicable to fully insured plans,
as well as to self-insured plans) that assures a uniform federal rule
for the specific parity requirements of S. 558 (e.g., treatment limits,
financial requirements, cost exemption).
We recognize that this modest preemption rule in the Senate bill
has generated some criticism and that the provision deviates from the
``federal floor/state ceiling'' preemption rule that currently applies
to fully insured plans under the existing federal mental health parity
requirements in section 712 of the Employee Retirement Income Security
Act (ERISA). However, this provision is targeted and well justified.
This narrow preemption rule was included in S. 558 because the sponsors
of the legislation recognize that the parity rules of the Senate bill
are very comprehensive and deserving of a uniform Federal approach. In
fact, it is hard to imagine a broader parity requirement pertaining to
treatment limits and financial requirements. Indeed, S. 558 would
extend broad new parity requirements to participants in insured plans
in the 8 states that currently have no parity requirement and expand
upon the parity requirements applicable to insured plans in
approximately 17 other states.
The sponsors of the Senate bill have approached this matter with
great thought and care to ensure that the targeted new preemption rule
preserves the traditional role of the States to regulate mental health
benefits provided under insurance policies in all other respects. For
example, special rules are included in the bill that ensure that:
State laws that mandate mental health benefits for fully
insured plans are preserved;
State laws that include parity requirements together with
non-parity requirements (e.g., some form of mandated benefit) will not
be completely preempted as they apply to fully insured plans--only the
State's specific and different parity requirements will be preempted
and the other aspects of State law will be preserved;
State laws that set parity requirements for insurance
offered in the small group market are preserved;
State laws that set parity requirements for the individual
insurance market are preserved;
State laws that define the term ``mental health benefits''
will not be preempted for fully insured plans;
State laws that require that insurers offer out of network
coverage for mental health benefits are not preempted; and
State laws that regulate the ability of insurers to manage
mental health benefits for fully insured plans are not preempted.
To ensure that there are no unintended preemption consequences
associated with the Senate bill, the sponsors of the Senate bill have
set out all of these rules explicitly in the text of S. 558. In my
view, these provisions are belts and suspenders to begin with--arguably
they are not even needed because the basic preemption rule in the bill
is narrowly targeted to begin with. The fact that employers have worked
closely with the Senate sponsors in the crafting of these comprehensive
clarifications relating to State insurance laws demonstrates the good
faith negotiations that have occurred. As a practicing lawyer in this
area, there is no doubt in my mind that any court or regulator that
would be called on to interpret the Senate bill will fully understand
that the Congress went out of its way to preserve and respect the
traditional role of the States to set standards for participants of
fully insured plans. Any arguments to the contrary are simply without
merit.
Employer Concerns with the House Mental Health Parity Bill
Unfortunately, the House parity bill does not address the issues of
key concern to employers in the same balanced fashion as the Senate
bill. As such, we urge that several changes be made to the legislation
as it is further considered. The primary issues which we believe need
to be addressed are the following:
1. Flexibility Needed in Covered Benefits
Under the House parity bill, if a health plan provides ``any''
mental health or substance-related disorder benefits, then the plan
must cover all of the same mental health and substance disorder
benefits as are provided to federal employees under the Blue Cross and
Blue Shield standard option health plan (the most heavily enrolled
health plan offering under the Federal Employee Health Benefits
Program). Plans offered to federal employees are required to cover all
conditions listed in the so-called DSM-IV manual, the diagnostic manual
used by mental health care professionals to identify and categorize all
disorders in this area. So, while the benefit mandate is stated
somewhat differently than it has been in previous mental health parity
bills, the basic requirement in the House bill is to cover all mental
health and substance-related disorders if a plan covers any services at
all in this area. Of course, the vast majority of plans do provide such
services.
We have several concerns about this sort of requirement. First, it
is not necessary to achieve the purposes of the legislation, which is
to provide parity in any financial requirements and treatment limits
which a plan applies to the benefits it covers. In our view, requiring
a plan to provide coverage for all of the conditions which are
identified in the diagnostic manual used by health care providers is
not a ``parity'' rule--it is a benefits mandate. In fact, it does not
establish ``parity'' at all because it requires much more specificity
of coverage than is required for any non-behavioral health conditions.
Such a requirement would send an immediate message to employers that
they no longer have any discretion over decisions about what benefits
they cover for their employees in this area of their plan, except the
decision to provide no coverage for these conditions at all.
In addition, state laws currently govern which benefits are
required to be covered for fully insured health plans so this is a
matter that can be, and often is, decided by the states for the health
plans which they regulate. In terms of self-insured health plans which
are regulated under federal law, there are no similar requirements
applied to any other broad category of health conditions or services
which are typically covered by employer-sponsored health plans, in
recognition that this is an important area of discretion for employers
when they voluntarily choose to provide health coverage to their
employees.
2. Protection for Medical Management Practices
Another major concern with the House bill is that, unlike the
current Senate measure, there is no specific protection for medical
management practices for self-insured plans. It is important to
preserve the ability of plans to manage coverage for mental health
conditions and substance-related disorders. We believe that employers
should be able to design plans so that proposed treatments for these
conditions are, whenever possible, consistent with standards for
evidence-based care. Indeed, in our view, the Senate bill's protection
for medical management does not go far enough--we would have greatly
preferred that the Senate bill preempt State insurance laws that limit
the ability of insurers to manage mental health benefits for fully
insured plans. But not doing so is one of the many compromises included
in the Senate bill.
One of the most important developments now occurring in the health
care field is in the preparation of measures by numerous clinical
specialty groups to help define appropriate care and expected outcomes
for patients for a wide range of conditions. Purchasers, health care
providers, consumer groups and many others are actively working in
several different forums to reach consensus on evidence-based measures
of quality health care. While much more needs to be done to achieve a
fully transparent and more accountable health care system, there can be
little doubt that the movement to achieve consistent measures of
quality care is a major step in the right direction and can help drive
overall health system reform.
We need to be careful to ensure that neither State nor federal laws
undercut or diminish efforts by plans to try to ensure that the health
care services received by plan participants are medically necessary and
appropriate for their conditions. Some health plans contract with
managed behavioral health care organizations for this purpose while
others perform medical management services as part of their core plan
operations. Either way, it is essential to safeguard these important
activities so that plans are able to ensure that coverage is provided
for quality health care services and protect themselves and their
participants from unnecessary costs. Advocates of H.R. 1424 maintain
that it is not their intention to interfere with medical management and
that nothing in the legislation would explicitly do so (i.e., the bill
is simply silent on the matter). This is very encouraging, but to
ensure that result, we urge the House to amend H.R. 1424 to include the
Senate bill's specific language to make that point absolutely clear.
3. Discretion Needed for Out-of-Network Coverage
A third significant concern that employers have with the House bill
is that it mandates coverage for mental health and substance-related
disorders by out-ofnetwork providers if a plan provides coverage for
substantially all medical or surgical services on an out-of-network
basis in any of three different categories (emergency services,
inpatient services or outpatient services). This requirement limits
important discretion in plan design. It also exceeds what is required
under the Federal Employee Health Benefits Program where parity is
required only for services provided on an in-network basis.
We would recommend that the House bill adopt the Senate approach
which includes a federal standard that calls for parity in plan
financial requirements and treatment limitations for any out-of-network
mental health coverage provided by a plan, but the Senate provision
does not require plans to offer outof-network coverage even where out-
of-network coverage is offered for other medical benefits. As noted
above, the Senate bill preserves the traditional role of the States to
regulate fully insured health plans in this area, so it does not
interfere with State laws which may require insurers to offer out-of-
network mental health coverage.
4. Changes Needed to Preemption Provisions
We have significant concerns with the provisions in the House
parity bill which would authorize States to provide ``greater consumer
protections, benefits, methods of access to benefits, rights or
remedies'' than the provisions set out in the legislation. Clearly,
this language gives States the ability to develop parity laws, at least
for fully insured health plans, that are more extensive than the
federal standards provided in the House bill. We prefer the approach
adopted in the Senate bill, which would establish uniform federal
parity rules applicable to treatment limitations and financial
requirements for both self-insured and insured plans while preserving
the traditional authority of States to require fully insured plans to
provide mental health coverage.
The more troubling aspect of this provision in the House bill is
that it opens the door for greater State law remedies for disputes
involving mental health benefits for participants in insured plans. The
Supreme Court has issued numerous rulings making clear that ERISA's
enforcement scheme is exclusive for both fully insured and self-insured
plans and completely preempts alternative State remedial schemes. It
makes no sense whatsoever to allow access to State law remedies for one
category of benefits--i.e., participants in fully insured plans for
disputes over mental health benefits. To the extent the House bill is
interpreted to revise remedies for all types of benefit disputes, H.R.
1424 is certainly not the vehicle to do so. The debate over ERISA's
remedies has occurred over many years, generally in the context of the
Patients' Bill of Rights. Such a fundamental issue as ERISA's remedial
scheme should not be an adjunct to a bill whose purpose is to address
mental health parity.
The uniformity that ERISA establishes for employer-sponsored
coverage, including its enforcement and remedies scheme, is sound
public policy and is something employers consider crucial to their
voluntary decision to offer health coverage to their employees. If
Congress believes that changes are needed in this area, such changes
should be debated on their own merits rather than included as one of
many provisions of a mental health parity bill.
House and Senate Parity Bills Fail to Apply to Federal
Programs
One of the many omissions of both the House and Senate parity bills
is that they fail to extend the same parity requirements to the mental
health benefits provided to millions of elderly and low-income
Americans who are covered under Medicare and Medicaid. While we are
aware that separate legislation sponsored by Rep. Pete Stark, H.R.
1663, would partially address this situation by requiring parity for
benefits covered by Medicare, nearly all of the debate and focus
concerning mental health parity over the past decade in Congress has
been around employer-sponsored health coverage.
We believe it is indefensible for Congress to impose parity
requirements on employer-sponsored health coverage, for both private
sector employers and state and local government health plans, while
ignoring the same issues in the programs that the Federal government
sponsors and pays for. If either the House or Senate bills were
enacted, mental health parity would be the law for employer-sponsored
coverage and, through previous action by Executive Order, for coverage
offered to federal employees (including members of Congress), but not
for those covered under Medicare or Medicaid.
It would send a fundamentally different message to employers if
mental health parity was not simply something that Congress was seeking
to apply solely to employer-sponsored health coverage, but was being
done as part of a more omnibus effort to achieve the same standards in
all federal health programs as well.
Conclusion
Thank you for the opportunity to testify today and share our views
with you on these important issues. Employers understand the importance
of quality mental health coverage for their employees and to
maintaining a productive, healthy workforce. We also fully understand
the strong sentiment in Congress to expand upon the current federal
mental health parity requirements. The American Benefits Council has
played a constructive and active role in the multi-stakeholder
negotiations that have helped shape the Senate mental health parity
bill. We are prepared to do the same with the House bill if a similar
approach is taken to making what we believe are important and needed
changes to ensure a more balanced proposal.
______
Chairman Andrews. Thank you very much, Mr. Breyfogle. As
usual, very well-prepared.
Mr. Melek, welcome to the committee. We look forward to
hearing your statement.
STATEMENT OF STEVE MELEK, ACTUARY, MILLIMAN, INC.
Mr. Melek. Good afternoon, Chairman Andrews and members of
the Subcommittee on Health, Employment, Labor and Pensions. It
is my pleasure and honor to testify before you on the Paul
Wellstone Mental Health and Addiction Equity Act of 2007.
My name is Steve Melek, and I am a fellow of the Society of
Actuaries and member of the American Academy of Actuaries. I am
a health care actuary with Milliman, which is a leading
actuarial consulting firm that consults to virtually all health
insurers and managed care plans in the U.S. and many employers.
I have been with Milliman for 17 years and have specialized
in actuarial work related to behavioral health care. Our report
contains the findings of the Milliman authors. Please note that
Milliman does not endorse legislation.
My work with parity dates back to the analysis of the
Health Insurance Reform Act of 1995. I personally helped health
insurers, providers, employers, managed behavioral health care
organizations and state governments price behavioral health
benefits, including legislation in Nebraska and Washington
state within the last year.
Milliman was commissioned by Capital Decisions Inc. on
behalf of several behavioral provider organizations. Our full
report contains important details about our findings, sources
and methodology.
From an actuarial standpoint, parity will bring the benefit
limits and cost-sharing for behavioral health care in line with
medical benefits. For example, a benefit plan might have a $10
co-pay for an office visit for a medical condition but a $25
co-pay for a therapy visit to a psychologist.
In addition, a benefit plan might limit behavioral therapy
to 20 visits per year but have no physician visit limits for
medical conditions.
Obviously, that can increase costs for the insurer or
employer, and it will decrease the amount the patient pays out
of pocket.
Our estimates show that the cost increase is modest
relative to total health care costs and to the ongoing annual
cost increases of health benefits.
We estimate this legislation would increase per capita
health insurance premiums of typical health plans in 2008 by an
average of 0.6 percent, or $2.40 per member per month, in our
baseline scenario.
In that scenario, we assume that employers and health plans
will take no steps to compensate for the added cost, such as
increasing cost-sharing or increasing utilization management.
Thus, our estimate is conservative, meaning it is on the high
side.
Employers and insurers commonly try to compensate for
increased cost by reducing benefits or increasing employee
premium contributions. The CBO, in its cost analysis of Senate
Bill 558, considered that employer responses will remove about
60 percent of the cost increase.
Applying this CBO figure to our baseline scenario increase
of 0.6 percent reduces the net cost increase to about 0.2
percent.
Another response of employers and insurers to increased
cost is to increase the intensity of utilization management.
The legislation does not appear to prevent the use of
utilization management, or U.M.
We developed another scenario, our increased U.M. scenario,
where payers would tighten their behavioral health care
utilization management. In this scenario, our cost estimates
result in an aggregate premium increase of less than 0.1
percent, or three cents, per member per month.
As members of the subcommittee are well aware, there is
enormous variation in the health system, and the increase for
any specific insurance plan will vary with many factors.
While we can't construct a set of circumstances where the
cost increase for a specific plan could be 1 percent to 2
percent or more, we believe such plans cover a small portion of
the people with group health coverage, probably less than 5
percent.
Increasing benefits for behavioral health care services may
result in reductions in other health care and employer costs.
This is because better behavioral health care can improve a
person's medical conditions.
It may also lead to an increase in the use of psychotropic
drugs. We did not consider these effects in our report.
We assumed coverage consistent with DSM-IV, but we did not
include treatment for tobacco use, obesity or the side effects
of medication.
We provide some information references regarding the well-
established evidence base for diagnosis and treatment of mental
and substance-related disorders which is on par with that for
diagnosis and treatment of medical and surgical conditions.
We also summarized how this evidence should be used for
medical necessity determinations by payers in the utilization
management process.
We also present summary information from Thompson Health
Care's work for SAMHSA. It shows that spending trend increase
for mental health and substance abuse-related services was less
than that for total health care spending between 1993 and 2003.
Future growth in behavioral spending is also projected to
lag other health care spending, partly because there is less
new technology expected for behavioral than for medical care.
Another trend we report is that the private insurance
portion of national mental health spending increased from 21
percent in 1986 to 24 percent in 2006, while substance abuse
disorder spending decreased from 30 percent to 9 percent.
Thank you again for the opportunity to present our report
today.
[The statement of Mr. Melek follows:]
An Actuarial Analysis of the Impact of H.R. 1424, by Stephen P. Melek,
et al, Milliman, Inc.
I. Executive Summary
Milliman, Inc. was commissioned by Capitol Decisions, Inc. to
perform an independent study and actuarial analysis of the impact of
behavioral health insurance parity legislation on behalf of several
interested parties.\1\ This report contains the authors' analysis of HR
1424, cited as the ``Paul Wellstone Mental Health and Addiction Equity
Act of 2007''.
HR 1424 would require that each group health plan or health
insurance issuer offering group health insurance coverage to employers
with more than 50 employees provide ``parity'' benefits for the
diagnosis and treatment of all behavioral healthcare. In particular,
the mental health and substance-related disorder benefits would have to
be covered on the same terms as for the diagnosis and treatment of all
physical health conditions. This includes the same treatment limits and
beneficiary cost sharing for both in-network and out-of-network
benefits. Additionally, HR 1424 defines a minimum scope of coverage for
mental health and substance-related disorders as the same range of
mental illnesses and addiction disorders covered by the health plan
with the largest enrollment of federal employees (under chapter 89 of
title 5, United States Code).
Findings
Our estimates indicate that the legislation will increase
per capita health insurance premiums of ``typical'' plans in 2008 by
0.6%, or $2.40 per member per month, if no increase in utilization
management activities occurs in response to parity. This is our
``Baseline Scenario.''
The legislation does not appear to prevent the use of
utilization management (UM), and under our ``Increased UM Scenario'',
where all benefit plans would choose to further tighten their degree of
behavioral healthcare management, our cost estimates result in an
aggregate premium increase less than 0.1%, or $0.03 per member per
month. Since some insured plans will likely increase their utilization
management while others will not, the actual cost increase will likely
fall between the less than 0.1% and 0.6% aggregate results.
The Congressional Budget Office (CBO) has estimated that
typical employer responses to required coverages will result in cost
reductions of about 60% of the gross cost estimate.\2\ Applying this
CBO estimate, aggregate employer contributions for health costs would
rise by about 0.2% under our baseline scenario, and by less than 0.1%
under our increased UM scenario.
We project that utilization of facility-based behavioral
healthcare services would increase by 9.7%, while professional services
would increase by 30.0% under the Baseline Scenario. Our Increased
Utilization Management (UM) Scenario shows much different results: a
21.3% decrease in use of facility-based services (the majority from
mental health services) and a 3.1% increase for professional services.
We project that member out-of-pocket costs for behavioral
health services will decrease by 18%, or about $0.20 per member per
month under the baseline scenario. This reflects a balance between an
increase in total out-of-pocket costs from higher service use by
members under the higher parity benefit limits and a decrease in out-
of-pocket costs per unit due to lower parity cost-sharing. For every
100,000 fully insured lives, member out-of-pocket costs are estimated
to drop by $240,000 annually.
We projected increased administrative costs in proportion
to the benefit cost increases due to parity. Administrative costs
account for about 15% of the total increase, or $0.36 or less per
member per month.
Increasing benefits for behavioral healthcare services may
result in cost offsets from other healthcare services, particularly
visits to primary care physicians and emergent/urgent care visits.
Increasing benefits may also result in increased use of
pharmaceuticals. We did not consider the effects of any such offsets or
dynamics.
Limitations
Our analysis used actuarial data that reflect the experience of
individuals covered through commercially available benefit plans. To
represent current coverage, we selected ``typical'' PPO and HMO benefit
plans.\3\ We utilized a distribution of covered members by type of
benefit plan.\4\ The estimates represent averages that may not be
applicable to any individual underlying population segment or any one
plan.
Because the economy and the healthcare system are dynamic, there is
an intrinsic uncertainty in projecting healthcare costs, especially
under healthcare reform, and that uncertainty applies to our work. The
estimates presented here are based on a number of assumptions as
described in Appendix A. Other researchers who use other assumptions
and methods may present different estimates, and the actual costs may
depend in part on factors we have not considered.
This report is not intended to support or detract from any
particular legislation. It is intended for the exclusive use of the
parties who commissioned the study and not intended to benefit any
third party. This report should not be distributed without the
permission of Milliman, and any distribution should be of the report in
its entirety. This report reflects the authors' analysis and should not
be interpreted as representing Milliman's endorsement.
II. Key Actuarial-Related Elements of HR 1424
HR 1424 would bring parity in coverage for behavioral health
benefits. HR 1424 would only apply to large group business, with small
group business covering 50 employees or less and individual business
being excluded from the requirement.
HR 1424 specifies that each group health plan or health insurance
issuer offering health insurance coverage in connection with a group
health plan provided to employers, provide benefits for the diagnosis
and treatment of all behavioral healthcare, including mental health and
substance-related disorders, on the same terms and conditions as those
provided under the policy for the diagnosis and treatment of all
physical health conditions. This includes the same treatment limits and
beneficiary financial requirements. For coverage of inpatient hospital
services, outpatient services and medication, the same coinsurance,
copayments, other cost-sharing, limits on out-of-pocket expenses, and
individual and family deductibles must apply equally to medical-
surgical benefits and to mental health and substance-related disorder
benefits. This requirement applies to in-network benefits and out-of-
network benefits.
We have assumed that for parity benefits to apply, a licensed
clinician would have to provide the diagnosis and treatment, which is a
typical requirement for any covered benefit. We have also assumed that
if a plan covers clinical trials or investigational treatments for
physical conditions, then such coverage would also apply to behavioral
conditions.
We have assumed that covered substance-related disorders are
consistent with those described in the Diagnostic and Statistical
Manual of Mental Disorders, Fourth Edition (SM-IV). However, in our
analysis, we do not include treatment for tobacco use, treatment of
obesity or side effects of medication.
We have assumed the legislation would not prevent insurers from
negotiating terms with behavioral health care providers on
reimbursement rates and other service delivery terms, managing the
provision of benefits, the use of pre-admission screening, step
therapy, or other mechanisms to enforce medical necessity requirements,
or enforcing the terms and conditions of a policy or plan of benefits.
III. Healthcare Cost and Premium Impact
HR 1424's mental health and substance-related disorder parity
provisions would affect commercial health plans' costs principally by:
Removing benefit limitations that often apply to mental
illness and substance related conditions, but not physical medical
conditions
Requiring beneficiary cost-sharing provisions for such
services is equal to those for care for all other physical diseases and
disorders.
These plan changes would also likely result in increased premium
rates in the absence of compensating changes to plan design or plan
operations.
We estimate that, under our Baseline Scenario, adding full parity
to behavioral healthcare benefits will increase costs, on average, by
0.6% for plans affected by the legislation. We estimate that an average
health plan in the United States will have 2008 monthly premiums of
about $450 for an employee with single coverage and about $1,200 for an
employee with family coverage. The increases in monthly premiums due to
parity are estimated to be $2.80 for single coverage and $7.40 for
family coverage.
The increase for any specific insurance plan would vary, depending
on the type of benefit plan (PPO, HMO, etc.), the scope and design of
behavioral and other benefits currently covered, demographics of
covered members, and the level of managed care applied to the
behavioral health benefits. While the cost increase for a specific plan
or employer under certain circumstances could be 1% to 2% or more (such
as a plan without managed care that currently has very little coverage
for behavioral healthcare services), we believe such plans cover a
small portion of the people with group plans (probably less than 5%).
Following is a detailed discussion of our methodology, assumptions
and findings.
A. Cost Estimation Approach and Baseline Results
To estimate the cost associated with HR 1424, we built actuarial
models that reflect current, typical healthcare coverage and then
estimated the cost changes due to parity. We assumed national average
cost and utilization levels and note that both utilization and cost can
vary dramatically by location, and health insurance coverage varies
greatly in the scope of covered services and member cost-sharing.
We used two model benefit designs to represent typical insured plan
benefits. One is a PPO plan and the other an HMO plan, and the benefit
designs are consistent with the benefit plan descriptions in Milliman's
annual Group Health Insurance Survey. Approximately 190 HMO plans and
210 PPO plans participated in the Survey in 2006.
We used these two model plans to represent the plan types and
behavioral benefits that are common today. They vary in benefit
structure, limitations on choice of providers, and level of managed
care.
For both model plans, we estimated current average per member per
month (PMPM) costs and average premiums charged by insurers. We also
estimated the costs and premium levels if the behavioral health
benefits of these plans were increased to comply with the modeled
parity provisions.
We show percentage changes in premiums. The same percentage changes
would also apply to administrative expenses of health insurers or
health plans, which reflects our assumption that administrative
expenses would change proportionately to the underlying change in
benefit costs. For benefit cost changes of the relatively small
magnitude presented in this report, we believe this proportionate
assumption is reasonable.
In developing these estimates, we used the Milliman Health Cost
Guidelines,\5\ our proprietary actuarial pricing guidelines. We also
used certain trend, utilization and cost data provided by health plans
to the Milliman Group Health Insurance Survey for 2006.\6\ Appendix A
provides more detailed information on our assumptions and approach.
Table 1 presents the estimated change in premium rates resulting
from the expected behavioral parity legislation for both model plans.
These estimates assume no change in benefits other than the behavioral
health benefits, and they assume no change in the level of utilization
management within each plan. We refer to this as our ``Baseline
Scenario''.
We estimated the distribution of members for our model plans from
information contained in the Survey of Employer Health Benefits 2006,
as published by the Henry J. Kaiser Family Foundation and the Health
Research and Educational Trust.\7\ This distribution is shown in Table
1 along with the resulting overall premium increase across our model
plans.
TABLE 1.--ESTIMATED 2008 CHANGE IN PREMIUM RATES FOR MODEL PLANS
[BASELINE SCENARIO--NO CHANGE IN UTILIZATION MANAGEMENT]
------------------------------------------------------------------------
Estimated Premium Membership
Model Plan Type Change Distribution
------------------------------------------------------------------------
HMO Plan 0.6% 25%
PPO Plan 0.6% 75%
------------------------------------------------------------------------
Total 0.6% 100%
------------------------------------------------------------------------
It is important to note that these premium estimates reflect the
assumptions we have made regarding average plan benefits. Based on the
information available and our knowledge of today's health insurance
marketplace, we believe these results represent a reasonable estimate
of overall average premium changes. However, actual plan provisions
involve a great deal more variation than exhibited by our model plans.
If we could evaluate all benefit plans actually applicable to U.S.
residents, we would find a greater range of premium changes than
illustrated in Table 1. In particular, some plans have more limited
behavioral benefits than we have modeled, and the corresponding cost
increases under parity for these plans could be 1% to 2% or higher,
while other plans will have very small cost increases of under 0.2%.
B. Role of Managed Care
Many HMOs and PPOs delegate management and administration of their
behavioral healthcare coverage to a specialty managed behavioral
healthcare organization (MBHO), often paying the MBHO a fixed,
``capitated'' premium. These business arrangements are sometimes called
``carve-outs.'' MBHOs may apply utilization management techniques and
use provider payment arrangements to manage costs. Health plans that do
not use MBHOs may also apply these techniques ``in-house.''
Under either the carve-out or in-house approach, we have observed
managed behavioral healthcare costs are often 25% to 50% lower than
costs of non-managed benefit packages. When legislative mandates
require parity for mental health and substance-related disorder
services, increases in costs are significantly lower for managed care
plans.
Because of this dynamic, behavioral healthcare parity tends to
encourage health insurers to tighten utilization management controls,
which is allowed by HR 1424. Typical actions would include greater
application of pre-authorization and concurrent review, including
stricter adherence to evidence-based clinical protocols. Employers may
choose to modify some of the benefit plans they offer to their
employees, substituting plans with greater degrees of managed care
provisions. This could involve greater use of carve-out MBHO vendors,
or substituting HMO plans for PPO plans.
To illustrate the potential impact of such tightening of managed
care, we developed a scenario that reflects a greater application of
utilization management (UM). This is our ``Increased UM Scenario''.
Appendix A provides an explanation of the managed care levels
described.
The Baseline Scenario levels of managed care were chosen based on
reported utilization rates of behavioral healthcare services of health
plans that participated in the national Milliman Group Health Insurance
Survey of 2006 and our knowledge of the managed behavioral healthcare
industry. Table 3 summarizes the estimated premium changes under the
Increased UM Scenario and compares them with those of the Baseline
Scenario.
TABLE 3.--ESTIMATED 2008 CHANGE IN PREMIUM RATES FOR MODEL PLANS
[INCREASED UM AND BASELINE SCENARIOS]
------------------------------------------------------------------------
Estimated Premium Change
Model Plan Type ------------------------------------------------
Baseline Scenario Increased UM Scenario
------------------------------------------------------------------------
HMO Plan 0.6% < 0.0%
PPO Plan 0.6% < 0.1%
------------------------------------------------------------------------
Total 0.6% < 0.1%
------------------------------------------------------------------------
Under the increased UM scenario, the cost of the additional parity
benefits is offset by savings from utilization management. Costs for
the HMO Plan and PPO Plans would be expected to barely change, despite
the increase in benefits. This is consistent with our experience, where
introduction of managed care or increased intensity of managed care
related to behavioral healthcare services often produces significant
reductions in costs.
Some plans will react in the fashion described, while others may
not make a change (either because they are already managing their
behavioral healthcare benefits or because they would choose to not
change after parity). Thus, the actual aggregate impact of the parity
legislation on premium rates would likely fall between the two high and
low values (< 0.1% for the Increased UM Scenario and 0.6% for the
Baseline Scenario).
When managed care is tightened for behavioral healthcare benefits,
prescription drug use for treatment of mental illness may increase as
psychotherapy visits and facility-based care fall. Some believe the
cost of increased prescription drug utilization offsets some of the
savings due to increased managed care, although the widespread
availability of generic drugs could ameliorate this drug cost. We are
not aware of studies of this dynamic, and our cost estimates do not
reflect any such increases in prescription drug costs.
C. Impact on Employers
The increase in premium rates for specific employers will depend on
the benefit plan(s) and the level of coverage currently provided.
Employers already providing full parity for these benefits would incur
no cost increase.
Employers could respond to a parity cost increase by changing
benefit plans or by increasing employee premium contributions, rather
than absorbing the full increase. In particular, they may choose to
offer plans with greater levels of managed care or higher insured cost-
sharing. The Congressional Budget Office (CBO) addressed the issue of
potential employer responses to behavioral health parity in a 1996
report.\8\ While CBO estimates that approximately 60% of the gross
increases would be offset by reductions in benefits, the report also
discusses the uncertainty inherent in such estimates, as follows:
``Projections of the relative magnitude of the possible responses
are, inevitably, speculative. The best studies of the effects of
mandates on health insurance coverage have large margins of error
associated with their estimates. Some empirical questions, such as the
degree to which other components of health benefits would be dropped in
response to a mandate about a specific component of coverage, have
simply not been addressed by academic studies.''
The CBO continued to use this 60% offset assumption in their cost
estimate of the Mental Health Parity Act of 2007, S. 558.\9\
IV. Impact on Access and Use of Behavioral Health Services
We expect access to and utilization of certain behavioral
healthcare services to increase with the proposed behavioral health
parity because of two dynamics:
1. Calendar limits on the maximum number of covered inpatient
hospital days, outpatient professional visits and any other benefit
limits for behavioral health benefits cannot differ from those used for
all physical health benefits. While health plans currently include such
limits on behavioral healthcare benefits, members typically have access
to unlimited inpatient and outpatient physical healthcare.
2. Insured copayments and cost-sharing must be on par with physical
health benefits. Behavioral healthcare benefits often have higher
levels of insured cost-sharing, and higher out-of-pocket costs tend to
discourage behavioral healthcare use. However, members may more
frequently visit psychotherapists if the per visit copay is $10 rather
than $25.
In our model, we estimated the impact behavioral healthcare parity
would have on facility-based services (inpatient hospital, partial
hospital and other outpatient hospital) and on professional services
(diagnosis, evaluation, therapies and medication management). Facility-
based utilization would increase by 9.7% and professional utilization
would increase by 30.0% under our Baseline Scenario. These increases
reflect both higher numbers of users of behavioral healthcare and
greater numbers of services used by some patients.
The expected utilization change would be much lower under the
Increased UM Scenario. Utilization management can significantly reduce
utilization of behavioral healthcare services--specifically those that
may be deemed as not medically necessary. This typically results in
fewer and shorter inpatient hospital admissions, shifting some use to
outpatient settings, and shorter treatment duration for selected
patients. In the Increased UM scenario, we estimate that facility-based
service utilization would decrease by about 21.3%. Professional service
utilization would increase by about 3.1%.
V. Impact on Member Out-of-Pocket Costs
As described above, behavioral healthcare parity is expected to
reduce insured member out-of-pocket costs as a result of lower cost-
sharing. We modeled the impact of behavioral health parity on these
costs, using the benefit designs in Appendix B. We project that insured
out-of-pocket costs will decrease by 18%, or about $0.20 per member per
month under the Baseline Scenario. This is the net result of increase
in member costs due to additional service use and decreases in out-of-
pocket costs per unit due to higher coverage levels. For every 100,000
fully insured lives, insured out-of-pocket costs are estimated to drop
by about $245,000 per year under this scenario. These figures are for
behavioral health care only, but are spread across the entire covered
membership, not just the users of behavioral health benefits.
Our model PPO plan has an integrated out-of-pocket limit for all
services (including behavioral). If cost sharing shrinks for behavioral
care, the contributions of this cost sharing toward out of-pocket
limits decreases. On average, across a population of covered lives,
this dynamic produces a very small increase in cost sharing for non-
behavioral services.
VI. Impact on Health Plan Administrative Costs, Risk Margins and
Profits
Health plans' administrative expenses consist of true
administrative cost, risk margins and profits, and we assumed these
would change proportionately to the change in benefit costs. This
reflects the expected impact on claims processing, utilization
management and other administrative functions, and risk margins. While
a detailed examination of administrative expense may show particular
additional changes due to parity, the relatively small magnitude of the
changes relative to total plan expenditures make the proportionate
assumption reasonable. We note that this assumption should be revisited
when considering organizations such as managed behavioral health carve-
out companies, because their business is concentrated in areas affected
by parity.
We have assumed that the covered services net of cost sharing
represent 85% of the total Health Plan premiums. Therefore, the
remaining 15% of premium is for administrative costs, risk margins and
profits. We note that some programs may have smaller or larger costs
for these elements. In particular, self-funded programs often have
different cost structures, and the application of our figures to those
programs may require adjustments.
We project that administrative costs, risk margins and profits will
increase by 0.6% under the Baseline Scenario and by less than 0.1%
under the Increased UM Scenario. On a per member per month (PMPM)
basis, these increases account for $0.36 or less. By contrast, 15% of
total premium for our 2006 Survey data trended to 2008 is about $59
PMPM, and the expected annual trend forecast is about 12%.
VII. Medical Cost Offsets
Many behavioral health advocates promote the concept that effective
behavioral healthcare can reduce medical costs, but this ``cost
offset'' has been a controversial subject. There is strong evidence
that behavioral problems and medical problems are associated with one
another.\10,11,12\ Some of these associations have been recognized by
recommended medical practices; for example, screening for post-partum
depression, depression following heart attack, or alcoholism
screening.\13,14\ In addition, the behavioral component of wellness and
disease management programs is well-recognized. For example, behavioral
components are recognized as important elements of smoking cessation
and obesity programs.\15,16\ Advocates believe the impact of effective
behavioral healthcare extends beyond these examples. Some health
insurers are developing integrated approaches to covering medical and
behavioral illnesses.
Because specialty behavioral healthcare is generally a small
component of total medical spending, even a small percent reduction in
medical costs through parity benefits could amount to a significant
cost offset relative to the increased cost of parity benefits. However,
we did not include any such offsets in this work.
VIII. Preemption of State Laws
HR 1424 does not appear to preempt any State law that provides
greater consumer protections, benefits, methods of access to benefits,
rights or remedies than would occur under HR 1424. Therefore, any State
laws that include broader requirements for access or coverage of mental
health or substance-related disorder benefits, such as additional
mental conditions or diagnoses or applicability to groups of 50 or less
employees, are not preempted by this legislation.
IX. Evidence Based Practices and Medical Management
Evidence Based Practices
The evidence base for diagnosis and treatment of mental and
substance-related disorders is well established and on par with the
medical evidence for diagnosis and treatment of medical and surgical
conditions. Mental and substance-related clinical practice guidelines
are broadly accepted in the medical community including the American
Psychiatric Association's evidence based practice guidelines,\17\ those
of American Academy of Child and Adolescent Psychiatry\18\ and those of
the American Society of Addiction Medicine Patient Placement
Criteria.\19\
Along with the expansion in the documentation of the science base
of treatments for mental and substance-related disorders, two recent
seminal reports strengthen the message that mental health is
fundamental to health and that mental disorders are real health
conditions that are equally as important as general health conditions.
The 1999 Surgeon General's Report on Mental Health\20\ provides a
review of the research supporting the fact that evidence based mental
health treatments are well established. According to the Report,
``The efficacy of mental health treatments is well
documented, and
A range of treatments exists for most mental disorders''
The 2006 Institute of Medicine (IOM) report Improving the Quality
of Health Care for Mental and Substance-Use Conditions\21\ takes the
discussion a step further to examine how well evidence based mental
health treatments are being delivered. The report also examines how the
framework and strategies to improve the quality of health care
delivery, proposed in the IOM 2001 report Crossing the Quality Chasm: A
New Health System for the 21st Century,\22\ should be applied to mental
health care. The IOM 2006 report highlights the lack of adherence to
established clinical practice guidelines for many mental health
conditions and the importance of attending to the quality problems
using the recommendations in the IOM 2001 report.
Medical Management of Mental and Substance-Related
Conditions
Medical management practices by payers can apply to medical as well
as mental health and substance-related utilization. As a matter of cost
and quality control, payers often use a process known as medical
necessity determinations to identify particular patients who do not
meet indications for needing a particular service.\23\ Medical
necessity determinations are intended to prevent inappropriate
utilization of services which can increase utilization and cost without
improving quality.\24\ Narrowly speaking, medical necessity
determinations do not affect the benefit design but influence
utilization of covered benefits for individuals. To oversimplify,
although an MRI may be a covered service, an insurer will not pay for
the MRI unless it is reasonably needed for the patient's diagnosis or
treatment. This distinction between covered benefits and administration
of benefits also applies to behavioral health.
Payers making medical necessity determinations should rely on
evidence based guidelines\25\ or treatment protocols and indicate such
in contracts with providers. HR 1424 does not appear to interfere with
the ability of payers to make medical necessity coverage determinations
and we expect that some payers will increase their application of this
process in response to parity. As we note above, this application of
managed care could actually reduce costs under parity for some payers
to below the pre-parity level. Payers are in a position to assist in
the measurement of effective evidence based practice in mental health,
a deficiency identified in the IOM 2006 report. Payers are also
positioned to incentivize providers to provide quality mental health
care delivery. Under parity, delivering evidence based mental health
care and measuring the quality of mental health care delivery would no
longer be restricted by benefit limits.
X. National Mental Health and Substance-Related Disorder Spending
Trends\26\
National expenditures for the treatment of mental health and
substance related disorders (MHSRD) disorders increased to $121 billion
in 2003, up from $70 billion in 1993--an average annual growth rate of
5.6%. This was lower than the 6.5% average annual growth rate during
this period for all health services. The projected MHSRD expenditures
for 2006 were $145 billion. Future growth in MHSRD expenditures are
expected to continue to lag the growth in all health services, due in
part to the lesser impact of cost-increasing technology on MHSRD
service delivery.
Mental health expenditures make up the majority of the MHSRD
expenditures. In 1993, they accounted for 78.6% of MHSRD spending at
$55 billion, and grew to 82.9% of 2003 MHSRD spending at $100 billion.
The 2006 projection is at 83.8% or $122 billion. The rapid rise in
prescription drug spending for mental disorders contributes
substantially to this trend.
Prescription drug costs within mental health service delivery have
risen rapidly from just 7% of total mental health spending in 1986 to
23% in 2003, and are projected to hit 30% of all mental health spending
by 2014. Meanwhile, total hospital costs (including inpatient acute
services and outpatient services such as day treatment) dropped from
41% in 1986 to 28% of total mental health spending in 2003. Physician
services increased from 11% in 1986 to 14% in 2003.
The distribution of expenditures by public-private payer differs
significantly between mental health and substance-related disorder
services. Private payers (includes private insurance, out-of-pocket,
and other private sources) accounted for 46% of mental health
expenditures in 1986, reduced to 42% by 2003, and is currently expected
to remain at that level for many years. Private insurance accounts for
24% of all mental health expenditures. Public payers (includes
Medicare, Medicaid, other federal, and other state and local payers)
accounted for 54% in 1986 and 58% in 2003. The addition of the Medicare
Part D benefits increased the Medicare component from 7% in 2003 to an
estimated 11% in 2006, while the Medicaid component dropped from 26% in
2003 to 24% in 2006.
Private payers accounted for 50% of all substance-related disorder
expenditures in 1986 but dropped to 23% by 2003, while the public
payers accounted for 50% in 1986 and 77% in 2003. Private insurance
accounts for just 9% of substance-related disorder expenditures. Other
state and local payers are the largest payer group of substance-related
disorder benefits at 46% in 2003. Current projections show the public
portion of substance-related disorder expenditures continuing to grow
under current conditions, up to 83% by 2014.
The largest category of expenditures for substance-related disorder
treatment are specialty substance-related disorder clinics, increasing
from 19% in 1986 to 41% in 2003, while total hospital costs dropped
from 48% of total substance-related disorder expenditures to 24% in
2003. Those levels are projected to remain fairly flat in the future.
Appendix A.--Assumptions
This section describes key assumptions and sources for our
estimates. We also present cautions about how the estimates should be
interpreted and used.
We estimated costs for the currently insured commercial population
in the United States. This does not include individuals covered by
Medicaid or Medicare. We used standard Milliman demographic
assumptions, intended to represent the age and gender mix of a typical
commercially-insured employee group with the demographics of the U.S.
labor force population.
We estimated per capita costs for two different typical benefit
plans in the United States commercial marketplace today--a PPO plan and
an HMO plan. We applied the benefit plan specification details
described in Milliman's 2006 Group Health Insurance Survey, to set pre-
parity benefit specifications. These details are summarized in Appendix
B. We also used an expected annual trend estimate from the Survey to
project costs to 2008. We note that trend for behavioral health
benefits has been lower than for medical benefits as a whole, and this
means our trend assumption may cause our estimates for 2008 to be
overstated somewhat.
We used a 25%/75% distribution between the HMO and PPO plan
designs, based on information contained in the Survey of Employer
Health Benefits 2006,\27\ published by the Henry J. Kaiser Family
Foundation and the Health Research and Educational Trust.
We applied cost estimates using Milliman's 2006 Health Cost
Guidelines (HCGs). The HCGs are Milliman's actuarial guidelines that
show how the components of per capita medical claim costs vary with
benefit design, demography, location, provider reimbursement
arrangements, degree of managed care delivery, and other factors. In
most instances, these cost assumptions are based on our evaluation of
several data sources, and are not specifically attributable to a single
data source. The HCGs are used by scores of client insurance companies
and health plans for premium rate setting, evaluating health insurance
products, and for financial management.
We used adjustment factors from the HCGs to modify our utilization
and unit cost assumptions for the modeled plans and included a typical
allowance for administrative costs, risk margins and profits. We
incorporated estimates of the effect of managed care delivery within
each plan. We also applied our knowledge of the managed behavioral
healthcare delivery systems.
If HR 1424 were enacted, health insurers will likely choose to
tighten utilization management controls within their existing benefit
plans, which is allowed under the legislation. They would typically
increase use of pre-authorization and concurrent review requirements
for mental health and substance-related disorder benefits, as well as
require stricter adherence to clinical criteria. In addition, employers
may choose to modify some of the benefit plans they offer to their
employees, substituting plans with greater degrees of managed care
provisions (for example, more restrictive networks) in place of plans
with lesser degrees of managed care provisions. This could involve
greater use of carve-out MBHO vendors, or substituting HMO plans for
PPO plans.
Discounted fees are common in HMO and PPO plans for in-network
healthcare providers. We have assumed that the health plans could
negotiate a discount of 25% for all in-network professional behavioral
services, 40% for all in-network facility services for alcoholism and
substance-related disorders, and 60% for all in-network facility
services for mental health disorders. These discounts are consistent
with what we have observed in managed behavioral healthcare contracts
recently. We assumed that no discount would be obtained for any out-of-
network services provided in the PPO plans.
In our premium rate estimates, we considered the following items
and benefit features as appropriate:
The maximum number of inpatient days and outpatient visits
for treatment for mental illness and substance-related disorders
Deductible, copay, coinsurance, and out-of-pocket maximum
adjustments appropriate to various benefits
Increases in utilization by service category due to
benefit richness and induced demand
Table 3 summarizes the estimated change in premium rates due to the
behavioral health parity provisions of the expected legislation under
the Baseline Scenario and the Increased UM Scenario. The premium values
are on a per member per month basis, meaning an overall average across
all adults and children. Note that the premium amounts for both
individual and family coverage would be higher than these member
values.
TABLE 3.--ESTIMATED CHANGE IN 2008 PREMIUM RATES FOR MODEL PLANS AFTER
PARITY
------------------------------------------------------------------------
Average Monthly Increase in Premium
Premium per Member ---------------------------------
for Behavioral
Model Plan Type Healthcare Services % of % of
---------------------- Amount Behavioral Total
Before After Health Premium
Parity Parity
------------------------------------------------------------------------
BASELINE SCENARIO
------------------------------------------------------------------------
HMO Plan........ $7.25 $9.60 $2.36 32.5% 0.6%
------------------------------------------------------------------------
PPO Plan........ $8.15 $10.56 $2.41 29.6% 0.6%
-------------------------------------------------------
TOTAL..... $7.92 $10.32 $2.40 30.2% 0.6%
------------------------------------------------------------------------
INCREASED UM SCENARIO
------------------------------------------------------------------------
HMO Plan........ $7.25 $7.25 $0.00 0.0% 0.0%
------------------------------------------------------------------------
PPO Plan........ $8.15 $8.19 $0.04 0.5% < 0.1%
-------------------------------------------------------
TOTAL..... $7.92 $7.95 $0.03 0.4% < 0.1%
------------------------------------------------------------------------
Appendix B.--Summary of Modeled Benefit Plan Provisions
Pre-Parity Benefit Designs
PLAN NO. 1.--HMO PLAN
------------------------------------------------------------------------
Benefit Description Medical/Surgical Behavioral
------------------------------------------------------------------------
Deductible............. None None
------------------------------------------------------------------------
Out-of-Pocket Limit.... None None
------------------------------------------------------------------------
Coverage............... 100% Inpatient after $0 100% Inpatient after
copay, 100% Outpatient $0 copay, 100%
after $10 copay Outpatient after $25
copay
------------------------------------------------------------------------
Limits................. No other limits 30 IP days/CY, 20 OP
visits/CY
------------------------------------------------------------------------
PLAN NO. 2.--PPO PLAN
----------------------------------------------------------------------------------------------------------------
Medical/Surgical Behavioral
------------------------------------------------------------------------------------------
Benefit Description Out-of-Network Out-of-Network
In-Network Benefits Benefits In-Network Benefits Benefits
----------------------------------------------------------------------------------------------------------------
Deductible........... $250 $500 $250 $500
----------------------------------------------------------------------------------------------------------------
Out-of-Pocket Limit.. $1,000 $2,000 $1,000 $2,000
----------------------------------------------------------------------------------------------------------------
Coverage............. 90% Inpatient 70% Inpatient 90% Inpatient 70% Inpatient
100% Outpatient after 70% Outpatient 100% Outpatient after 70% Outpatient
$10 copay $25 copay
----------------------------------------------------------------------------------------------------------------
Limits............... No other limits No other limits 30 IP days/CY, 20 OP 30 IP days/CY, 20 OP
visits/CY visits/CY
----------------------------------------------------------------------------------------------------------------
About Milliman
Milliman serves business, financial, government, and healthcare
organizations with expertise in managing and analyzing financial and
other risk. Milliman employs more than 900 qualified consultants and
actuaries. The Milliman Care Guidelines are the leading evidence-based
clinical guidelines used by managed care organizations. The company is
owned only by its principals, not by an insurer, outsourcing company,
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measure their financial status, appraise business opportunities,
develop new products, and determine premium rates.
endnotes
\1\ American Association for Child and Adolescent Psychiatry,
American Counseling Association, American Society of Addiction
Medicine, Bradford Health Services, Caron Treatment Centers, Hazelden
Foundation, NAADAC--The Association for Addiction Professionals,
National Association of Addiction Treatment Providers, National Board
for Certified Counselors, and National Council for Community Behavioral
Healthcare.
\2\ Congressional Budget Office Cost Estimate, S.558 Mental Health
Parity Act of 2007, March 20, 2007
\3\ We used the plan designs in Milliman's annual Group Health
Insurance Survey. See www.Milliman.com
\4\ The Survey of Employer Health Benefits 2006 includes detailed
trend information on health insurance enrollment, premiums and
contributions between 1988 and 2006. See www.kff.org/insurance/7527/.
\5\ The Milliman, Inc. Health Cost Guidelines provide a flexible
but consistent basis for the determination of claim costs and premium
rates for a wide variety of health benefit plans. The Guidelines are
developed as a result of Milliman's continuing research on health care
costs. First developed in 1954, the Guidelines have been updated and
expanded annually. These Guidelines are continually monitored; Milliman
consultants and many insurers use the Guidelines for a variety of
actuarial and financial management purposes.
\6\ The 15th annual Milliman, Inc. survey of the nation's HMOs and
fully-insured PPOs. Over one-third of all companies responded to the
2006 survey. Data collected includes manual premium rates, employee
tiered rates, renewal rate changes anticipated, medical trend rates,
inpatient utilization data, cost per utilization data, physician
reimbursement rates as a percent of Medicare RBRVS, and medical expense
ratios. Data reported in the survey includes straight average results,
25th percentile results, and 75th percentile results from all
contributing companies.
\7\ The Survey of Employer Health Benefits 2006. Op cit.
\8\ Congressional Budget Office Cost Estimate, Estimates of the
Impact on Employers of the Mental Health Parity Amendment in HR3103;
May 13, 1996
\9\ CBO Cost Estimate, S558, op cit.
\10\ World Health Organization press release; October 8, 2004; Dr.
Matt Muijen, Acting Regional Adviser for Mental Health
\11\ David Whitehouse, MD, Improving Total Health & Well-Being: An
Innovative Approach That Integrates Behavioral Health Across the Health
Care Continuum, Open Minds, September 2006
\12\ Patrick R. Finley, et al ``Impact of a Collaborative Care
Model on Depression in a Primary Care Setting: A Randomized Controlled
Trial, Pharmacotherapy 23(9):1175-1185, 2003.
\13\ Agency for Healthcare Research and Quality, Research
Activities, November 2006, No. 315, ``Depression among heart attack
survivors can persist for a year after leaving the hospital''
\14\ United States Preventive Services Task Force, Guide to
Clinical Preventive Services. http://www.ahrq.gov/clinic/cps3dix.htm.
\15\ Fiore MD, Bailey WC, Cohen SJ et al. Treating tobacco use and
dependence. Clinical Practice Guidelines. Rockville, MD. US Department
of Health and Human Services. Public Health Service. June 2000.
\16\ Centers for Medicare and Medicaid Services, Decision Memo for
Bariatric Surgery for the Treatment of Morbid Obesity (CAG-00250R),
February 21, 2006. Available at http://www.cms.hhs.gov/mcd/overview.asp
\17\ APA Practice Guidelines available at http://www.psych.org/
psych--pract/treatg/pg/prac--guide.cfm
\18\ AACAP Practice Guidelines. http://www.aacap.org/
page.ww?section=Practice+ Parameters&name =Practice+Parameters
\19\ http://www.asam.org/PatientPlacementCriteria.html
\20\ U. S Department of Health and Human Services. Mental Health: A
Report of the Surgeon General--Executive Summary. Rockville, MD: U.S.
Department of Health and Human Services, substance Abuse and Mental
Health Services Administration, Center for Mental Health Services,
National Institutes of Health, National Institute of Mental Health,
1999.
\21\ Institute of Medicine, Committee on Crossing the Quality
Chasm: Adaptation to Mental Health and Addictive Disorders. Improving
the quality of health care for mental and substance-use conditions.
2006. The National Academies Press. Washington, D.C.
\22\ Institute of Medicine Committee on Quality of Health Care in
America, Crossing the quality chasm: A new health system for the 21st
century. 2001. The National Academies Press. Washington, D.C.
\23\ For example, see Regence Blue Shield, www.or.regence.com/
provider/clinicalCorner/docs/behavioralHealthPracticeGuideline.pdf
\24\ Dartmouth Atlas, http://www.dartmouthatlas.org/
\25\ Sackett, DL, Rosenberg WM, Gray JA et al. Evidence based
medicine: what it is and what it is not. BMJ. 1996;312:71-72.
\26\ Levit KR et al. Projections of National Expenditures for
Mental Health Services and Substance Abuse Treatment, 2004-2014. SAMHSA
Publication. Rockville, MD, 2006
\27\ The Survey of Employer Health Benefits 2006, op cit.
______
Chairman Andrews. Mr. Melek, thank you very much. And as I
say, your entire statement has been entered into the record.
Mr. Dilweg, welcome to the committee all the way from
Wisconsin. We are happy to have you.
STATEMENT OF SEAN DILWEG, WISCONSIN INSURANCE COMMISSIONER
Mr. Dilweg. Thank you, Chairman Andrews, Ranking Member
Kline and members of the committee.
My name is Sean Dilweg. I am the insurance commissioner
from the state of Wisconsin. Thank you for inviting me to
testify this afternoon on the Paul Wellstone Mental Health and
Addiction Equity Act of 2007.
Today I will speak to the importance of parity legislation
and highlight the importance of H.R. 1424 in addressing unequal
coverage limitations on mental health services.
In addition, I will express my concern with preemption
language included in the amended Senate mental health parity
bill, which leaves Wisconsin's mental health mandate and laws
in other states vulnerable to court interpretation.
There are currently 46 states with laws requiring some
level of mental health coverage and 27 states with full parity
laws. I have had discussions with other state commissioners who
are strongly concerned with the Senate language.
Individuals diagnosed with a mental illness are too often
limited in their ability to access treatment due to
insufficient insurance coverage.
Such treatment limitations force this population to look to
their own finances or public programs as means to cover
expenses. In the worst cases, people forego services
altogether, given the debilitating nature of many mental
illnesses.
Individuals find they cannot maintain employment, health
conditions related to mental health illness go untreated, and
people generally find themselves unable to maintain the quality
of life most of us enjoy.
The House bill will greatly improve access to mental health
services by ensuring individuals the same level of insurance
coverage for their mental health needs as would be available
for their treatment of other medical conditions.
In Wisconsin, group health insurers providing coverage for
inpatient hospital treatment, outpatient treatment or both must
also provide coverage for mental health and alcohol and other
drug abuse services.
This means insurance companies selling health insurance
coverage to employers in Wisconsin must include coverage for
mental health-related care.
State law requires a minimum of $7,000 in coverage be
provided for these services but also allows plans to limit
benefits to the statutory amount.
These coverage requirements do not go far, especially for
those who have a severe mental illness or dual diagnosis. This
has been in place for 30 years.
I have seen Democratically controlled Senate, House and
governor in our body and also Republican-controlled, and we
have never been able to change this to full parity. I welcome
the fact that you are pursuing full parity under the preempted
ERISA plans.
The gaps in coverage across the nation with regard to
mental health services are vast. There are also disparities
between what group health insurers and the self-insured are
required to pay within states across the nation.
Some employers have been known to move to a self-insured
plan specifically to avoid the state mandates. Once again, I
welcome the federal mental health parity law and look forward
to action on this bill.
I also commend Representatives Kennedy and Ramstad in their
efforts to improve coverage of mental health benefits in
private health insurance while ensuring that federal standards
serve as a floor, not a ceiling.
This is consistent with the preemption language in the
Health Insurance Portability and Accountability Act of 1996.
HIPAA's portability and access provisions affecting private
health coverage has been a model for how federal and state
health coverage reforms can work together, with states having
the flexibility to supplement federal standards to better
protect consumers when necessary.
In moving forward toward equity in coverage for mental
health services, it is important to maintain the recognition
that state policy makers may determine it necessary to have a
stronger set of standards to ensure the protection of patients
in state-regulated health insurance policies.
Under the Senate version, it would be very problematic for
Wisconsin and other states if the House were to move in the
direction of the Senate with regard to preemption.
The Senate version preempts any state mental health parity
standard or requirement which differs from the mental health
parity standards required in the bill. Wisconsin and other
states are struggling to predict how the preemption language
may impact our current parity laws.
Concerns have been expressed on the impact to mental health
mandates in states including Washington, Vermont, Oregon,
Connecticut--I just spoke with California this morning--
Montana, Maryland and Nevada.
In states such as Wisconsin, California, Maryland and
Montana, where the mental health parity laws apply generally to
health insurance coverage, and there is no distinction between
small and large group coverage, it is questionable whether
courts will uphold these laws as they apply to individual and
small group policies if challenged under ERISA.
As a result, the legislative intent in the bill to save
state individual and small group coverage from preemption may
not be accomplished.
Washington and Connecticut have a mandated benefit and
require parity with medical coverage. If these mandated
benefits are preempted by unclear language of the manager's
amendment, carriers would not be required to provide mental
health benefits, leaving consumers at risk of losing coverage
they currently rely on.
In conclusion, as the insurance commissioner charged with
protecting consumers, I have a responsibility to bring to light
issues that may put consumers at risk. The intent of the House
and Senate bill is laudable.
However, the Senate preemption language opens the door for
an all-or-nothing situation in Wisconsin and other states with
similar mental health mandates.
I have raised several preemption questions. There are
others that may come to light as other states more carefully
review the proposed language. These could be open to
interpretation and based on new ERISA-related litigation that
will come at a high price tag for people who may lose benefits
while waiting years for courts to determine if state laws are
preempted.
The preemption language included in the House is clear and
will preserve and strengthen Wisconsin and other states' mental
health mandates as well as many mental health parity laws
across the nation.
Thank you again for this opportunity to testify.
[The statement of Mr. Dilweg follows:]
Prepared Statement of Sean Dilweg, Wisconsin Insurance Commissioner
Good afternoon Chairman Andrews, Ranking Member Kline, and members
of the committee. My name is Sean Dilweg and I am the Insurance
Commissioner from the State of Wisconsin. Thank you for inviting me to
testify this afternoon on H.R. 1424, the Paul Wellstone Mental Health
and Addiction Equity Act of 2007.
Today I will speak to the importance of parity legislation and
highlight the importance of H.R. 1424 in addressing unequal coverage
limitations on mental health services. In addition, I will express my
concern with preemption language included in S. 558 (June 13, 2007
draft manager's amendment), the Senate Mental Health Parity bill, which
leaves Wisconsin's mental health mandate and laws in other states
vulnerable to court interpretation. There are 46 states with laws
requiring some level of mental health coverage and 27 states with full
parity laws.
Importance of Parity
Individuals diagnosed with a mental illness are too often limited
in their ability to access treatment due to insufficient insurance
coverage. Coverage limits for mental health services are generally more
restrictive than those applied to other medical conditions. Such
treatment limitations force this population to look to their own
finances or public programs as a means to cover expenses. In the worst
cases, people forgo services altogether. Given the debilitating nature
of many mental illnesses, individuals find they cannot maintain
employment, health conditions related to the mental illness go
untreated and people generally find themselves unable to maintain the
quality of life most of us enjoy. It is estimated the indirect cost of
mental illness is $79 billion, with $63 billion of that amount related
to lost productivity.\1\ H.R. 1424 will greatly improve access to
mental health services by ensuring individuals the same level of
insurance coverage for their mental health needs as would be available
for their treatment of other medical conditions.
In Wisconsin, group health insurers providing coverage of inpatient
hospital treatment, outpatient treatment or both, must also provide
coverage for mental health and alcohol and other drug abuse services.
This means that insurance companies selling health insurance coverage
to employers in Wisconsin must include coverage for mental health
related care. Current state law requires a minimum of $7,000 in
coverage be provided for these services, but also allows plans to limit
benefits to this statutory amount. The law allows insurers to offer
better coverage, but in most cases, policies with more coverage are not
available.\2\ These coverage requirements do not go far, especially for
those who have a severe mental illness or duel diagnoses.
H.R. 1424
I commend Representatives Kennedy and Ramstad in their efforts to
improve coverage of mental health benefits in private health insurance
while ensuring that federal standards serve as a ``floor'', not a
``ceiling.'' As currently drafted, the House bill specifically states
that nothing in the federal legislation ``shall be construed to preempt
any State law that provides greater consumer protections, benefits,
methods of access to benefits, rights or remedies.'' This language is
consistent with the preemption language in the Health Insurance
Portability and Accountability Act of 1996 (HIPAA) which has been very
successful in expanding important access protections throughout the
country. HIPAA's portability and access provisions affecting private
health coverage has also been a model for how federal and state health
coverage reforms can work together, with states having the flexibility
to supplement federal standards to better protect consumers, when
necessary.
In moving forward toward equity in coverage for mental health
services, it is important to maintain the recognition that state
policymakers may determine it necessary to have a stronger set of
standards to ensure the protection of patients in state-regulated
health insurance policies. For example, H.R. 1424 would not mandate
that group health insurance policies provide mental health benefits;
it, however, would set standards for group health plans that choose to
provide benefits for mental health. Wisconsin's policymakers have
determined that a mandate is necessary to ensure that some mental
health benefits are provided in all group policies. Wisconsin's
requirement to cover mental health care coupled with the proposed
federal parity is the way to ensure that state-regulated insurance
policies provide necessary coverage to patients with mental illnesses.
S.558 and Preemption
It would be very problematic for Wisconsin and other states if the
House were to move in the direction of the Senate with regard to
preemption. The Senate version preempts, subject to certain exceptions,
any state mental health parity standard or requirement which differs
from the mental health parity standards or requirements as defined in
subsections (a), (b), or (e) of section 712A.'' The Senate Mental
Health Parity Bill (manager's amendment draft June 13, 2007), would
completely preempt all state protections in the following areas:
Parity in financial requirements, i.e. coverage limits,
co-pays, deductibles; and
Exemptions to parity requirements due to increased costs.
Wisconsin and other states are struggling to predict how the
preemption language might impact current parity laws. Short of
litigation in federal court, it is unclear who decides if the state law
differs from the federal law and what a state's options are if the
state disagrees with that decision. There are 46 states with laws
requiring some level of mental health coverage and 27 states have full
parity laws, requiring insurers to provide the same level of mental
health benefits as medical and surgical benefits. Coverage in most of
these states, to varying degrees, is at risk of being weakened or
completely eliminated by the Senate preemption language. Concerns have
been expressed on the impact to mental health mandates in states,
including, Washington, Vermont, Oregon, Connecticut, California,
Montana, Maryland and Nevada.\3\ Insurance Commissioners in
Connecticut, Vermont, Washington and Oregon have shared written
concerns with their Senate members. Copies are attached for your
review.
National Association of Insurance Commissioners
In a letter to Chairman Kennedy and Ranking Member Enzi of the
Senate Health, Education, Labor and Pensions Committee, dated May 2,
2007 analyzing S. 558 as voted out of committee, the National
Association of Insurance Commissioners stated that the nation's
insurance commissioners find the Senate bill's preemption language
``both excessive and unnecessary.'' They go on to recommend that,
``should the Senate decide to include any preemption language in the
bill, we would prefer the language in the Mental Health Parity bill
currently being considered in the House of Representatives.'' I
acknowledge that the June 13th language is significantly better;
however it does not address all preemption concerns and would still
leave state laws open to potential preemption challenges.
Wisconsin's Mental Health Mandate
Of particular concern for Wisconsin is the extent to which
preemption will impact the state's current requirement that a group
health insurance policy provide coverage of mental health services. Our
state mandate for coverage and the coverage limits are tied together
under the same statutory provision. If a Senate Mental Health Parity
bill preempts coverage requirements, such as Wisconsin's required
$7,000 minimum, a court must determine whether the entire statutory
provision (the minimum coverage amount and the requirement to provide
services) or only the provision mandating a minimum ``floor'' of $7,000
is preempted.
Generally, statutory provisions are ``severable'' so one provision
may avoid preemption even if a related provision is preempted. However,
the court must determine whether the resulting statutory language is
consistent with the ``intent of the legislature.''
The statute resulting from ``partial'' preemption would be a
mandate to provide mental health benefits up to at least the maximum
limits otherwise available under the policy. However, the Wisconsin
legislature specifically included limits on its mandate to provide
mental health benefits. This may lead a court to rule the entire
statute preempted because to do otherwise would be inconsistent with
the intent of the legislature.
The senate bill raises several questions relating to Wisconsin's
mandate, and if passed would leave consumers extremely vulnerable to
losing coverage, as it is anticipated a great number of employers and/
or insurers would take advantage of the new flexibility by challenging
state law and dropping coverage for mental health. As I mentioned
earlier, under H.R. 1424, Wisconsin's mandate and those in other states
would be preserved.
The argument has been made that laws like Wisconsin's would be
protected under the exception that reads:
``* * * nothing in section 712(A) shall be construed to require a
group health plan to provide the following: (i) Any mental health
benefits, except that State insurance laws applicable to health
insurance coverage that require coverage of specific items, benefits,
or services (including specific mental health conditions) are
specifically not preempted * * *''
While the intent behind the exception may be to preserve state
mental health mandate laws, the proposed language does not go far
enough in clearly excluding states from the preemption provisions in
the bill. It is my understanding that, before this exception can be
applied, a state's coverage provisions must be consistent with the
federal parity provision. As I mentioned earlier, Wisconsin's statute
says coverage ``need not exceed $7,000'' while the proposed federal
provision requires coverage equal to the medical maximum limit.
A court would have to determine that the new proposed limits
qualify as a requirement for a ``specific benefit'' within the
exception. In other words, if Wisconsin will have to impose the
coverage limits in the bill, and those new coverage limits are
considered ``specific benefits,'' Wisconsin's mandate for providing
coverage of mental health services is preserved under the exception.
The federal parity would then ``overlay'' the state mandate to
separately require higher maximum limits.
The risk under this language is that my state as well as other
state mental health laws would be preempted. New legislation would be
necessary to reinstate Wisconsin's mandate; however, one only needs to
look to the past few sessions in the Wisconsin Legislature to see the
political will is not there to pass legislation that results in parity.
Under this scenario, consumers will be left with fewer protections than
they have under the current model.
Other states with similar mental health mandate requirements would
face similar preemption problems. Therefore, the risk of consumers
losing existing state-based minimum coverage guarantees goes beyond
Wisconsin's borders.
Cost Exemption
Preemption with regard to the cost exemption is also extremely
problematic given Wisconsin and many other states with some level of
parity do not allow insurers to end coverage if a cost increase is
demonstrated. S. 558 does not apply if a plan's cost in the first year
goes up by 2% and 1% in subsequent plan years. S. 558 would preempt any
state law to the contrary, thus severely weakening Wisconsin's mandate
to provide coverage. In addition, it will be extremely challenging to
question plans' allegations with regard to cost increases given the
exemption does not require actuarial analysis to be independent or
publicly available.\4\
There are approximately 12 states' mental health parity laws which
contain provisions exempting certain employers from the parity
requirements if they can demonstrate a certain level of increased costs
due to those requirements.\5\ Approximately half of those states impose
a cost exemption with more stringent standards than those found in this
legislation.
The state of Indiana, for example, requires that insurers
demonstrate a 4% increase in premiums due to mental health parity
requirements,\6\ Michigan requires a 3% increase due to substance abuse
treatments,\7\ and both Nevada and Oklahoma require a 2% increase in
each year.\8,9\ Each of these exemption provisions would be replaced by
the less-consumer friendly federal standard, and 34 states would have
the cost exemption language imposed upon them for the first time. By
contrast, under the House bill only those states laws providing fewer
protections to consumers would be affected.
Conclusion
As the Insurance Commissioner charged with protecting consumers, I
have a responsibility to bring to light issues that may put consumers
at risk.
I have raised several preemption questions; there are others that
may come to light as other states more carefully review the proposed
language and the approach the Senate takes. These could be open to
interpretation and based on a long and difficult history of ERISA-
related preemption litigation, it is likely that different courts will
reach different conclusions and ultimately the final word will come
from the Supreme Court. New ERISA-related litigation will come with a
high price tag for already strained state budgets and even a higher
price tag for people who may lose benefits while waiting years for
courts to determine if state laws are preempted.
The House bill before you today will increase access to mental
health coverage for people covered by employers that choose to cover
mental health benefits. The preemption language is clear and will
preserve and strengthen Wisconsin's mental health mandate as well as
many mental health and parity laws across the nation. The ``floor''
created by H.R. 1424 protects consumers by ensuring states can enforce
current laws that are stronger than the proposed federal standards.
Thank you again for this opportunity to testify today.
endnotes
\1\ New Freedom Commission on Mental Health, Achieving the Promise:
Transforming Mental Health Care in America. Final Report. DHHS Pub. No.
SMA-03-3832. Rockville, MD: 2003.
\2\ In part, this is because of adverse selection problems.
\3\ Mila Kofman, Georgetown University Health Policy Institute,
``California's mental health parity law is a standard that applies
generally to health insurance coverage. Unlike a specific law
applicable to individual or small group coverage, there is no guarantee
that courts will uphold the law as it applies to individual and small
group policies if challenged under ERISA and as a result, the
legislative intent in the bill to save state individual and small group
coverage from preemption may not be accomplished.''
``Montana law requires coverage for severe mental illness and such
coverage must be provided on parity with coverage for physical illness.
The standard applies to individual and group coverage with no
distinction between small group and large group coverage. The parity
requirements differ from S. 558 and would be preempted, unless the
exception in the bill is interpreted broadly.''
In reference to Maryland ``* * * requirements for individual
coverage and large group coverage are in one section. Litigation may be
necessary to determine if standards for individual coverage would
continue. The mandate for large group coverage to include mental health
benefits and provide coverage on parity with physical illness may also
be litigated to determine if it is saved from S.558 preemption.''
In reference to Nevada ``* * * the mental health parity law for
group coverage applies to groups of more than 25 employees. Similar to
other states, although there is a mandate to cover mental health
(severe mental illness), the standards for the mandate are `parity
type' standards. It may be up to the courts to determine if Nevada's
law is saved under the new preemption standards.''
\4\ Randy Revelle, Chairman, Washington Coalition for Insurance
Parity.
\5\ Ibid
\6\ Indiana Code Sec. 27-8-5-15.7
\7\ Michigan Compiled Laws Sec. 500.3501
\8\ Nevada Revised Statutes Sec. 689A.0455
\9\ Oklahoma Statutes Sec. 36-6060.12
______
[Additional submission from Mr. Dilweg follows:]
Insurance Division Memorandum,
May 23, 2007.
Subject: S. 558 Federal Mental Health Parity
You asked me for an analysis of the S. 558, the Federal Mental
Health Parity legislation. Below I outline the major issues identified
and discuss the impact of S. 558 on the protections provided to
Oregonians under SB 1.
The major issues identified include:
Preemption of State parity laws
Interpretation of the federal parity law--Who decides if a
state's laws differ from the federal? Who has final interpretation
authority of what the law means, what if the state interpretation
differs from DOL or HHS?
Enforcement--who enforces the parity requirement? Consumer
protections?
Cost increase opt-out--the cost opt-out is artificially
low and allows companies to opt-out of the parity law, but not from a
state's requirement to offer mental health coverage.
Preemption of Oregon's parity laws
Section 4(c) of the federal bill would preempt Oregon's Mental
Health Parity Laws (SB 1) because those laws ``differ'' from the
federal bill in regards to parity, negotiation and management, in- and
out-of-network, and the cost opt-out provisions of the bill.
Effectively, S. 558 creates both a federal floor and ceiling that
eliminates Oregon's ability to provide greater protection for consumers
in specified areas:
Oregon's law requires coverage of mental or nervous
conditions and chemical dependency in all group health insurance.
Oregon's law defines mental or nervous condition and
chemical dependency.
Oregon's law requires a single definition of ``medical
necessity'' and ``experimental or investigational'' treatments. There
is no such requirement in the federal law.
Oregon's law allows for IRO review of denials based on
medical necessity and experimental or investigational and requires the
IRO to determine if the insurer uniformly applies those definitions to
mental health and other medical conditions. There is no such
requirement in the federal law.
The federal law provides a cost opt-out that allows
employers to waive coverage for one year if mental health costs
increase more than 2% in the first year or 1% in subsequent years.
There is no cost cap in Oregon law.
Oregon's law defines ``provider'' and sets forth the
requirements for providers to be eligible for reimbursement under the
law. The federal law allows for the plans to negotiate separate
reimbursement or provider payment rates and service delivery systems.
Interpretation of the federal parity law
There are similarities in the two bills:
Parity--financial requirements for mental health can be no
more restrictive than those for other medical conditions
Management tools are allowed including utilization review,
prior authorization, and use of network providers.
Provides parity for ``medically necessary'' treatments.
However, while these requirements are similar, they do ``differ.''
The preemption of ``any'' state law that ``differs'' from the federal
law could come down to a matter of interpretation. Oregon's
administrative rules set very specific guidelines for insurance
companies for mental health coverage and for implementing SB 1. There
is nothing in the federal bill that provides for states to
``interpret'' the federal statute--this brings up issues of how to
enforce rate and form review, market regulation, and consumer
protections. It is unclear who decides if the state law differs from
the federal law and what a state's options are if the state disagrees
with that decision.
Enforcement
The language in the federal law is very broad and much of the
implementation of this bill will depend on the final regulations
promulgated by DOL and HHS. Depending on how those regulations are
worded, the differences in the Oregon law and the final regulations
could be substantial. There is no clarity in the federal bill as to the
ability of states to interpret or enforce laws that ``differ'' from the
federal law. This could be an issue in form reviews for large groups.
If there has been an audit by DOL or HHS which finds the company in
compliance, but our Rates and Forms sections believes the form does not
meet the requires it is unclear if we could disapprove the form. The
same issues could arise in market surveillance and in consumer
protection. If our parity laws differ from the federal law how do we
enforce violations of the law or assist consumers in disputes with
companies?
Cost increase exemption
The opt-out because of cost increases is a serious concern as it
would allow employers to opt-out of mental health parity for one year
(although in Oregon they would still be required to offer mental health
coverage) if the actual costs of mental health treatment was more than
2% greater than medical conditions in the first year or more than 1% in
subsequent years. The one-year opt-out also raises the question of
what, if any parity laws or coverage requirements would apply in
states, such as Oregon, when mental health coverage is required.
Comparison of S. 588 and Oregon's SB 1
The following chart outlines the difference between S. 558 and SB
1.
S. 588 AND OREGON SENATE BILL 1
----------------------------------------------------------------------------------------------------------------
S. 558 SB 1
----------------------------------------------------------------------------------------------------------------
.................................. ORS 743.556 Requires all group health
insurance policies issued in
Oregon to included coverage for
mental or nervous conditions and
chemical dependency
----------------------------------------------------------------------------------------------------------------
Section 712A(a)(1) Requires financial requirements ORS 743.566(2) OAR Expenses for treatment of mental
2705A (a)(1) for mental health benefits to be 836-053-1405(1) health conditions must be
``no more restrictive than'' provided ``at the same level as,
those for all medical and and subject to limitations no
surgical benefits more restrictive than'' those
for treatment of other medical
conditions
----------------------------------------------------------------------------------------------------------------
712A(a)(1) Deductible, co-payments, 743.566(2) OAR 836- Reimbursement and cost-sharing,
coinsurance, out-of-pocket 053-1405(2)(a) including deductible, co-
expenses may be ``no more payments, coinsurance, out-of-
restrictive than'' those for all pocket expenses for mental
medical and surgical benefits health may be no greater than
those for treatment of other
medical conditions
----------------------------------------------------------------------------------------------------------------
.................................. 836-053-1405(2)(b) Reimbursement and cost-sharing,
including deductible, co-
payments, coinsurance, out-of-
pocket expenses for wellness and
preventive services for mental
health may be no greater than
those for treatment of other
medical conditions
----------------------------------------------------------------------------------------------------------------
.................................. 836-053-1405(2)(d) Reimbursement and cost-sharing,
including deductible, co-
payments, coinsurance, out-of-
pocket expenses for prescription
drugs for mental health may be
no greater than those for
treatment of other medical
conditions
----------------------------------------------------------------------------------------------------------------
712A(a)(2) 2705A Treatment limits for mental health 743.566(3) & (7) Treatment limits including annual
(a)(2) may be no more restrictive than 836-053-1405(2)(c) or lifetime limits, limits on
those for all medical and total payments, limits on
surgical benefits--including duration of treatment, or
frequency of treatment, number of financial requirements may be no
visits, days of coverage, or less than those for other
scope or duration of treatment. medical conditions.
----------------------------------------------------------------------------------------------------------------
712A(b) 2705A (b) Benefits may be managed to provide 743.566(3) Treatment may be limited to
``medically necessary'' services. treatment that is ``medically
Management may include necessary'' as determined under
utilization review, authorization the policy.
or management practices and Management methods include,
contraction with and use of selectively contracted provider
network providers. panels, policy benefit
differential designs,
preadmission screening, prior
authorization, case management,
and utilization review.
----------------------------------------------------------------------------------------------------------------
.................................. 836-053-1405(3) Group health insurance policy
must contain a single definition
of medical necessity and
experimental or investigational.
Allows for IRO review of denials
of treatment based on
experimental or investigation or
medical necessity including
whether the insurer's definition
is uniformly applied to mental
health and other medical
conditions.
----------------------------------------------------------------------------------------------------------------
712A(c) 2705A (c) Requires benefits for in- and out-
of-network services to be the
same for mental health and other
medical benefits. Does not
require out-of-network coverage
of mental health if out-of-
network coverage is not provided
for medical.
----------------------------------------------------------------------------------------------------------------
712A(c) 2705A (c) Allows insures to negotiate 743.566(5) Defines providers who are
separate reimbursement or eligible for reimbursement.
provider payment rates and
service delivery systems for
different benefits.
----------------------------------------------------------------------------------------------------------------
712A(d) 2705A (d) Exempt small employers (2-50) ................... Does not exempt small employers
----------------------------------------------------------------------------------------------------------------
712A(e) 2705A (e) Cost cap exemption of 2% year one ................... No cost exemption
and 1% subsequent years if the
application of the law results in
an increase for the plan year of
the actual total costs of
coverage with respect to medical
benefits and mental health
benefits.
Allows exemption for one plan
year.
----------------------------------------------------------------------------------------------------------------
712A(g) 2705A (g) Allows health insurance plan to 836-053-1405(1) Mental or nervous conditions and
define Mental Health Benefits chemical dependency are defined
by rule. Excepts tobacco and
food addictions from definition
of chemical dependency.
----------------------------------------------------------------------------------------------------------------
Section 4 ERISA preemption--S. 558
supercedes any provision of State
law that ``establishes,
implements, or continues in
effect any standard or
requirement which differs'' from
(a), (b), (c), or (e)
Does not preempt state laws
relating to individual or small
employer plans.
----------------------------------------------------------------------------------------------------------------
Section 5 Consumer protections: ................... Consumer Protections under Oregon
DOL and HHS must designate a Law:
``group health plan ombudsman'' Group health insurance policy
to serve as an initial point of must contain a single definition
contact to permit individuals to of medical necessity and
obtain information and to experimental or investigational
provided assistance with mental for chemical dependency and
heath services under health mental condition and for all
insurance coverage. other medical conditions.
Allows for IRO review of denials
of mental health treatment based
on experimental or investigation
or medical necessity including
whether the insurer's definition
is uniformly applied to mental
health and other medical
conditions.
----------------------------------------------------------------------------------------------------------------
HHU and DOL must conduct ``random ................... Requires the Department to do a
audits'' of group health plans to review of the rules within two
ensure compliance with the Act. years of the effective date to
determine whether the
requirements are being met.
Requires insurers to have policy
and procedures in place to
ensure uniform application of
the policy's definition of
medical necessity to all
conditions.
Allows the Department to conduct
on-going market surveillance of
insurers' policies and
procedures for implementing SB
1.
Requires insurer's to file policy
forms for review by the
Department to ensure compliance
with the rules and statutes.
The Department has a Consumer
Protection section that deals
with complaints from consumers,
provides information about
mental health services and
benefits to consumers, and
assists consumers in working
through disputes with insurers.
----------------------------------------------------------------------------------------------------------------
______
------
Chairman Andrews. Well, thank you, Commissioner.
And we thank all the witnesses for giving us an excellent
basis for our discussion as a committee.
I would ask unanimous consent that two letters dealing with
the issue of the scope of preemption in the Senate bill be
entered into the record. The first is from Mila Kofman,
associate research professor at Georgetown University, and the
other is a letter from Gregory Heller.
Without objection, they will be entered into the record.
[The letters follow:]
------
------
Chairman Andrews. Again, I would like to thank each of the
witnesses for very edifying testimony.
And, Mr. Trautwein, I wanted to come to you for a moment.
You had said that one of the effective cost control strategies
for insurers and employers who offer a mental health benefit is
medical management.
When you say medical management, what do you mean?
Mr. Trautwein. This is the process of making sure the
appropriate care is directed to the individual. So it is a
question of matching the care to the person.
Chairman Andrews. So, for example, an insurer would
determine whether the level of care--whether a psychiatrist
would be appropriate or a therapist or some other form of care
provider, is that correct?
Mr. Trautwein. It is basically a check not only on
utilization, but you want to make sure that the care is
effective, that it is helping the particular individual.
Chairman Andrews. Right. And in your testimony on page two,
you say that you are troubled by the lack of specific
protection for medical management of benefits in the bill
before us.
Where in the bill that is before the committee is there any
language that would prohibit the kind of medical management
that you are making reference to?
Mr. Trautwein. That is precisely what troubles us. The
previous House and Senate bills had specific provisions.
In fact, former members, in the past, very much emphasized
the protections for medical management as a means of keeping
the cost, overall cost, of the bills down.
So this lack of specific provision----
Chairman Andrews. Yes, I understand that there is not a
specific provision saying that insurers can do this, but where
is there language that says they can't?
Mr. Trautwein. The answer is there is no line, but the lack
of a positive protection leads us to believe that there could
be inroads on our ability to do that.
Chairman Andrews. So if I understand your argument, it is
that in the matter of an insurance contract that is governed by
ERISA, if a specific practice isn't authorized by the statute,
the insurer can't do it? Is that your position?
Mr. Trautwein. I think our primary concern is at the state
level, that the states might----
Chairman Andrews. Well, of course, we are talking about
this bill, though, what in this bill.
So is it your position that if ERISA as amended would not
specifically authorize an insurer or an employer to do
something, they can't do it? Is that your position?
Mr. Trautwein. No, sir.
Chairman Andrews. Well, why would we be concerned, then,
about this bill?
It seems to me that the bill's silence about the
availability of medical management techniques for insurers and
employers means they could utilize them, doesn't it?
Mr. Trautwein. I think to an extent it does, but we would
feel better and more secure if we had that provision in there.
Chairman Andrews. Mr. Melek, in your testimony, you talked
about medical management provisions, and I want to make sure I
understand this correctly.
In your conservative estimate, meaning, I guess, in this
case that medical management tools either couldn't be used or
weren't used as aggressively as they could be, it is your
conclusion, isn't it, that the average increase is 0.6 percent
in outlays? Is that correct?
Mr. Melek. That is correct. If there is no response to
increase utilization management or the employers didn't take
additional action to reduce their cost----
Chairman Andrews. Could you tell us again what your
conclusion was if under your so-called increased U.M. scenario,
which I take it means more profound use of the tools that Mr.
Trautwein just talked about--what was your cost increase
projection if that happened?
Mr. Melek. Well, it is as close to zero as you can get. It
is three cents per member per month.
Chairman Andrews. Three cents per member per month.
And let me also ask you--I think I understood that you said
that your calculations were gross cost calculations, meaning
that you did not take into your analysis reductions in
absenteeism, increases in productivity, decreases in physical
and surgical health outlays, is that correct?
Mr. Melek. That is correct.
Chairman Andrews. So it is plausible, isn't it, that if one
were to take those into consideration that you could make a
strong argument that the payer, the insurer or the employer,
actually has a net benefit from implementation of mental health
parity, is that not correct?
Mr. Melek. That is correct.
Chairman Andrews. Mrs. Carter, has that been your
experience? You mentioned Mr. Johnson from CNN and others. Has
that been your experience over the years, that employers who
have voluntarily adopted parity programs have seen a business
benefit?
Mrs. Carter. I don't understand what he is talking about,
because we in the mental health community have been watching
companies for years who have had parity insurance for their
employees.
And what we have seen happen is that over the first few
years insurance might go up just a very little bit, but over 3
years or 4 years or 5 years, the total cost of health care for
the company comes down, because people who go for physical
health--I don't like to make a distinction, because I don't
think there should be a distinction.
But people who go for physical health who are depressed or
suffer from some mental illnesses and don't realize it keep
going to the doctor and going to the doctor, and health costs
are more than when they receive mental health care.
Then they don't go to their physical health doctors.
Chairman Andrews. So, Mrs. Carter, it is----
Mrs. Carter. So over a period of time in all the ones that
we have studied the health care costs, overall health care
costs came down.
Chairman Andrews. This, Mrs. Carter, would be the person
who gets treatment for clinical depression and therefore
doesn't suffer significant weight loss and a stroke or a heart
or attack or something that comes with that, then, right? That
is what we are really talking about----
Mrs. Carter. Yes.
Chairman Andrews [continuing]. Somebody who has that kind
of--thank you.
Mrs. Carter. And people who are depressed don't feel good.
They don't know what is the matter. They have stomach aches and
all kinds of aches and pains and just keep going to the doctor
for care.
Chairman Andrews. Very well.
I understand that our friend and colleague Mr. Ramstad has
arrived.
Is that right, Jim? Are you here? Jim, please come forward.
And with Mr. Kline's consent, I am going to recognize Mr.
Ramstad for a statement at this time and then go to Mr. Kline
for questions, if that is okay.
Okay. Without objection, there is a seat for you, Jim at
the end of the table there. We are glad to see you arrived
safely. We welcome you and thank you for the great work you
have done on this issue.
STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MINNESOTA
Mr. Ramstad. Thank you, Mr. Chairman, Mr. Kline and
distinguished committee members, friends all. Thank you very
much for your indulgence and for allowing me to testify out of
order today.
What is normally a 2-hour flight from Minneapolis turned
into a 5-hour ordeal by way of Dulles, so thank you very, very
much.
As some of you know, on July 31st, 1981, I woke up from my
last alcoholic blackout under arrest for a variety of offenses
in Sioux Falls, South Dakota, the city jail.
I am alive and sober today only because of the access I had
to treatment, along with the grace of God and the support and
fellowship of other recovering people over the last 25 years,
11 months.
But too many people don't have the access to treatment that
Patrick Kennedy and I had. I believe it is a national disgrace
that 270,000 Americans last year were denied addiction
treatment, according to SAMHSA.
I think it is a national tragedy that 150,000 of our fellow
Americans died last year as a direct result of chemical
addition. Thirty-four thousand Americans committed suicide as a
direct result of their untreated depression.
And I know there are some people on this committee
concerned about cost. Let's look at the cost. It is a national
crisis that untreated addiction and mental illness cost our
economy over $550 billion last year. That is according to
respected actuarial firms that have done those studies.
And of course, the costs that can't be measured--I am sure
you have heard today from witness after witness--that can't be
measured in dollars and cents. The human suffering, the broken
families, the shattered dreams, the ruined careers, the
destroyed lives, and on and on and on.
It is time to end the discrimination against people
suffering the ravages of chemical addiction and mental illness.
It is time to end the higher co-payments, the deductibles, the
out-of-pocket limitations, costs that are higher than people
who undergo treatment for other diseases pay.
These are discriminatory barriers to treatment that don't
exist for other diseases. And if you accept the premise of the
American Medical Association, 1956, that mental illness is a
disease, that addiction is a disease, then you can't justify
this discrimination vis-a-vis other diseases, this
discrimination in treatment.
And that is why we have worked so hard on the Paul
Wellstone Mental Health and Addiction Equity Act, so many of
us.
I am sure Patrick Kennedy, our colleague from Rhode Island,
explained the 14 field hearings that we had across this land--
people desperate for greater access to treatment, people
suffering the ravages of these diseases, people who want the
discrimination ended.
And speaking of cost, we had at these field hearings CEO
after CEO who have either on their own, as self-insured, or
through their health plans already provided treatment equity
for their employees.
CEO after CEO after CEO testified they are saving dollars.
They are saving hundreds of thousands of dollars, small-,
medium-and large-size companies.
We had six insurance plan CEOs testify in support of this
legislation. Why? Because they have seen all the empirical data
in the world that shows parity doesn't cost, it saves dollars.
So I urge this respected committee, friends all, all of
you, that you mark up this important lifesaving bill.
With me, this isn't just another public policy issue. This
truly is a matter of life and death, because I have seen my two
uncles die from untreated alcoholism.
I have seen others suffer immeasurably from their mental
illness and chemical addiction. I have seen families torn apart
by the ravages of their child's addiction.
And we can address this problem as a nation by passing this
bill. It won't raise premiums. This is according to Milliman &
Robertson, again addressing my friends' concerns about cost.
Milliman & Robertson, the highly respected actuarial firm,
who doesn't have a political axe to grind, said in their study
that for the price of a cheap cup of coffee per month, 16
million people on health plans can receive treatment for their
mental illness or chemical addiction.
Again, I will be glad to furnish the actuarial studies to
anybody who argues that this is going to be a costly mandate.
First of all, it is neither. It is not a mandate, and it is
going to save literally billions of dollars.
Let me conclude, Mr. Chairman--and again, you have been
very generous, and I appreciate the chance to testify here
today.
Let me conclude by saying as strongly as I can, it is time
to end the discrimination against people who need treatment for
their mental illness and addiction. Thank you, Mr. Chairman and
members of the committee.
[The statement of Mr. Ramstad follows:]
Prepared Statement of Hon. Jim Ramstad, a Representative in Congress
From the State of Minnesota
Chairman Andrews, Ranking Member Kline, distinguished committee
members and friends all, thank you for holding this important hearing.
On July 31, 1981, I woke up in a jail cell in Sioux Falls, S.D.,
under arrest as the result of my last alcoholic blackout.
I'm alive and sober today only because of the access I had to
treatment, as well as the grace of God and support of recovering people
the past 25 years. I'm living proof that treatment works and recovery
is possible.
But too many people don't have access to treatment. It's a national
disgrace that 270,000 Americans were denied addiction treatment last
year. It's a national tragedy that last year alone, 150,000 of our
fellow Americans died from chemical addiction and 34,000 Americans
committed suicide from depression. And it's a national crisis that
untreated addiction and mental illness cost our economy over $550
billion last year.
And think of the costs that can't be measured in dollars and
cents--human suffering, broken families, shattered dreams, ruined
careers and destroyed lives.
It's time to end the discrimination against people suffering the
ravages of mental illness and chemical addiction. It's time to end the
higher copayments, deductibles, out-of-pocket costs, and limited
treatment stays--discriminatory barriers to treatment that don't exist
for other diseases. According to the GAO, 90 percent of plans impose
financial limitations and treatment restrictions on mental health and
addiction care that are not imposed on other illnesses. It's time to
treat mental illness and chemical addiction under the same rules as
other medical illnesses.
The Paul Wellstone Mental Health and Addiction Equity Act will give
Americans suffering from addiction greater access to treatment by
prohibiting health insurers from placing discriminatory restrictions on
treatment.
It will end the discrimination against people who need treatment
for mental illness or chemical addiction.
Expanding access to treatment is not only the right thing to do;
it's also the cost-effective thing to do. We have all the empirical
data, including actuarial studies, to prove that equity for mental
health and addiction treatment will save billions of dollars nationally
while not raising premiums more than one half of one percent. In other
words, for the price of a cheap cup of coffee per month, 16 million
people in health plans could receive treatment for their mental illness
or chemical addiction.
Furthermore, it's well-documented that every dollar spent on
treatment saves up to $12 in health care and criminal justice costs
alone. That does not even take into account savings in social services,
lost productivity, absenteeism and injuries in the workplace.
Let me conclude by repeating as strongly as I can: It's time to end
the discrimination against people who need treatment for mental illness
and addiction. It's time to prohibit health insurers from placing
discriminatory restrictions on treatment. It's time to provide greater
access to treatment. It's time to pass the Paul Wellstone Mental Health
and Addiction Equity Act.
The American people cannot afford to wait any longer for Congress
to act.
______
Chairman Andrews. Well, Mr. Ramstad, thank you for being
here and being with us, and we celebrate your continuing
personal victory as well as your commitment to this cause very,
very much.
Mr. Ramstad. By the way, Mr. Chairman, one addendum. I
would just like to add that we appreciate also the support of
the president of the United States, who endorsed parity
legislation in 2002 in a speech in Albuquerque, New Mexico when
he was with the Senate chief sponsor, Senator Domenici.
We are anxious to get the bill down to him to sign.
Chairman Andrews. As we said, we believe we have a lot of
bipartisan support for this legislation.
I am going to turn now to my friend from Minnesota, Mr.
Kline, for his questions.
Mr. Kline. Thank you, Mr. Chairman.
And welcome, Jim. I will congratulate myself again for
having chosen to come back last night. [Laughter.]
I don't know what moved me, but--so I know what that means
when a 2-hour flight turns into a multi-hour ordeal. Glad to
see you, and glad you made it and glad you are safe.
A couple of comments and questions. I think many of us are
eager to move forward with some parity legislation.
And part of what we are talking about today and trying to
learn about are the differences between the Senate bill co-
sponsored by Senator Kennedy and Senator Domenici and the bill
that the president was talking about--what is in that bill
versus what is in the House bill that is sponsored by our
colleagues Mr. Ramstad and Mr. Kennedy.
And by the way, I of course always appreciate the passion,
Jim, that you bring to this and our colleague Patrick as well.
And so I have got some questions, probably not for you, Jim,
but for some of the other members of our panel.
And by the way, Mr. Chairman, I would like unanimous
consent to submit this letter for the record from----
Chairman Andrews. Without objection.
[The letter follows:]
The George Washington University,
June 27, 2007.
Hon. Pete V. Domenici; Hon. Edward M. Kennedy; Hon. Michael B. Enzi;
U.S. Senate, Washington, DC.
Dear Senators Domenici, Kennedy and Enzi: This letter is written in
response to your request for an analysis of the preemption provisions
of S. 558, the Mental Health Parity Act of 2007. The views expressed
herein are my own and not those of the George Washington University.
Based on my review, I conclude that the preemption provisions
contained in the Act save comprehensive state laws that regulate the
mental health benefit design of insurance products sold in the
employer-sponsored group health plan market. I further conclude that
the Act's preemption provisions are wholly consistent with current
ERISA preemption doctrine, which treats states as full partners in the
regulation of insured plans. Given the broad policy imperatives
underlying this legislation, I believe that its enactment would cure
one of the most serious unaddressed issues in civil rights policy for
persons with disabilities, while preserving the ultimate power of the
states to determine the reach of these federal protections in the case
of ERISA plans that purchase state-regulated health insurance.
I am a professor of health law and policy at the George Washington
University School of Public Health and Health Services, where I also
serve as the founding Chair of the Department of Health Policy. My 30-
plus year legal career has focused on matters related to health care
access, quality, and equality in the case of low income, minority,
medically underserved, and vulnerable populations, including persons
with or at risk for both physical and mental disabilities. Because of
the unique interaction between the American legal system and the U.S.
health care system, my health law knowledge and experience span federal
and state law, with a particular emphasis on laws that finance health
care and that regulate health care financial arrangements.
I have written extensively on health insurance, employee health
benefits, and ERISA. The textbook that I co-authored with Professors
Rand Rosenblatt and David Frankford, Law and the American Health Care
System (Foundation Press, 1997, 2001), was the first health law
textbook to give extensive treatment to ERISA as a central aspect of
U.S. health law and policy. Over the course of my career, I have
provided technical assistance, to Members of Congress from both parties
on matters related to the legal implications of federal legislative
proposals. In this capacity, I have, on several occasions, raised
concerns regarding the preemptive effects of pending federal
legislative measures, particularly when such measures threatened to
harm underlying state law remedies for injured persons.
After careful analysis, I have concluded that far from diminishing
protections for individuals, S. 558 advances long overdue national
policy while at the same time, preserving states' power to adopt more
comprehensive regulatory standards for health insurance products sold
to ERISA-governed group health plans.
My conclusion is based on the fact that the legislation's special
preemption provisions give clear and consistent direction to the courts
regarding how to approach questions of preemption. In my view, S. 558
delineates its reach with care; a straightforward textual reading shows
that the legislation honors ERISA's central preemption assumption:
state laws regulating insurance should remain undisturbed unless they
clearly conflict with a federal standard. I also believe that the
legislative text clearly reflects Congress' underlying intent to remedy
longstanding discrimination against persons with mental illness, while
continuing to permit states to define the full parameters of these
important federal safeguards through the application of more rigorous
standards to insured products.
The need for a national policy on mental health parity is a
longstanding and pressing one. I can think of few examples--not simply
in the case of employer sponsored plans but also with respect to health
care financing generally--in which the legal protections and safeguards
established under state law have been weaker. Indeed, the United States
Supreme Court's decision in Olmstead v L.C.\1\ stands as a testament to
the pervasive problems that individuals with mental illness encounter
in attempting to secure equal access to appropriate treatment.
S. 558 will ensure parity for millions of Americans who are
currently unprotected by state laws
If enacted, S. 558 will provide much needed relief in the case of
ERISA-governed employer-sponsored plans. For two reasons, the
imperative for federal intervention is overwhelming: first, states
cannot reach self-funded health plans; second, millions of persons live
in states whose mental health parity protections are weak to non-
existent.
S. 558 offers a careful legislative structure that includes a
special preemption clause, whose provisions save more stringent state
insurance laws. This structure parallels more than two decades of
United States Supreme Court decisions, which have interpreted the
preemptive reach of ERISA Sec. 514 (the original federal ERISA
preemption statute) as nonetheless saving state insurance laws in the
case of insured products.\2\
Furthermore, modern ERISA jurisprudence has extended the reach of
the term ``state laws that regulate insurance'' under Sec. 514 to reach
not only benefit and coverage design, but also network structure and
the power to make final determinations regarding the meaning of
insurance contract clauses.\3\
In determining whether the Mental Health Parity Act represents a
departure from this general and longstanding rule, the starting point
for any ERISA preemption analysis would be the United States Supreme
Court's seminal decision in New York State Conference of Blue Cross and
Blue Shield Plans v Travelers Insurance Co.\4\ In Travelers, a
unanimous Court reminded lawmakers that ``pre-emption claims turn on
Congressional intent'' and that the courts do their work ``on the
assumption that the historic police powers of the States were not to be
superseded by [a] federal act unless that was the clear and manifest
purpose of Congress.'' \5\ The regulation of health insurance, as
recognized by the ERISA preemption statute itself, represents such an
area of ``historic'' state power to regulate conduct.
The Mental Health Parity Act's preemption clause has three key
components. First, the ``special'' preemption section (Section 4)
provides that the legislation preempts a state ``parity standard or
requirement'' that ``differs from'' the provisions of subsections (a),
(c) or (e) of Section 712A of ERISA or Section 2705A. Second, this
preemption clause is limited by certain clarifications, i.e., special
rules of construction that, without exception, specifically save state
laws regulating benefits, services, the treatment of certain
conditions, and networks. Finally, the legislation clarifies that
states remain free to regulate, without regard to federal standards,
the individual and small group markets. Taken together, these
provisions can be read as placing national minimum standards under
medium and large group plans, while permitting states to both
strengthen these standards in the areas of benefits, coverage,
conditions to be treated and networks, and to regulate the individual
and small group markets. In short, the ``Special Preemption Rule''
found in Sec. 4 is a clear signal to the courts that where mental
health parity is concerned, their preemption analysis is to follow this
carefully delineated approach.
In my view, concerns that S. 558 lacks clear directives on
``ceilings'' or ``floors'' are misplaced. It is the structure of Sec. 4
that is critical, and this special preemption rule, taken together with
other aspects of the bill and its history, protect the key aspects of
more stringent state laws, including those that cover the small group
market, mandate coverage of mental health benefits and regulate the
management of benefits and networks. At the same time, S. 558's robust
parity requirement, which contains none of the exceptions, limitations
and exclusions frequently found in state parity laws, will supersede
weaker state parity statutes. Thus, while commonly described as a
``ceiling,'' in practice S. 558 functions like a ``floor'' because of
its saving clause. In sum, S. 558 sets out a special analytic protocol
when considering preemption in a mental health parity context, and its
approach quite clearly favors the retention of the more stringent
features of state mental health parity laws.
1. The special preemption rule in S. 558 preserves state powers to
regulate the individual and small group markets.
The arguments that have been advanced regarding the preemptive
impact of S. 558 on the small group and individual markets fail to take
into account the limited scope of S. 558's basic preemption language.
As noted above, only subsections (a), (c) and (e) of Section 712A of
ERISA and Section 2705A of the PHSA are given preemptive effect. None
of these subsections contain any language exempting the small group or
individual market. S. 558's small group exemption is contained in
subsection (d). However, this subsection has no preemptive effect.
Simply put, state laws covering the small group or individual markets
(whether they cover such markets exclusively or as part of a broader
statute applicable to all markets) do not ``differ from'' any of the
provisions of S. 558 that have preemptive effect, and therefore, such
laws cannot be preempted.
In addition, even if S. 558's basic preemption provision were not
so clearly limited, the bill's special preemption rule explicitly
preserves state laws regulating the individual and small group markets
in recognition of the fact that S. 558 reaches employer groups of 50 or
more. The measure states as follows:
Rule of construction relating to certain state laws--Nothing in
this subsection shall be construed to preempt State insurance laws
relating to the individual market or to small employers (as * * *
defined [under the bill]). ERISA Sec. 731(c) (2)(B) as added.
In my view, this clarification clearly protects state laws
applicable to the small group or individual market, without regard to
whether the law specifically references such markets or applies more
broadly to all insurance policies. The term ``relating to'' in the
clarification section is the same phrase used in ERISA's basic
preemption provision, and will be interpreted in accordance with
longstanding ERISA preemption case law.\5a\ The courts have
consistently held that state laws mandating the coverage of particular
benefits ``relate to'' group health plans, whether or not these laws
expressly reference such plans or sweep more broadly.\6\
Furthermore, the special preemption section provides an overarching
``clarification'' instruction to the courts, which, underscoring
Congressional intent, cautions the courts not to read its preemptive
provisions broadly:
In general--to the extent that any provision of State law is
preempted under this subsection, any remaining provision of such state
law shall remain in effect and shall not be preempted. ERISA
731(c)(2)(A) as added.
Thus, even if the basic preemption provision of S. 558 preempted
state laws covering the small group or individual markets, which it
clearly does not, the clarification language would certainly protect
any such laws without regard to the manner in which they were
structured.
2. S. 558 explicitly saves state laws that define what constitutes
mental health benefits in connection with health insurance coverage
offered under an employer-sponsored plan.
As a matter of federal law, the Act defines the term ``mental
health benefits'' as what is specified under a group health plan or a
health insurance issuer offering coverage in connection with a group
plan. At the same time, the text makes clear that states can go
farther. Specifically, S. 558 provides that mental health benefits
mean:
[B]enefits with respect to mental health services (including
substance use disorder treatment) as defined under the terms of the
group plan or coverage, and when applicable, as may be defined under
state law * * * applicable to health insurance coverage offered in
connection with a group health plan. Sec. 2705A(f) as added [emphasis
added]
The intent of Sec. 2705A is clear: federal law allows plans and
issuers to define mental health benefits unless such a definition is
contained in a state law governing health insurance products sold to
employer groups. S. 558 thus preserves state power to define the reach
of mental health parity in the case of insured products. Indeed,
because states are given unconditional power over the central
definition of the Act, they effectively have the power to delineate the
parameters of mental health coverage design in the case of insured
products, not only with respect to the provision of any mental health
services but also with respect to the amount, duration, and scope of
mental health services that must be furnished.
3. The special preemption rule in S. 558 saves state regulatory
standards mandating coverage of mental health benefits or requiring
out-of-network coverage, thereby empowering states to effectively
define the reach of parity in the case of insured products.
Rather than closing off state protections where parity's scope is
concerned, S. 558 in fact preserves state laws that define the remedial
reach of the Act's provisions in the case of the insured market. The
Act's special preemption rule contains explicit ``Clarifications''
whose express purpose--as a textual matter--is to limit the preemptive
effects of the Act. In this regard, the Act contains an additional rule
of construction where benefit and coverage design and out-of-network
provider coverage are concerned:
Rule of construction relating to mental health and out-of-network
coverage * * * [N]othing in section 712A [relating to parity] shall be
construed to require a group health plan (or coverage offered in
connection with such a plan) to provide the following
(i) any mental health benefits, except that state insurance laws
applicable to health insurance coverage that require coverage of
specific, items, benefits, or services (including for specific mental
health conditions) are specifically not preempted by this subsection or
such section 712A [emphasis added]
(ii) Out-of-network coverage for either medical and surgical
benefits or mental health benefits, except that state insurance laws
applicable to health insurance coverage relating to the provision of
out-of-network mental health coverage are specifically not preempted by
this subsection or such section 712A ERISA. Sec. 712(c)(2) as added by
S. 558 [emphasis added]
This express rule of construction clarifies that, consistent with
general principles of ERISA preemption under ERISA Sec. 514, state
benefit mandates applicable to the design and administration of insured
products sold to employer-sponsored plans, including state laws that
regulate provider structure and design and laws that govern the
interpretation of insurance contracts are not preempted.\7\
The Mental Health Parity Act thus leaves states free to delineate
the terms of insurance products sold to employer-sponsored group health
plans, including the items, benefits and services that together
constitute the coverage design to which the federal parity law applies.
(The phrase ``items benefits and services'' is a common tern of art
used in both public and private health insurance law; it is used to
refer to benefit classes, covered procedures within classes, the
amount, duration, and scope of benefits, limitations and exclusions,
and key definitional terms such as ``medical necessity.'')
State benefit mandates should be protected from preemption whether
they are ``freestanding mandates'' (e.g., a requirement to cover a
minimum number of visits per year) or mandates embedded in mental
health parity laws (i.e., a law requiring insurers to cover mental
health benefits and to do so at parity with other benefits). Contrary
to what some have argued, I do not believe there is any conflict
between the ``Clarifications'' language regarding benefit mandates and
the basic parity standard contained in S. 558. Although S. 558's parity
provision does not, by itself, mandate coverage of mental health
benefits, the ``Clarifications'' language makes it clear that if a
state parity law does mandate such coverage, that aspect of the state
law is not preempted.
It is also worth emphasizing that the often-highlighted distinction
between ``conditional parity laws'' (which do not mandate the coverage
of mental health benefits) and ``mandated parity laws'' (which do
impose such a mandate) is largely irrelevant in practice. Evidence from
the Kaiser Family Foundation's annual review of employer-sponsored
benefits suggests that there is no appreciable market for health plans
that cover no mental health benefits whatsoever, especially in the
large group market that is subject to S. 558. This evidence suggests
that only about 2% of all insured individuals have no mental health
coverage at all, even in states that have conditional parity laws.
Thus, even when insurers are legally permitted to exclude all mental
health benefits, it does not appear that they have the ability to do so
as a practical matter. As a result, I consider ``conditional parity
laws'' such as S. 558 and ``mandated'' parity laws'' to be distinctions
without true differences,
In sum, as a matter of federal law, the Mental Health Parity Act's
special preemption provision, in combination with the Act's PHS Act
amendments, clarify the following Congressional intent: (1) that as a
general matter, state laws regulating insurance products sold in the
employer group market will be saved unless specifically preempted under
the Act; (2) that state laws delineating a minimum mental health
benefit design in the group health insurance coverage market (including
a minimum mental health benefit and the minimum range of conditions to
which absolute parity must apply) should be saved; (3) that state laws
that delineate the range of services, items, benefits and procedures to
which parity applies are saved; and (4) that state network parity
requirements are saved.
4. State laws regulating the manner in which mental health and
other benefits are managed would not be preempted by S. 558.
As explained above, only subsections (a), (c) and (e) of Section
712A of ERISA and 2705A of the PHSA are given preemptive effect. The
provision of S. 558 authorizing health plans to manage benefits through
the application of medical necessity reviews or otherwise is contained
in subsection (b). Moreover, there is nothing in subsections (a), (c)
or (e) that refers to or is inconsistent with State benefit management
laws. Accordingly, even if the very general language in subsection (b)
were somehow construed as inconsistent with such state laws, the laws
would not be preempted by S. 558. For example, I do not see any basis
for preemption of Pennsylvania's law restricting health plan medical
necessity reviews of substance abuse services provided during an
initial treatment period or the quality standards set forth in
Vermont's Rule 10.
There is a compelling policy imperative for the approach taken by
S. 558, and a ``HIPAA'' approach to preemption is no less susceptible
to extensive litigation to clarify the terms of the law.
S. 558 addresses mental health parity, a matter of fundamental
importance to the health of the American people. Many observers--
including prior Presidential Administrations and numerous legal
observers including my colleagues Rand Rosenblatt, Sylvia Law, David
Frankford, and myself in our textbook Law and the American Health Care
System--assumed that parity was addressed by Titles I and III of the
Americans with Disabilities Act in combination with the health
insurance safe harbor. Unfortunately that has turned not to be the
case; indeed, the United States Supreme Court has given at least
implicit approval to lower court decisions that effectively interpreted
questions of health insurance design as beyond the reach of the ADA,
thereby permitting public and private health insurers and employer-
sponsored group plans to continue blatant discrimination.\8\
The reforms contained in S. 558 represent an important step toward
rectifying the injustice of discrimination against persons with mental
illness. Furthermore, the legislation takes this step while carefully
balancing the need for a national floor with discretion on the part of
states to provide a more comprehensive framework in the case of insured
plans.
The law should be read as encouraging an expanded state
intervention, not only because it is a remedial statute, but also
because of the broad problem of mental health parity across health care
all categories of state-regulated health care financing arrangements.
To be sure, states such as Vermont, have made remarkable strides in
developing a parity policy. At the same time, the decade-long record in
the case of S. 558 underscores the seriousness of the problem and the
absence of state protections across the board. Comprehensive state
parity laws are wanting not only with respect to insurance products
sold to employee health benefit plans but also with respect to Medicaid
coverage for adults,\9\ coverage for children under separately
administered SCHIP plans,\10\ insurance sold in the individual market,
and public employee health benefit plans (as Vermont's law
illustrates,\11\ state employee plans may be excluded as a matter of
state law in the absence of a statute that explicitly extend parity to
public employee plans).
There are some who argue that what is needed in order to clarify
state powers and reduce the risk of litigation is a ``HIPAA approach''
to preemption that would save ``more stringent'' state laws. Apart from
the fact that it is not possible in my view to draft state law
protections any stronger than the special preemption statute contained
in S. 558, the notion that a HIPAA standard somehow will avoid legal
confusion is misplaced. In a federal legal system, preemption disputes
probably are inevitable, regardless of whether the dispute arises in
the case of a Commerce Clause or Spending Clause statute. Indeed, along
with several colleagues I recently published an analysis of the more
than 500 HIPAA preemption cases decided since the final Privacy Rule
was promulgated.\12\ To say that the HIPAA preemption framework has
generated legal disputes regarding which state laws are preempted and
which are saved because they are more ``stringent'' frankly is the
understatement of the century.
Regardless of whether a federal statute purports to establish a
``ceiling'' or a ``floor'' (both nice catch-phrases but without any
legal meaning), the critical issue in resolving preemption disputes is
the clarity of the text and the evidence of underlying Congressional
legislative intent. In this regard, S. 558 could hardly provide a
clearer or more consistent roadmap that balances the need for national
standards with the ability on the part of states to expand upon those
standards. The drafters have gone to great lengths in my view to
provide clarity regarding the power of states to regulate the group
health plan insurance market. It is my hope that this critical national
debate over parity ultimately will spark a comprehensive vision of
parity at all levels of government and with respect to all forms of
health care financing.
Please do not hesitate to contact me if I can be of further
assistance.
Sincerely,
Sara Rosenbaum, J.D.,
Harold and Jane Hirsh Professor of Health Law and Policy and Chair,
Department of Health and Human Services, Centers for Medicare and
Medicaid Services.
endnotes
\1\ 527 U.S. 581 (1999)
\2\ Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724
(1985)
\3\ Ky. Ass'n of Health Plans, Inc. v Miller 538 U.S. 329 (2003);
Rush Prudential HMO v Moran 536 U.S. 355 (2002)
\4\ 514 U.S. 645 (1995)
\5\ 514 U.S. 655
\5a\ United States v. Ness, 466 F.3d 79, 81 n. 1 (2d Cir. 2006)
(``We follow the general rule that the use of identical language in
different provisions of a statute is a strong indication that they are
to be given the same interpretation, absent clear evidence that
Congress intended otherwise.'')
\6\ See, e.g., Shaw v. Delta Air Lines, 463 U.S. 85, 96-97 (1983);
Aloha Airlines, Inc. v. Ahue, 12 F.3d 1498, 1504-05 (9th Cir. 1993);
Standard Oil Co. of Cal. v. Agsalud, 633 F.2d 760 (9th Cir. 1980).
\7\ In the wake of Rush Prudential HMO v Moran and Kentucky
Association of Health Plans v Miller, it is difficult to think of any
state insurance regulation that would not be saved, other than state
laws that are found to create additional remedies. See Aetna Health
Inc. v Davila 542 U.S. 200 (2004)
\8\ See e.g., Doe v Mutual of Omaha 179 F. 3d 2d 557(7th Cir.,
1999), cert. den. 528 U.S. 1106 (2000). Doe involved HIV, the other
health condition that triggers rampant discrimination in insurance
design. During the oral argument in the case, Mutual of Omaha
stipulated that ``it has not shown and cannot show that its AIDS Caps
are or ever have been consistent with sound actuarial principles,
actual or reasonably anticipated experience, bona fide risk
classification, or state law.'' Id., 179 F.3d. 562. Unyielding industry
resistance to evidence showing the potential for fair and efficient
management of mental conditions underscores how equally apt this
stipulation would be in the context of mental health coverage.
\9\ See.e.g. Rodriguez v Miller 212 F. 3d 211 (2d Cir., 1999) (No
ADA violation when a state Medicaid program imposes restrictions on
personal care services for persons with mental illness that do not
exist in the case of beneficiaries with physical conditions).
\10\ Rosenbaum, S., Markus, A., and Sonosky, C. Public Health
Insurance Design for Children: The Evolution from Medicaid to SCHIP.
The Journal of Health and Biomedical Law. March 2005.
\11\ See memorandum from Herbert W. Olson to Paulette Thabault
regarding S. 558 (June 16, 2007)
\12\ Rosenbaum, S., Borzi, P., Burke, T., and Nath, Sonia W. Does
HIPAA Preemption Pose a Legal Barrier to Health Information
Transparency and Interoperability? BNA's Health Care Policy Report.
Vol. 15, No. 11, 3/19/2007.
______
Mr. Kline [continuing]. George Washington University.
Medical management has been an issue discussed back and
forth here, and the chairman correctly asked, ``Well, if it is
not explicitly excluded, can't we assume that it is there?''
And I guess I would ask the question what would be the harm
in making sure that the language is put in there to explicitly
allow it.
Can you address that, Mr. Trautwein, and why that would
make you feel better and what the concerns are?
Mr. Trautwein. Well, again, in the administration of
benefits, there is always a tug-of-war about who can do what
when and where, and not only the tug-of-war in preemption
between what the federal government can do, what the states can
do, but in terms of regulation, what plans can do and what the
restrictions are.
So I think we would be much more comfortable if that
language was there, as it has been in past bills.
Mr. Kline. Okay. Thank you.
And I think, in fact, when we were talking about the 0.6
percent, 0.3 percent, 0.2 percent, at least initially, I think,
Mr. Melek, didn't you make an assumption that there was medical
management, and then you looked at different levels if you
didn't have it? Is that correct?
Mr. Melek. Yes. In our baseline scenario, we had 0.6
percent increase. That had an underlying----
Mr. Kline. I don't mean to interrupt--an underlying
assumption that there was medical management at sort of current
levels.
Mr. Melek. That is right, compared to what is currently
commonly in place in managed care plans.
Mr. Kline. Okay. And so, in order to sort of solidify your
analysis, it would be clearer and easier for you if we had
explicit language allowing medical management, is that correct?
Mr. Melek. I think that is correct, although, de facto, in
health care today it is used.
Mr. Kline. Okay. Thank you very much.
Now, we were in a discussion earlier talking about the
House bill, and I think, Jon, you brought it up in your
testimony about new remedies that might be available and the
litigation.
Can you expand on that, what those costs might be and what
those remedies might be, what the impact would be?
Mr. Breyfogle. Right. And before I do, on the medical
management point, there are a couple of provisions in the House
bill that I do think warrant the clarification we are asking
for.
First of all, the House bill imposes a broad requirement
that there be no differences in treatment limitations, and
treatment limitations is fairly broadly defined.
So if you had different U.R. tools that were being applied
to medical benefits versus mental health benefits, you might
see somebody arguing that there was non-parity in that regard.
So there is the issue there.
The other provision in the House bill is actually the one
that is the remedies provision, which basically says, to
paraphrase the medical management point, nothing in the federal
law should be construed to preempt any state law that provides
greater methods, provides greater consumer protections methods,
methods of access to benefits, et cetera.
So I don't know what methods of access to benefits means,
but if a state law were to regulate U.R., that is a method or
imposition on accessing benefits, arguably. So I think there is
some unclarity there that relates to medical management.
Mr. Kline. So explicit language authorizing----
Mr. Breyfogle. There are a couple of provisions----
Mr. Kline [continuing]. Would fix that?
Mr. Breyfogle [continuing]. That I do think--and that
provision might be read to just apply to insured plans, but it
might be read more broadly.
And the treatment limits rule clearly applies to self-
insured and insured plans.
The second point on medical management is the law does not
preempt state insurance laws as to insured plans, so there are
states that do bar medical management for mental health and
limit it.
So already, there is a built-in preservation of anti-
medical management laws in the insured market in the House
bill.
We didn't get everything we wanted in the Senate bill,
which has essentially the same framework. But those are the
reasons why we want the clarity in this bill.
As to the remedies point that you asked, basically there--
ERISA provides the exclusive set of rules for litigating claims
under ERISA plans. It is in federal court. It has certain
remedies.
State laws that provide punitive damages, compensatory
damages are completely preempted. That is all very settled.
There is a special rule that is being added just for mental
health benefits provisions that saves state remedies. I mean,
remedies is a pretty precise term legally speaking.
And so I think if you have a dispute over whether a parity
law is being followed, and you are in an insured plan, you have
a darn good argument under the House bill that you can sue for
whatever state law remedies are available, punitive damages,
compensatory damages, et cetera.
Mr. Kline. Okay. Thank you.
And I thank the chairman for letting me go past the time. I
yield back.
Chairman Andrews. Thank you very much, Mr. Kline.
Mr. Kildee is recognized for 5 minutes.
Mr. Kildee. Thank you, Mr. Chairman.
First of all, I thank all of you.
Mrs. Carter, I arrived in Washington with you and your
husband in 1976. You were very kind, by the way, you and your
husband, to my children, who were 4, 5 and 6 at that time. They
used to play in the tree house with Amy in the backyard of the
White House.
As a matter of fact, my 4-year-old left for Baghdad last
night again.
And it is good to have you here, and thank you for all you
have done in this field. Let me ask you this.
We know of the inequality between mental and physical
health treatment, and there is still some amongst us who have
either a medieval or superstitious attitude toward mental
health, and that attitude has changed a great deal in the 30
years that I have been in Congress.
But that lack of understanding is found among people in
government and people in business. Is that lack of
understanding greater in business or greater in government?
Or have attitudes changed and it is now more of a false
concern for cost for mental health?
Mrs. Carter. Well, first, congratulations on being able to
stay in Washington.
Mr. Kildee. Thank you. [Laughter.]
Mrs. Carter. I think attitudes are changing a little bit. I
think for the first time since I have been involved the stigma
is beginning to lift. We still have a long way to go, but I
think it is beginning to lift.
I think that Katrina and soldiers coming home, National
Guardspeople coming home, have helped people to see that mental
illnesses are real and that people need help.
The stigma goes back to when--actually, before I first
started, of course, for generations, but when I first started,
people were being moved out of the big central hospitals into
communities with no services available.
And nobody knew how to treat mental illnesses. There was no
knowledge about the brain. And that has all changed. And so
many people still have that same attitude about mental
illnesses that was prevalent back when I first began.
But today, mental illnesses can be diagnosed and treated
and the overwhelmingly majority can lead normal lives, living
at home, going to school, working.
And so to me, it is just a tragedy that we don't help
people. We relegate them to a lower standard because of their
illness. I hope government is changing, because I really want
to have this parity bill passed.
And I do think, from what I have seen over the years,
businesses are beginning to come around. I don't think it is
just because Tom Johnson is in Atlanta, Tom Johnson and these
other CEOs.
But so many businesses are beginning to see that if they
provide parity they have a happy, healthier workplace, and the
productivity goes up. And so I think some businesses, not all
of them by a long shot--so many are not--but I think it is
beginning to happen.
I think there is a new awareness of the necessity to help
people with mental illness.
Mr. Kildee. And you have indicated that this concern for
cost is really a false concern for cost.
Mrs. Carter. Well, the first argument is it is going to
break the bank. But we have evidence from all the studies that
that doesn't happen, that the cost is very minimal.
And as I said before, over a period of time overall health
costs for a company actually come down. And I think the main
reason is because people go to primary care doctors.
And when mental health services are available to them
through insurance and they access the professional mental
health person and get treatment, then they have so many fewer
trips to doctors, to the primary care doctor.
Some primary care doctors understand and recognize mental
illnesses, but they are very few.
Mr. Kildee. Thank you very much, Mrs. Carter.
Chairman Andrews. The gentleman yields back his time.
It is a pleasure to turn to our Dr. Boustany for 5 minutes.
Mr. Boustany. Thank you, Mr. Chairman. I would like to
thank you for holding this hearing.
And I want to thank all the witnesses for your very
excellent testimony.
To Ms. Smith, I want to say I have a lot of empathy for
your situation, and I applaud your courage for being here
today.
My daughter, who is 22 years old, would not be alive today
if we didn't go the extra mile as a family to seek out care for
her depression several states away because I could not find
adequate care in my hometown.
And I have practiced medicine in my home town for 15 years
as a cardiovascular surgeon and had pretty good access to just
about any health care in a town of 120,000.
So the parity issue--it goes way beyond just simply, you
know, the insurance fix that we are looking at in this bill or
even the Senate bill.
And I think Jim is nodding his head. He recognizes that,
you know, as well, that just doing this is only going to be a
real scratch on the surface of the problem, because there are
so many other things that affect access to health care. Some
have been alluded to today.
I worry that this whole thing is going to degenerate into
the usual fight over the ERISA preemption, and, you know, it
would be a shame if we don't get anything all the way through
the legislative process and onto the president's desk if that
were to be the block again.
And I have a quick question. I guess I will start with Mr.
Trautwein.
Do the self-insured groups typically have better mental
health coverage than other insured groups?
Mr. Trautwein. I think particularly larger employers were
first as the ethic changed from treatment to prevention and
management of chronic conditions. I think the better coverage
followed that ethic.
Mr. Boustany. Because I worry that if we dismantle the
ERISA preemption and take down what a good plan's--then, you
know, we are actually doing more damage in the long run, and
that is--I guess that is a concern I have.
I know the Senate has worked very hard to strike that
balance, looking at the reality of how do you get everybody
together to move something forward.
And I guess that is one concern I have about moving this
House bill forward, and hopefully we can continue to have
serious dialogue as we go forward on it.
Mr. Dilweg, when you were testifying, you mentioned if the
Senate bill is enacted, consumers would lose existing state-
based coverage guarantees.
But under the bill, wouldn't the states regulating
insurance remain undisturbed unless they clearly violate a
federal standard?
Mr. Dilweg. I think how we look at the Senate bill is--I
mean, obviously, it deals with the ERISA side, and in Wisconsin
about 40 percent of my population is under self-insured plans,
so we welcome this issue coming to those self-insured plans.
But I also see that we would need to implement new
legislation. We have a legislative intent on a very low mandate
that has been there for 30 years of $7,000 capped on just an
overall cost not specific to benefits.
So it would be beholden to our legislature to enact parity.
And for the past 30 years, we have been unable to enact parity.
So then I would look at about a third of my population
potentially losing their current $7,000 coverage.
And this is also reflected by the state of California as
well. Although they have full parity, not a lower coverage than
we do, they share our concerns as well on this.
Mr. Boustany. Isn't it true that some states have weaker
requirements, clearly? And you know, I guess if we were to
enact the Senate bill, it might have a positive impact in some
25 states with weaker existing requirements.
Mr. Dilweg. Well, I also worry that it is easier for
employer groups to move state by state and knock down parity
laws. So you could have really an all-or-nothing situation in
some of these areas. And that is a concern of mine, a concern
in Wisconsin.
So you know, the House bill may not be as convenient as the
Senate bill, but I am concerned about my consumers, and I am
not alone in that, in sharing that.
Mr. Boustany. Mr. Breyfogle, would you like to comment on
that?
Mr. Breyfogle. Yes. There is a specific provision in the
Senate bill that basically says if a state law has a parity
component and a mandate component, that the Senate bill only
preempts the parity component, leaving the mandate component in
place.
You know, what that would do in the Wisconsin case is
basically raise the bar, eliminate the $7,000 limit that is
permissible in Wisconsin and raise the bar and allow full
parity on benefits and some existence of the mandate.
There is a sort of tricky legal question which is because
of that, then a state court might look at if this provision is
severed, is the rest of the Wisconsin law preempted.
I think the answer is probably not, but the important point
is it is the same legal issue even under the House bill,
because the House bill says that it would preempt any state law
that preempts the application of the new federal standard.
So the problem in Wisconsin is under the House bill,
because the parity rule in Wisconsin--there is no parity, so
you would have a situation where the $7,000 limit is preempted
even under the House bill.
It would be jacked up so you had full parity, and you would
still have state courts struggling with the question of given
that, would the state of Wisconsin legislature have adopted the
original mandate plus parity. So the House bill creates the
exact same legal issue for Wisconsin.
And any state that has coupled parity with mandates where
the parity rule is not a full one or a complete one has that
same issue. So it is really a specious comparison----
Chairman Andrews. I am going to just permit Mr. Dilweg to
respond. Then we are going to go to Ms. McCarthy.
Mr. Breyfogle. Sure, sure.
Mr. Dilweg. Thank you, Mr. Chairman.
I think, you know, you are getting into the detail of
preemption here, but I think what I see from my perspective is
a lot of experts disagreeing on preemption in the Senate with
the Senate bill and a lot of attorneys much wiser than me
getting into that.
But I recognize when attorneys disagree that I am going to
be in court for about 5 years to 10 years. I look at what is in
the House bill and I see the HIPAA model moving forward, and
there is pros and cons to that. But that is a working model,
and so that is----
Chairman Andrews. Yes. We certainly don't want to do
anything that would disrupt the ERISA preemption litigation
industry. [Laughter.]
Mr. Breyfogle. Thank you very much.
Chairman Andrews. The bar that has grown up around
interpreting ERISA preemption is a very valued part of our
committee.
I would go to Ms. McCarthy for 5 minutes.
Mrs. McCarthy. Thank you, Mr. Chairman, and thank you for
holding this hearing.
And my colleague, Mr. Ramstad, I remember being on the
floor at 2 in the morning several years ago when we actually
thought we were going to bring the bill up and get it passed.
Unfortunately, here we are many, many years later. I thank
you for certainly carrying this through, because it is an
important issue.
You know, I think that the majority of us know someone that
has gone through mental illness. I can speak for someone in my
family who I have watched over 30 years struggle, and I will
say that it is only in the last couple of years that, finally--
bipolar, but finally coming up to a medication that actually
works for him.
It is a great time right now for what we have seen in the
advancement of medications to help people. And it is like night
and day. You know, my brother, who I loved through all those
years, to see him happy is probably the most rewarding thing.
You talk about medical management, and you know, I have a
concern with that, mainly because my office--and I can't speak
for other offices--when we see a lot of these health plans that
have medical management, there is a constant fight because they
are denied, denied, denied, to the point of where our office
has to get involved to get the treatment.
And I am not talking about mental illness. I am talking
about any kind of health care. So I could see this coming down
into our office on trying to fight for people for the care that
they should have.
You know, when I hear about CEOs, we know that CEOs want to
have mental parity, many because they train a lot of their
employees, and it costs them a couple hundred thousand dollars,
and yet when they fight to have--whether it is depression or
anything else, they are having a hard time, even though they
are paying the insurance companies to have that treatment.
It gets down to be a hassle because the patient or the
employee is not going to fight constantly to get the treatment
that they need, because they will give up on it. And I have
seen this too often.
So hopefully, you know, we are going to go down the road
and get a bill out that will be good for everybody.
But I guess the question that I wanted to ask--and I will
throw this out--on September 11th, we had a national tragedy.
Katrina, we had a national tragedy.
And certainly, with 9/11 I am still dealing with--when I
say I--the children now. They are all going through post-
traumatic syndrome. You can see it through the therapy that
they have been getting. We have run out of money.
Those groups that came together to take care of the
families and now the children--there is no money for them to
take care of them. Most of them don't have the kind of
insurance where they can get the treatment that they need.
So I am probably leaning more toward the Ramstad bill, only
because people will have the access that is there.
But I guess my question is do you think that the mental
health parity regulation would have helped the nation and my
constituents recover from this disaster more quickly?
And what do you view as the benefit for having this
legislation in place in the event of future national tragedies
and disasters like those that we witnessed on 9/11?
Mr. Wellstone, if you have an answer for that, I would love
to hear your input.
Mr. Wellstone. Yes. Would you be able to repeat that for me
again? I am sorry.
Mrs. McCarthy. Talk about 9/11. I mean----
Mr. Wellstone. Yes. No, I have got your question. I think
if we had had a mental health parity bill, it would have
helped, absolutely, because people would have been able to
access much more treatment.
So the answer is yes, I think it would have.
Mrs. McCarthy. Because I dealt with the--certainly, we had
a very large impact in Nassau County where I live. But I think
the nation as a whole, you know, suffered a great deal of
anxiety and depression.
Mr. Wellstone. I think you are absolutely right, I mean,
and I think it is just the right thing to do. I think it is the
right thing to do, to allow everybody to have access to decent
treatment and care that is going to help them.
And then when we hear these costs--I mean, it seems like it
is very, very iffy if there is even costs at all.
And then when you start to look at the, you know, lost
productivity, lost days at work and all that stuff, it sounds
to me that we could not only provide fairness to everybody but
also save money.
Mrs. McCarthy. Well, my background was a nurse before I
came here, and I have to say it has been a very tough argument
over these years that preventative care or continuous chronic
care for anything actually saves money in the end.
But hopefully one day we will win all those battles.
Chairman Andrews. Thank you. The gentlelady yields back her
time.
We go to Mr. Loebsack for 5 minutes.
Mr. Loebsack. Thank you, Mr. Chairman.
I want to thank you, Mr. Ramstad, as I did Patrick Kennedy
for coming in. I am a new member here and getting to know
folks, and only recently I learned of your involvement in this,
so I want to thank you very much.
I mentioned already that my mother suffered from mental
illness when I was growing up, and I dare say that--or at least
I would guess that maybe everybody in this room has been
touched by mental illness in one form or another, and if not
mental illness, then some kind of addiction.
So I just think this is such an important hearing that we
are having today, and I didn't plan to come back this early,
but I did intentionally so I could be a part of this.
So I appreciate the testimony from everyone. I want to make
one comment.
Mrs. Carter, you know, I have thought about these issues a
lot in the past, in part from a personal standpoint, but I
never really made the connection between lack of insurance
parity and stigma.
I mean, I have grown up. I am 54 years old. I have thought
about the stigma aspect a lot as I have grown up, but I never
thought about it in terms of lack of insurance parity. Can you
just comment a little bit more on that, that connection?
Mrs. Carter. I really believe that when insurance covers an
illness that it makes it all right to have. I really believe
that. I have seen that with other illnesses, not mental
illnesses, but cancer, for instance.
I remember when nobody spoke about cancer and nobody would
mention the word. And the stigma was terrible. And when you--
are you familiar with Kay Jameson?
Mr. Loebsack. No, I am not.
Mrs. Carter. She says that when you find a cure for a
disease, the stigma goes away. Well, there is cancer treatment
now, but there is--and there may be a cure for some of them,
but not for all.
And I think we are approaching that with mental health. We
have so much better treatment today, and I think that if
insurance covers it--for instance, in some of the companies
that we have been watching for years, when mental health
coverage was available through the insurance, through the
company, it took a while for people to access it.
The stigma was still there. But then after a while, one
would go, and then another one would go, and then pretty soon
it just became the thing to do, to access this coverage.
And so I think parity will not only help people who suffer
because they cannot pay for help, but it will also lift the
stigma.
Mr. Loebsack. Thank you.
Also, I guess when I listen to folks who are concerned
about the cost of coverage from an employer standpoint, I get
very frustrated, obviously. I understand the concerns, the
costs and all the rest.
But it also sort of makes me think about just sort of the
47 million Americans who are without health insurance, period,
let alone extending it for mental health issues.
And I have one question for Ms. Smith, because I am not
sure you have been asked a question yet, but I am a new member
of Congress, and so when I come to hearings or prior to the
hearings, I have a very steep learning curve on so many issues.
And I can only imagine what is going through your mind as
you are listening to all this today. But I do want to ask you,
what are your impressions of what you have heard today?
Because you have a wonderful compelling story that you told
us, but what do you think about this debate today?
Ms. Smith. I think that we are right at the dawn of a new
age in terms of mental health. And I really agree with Mrs.
Carter that I believe that the stigma is lifting and that the
treatments are much, much improved over years in the past,
where they were actually barbaric in some cases.
And this particular hearing today really fills me with
hope, because, like so many people have said, it is the right
thing to do. And to hear that over and over again from all
these people is really thrilling.
Mr. Loebsack. Thank you.
Thanks to all of you.
And thank you, Mr. Chairman.
Chairman Andrews. Thank you.
Mrs. Carter. Could I say one other thing?
Mr. Loebsack. Yes, please.
Mrs. Carter. I didn't mean we are approaching the time when
stigma is gone.
Mr. Loebsack. I understand.
Mrs. Carter. I mean we are approaching the time when we
have good treatments and know a lot more about the brain and
how to deal with mental illnesses.
Mr. Loebsack. Thanks for all your efforts.
Chairman Andrews. Before we go to Mr. Hare, Mrs. Carter, it
is my understanding that your later flight has been canceled
and you need to depart by 5 o'clock.
If you need to leave now, that is fine, but we have one
more questioner with Mr. Hare, so we will be finished at about
4:55. It is entirely up to you.
Mrs. Carter. I think if I leave by--I have to leave by
5:00, they tell me.
Chairman Andrews. Very well.
Mr. Hare, you are on for 5 minutes.
Mr. Hare. I promise you, Mrs. Carter, I will go fast. I
know what it is like. I had a 5-hour flight, too, from Illinois
back.
And I want to thank you all for coming.
I, too, like my friend Dave Loebsack, am a new member, but
just as a personal aside, if I could, Mr. Wellstone, I had the
honor of meeting your dad twice.
And I have to tell you that from my perspective, I have
never met a better public servant than your father. He was a
tremendous man. And you know, I thank you for picking up that
torch and moving it.
It seems to me that if we are talking about this debate
today--and Ms. Smith said she was glad to hear this--and I
apologize for being late on the testimony, Mr. Wellstone.
But one thing you said that was incredibly compelling to me
is that every 16 minutes a child or adult takes their life
because of depression and the pain of depression and untreated
and other mental illnesses associated with it. I think the
clock is ticking pretty fast here.
And so I commend you, Mr. Chairman, for having the hearing.
And I want you to know that from this freshman's perspective,
H.R. 1424--we need to move this thing very, very quickly.
And I am honored, Mr. Ramstad, to be a co-sponsor of the
bill, because I think it is incredibly important.
And so I just want to thank you all for that. I just had
two quick questions.
And one for you, Mrs. Carter, and I know you have to leave.
You know, from your perspective, could you go into a little bit
of detail--if Congress doesn't act on this parity act in a
meaningful period of time here, what, from your perspective--
what it is going to have regarding mental health care treatment
and why it is so necessary that we get this thing quickly and
correctly?
Mrs. Carter. I think it will be a tragedy if this bill is
not passed now. We have had three reports--I named them before;
the surgeon general's report, President Bush's New Freedom
Commission report--and they all confirm that the mental health
system in this country is in a shambles and that there is no
way to repair it. We have to start over.
There is no way to start over and do anything now. I mean,
it takes a long time. And there is great opportunity now to
pass parity and get help for people who suffer.
People are suffering in our country, and I just get very
distressed about it, because it seems like we don't provide
help for them, and we don't even have a guilty conscience about
it.
I am just so hopeful that parity is going to pass. It will
mean so much to our country.
Mr. Hare. Well, I believe, Mrs. Carter, in my heart of
hearts, it is going to pass.
You know, I want to thank you for everything you have done
on this, and you know, one way or another, it is--I am a new
kid on the block here, but you know, we will get her done. And
I think it is incredibly important.
Mr. Breyfogle, you mentioned that the Senate mental health
parity legislation is better than the House bill because it
doesn't mandate coverage of all illnesses listed under the DSM-
IV.
But in Mrs. Carter's experience working with behavioral
diseases, she says that all mental illnesses are potentially
devastating, so therefore covering all of them is critical, it
seems to me.
And I guess, you know, we need to treat all illnesses
defined in DSM-IV in order to eliminate the stigma--and we have
heard about that--surrounding the mental illness which prevents
people from seeking long-term treatment and costs more in the
long run.
I was wondering if you could maybe just respond to that.
Mr. Breyfogle. I think the point isn't to pick out anything
in the DSM-IV that we don't think should be covered or we don't
think is appropriate.
I think from an employer's perspective being able to design
the terms of your health plan is critical in terms of how you
allocate a scarce set of resources to cover a group of people.
And so it is a basic tenet.
There is no manual that is mandated for traditional
inpatient medical benefits that is mandated under law that you
have to cover every particular thing.
And it is sort of a critical point that employers have
which is that they need the flexibility to design their health
plans to target coverage in a way that they think is most
effective for their particular workforce.
It is not that there is anything in the DSM-IV that
employers would point to and say this is unworthy. Not every
employer can afford the most expensive health plan. Some
industries are much more competitive than others. Some
employers are just struggling to have a health plan.
And so a mandate that requires really an unprecedented--and
further than parity--for this as mental health--the statute is
going to define everything that is covered, whereas for non-
mental health, the statute is silent. That is really not
parity, in our view.
Mr. Hare. Well, I think it--just to conclude, Mr. Chairman,
I think it would be a wonderful day when we pass this
legislation for people who have mental illness and their
families, because it isn't just the person with the mental
illness that is affected. The entire family is.
And if not now, you know, when? And if not us, you know,
who?
So I yield back. Thank you, Mr. Chairman.
Chairman Andrews. I thank the gentleman for yielding.
I want to thank each of the witnesses for their efforts and
their testimony today. I think you have given the committee an
excellent record with which to work as we go forward.
Mr. Kline, did you have any concluding remarks?
I did want to say to Mrs. Carter again how very, very
honored we are to have you with us.
And just as a personal aside, I grew up in a town called
Bellmawr, New Jersey, and in 1976 when then Governor Carter was
seeking the presidency, you came to our home town. I was not
present. I was in college at the time.
But my father and mother went to see you. I think half the
town did. And I will tell you that your picture is in the town
hall. Your visit was regarded as one of the great moments in
the history of our community.
And I think it shows you the esteem with which you are held
across the country by people. We thank you very much for your
participation here today. Thank you, Mrs. Carter.
And we thank the other witnesses.
And I would ask unanimous consent that letters from the
attorney generals of Maryland, Washington and Connecticut and
from the National Association of Insurance Commissioners be
entered into the record.
Without objection.
[The letters follow:]
Chairman Andrews. As previously ordered, members will have
14 days to submit additional materials for the hearing record.
We thank each of the witnesses for doing a great job today.
And we declare the hearing closed.
[Additional submission from Mr. Andrews follows:]
Prepared Statement of Raymond F. Anton, M.D., President, the Research
Society on Alcoholism
The Research Society on Alcoholism (RSA) welcomes the opportunity
to submit this statement in support of the ``The Paul Wellstone Mental
Health and Addiction Equity Act of 2007,'' (H.R. 1424). RSA is a
professional research organization whose 1,600 members conduct basic,
clinical, and psychosocial research on alcoholism and alcohol abuse.
RSA's physicians, scientists, researchers, clinicians, and other
experts work closely with the National Institutes of Health (NIH) and
the National Institute on Alcohol Abuse and Alcoholism (NIAAA) to
stimulate critical and innovative research initiatives in an effort to
address the myriad of health problems that are directly attributable to
heavy alcohol use, alcohol abuse, and alcoholism.
Alcoholism is a serious disease that affects the lives of millions
of Americans, devastates families, compromises national preparedness,
and burdens the country's health care systems. It is beyond cavil that
each dollar spent on alcoholism research will pay huge dividends for
all Americans. The fruits of such research will not be fully realized,
however, unless those who have alcohol-related conditions have access
to the care and treatments which they need. For this reason, RSA
respectfully urges the Education and Labor Committee to ensure that the
Paul Wellstone Mental Health and Addiction Equity Act, introduced by
Representatives Patrick Kennedy (D-MA) and Jim Ramstad (R-MN), is
approved and travels an expeditious path to the House floor. The bill
is a critical step in the prevention and treatment of alcoholism and
the illnesses, injuries, and personal and economic loss associated with
the abuse of alcohol.
Alcoholism is a tragedy that touches virtually all Americans. More
than half of all adults have a family history of alcoholism or problem
drinking. One in ten Americans will suffer from alcoholism or alcohol
abuse and their drinking will impact their families, their communities,
and society as a whole. Untreated addiction costs America $400 billion
annually and recent research indicates that alcoholism and alcohol
abuse alone costs the nation approximately $185 billion annually. One
tenth of this pays for treatment; the rest is the cost of lost
productivity, accidents, violence, and premature death.
The Centers for Disease Control and Prevention (CDC) ranks alcohol
as the third leading cause of preventable death in the United States.
Heavy drinking, defined as having five or more drinks at least once a
week, contributes to illness in each of the top three causes of death:
heart disease, cancer, and stroke.
The CDC also links excessive alcohol use, such as heavy drinking
and binge drinking, to numerous immediate health risks that pose a
menace not only to those consuming alcohol, but those surrounding them
including traffic fatalities, unintentional firearm injuries, domestic
violence and child maltreatment, risky sexual behaviors, sexual
assault, miscarriage and stillbirth, and a combination of physical and
mental birth defects that last throughout the life of a child.
Statistically, alcohol is a factor in 50 percent of all homicides,
40 percent of motor vehicle fatalities, 30 percent of all suicides, and
30 percent of all accidental deaths. The long-term effects of alcohol
abuse are just as extreme, leading to chronic organ diseases,
neurological and cardiovascular impairment as well as social and
psychiatric problems.
The NIAAA, along with the National Institute on Drug Abuse (NIDA),
and the Substance Abuse & Mental Health Services Administration
(SAMSHA), have conducted research that demonstrates that substance
abuse is particularly problematic in younger adolescents because that
is the time when individuals are most vulnerable to addiction.
According to the CDC, people aged 12 to 20 years drink almost 20% of
all alcohol consumed in the United States. The NIAAA's National
Epidemiologic Survey on Alcohol-Related Conditions (NESARC) states that
18 million Americans (8.5% of the population age 18 and older) suffer
from alcohol use disorders (AUD), and only 7.1% of these individuals
have received any treatment for their AUD in the past year. According
to SAMHSA, in 2005, 20.9 million Americans needed treatment for AUD but
did not receive it.
The scientific community is addressing alcoholism and addiction
disorders at many different levels, starting at the earliest stages of
human development. For instance, the NIAAA's NESARC survey sampled
across the adult lifespan to allow researchers to identify how the
emergence and progression of drinking behavior is influenced by changes
in biology, psychology, and in exposure to social and environmental
inputs over a person's lifetime. Scientists at NIH are supporting
research to promulgate pre-emptive care for fetuses, early childhood,
and adolescents; since children who engage in early alcohol use also
typically display a wide range of adverse behavioral outcomes such as
teenage pregnancy, delinquency, other substance use problems, and poor
school achievement.
NIAAA has been working closely with SAMHSA to play a leading role
in the work of the Interagency Coordinating Committee for the
Prevention of Underage Drinking established under the Sober Truth on
Preventing Underage Drinking Act or STOP Act (P.L. 109-422), and for
the first Call to Action against underage drinking issued by the
Surgeon General's Office on March 6, 2007.
The data on alcohol abuse are particularly disquieting in a
subsection of the population that is unique for observing the effects
of alcohol over a large cross-section of individuals. In the military,
the costs of alcoholism and alcohol abuse are enormous. The 2005
results of the Department of Defense's (DoD) 2005 Survey of Health
Related Behaviors among Active Duty Military Personnel demonstrate that
the rates of heavy drinking remain elevated among U.S. military
personnel. This was the first time that this survey series has
evaluated behaviors related to mental well being, work stress and
family stress associated with deployment to Iraq, Afghanistan, and
other theaters of operation.
The prevalence of heavy drinking is higher in the military
population (16.1%) than in the civilian population (12.9%). About one
in four Marines (25.4%) and Army soldiers (24.5%) engages in heavy
drinking; such a high prevalence of heavy alcohol use may be cause for
concern about military readiness. Furthermore, each individual Service
branch showed an increasing pattern of heavy drinking from 2002 to
2005. These patterns of alcohol abuse, which are often acquired in the
military, frequently persist after discharge and are associated with
the high rate of alcohol-related health disorders in the veteran
population.
While the high rates of use and abuse of alcohol are alarming, the
good news is that this nation is poised to capitalize on unprecedented
opportunities in alcohol research, opportunities which must be seized.
Scientists are currently exploring new and exciting ways to prevent
alcohol-associated accidents and violence. Importantly, prevention
trials are developing methods to effectively address problem alcohol
use. Further, scientists have identified discrete regions of the human
genome that contribute to the inheritance of alcoholism. Our improved
genetic research will accelerate the rational design of medications to
treat alcoholism and also improve our understanding of the interaction
and importance of heredity and environment in the development of
alcoholism.
The field of neuroscience is an important and promising area of
alcohol research. The development of more effective drug therapies for
alcoholism requires an improved understanding of how alcohol changes
brain function to produce craving, loss of control over drinking
behavior, tolerance to alcohol's effects, and the alcohol withdrawal
syndrome. NIAAA is testing therapeutic agents that target different
neurobiological substrates of alcohol dependence.
Alcohol abuse and alcoholism are devastating problems of national
importance. Fortunately, alcohol research has reached a critical
maturity. RSA is committed to stimulating critical and innovative
research initiatives to address the myriad of health problems that are
directly attributable to heavy alcohol use, alcohol abuse, and
alcoholism. RSA understands all too well the substantial costs which
alcoholism and alcohol abuse impose on individuals and the health care
system. We also know that mental health and addiction parity
legislation is necessary to ensure that access to critical services is
available to those who need it. We urge Congress to pass the Paul
Wellstone Mental Health and Addiction Equity Act of 2007 as soon as
possible.
______
[Additional submissions from Mr. Kline follow:]
------
------
[Prepared statement of the American Occupational Therapy
Association, submitted by Mr. Wu, follows:]
Prepared Statement of the American Occupational Therapy Association
(AOTA)
The American Occupational Therapy Association (AOTA) submits this
statement for the record of the July 10, 2007 hearing. We appreciate
the opportunity to provide this information regarding the relationship
of occupational therapy services to mental health and substance abuse
treatment and highlighting the unique contributions of occupation based
interventions. AOTA fully supports passage of H.R.1424, The Paul
Wellstone Mental Health and Addiction Equity Act of 2007 and joins
several hundred national advocacy organizations and a majority of House
members in urging rapid passage of the bill.
Occupational Therapy for People with Mental Illness and Substance Abuse
Disorders
Occupational therapy is concerned with an individual's ability to
do everyday activities, or occupations, so that they can participate
fully at home, work, and in the community. Occupational therapy
practitioners use purposeful activities as therapy to help individuals
with functional impairments, regardless of the cause, to maximize
performance and independence. The profession has been guided by a
holistic approach with an emphasis on psychosocial factors that impact
human function. Occupational therapy brings a rehabilitation
perspective to mental health and substance abuse treatment in keeping
with increased emphasis on recovery and functionality.
The expertise of occupational therapy in the assessment and
treatment of function and functional impairment across the lifespan
argues for occupational therapy practitioners' full inclusion in mental
health and substance abuse systems of care. Inclusion would ensure that
their unique educational preparation and experience can be utilized for
the benefit of people with mental illness and substance abuse
conditions. According to the Institute of Medicine's Quality Chasm
report, Improving the Quality of Health Care and Substance Abuse
Conditions (November 2005), integration and collaboration among mental
health practitioners is crucial to improving the mental health system.
AOTA believes that inter-disciplinary teams maximize the level of
expertise and experience available to a patient with mental illness.
The federal New Freedom Initiative also calls upon the nation's mental
health system to deliver higher quality, integrated services that
contribute to more successful outcomes for people with mental illness.
Occupational therapy is an essential part of the mental health
assessment, treatment planning, and intervention process that will
improve and restore function and independence for people affected by
mental illness. There is also a distinct activity-based role for
occupational therapy in both the acute treatment and recovery models of
substance abuse treatment.
Occupational therapy practitioners work with people throughout the
lifespan and in all types of settings where mental health services,
substance abuse treatment and psychiatric rehabilitation are provided.
Through the use of real life activities as therapy, occupational
therapy practitioners improve functional capacity and quality of life
for people with mental illness and substance abuse in the areas of
employment, education, community living and home and personal care. As
well as providing care in home and community based settings, in roles
such as case mangers, occupational therapists continue to work in
traditional mental health settings such as hospitals, state mental
health institutions and partial hospitalization programs. Occupational
therapy is covered by Medicare as a mental health service, especially
in the partial hospitalization program. It is also recognized in many
state mental health programs.
AOTA believes that occupational therapy is an underutilized service
for people with mental health and substance abuse disorders that can
meet and address independent living and recovery needs. This limited
access affects both substance abuse and mental health systems of care
and the limitation is often due to a lack of understanding about how
occupational therapy can help or because of perceptions that therapists
only address impairments of function caused by physical illness or
injury. Occupational therapy can be invaluable in helping individuals
maximize performance and develop or maintain skills for independent
living and recovery consistent with a rehabilitation model of care.
Recognizing the potential of occupational therapy to address functional
impairment for people with mental illness and addictive disorders is
essential to moving toward a recovery model for mental illness and
substance abuse treatment that takes into account the importance of
community integration and independence.
AOTA is committed to working collaboratively with other mental
health and substance abuse providers and consumer advocacy
organizations to improve the integration and coordination of services
to meet the needs of patients suffering from these conditions.
Occupational therapy's unique perspective and focus on activities of
meaning can deliver positive outcomes for patients in regard to both
community integration and recovery. Fully utilizing the expertise and
knowledge of occupational therapists to minimize functional impairment
caused by behavioral and substance abuse disorders and to maximize
independence is an essential part of developing more integrated and
effective systems of care.
Again, we thank you for the opportunity to comment on the role of
occupational therapy in improving mental health and substance abuse
services and to express our support for mental health and substance
abuse parity. We look forward to continue working with the Committee to
improve treatment and outcomes for people with those conditions.
______
[Whereupon, at 4:59 p.m., the subcommittee was adjourned.]