U.S. GOVERNMENT PRINTING OFFICE

66–251 CC WASHINGTON : 2000

SUBSTANCE ABUSE TREATMENT PARITY: A VIABLE

SOLUTION TO THE NATION’S EPIDEMIC OF

ADDICTION?

HEARING

BEFORE THE

SUBCOMMITTEE ON CRIMINAL JUSTICE,

DRUG POLICY, AND HUMAN RESOURCES

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

OCTOBER 21, 1999

Serial No. 106–138

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

CARLA J. MARTIN, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY, AND HUMAN RESOURCES

JOHN L. MICA, Florida, Chairman

BOB BARR, Georgia

BENJAMIN A. GILMAN, New York

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

ASA HUTCHINSON, Arkansas

DOUG OSE, California

DAVID VITTER, Louisiana

PATSY T. MINK, Hawaii

EDOLPHUS TOWNS, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

JANICE D. SCHAKOWSKY, Illinois

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

SHARON PINKERTON, Staff Director and Chief Counsel

STEVE DILLINGHAM, Professional Staff Member

MASON ALINGER, Professional Staff Member

LISA WANDLER, Clerk

CHERRI BRANSON, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on October 21, 1999 .......................................................................... 1

Statement of:

Conley, Michael, chairman of the Board of Trustees, the Hazelden Foundation; Michael Schoenbaum, economist, RAND Corp.; Kenny Hall,

addiction specialist, Kaiser Permanente; Capt. Ronald Smith, M.D.,

Ph.D., vice-chairman, Department of Psychiatry, National Naval Medical Center; Peter Ferrara, general counsel and chief economist, Americans for Tax Reform; and Charles N. Kahn III, president, Health Insurance Association of America ......................................................................... 51

Ramstad, Hon. Jim, a Representative in Congress from the State of

Minnesota ...................................................................................................... 27

Rook, Susan, media consultant ....................................................................... 41

Wellstone, Hon. Paul, a U.S. Senator in Congress from the State of

Minnesota ...................................................................................................... 5

Letters, statements, et cetera, submitted for the record by:

Conley, Michael, chairman of the Board of Trustees, the Hazelden Foundation, prepared statement of ...................................................................... 53

Ferrara, Peter, general counsel and chief economist, Americans for Tax

Reform, prepared statement of .................................................................... 83

Hall, Kenny, addiction specialist, Kaiser Permanente, prepared statement

of ..................................................................................................................... 71

Kahn, Charles N., III, president, Health Insurance Association of America, prepared statement of ............................................................................ 87

Mica, Hon. John L., a Representative in Congress from the State of

Florida, letter dated Novemebr 12, 1999 .................................................... 97

Mink, Hon. Patsy T., a Representative in Congress from the State of

Hawaii, letter dated October 20, 1999 ........................................................ 9

Ramstad, Hon. Jim, a Representative in Congress from the State of

Minnesota, prepared statement of ............................................................... 31

Rook, Susan, media consultant, prepared statement of ................................ 43

Smith, Capt. Ronald, M.D., Ph.D., vice-chairman, Department of Psychiatry, National Naval Medical Center, prepared statement of ..................... 79

Sturm, Roland, Ph.D., RAND Corp., prepared statement of ........................ 61

(1)

SUBSTANCE ABUSE TREATMENT PARITY: A

VIABLE SOLUTION TO THE NATION’S EPIDEMIC OF ADDICTION?

THURSDAY, OCTOBER 21, 1999

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY,

AND HUMAN RESOURCES,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room

2154, Rayburn House Office Building, Hon. John L. Mica (chairman of the subcommittee) presiding.

Present: Representatives Mica, Barr, Souder, Hutchinson, Ose,

Mink, Kucinich, Tierney, and Schakowsky.

Staff present: Sharon Pinkerton, staff director and chief counsel;

Steve Dillingham and Mason Alinger, professional staff members;

Lisa Wandler, clerk; Cherri Branson, minority counsel; and Jean

Gosa, minority staff assistant.

Mr. MICA. I would like to call this hearing to order this morning.

We do have a full schedule, and so we will go ahead and proceed.

The subject of today’s hearing is Substance Abuse Treatment

Parity: A Viable Solution to Our Nation’s Epidemic of Addiction, is

the question that is asked and before our subcommittee. I am

pleased that we have three panels of witnesses who are providing

testimony.

I will start today’s hearing with an opening statement and then

yield to our ranking member and other Members who will be joining us, but we do want to go ahead and proceed since we do have

a lengthy schedule.

The Subcommittee on Criminal Justice, Drug Policy, and Human

Resources convenes today to discuss our country’s war on drugs

from a perspective that is different from that of previous hearings.

Recently, we have held a number of hearings on topics that impact

the supply of drugs in our Nation. Our hearings have ranked from

international narcoterrorism developments in Colombia to interdiction operations and resource needs across our southwest border.

Last week, we held an important and insightful hearing on what

is being done through our now federally funded media campaign to

reduce the demand for drugs.

Today, we will examine another important component of national

efforts to reduce the demand for drugs. We will focus on drug treatment and funding options that might be affordable and make a difference in the drug war. Treatment generally receives less coverage

2

in the press and is often misunderstood. We will examine carefully

how treatment might be used to reduce drug-related deaths and destruction.

Today, we will hear more about the positive consequences of successfully treating drug abuse. We are especially grateful to our witness who has come forward to tell us about her personal experiences. Her testimony will illustrate how some people with alcohol

and illicit drug addictions have broken those terrible chains and regained control of their lives.

We all agree that the number of such positive outcomes from addiction should be increased to the greatest extent possible. Accordingly, drug treatment benefits and funding options deserve our

close attention.

Since 1996, Congress increased Federal spending from $13 billion to almost $17.8 billion for drug control programs and activities.

Most of this increased funding has been targeted toward reducing

demand. Of the $4 billion increase, 26 percent was set aside for improving treatment options.

However, despite the commitment of more dollars and an emphasis on treatment and reducing the demand for drugs, alarming

trends demonstrate the need for further action. We know, for example, that from 1993 to 1997 the number of Americans reporting

heroin use rose from 68,000 to 725,000—more than quadrupling.

With an estimated 26 million Americans addicted to drugs and

alcohol, the human toll is ever present. In mid-August, drugs

claimed the life of a young 13-year-old in central Florida. The soonto-be eighth grader, Jonathan Hilaire, died of a cocaine overdose

while visiting Disney World in Orlando.

How can this happen? What can be done to save these young

lives? I think we can all agree that more action is needed.

Mrs. Mink, I don’t know if you saw, we have the most recent statistics on drug-induced deaths; and it has now climbed to over

15,000, I think it is 15,200, which is a 7.8 percent increase over

last year.

In fact, combating substance abuse requires the best efforts of

our Federal, State and local governments; our families and communities; our social and religious institutions; and our employers and

private sector businesses.

In recent years, some observers have adopted the view that drug

addiction should be considered as a brain disease, because of accompanying biological changes that occur in the brain. Others

argue that addiction is primarily a behavioral disorder, often as the

result of personal or character weaknesses over which individuals

can and should exercise personal control.

These differing views also must factor in the realization that we

expect the criminal justice system to respond to drug-related

crimes—and to encourage law-abiding behaviors. This responsibility often includes the treatment of offenders for drug addictions.

Numerous studies indicate that the longer a person stays in an attempt program, the better the outcome will be. Treatment options

enforceable under the law provide added leverage to ensure an

abuser’s participation.

Today, we will discuss options for including substance abuse

treatment in employee health plans.

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Too often, we stereotype drug addicts as being people unable to

hold down regular jobs. A Bureau of Labor Statistics report released earlier this year reports that more than 70 percent of those

using illicit drugs and 75 percent of alcoholics do, in fact, hold

down regular jobs. This represents a significant portion of the

country’s substance abusers. Many of these employees have, or may

acquire, access to some form of employer-provided health care coverage.

Today, it has been estimated that only about 2 percent of substance abusers are fortunate enough to be covered by health plans

that provide for adequate treatment. I recognize that a handful of

States already have passed legislation that includes substance

abuse parity provisions. I also fully realize that unwise Federal

mandates can disrupt markets, cause inefficiencies, and have other

unintended negative consequences. For these reasons, any new

Federal mandates should be considered only under exceptional circumstances of demonstrated need.

In light of the impact of drugs on our lives and livelihood, we

must consider all appropriate and promising measures. If affordable and effective, employee access to substance abuse treatment

through employee health plans might be a viable weapon in reducing the demand for drugs in this country. The National Institute

for Drug Abuse [NIDA] estimates that drug treatment reduces use

by 40 to 60 percent and significantly decreases criminal activity

after treatment.

In addition to preventing human misery, promoting substance

abuse treatment potentially could have significant economic benefits.

The costs of both drug and alcohol addiction to society—including

costs for health care, substance abuse prevention, treatment for addiction, combating substance-related crimes and lost resources resulting from reduced worker productivity and deaths—are enormous. Estimates range from $67 billion annually up to $246 billion—almost a quarter trillion dollars.

The Substance Abuse and Mental Health Administration

[SAMHSA], claims that dollars spent on substance abuse treatment

can have tremendous savings—saving society as much as $4 to $7

for each dollar that is wisely invested in effective drug treatment.

If accurate, spending a comparatively small percentage of our business dollars for prevention and treatment—an amount less than

what would be needed to recoup the costs of lost productivity due

to addictions—might be a wise and cost-effective investment.

Legislative proposals for providing substance abuse treatment in

employee health plans have taken varying approaches. The different proposals introduced in this Congress focus on providing insurance benefits for substance abuse treatment that are equal to

benefits for other medical and surgical care. While these bills promote access to substance abuse treatment through employee health

plans, consensus has not been reached regarding the scope of coverage and the cost that employees and employers must bear.

The panels of witnesses before us this morning will discuss treatment successes, studies, legislative proposals and possible treatment payment options.

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In some instances, comparisons will be made to the Mental

Health Parity Act of 1996 and how that law has impacted employers, insurers, treatment providers, participants and others. The act

imposed a national minimum benefit standard for mental health

benefits on employer-sponsored health insurance for the first time.

Key questions we must consider are whether the approach taken

with mental health treatment benefits is working and whether this

approach is fully applicable to alcohol and substance abuse treatment benefits.

Our first two panelists are very respected Members of Congress.

We are very pleased to have one individual leader on this subject

from the U.S. Senate and another fellow colleague of ours who has

been a champion in the House of Representatives. Each has worked

long and hard to promote substance abuse treatment parity at a

national level. We look forward to hearing their thoughts and proposals on the subject, and I will introduce them in just a minute

as our first panel.

The panelist on our second panel has graciously agreed to come

and share her personal story of addiction. Her remarks will serve

to enlighten us about the difficulties faced by those who struggle

to overcome substance abuse, and we will hear her personal success in meeting that challenge.

Our third panel is made up of experts from the field who will discuss the costs and benefits of treatment and their ideas and concerns regarding substance abuse treatment parity in health care

plans.

These officials, experts, and persons with firsthand knowledge of

addiction and treatment will give us a better understanding of this

critical issue and how we might promote effective substance abuse

treatment in our efforts to combat addiction and illegal narcotics.

We look forward to hearing this testimony.

I am pleased at this time to yield to our ranking member on the

panel, the distinguished gentlelady from Hawaii, Mrs. Mink.

Mrs. MINK. Thank you, Mr. Chairman. I especially want to commend you for holding these hearings on substance abuse treatment.

I want to thank Senator Wellstone and Representative Ramstad for

coming and taking the time to give us their own perspective on this

very important issue.

Mr. Chairman, we all know that there are a wide variety of approaches toward this drug menace in our country. Law enforcement, interdiction, and prevention programs are all important.

However, when the individual becomes addicted to drugs, we must

have in place access to treatment.

The Office of National Drug Control Policy reports that 50 percent of the adults and 80 percent of the children who need substance abuse treatment do not receive it. That is really the heart

of our hearing today. Numerous studies show that treatment is

both effective and cost effective in saving lives. Therefore, Congress, I feel, should move quickly to require private coverage. This

is certainly one area which, if we ignore, vast numbers of people

who are uninsured may not be able to get the treatment that they

need.

I hope that as a result of the hearings today, Mr. Chairman, that

we will not only have a greater understanding of the problem, but

5

come closer to finding a solution so that those individuals who need

treatment have access to them out of national policy as well as

State and local.

Thank you very much, Mr. Chairman.

Mr. MICA. Thank you.

We will allow other Members to submit their opening statements

or statements for the record. We will leave the record open for at

least 10 days for submissions.

I would like to proceed now with our first panel which consists

of two very distinguished Members of Congress, one from the Senate and one from the House, two leaders who have fought to bring

the problem of chemical dependency to the forefront of the Congress and the Nation.

The first individual I will recognize is a leader from the Senate

side. He is the senior Senator from Minnesota. His committees include Health, Education, Labor and Pension Committee. He is also

on Foreign Relations, Small Business, Indian Affairs and Veterans

Committee. In the 105th Congress, he was the author of the Substance Abuse Treatment Parity Act of 1997. In the 106th Congress,

he was the sponsor of the Fairness in Treatment, the Drug and Alcohol Addiction Recover Act of 1999.

We certainly applaud your leadership on these issues and welcome you to our panel over on the House side this morning. We

would like to recognize you at this time.

STATEMENT OF HON. PAUL WELLSTONE, A U.S. SENATOR IN

CONGRESS FROM THE STATE OF MINNESOTA

Senator WELLSTONE. Thank you, Chairman Mica and Ranking

Member Mink, for the opportunity to speak to this subcommittee

on the important issue of parity for alcohol and drug addiction

treatment.

I want to thank my colleague, Jim Ramstad. It has been productive and really a very rewarding experience to work with him on

this legislation, and I think he has really been one of the leaders

in the country because he has used his own very empowering and

personal experience as a successful and I think as a highly respected representative who speaks out about what he has been

through, and I think his voice is terribly important.

I also want to thank Michael Conley, the chairman of the Board

of Trustees of Hazelden from Minnesota.

You mentioned Susan Rook, Mr. Chairman. I would like to thank

Susan for her courage as well.

And I want to make a quick apology to the panelists. There are

a lot of people here, and you speak and you leave, and it almost

seems like you don’t care. I am not even going to get a chance to

hear Jim’s testimony. I have two committees and a vote that is

coming up in the next 20 minutes, and so I will try to be brief.

I have introduced a full parity bill, S. 1447, and basically what

we are talking about is full parity or ending discrimination in insurance coverage for drug and alcohol addiction, and I am pleased

to say that this bill was introduced with Senator Daschle, who is

our minority leader in the Senate, Senators Kennedy, Moynihan,

Inouye and also Senator Johnson.

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The bill provides, and this is I think really the key point, for nondiscriminatory coverage of drug and alcohol addiction treatment

service by private health insurers. The bill does not require that

drug and alcohol be a part of any health care benefits package. It

doesn’t require that. So in that sense there is no mandate whatsoever. It prohibits discrimination by health plans who offer such

benefits but all too often place restrictions on the treatment that

are different from other medical services.

It is my full intention to move this bill forward in the Senate,

and I am looking forward to working with you all on the House

side. I want to applaud the administration’s efforts during the last

year to recognize the need for this coverage for Federal employees.

I think that was a positive step forward.

I want to applaud the work of General McCaffrey and to recognize his efforts to end drug addiction; and the point that he makes

which is he will not be successful if we just focus on the supply

side, although we must, but we must also focus on the demand side

and you mentioned that as well, Mr. Chairman.

I will gloss over the statistics. I think we all know them. The disease, I use that word deliberately, of alcohol and drug addiction,

costs our Nation $246 billion annually, $1,000 for every man,

woman and child; and the fact of the matter is that it doesn’t tell

us anything in personal terms about broken dreams and broken

lives and broken families and all of the people who, if they had

treatment like Congressman Ramstad, could live such a productive

life, could do so much for our country and do so much for our community.

I would like to thank Congresswoman Mink for her statistics on

those who don’t receive the coverage. Therefore, I am not going to

go over those figures at all.

The question that is posed in the title of the subcommittee hearing is this: Is substance abuse treatment parity a viable solution

to the Nation’s epidemic of addiction? The answer, Mr. Chairman,

is yes. Not only is it viable, but it is necessary. At this point the

crisis of drug and alcohol addiction in this country warrants solutions from all sectors of our society, all levels of government, the

insurance industry, education and health care as well.

Now, most private health insurance plans that cover alcohol and

drug treatment, this is the problem, set discriminatory and unrealistic annual lifetime and visit limits on the treatment, and these

limits fly directly in the face of the scientific recognition of addiction as a chronic, recurrent condition.

As a result of these limits, most people who seek treatment who

seriously want to end their addiction can’t get the treatment. I

think Congresswoman Mink made this point very well. That is

really what this is about. Proper medical treatment for the disease

of addiction is an essential part of this recovery.

When privately insured individuals have no benefits, or when

you have a plan which does not provide any coverage for this addiction, quite often the public sector has to pick it up. That is what

happens. Or, I am very sorry to say that all too often children and

sometimes adults basically wind up in correctional facilities for

their treatment program, which is wrong—and that kind of treatment is terribly inadequate.

7

Now there will be others who talk about the cost issue, just to

mention that the RAND study is extremely important. As a matter

of fact, the costs for full parity for drug and alcohol treatment addiction are very low, but the costs for failure for treatment are terribly high. That is what we want to say.

Finally, let me conclude this way. I want to emphasize the research. I want to emphasize the data, and the scientific evidence,

the work that is being done at NIH, the National Institute on Drug

Abuse and the National Institute on Alcohol Abuse and Alcoholism

which basically say that treatment is effective. We know from this

research that addiction causes long-lasting changes in the brain,

changes that in fact contribute to relapse. We are talking about a

chronic and relapsing disease that can be treated if there is that

treatment, and what we want to do in this legislation is not a mandate but just end the discrimination.

Now, the principle of ending this discrimination in insurance coverage for treatment has received strong support from the White

House, from General McCaffrey, former Surgeon General C. Everett Koop, former President and Mrs. Gerald Ford, the U.S. Conference of Mayors, Kaiser Permanente Health Plans and many

leading figures in medicine, business, government, journalism and

entertainment who have successfully fought this battle of addiction

with the help of treatment.

We had hearings last year in the Senate which were very helpful,

and that is why I appreciate these hearings. We had hearings in

the Senate Appropriations Committee and in the Committee on

Labor, Education and Pensions which highlighted all of the recent

major advances in scientific information about the disease, the biological causes of addiction, and the effectiveness and low cost of

treatment, and the many painful personal stories of people, including children, who have been denied treatment. That is part of the

record of the Senate.

It is time for this disease to be treated with fairness, and it is

time to end the discrimination against those with this disease. I

commend this subcommittee for holding this hearing today. I commend you for bringing this important issue to light. And, most important of all, Mr. Chairman, by forming an alliance between those

who support supply and demand side solutions, we as a country

will be able to help millions of Americans affected by this disease.

I think that is what this hearing is about.

I thank my colleague, and again I apologize to other Congressmen that have come in that I have to leave, but thank you very

much.

Mr. MICA. Senator, before you scoot, and I know that you have

to get away, if we could get just one or two quick questions. There

are about eight States I think that have adopted similar measures.

I am not really that familiar with what each State has to what you

are proposing, including Minnesota.

One of the constant things that we hear is that there may be significant additional costs in premiums to the insurance insurers and

those paying the premiums. To your knowledge, in the eight States

or Minnesota, has there been any significant difference in costs

since they passed these parity requirements?

8

Senator WELLSTONE. I appreciate the question, and Jim may

have the exact figures. It is a perfect question to ask and a perfect

question for me to answer.

Actually, in Minnesota we have done both the mental health and

substance abuse in ending discrimination, and all of the reports

have been that it is extremely cost effective, hardly any rise in premiums. But there is also, and you may have it, Jim, the estimates

of the savings for the State. In other words, these costs are no

longer dumped on the public sector, and the productivity of people

who have been treated adds to the cost effectiveness.

So the reports that we have out there show very strong support

both by Democrats and Republicans, and we have not had that

problem at all.

I think Ronald Sturm is going to be testifying for RAND Corp.

about the study of the costs nationally.

The interesting thing is that in this particular area every study

I have seen, every analysis that I have seen, including independent

analyses, points out that not only can the treatment be effective

but it is quite cost effective as well.

In Minnesota—one problem is that we can’t get self-insured

plans. That is the whole ERISA question, in which case people look

to us in Congress to try to pass some kind of legislation that will

deal with this discrimination.

Mr. MICA. Mrs. Mink.

Mrs. MINK. Mr. Chairman, I don’t know if you are putting this

letter from General McCaffrey into the record.

Mr. MICA. We would be so glad to. Without objection, so ordered.

[The information referred to follows:]

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Mrs. MINK. And in response to your inquiry, which I think is

very critical, in this report it says that the studies show that the

average premium increase is only 0.2 percent, so it is very minimal. So I don’t think that it is a cost factor. There is some hangup someplace else.

Senator WELLSTONE. I think, Congresswoman Mink, and I leave

on this, and you will find this in the hearing today and many of

you already know it, you have this disconnect or lag between the

scientific evidence, the data, and the perceptions that people have,

both about what we are talking about, also about the nature of this

disease and also about the treatment and the cost of it. The consequences are really tragic of our not trying to end this discrimination and getting some coverage for people.

Thank you very much.

Mr. MICA. Thank you, Senator, and we will let you scoot.

I would like to now recognize our champion on this issue, someone who is really the leading force in our conducting this hearing

today, who has been just tireless in trying to bring this issue before

Congress. As we all know, this is a tough venue, but there are individuals among us who will take an issue and just hammer away

and work at it, and Jim Ramstad, who has himself had problems

and is a survivor from chemical dependency, I have heard him talk

about it, has turned a difficult personal experience into something

very positive for himself and also for our country and has been the

leader since he came to Congress on this issue.

He is also on the Ways and Means Committee and on the Health

and Trade Subcommittees and House Law Enforcement Caucus

and Medical Technology Caucus, and he is in the author in the

105th Congress of the Substance Abuse Treatment Parity Act of

1997 and sponsor of the Substance Abuse Parity Act of 1999 in the

106th Congress. And, again, just an untiring champion. And we

thank you for your persistence and are pleased now to recognize

you.

STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MINNESOTA

Mr. RAMSTAD. Thank you very much, Mr. Chairman, Ranking

Member Mink, and members of the distinguished panel. I appreciate your leadership and in particular, Mr. Chairman, your kind

words. Also, I want to thank Sharon, Mason, and Steve from your

staff for helping put this hearing together, as well as Megan from

my staff.

Mr. Chairman, members, we are talking about the epidemic of

addiction in America, dealing with an epidemic, and I use that

term advisedly because 26 million Americans are presently addicted to drugs and/or alcohol. Of these addicted, 16 million people

are covered by health insurance plans, but only 2 percent of these

16 million, as the chairman pointed out, can access effective treatment.

That is because of, as Senator Wellstone explained, discriminatory caps, artificially high deductibles, limited treatment stays and

copayments that don’t apply to any other diseases. In short, only

2 percent of alcoholics and addicts covered by health plans are acVerDate 11-MAY-2000 09:00 Nov 08, 2000 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 C:\DOCS\66251.TXT HGOVREF1 PsN: HGOVREF1
28

cessing treatment because of discrimination, discrimination against

people with addiction.

Now every day we all hear talk around here of the goal of a ‘‘drug-free America.’’ But we will never even come close to a drugfree America until we knock down these barriers of discrimination,

these barriers to chemical dependency treatment. We can build all

of the fences on our borders, all of the prison cells that money can

buy, hire border guards, other drug enforcement officers, but simply dealing with the supply side of the drug problem will never

solve it.

Mr. Chairman, your words in your opening statement were very

refreshing. You recognized the need to deal with the demand side,

to deal with treatment as well as the supply side.

The American Medical Association first recognized in 1956 that

chemical addiction is a disease, and it is a fatal disease if not treated properly. If we are serious about reducing illegal drug use in

America, we must address the disease of addiction by putting

chemical dependency treatment on par with treatment for other

diseases. If you believe what the American Medical Association told

the Congress and the country in 1956, then you can’t justify the

discrimination. And that is why Senator Wellstone and I introduced the Substance Abuse Treatment Parity Act named after Harold Hughes in the Senate and Bill Emerson in the House with

whom many of us served. Their recoveries from addiction certainly

inspired thousands of chemically dependent people, including myself. We now have 50 co-sponsors in the House for this legislation.

And this the bill that we are bringing forward would enable 16

million Americans to receive treatment without significantly increasing health care premiums. It is the right thing for Congress

to do, and it is clearly the cost effective thing to do.

I am a recovering alcoholic, and I know that the treatment

works, and I know firsthand the value of treatment. I have been

in recovery for over 18 years, and I am absolutely alarmed by the

dwindling access to treatment in America. Over the last 10 years,

over 50 percent of the treatment beds are gone. Even more alarming is the fact that 60 percent of the adolescent treatment beds in

America have disappeared in the last 10 years.

Why do we have youth violence? Why do we have so many problems with juvenile crime? Let’s look and treat the underlying

cause—addiction. Any police officer will tell you that 80 percent of

it is related directly to addiction. Now, over half of the treatment

beds are gone for adults, 60 percent for adolescents. Why? Because

only 2 percent of the alcoholics and addicts covered by health plans

are able to access treatments.

It is time, Mr. Chairman and members of this panel, to reverse

this alarming trend. It is time to end the discrimination against

people with alcoholism and drug dependency. It is time to provide

access to treatment by prohibiting the discriminatory caps, the

high deductibles, the copayments that don’t apply to any other disease.

We have all of the empirical data, including actuarial studies, to

prove that parity for chemical dependency treatment will save billions of dollars nationally while not raising premiums, as you explained, more than two-tenths of 1 percent in the worst-case sceVerDate 11-MAY-2000 09:00 Nov 08, 2000 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 C:\DOCS\66251.TXT HGOVREF1 PsN: HGOVREF1
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nario. Dr. Roland Sturm is here, the senior economist with the

RAND Corp., to testify on the cost savings from parity for treatment. Because that is the first question I asked when I was approached by people with addiction and others from my district to

champion this legislation. The first thing I asked, what is it going

to cost in terms of increased premiums?

In addition to savings billions of dollars, every dollar spent for treatment saves $7 in health care costs, criminal justice costs, lost

productivity, injury, sub par work performance, and so forth. A

number of studies have shown that health care costs alone are 100

percent higher for untreated alcoholics and addicts compared to

people like me who have had the benefit of treatment. Think of

that. Health care costs for these 26 million untreated alcoholics

and addicts today in America are 100 percent higher than they are

for people like me and Ms. Rook, who will testify shortly, who have

had the value of treatment.

Mr. Chairman, I would like to address one last point which has

been raised in opposition to this critical legislation, and that is the

argument that it imposes a mandate. H.R. 1977, the Substance

Abuse Treatment Parity Act, does not require insurance companies

or health plans to cover anyone for treatment of chemical dependency. It simply bans discrimination by saying that addiction must

be treated like any other disease. Plus there is an exemption option. If the sky fell in and for some reason health care costs increased 1 percent or greater, then the parity requirement is off. No

parity. And of course businesses with 50 employees or fewer are exempted under this legislation.

Let me just say in closing, Mr. Chairman and Members, that I

truly do appreciate this hearing today. The fact that you accommodated my requests for many of the witnesses here today, you are

going to hear from some incredible people, and I hope many of you

can hear their testimony. They are vital stakeholders in the battle

against drugs and alcohol addiction, recovering physicians and people, employers and insurance company representatives. They know,

like the American Medical Association told us in 1956, that we are

dealing with a disease. If you believe that, if you accept that, then

there is no way that we can justify the continued discrimination

against people with addiction. We cannot justify discrimination

against this disease.

We also know and I know firsthand that this disease, if not

treated, is fatal. It is a fatal disease we are dealing with. And I am

very grateful as a recovering alcoholic, because I know, Mr. Chairman, without any doubt at all if it weren’t for treatment, I would

be dead. I would not be here because of the quantities of alcohol

that I was consuming over a 12-year period of time.

I didn’t want to be an alcoholic. I had two uncles who died of this

addiction. One was a doctor who did very well on my mother’s side

of the family. The other was a very successful businessperson, my

uncle George in Alaska, who died after making millions of dollars

in the construction business, who died on Skid Row in Anchorage

drinking wine out of a brown paper bag.

I didn’t want to be an alcoholic. Nobody chooses to be an alcoholic. There are various components to this disease, and I trust

that this panel understands the disease nature of addiction.

30

I truly hope that each one of you will work hard with me, with

Mark Souder, with others who are championing this legislation because, believe me, it is not my battle alone. We have 50 cosponsors

bridging the ideology gap in the House, from some of the most conservative friends and Members on the far right to some of our most

liberal friends on the far left, and a lot of us who are more centrist.

This is not a political issue. It should not be partisan. It is a

human issue, a life-or-death issue.

And, Mr. Chairman, again, let me express my gratitude to all of

you for holding this hearing today and working together in a bipartisan, common-sense, pragmatic way to move this legislation forward. Thank you.

Mr. MICA. Jim, I thank you for your very compelling testimony

and, again, your leadership on this issue. You do so I think from

the heart and from personal experience in trying to bring some

hope and resolution to the great personal problem that you have

had and so many others have experienced.

[The prepared statement of Hon. Jim Ramstad follows:]

31

32

33

Mr. MICA. I would like to see if you have any questions, any

questions from our side? Go ahead, Mr. Hutchinson.

Mr. HUTCHINSON. Thank you, Mr. Chairman.

I want to express my appreciation to Representative Ramstad for

his compelling testimony and personal experiences he shared. I

doubt that there are many Members of Congress who do not have

some family member somewhere who has been impacted by this.

In my life, I have had a nephew, and I have very close family

members that have had substance abuse problems, and it can be

fatal. For my nephew, it was not a matter of access to a treatment

facility, it was a matter of it not being successful, and he ultimately committed suicide.

I am certainly struck by your testimony. There has been a decline in adolescent treatment beds, and I would like for you to

elaborate why you see that is the case. Is it simply a lack of resources and people cannot afford these beds? And then what obstacles are you running into getting this legislation through?

Mr. RAMSTAD. Thank you for the comments and for sharing your

own family experience.

Each week on the average I get two to three calls from people,

mostly in Minnesota, but sometimes elsewhere, recently in Oklahoma, Florida, from people with sons or daughters, families who

are suffering the ravages of addiction. Virtually all of these people,

most of them, although the one in Oklahoma didn’t, most are covered by insurance plans. One or two of the parents are gainfully

employed and covered for substance abuse treatment. But because

of the limitations placed on the plans, they are not able to access

treatment.

I wish I had all day, and I would like to share with you a couple

of those statements.

A family in Eden Prairie, a family in a town in Oklahoma and

a family in Florida who have been absolutely devastated, and at

least two of those families had insurance, but the main problem is

only 2 percent of the 16 million people covered under health plans

are able to access treatment because of the limited treatment stays,

on the average from 2 to 7 days.

Dr. Smith, a Navy Captain, is going to testify later today. He is

the expert. He knows more about addiction than anyone in this

country. He will tell you that no one can get meaningful treatment

in 2 to 7 days. The artificially high copayments and the caps that

don’t apply to any other disease are what we are trying to overcome and eliminate.

Mr. HUTCHINSON. This is a disease, but it is related to behavior

as well. Is there a comparison where other diseases that are impacted by behavior is covered, but for this there are all of these

caps?

Mr. RAMSTAD. I am not sure that I understand your question.

Another disease that is caused by——

Mr. HUTCHINSON. For example, I can see people objecting saying—and I think it is perhaps through a lack of understanding— that substance abuse relates to behavior. You start with a weakness, it leads to a disease, and so why should everyone who is on

a health plan subsidize someone else’s poor behavior habits. I am

thinking this through in my own mind. You have heart disease,

34

also, but that is related to behavior because you have not—perhaps

not eaten correctly.

Mr. RAMSTAD. A good example is lung cancer caused by smoking.

We were told by the AMA about the direct link, the cause-effect

link, causal relationship between smoking and lung cancer, but we

don’t discriminate against lung cancer patients like we do alcohols

or addicts.

I think the American Medical Association, based on the chromosome research—and there are experts following me in the testimony today who can testify as to the disease concept, but I think

they would question—I don’t think that I am a weak person. I

never thought of myself as a weak person. But when I had a beer

or a glass of wine I responded differently from my nonaddicted

mother and sister, from other friends who are not alcoholics or addicts. It is partly physical and partly psychological and partly emotional.

Mr. HUTCHINSON. I yield back the balance of my time.

Mr. MICA. We only have 41⁄2 minutes before this vote.

Mrs. MINK. Yes, I just want to say that I am certainly impressed

by your testimony, and if I am not already a cosponsor, I will become one.

Mr. RAMSTAD. You are and thank you. Thank you for your cosponsorship. I should have pointed that out.

Mr. MICA. Mr. Tierney.

Mr. TIERNEY. The cutoff point at 50 employees or less, how many

people does that leave out and was that strictly a decision over

what you could gather support with?

Mr. RAMSTAD. That was the pragmatic part of the bill, and we

made some other changes too.

Many changes we have made are positive. One provision addressing faith-based treatment centers is appropriate. I am close to a

faith-based treatment center sponsored by an Assembly of God

Church in south Minneapolis, and I go there frequently and share

my story and listen to the kids’ stories, and their results are about

the same as Hazelden or Fairview Recovery Services or Turning

Point or any of the other programs that I am familiar with.

Mr. TIERNEY. Would that add a significant cost or is there just

the perspective of people that would add a cost that makes you

back off that on the bill?

Covering employees of 50 or less, would that add to the cost of

this whole operation, or is it just that people perceive that so you

want to stay away from it politically?

Mr. RAMSTAD. In working with the various groups in putting this

bill together and getting last year 98 cosponsors and this year 50

already, we had to give and take a little bit. I would just as soon

not see that exemption, but to get the bill moving and to bring in

conservatives and others, we compromised.

Mr. MICA. We are down to about 3 minutes. If you want to come

back, Jim.

Mr. RAMSTAD. I would be happy to come back.

Mr. MICA. We will come back. In 15 minutes we will be back

here.

[Recess.]

35

Mr. MICA. We will call the subcommittee meeting back to order

here. I did not have a chance to ask questions and will do so at

this time.

Mr. Ramstad, one of the concerns is that, again, the potential

cost, increasing costs. I asked Senator Wellstone about this, and

you did tell me that you have a trigger in your Substance Abuse

Parity Act. That 1 percent premium increase would allow companies to, I guess, exempt themselves from this. Could you tell us

how that would work, specifically?

Mr. RAMSTAD. How the exemption option would be utilized?

Mr. MICA. Right.

Mr. RAMSTAD. It is simply an option on the part of business.

Mr. MICA. They have to experience a 1 percent, and then it is

triggered?

Mr. RAMSTAD. Exactly. Then the option is up to them.

Mr. MICA. All right. What about ERISA plans. Are they covered?

Mr. RAMSTAD. ERISA plans, yes, similarly.

Mr. MICA. All right. And, as I mentioned, we have eight States

that have now adopted some type of parity provision, somewhat

similar in requirements. Why do you believe the Federal Government should get into this particularly mandated requirement, as

opposed to allowing each State to pursue its own legislative remedy?

Mr. RAMSTAD. Well, for several reasons. I reviewed my good

friend Chip Kahn’s testimony last night. Chip is not supporting

this legislation on behalf of the Health Insurance Association of

North America, but he will after we educate him as to the cost effectiveness. I haven’t spent enough time with Chip yet.

But as Chip’s testimony pointed out, Mr. Chairman, even he recognizes that the State laws are inconsistent and incomplete. In his

statement he notes that among the States with substance abuse

parity laws, quoting from his testimony, requirements vary as to

who is eligible for the expansion of benefits and what benefit levels

are required to be covered. Because of those inconsistencies, we are

not realizing the full cost savings.

To complete the answer to the question that you posed to Senator Wellstone and he deferred to me, and there will be more extensive testimony from the representative of RAND Corp., but let

me put it this way so everybody can understand. For less than the

price of a cup of coffee per month, we can treat 16 million addicts

in America. That is the bottom line. For less than the cost of a cup

of coffee per month, increase in premiums, two-tenths of 1 percent,

we can treat 16 million Americans addicted to drugs and/or alcohol

today.

The RAND Corp. study found that removing the annual limit of

$10,000 per year on substance abuse treatment is estimated to increase insurance payments by 6 cents per member per year. The

RAND Corp. study also found removing a limit of $1,000 increases

payments by $3.40 per year, or 29 cents per month. I don’t know

any coffee you can buy for 29 cents.

Mr. MICA. Thank you.

Let me see, Mr. Barr was here and was about to ask a question.

Then we will go to Ms. Schakowsky. Mr. Barr.

36

Mr. BARR. Thank you, Mr. Chairman. Starbucks’ coffee costs considerably more, which is what I drink.

Mr. RAMSTAD. It sure does.

Mr. BARR. But I guess you get what you pay for.

Jim, you used a lot of statistics this morning, and one that I am

not sure that I caught correctly was one you mentioned, in talking

about law enforcement, 80 percent is related to addiction. Is that

the figure—I have heard the figure from a lot of law enforcement

people that 80 percent of the crime they see is drug-related, which

is not to me necessarily the same as addiction. A lot of that is drug

trafficking, money laundering, sales, so-called recreational use and

so forth.

Is that what you meant by the 80 percent, or is there

something—— Mr. RAMSTAD. I was alluding to the Columbia University—the recent 10-year comprehensive study of crime in America conducted

by the Institute of Criminal Justice at Columbia University in New

York City, and their finding, exhaustive research, is that 80 percent of all criminal activity in America is related directly or indirectly to drugs and/or alcohol addiction, to drugs and/or alcohol.

Mr. BARR. I think I would be a little bit suspect with that.

Mr. RAMSTAD. I can also show you six other studies that corroborate the Columbia University study. More importantly, or just, I

think, Bob, as importantly, come and ride with me in north Minneapolis or south Minneapolis or St. Paul or my district, certain

parts, and any police officer will tell you—and I spent 1,600 hours

riding in squads since 1984 and chronicled every hour—every cop

tells you the same thing.

Mr. BARR. I am not saying 80 percent of the crime is drug related—it’s not. I understand that. That was pretty much the figure

when I was the prosecutor and so forth. I don’t accept the fact that

it is addiction-related. I think it is drug-related. It may be how

broadly one defines ‘‘addiction.’’ I may not agree with how they conducted their studies using the term addiction.

But to me somebody that sells a joint of marijuana is violating

the law, and that is a crime that is related to drugs. It is not necessarily a crime related to addiction. I don’t think that everybody

that uses drugs is addicted to them. I think a lot of people choose

to use drugs, and the same as a lot of people, I understand that

some people—I think a lot of people choose to use alcohol. If one

says that people can’t choose not to be—don’t choose to be an addict or an alcoholic, one also has to accept the fact that a lot of people, even those who grow up in families with a history of alcoholism, choose not to become alcoholics.

So it plays both ways. I think we have to be very careful in the

use of some of these statistics. I am not saying you are not being

careful, but one really has to look at the terms on which these

studies are based. I think it might very well be valid to say that

80 percent of crime is drug related. To me, that is not necessarily

if we simply took care of those who are suffering true addiction, the

crime problem would go away. I don’t think that would happen.

Mr. RAMSTAD. Certainly you believe the statistics from the American Medical Association, and they have been corroborated as well

by other studies, by 10 or 12 studies that I have seen, that there

37

are approximately 26 million—obviously you can’t quantify it to the

person, but approximately 26 million people in America today addicted to drugs and/or alcohol. That is a fact. One out of 10 Americans is addicted to drugs and/or alcohol. Nobody disputes that, that

I know of.

Mr. BARR. There are an awful lot of people, far too many people,

that use drugs and alcohol.

Mr. RAMSTAD. I am talking about those addicted. You are right,

there are recreational users, I hate that term, but that is what everybody understands, that aren’t chemically dependent people. I

know a lot of people. Most of my friends will have a beer or glass

of wine. They don’t have disastrous consequences. They are not

chemically dependent. They can stop after one glass of wine or two,

or a beer or two. They are not addicts, chemically dependent.

I didn’t choose to be chemically dependent. I wish I weren’t. I

would love to have a beer after running my 3 miles. Of course, that

would defeat the run, but playing tennis or whatever. I didn’t

choose to be chemically dependent, any more than I choose to be

a male versus a female. It is not something I chose.

I think if you look at the research and the report to the Nation,

to the Congress, in 1956 by the American Medical Association that

explains the disease nature, and then look at the followup research

that has been done, the Bill Moyer series last year on public television that went to identifying the genes and the chromosomes that

are different from people like me, who are chemically dependent,

and people like my sister, the commissioner of corrections in Minnesota, who is not.

Mr. BARR. Thank you.

Mr. RAMSTAD. Thank you for your question.

Mr. MICA. Thank you.

The gentlelady from Illinois.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman.

Mr. Ramstad, I am proud to be a cosponsor of your legislation

and couldn’t agree more on whether we want to dispute some dollars. It seems to me everyone, all experts in the field, are in agreement that it is the most cost-effective way to deal with this issue,

is through treatment and prevention.

I wanted to ask you a question about the 1 percent waiver. Is

that in our bill because you are confident that most won’t achieve

that 1 percent? We certainly don’t want to set barriers that are

going to——

Mr. RAMSTAD. You know, when I talk to small businessmen and

women back home, most of them realize, who have programs that

cover chemically dependent employees, they realize the value in

this. They would be willing to pay increased premiums to have

their people treated. They realize that absenteeism drops markedly

when people are treated; productivity increases dramatically when

people are treated who are chemically dependent.

The empirical reason for that—I explained the political reason to

get the bill moving. The empirical reason for that is some small

employers are having trouble getting insurance, as we all know,

and we don’t want to put another burden. We want to give the employers the option if costs for, let’s say, I said before, if the roof fell

38

in and costs did increase more than 1 percent because of parity, we

want to give them that option to be exempted.

Ms. SCHAKOWSKY. When we say premiums have increased because of parity, in your discussions with the insurance industry has

there ever been clear documentation or justification or explanation

of why insurance premiums go up? It is kind of a mystery I think

in many cases.

Mr. RAMSTAD. That is why Mr. Kahn is here today, to answer

that question. I hope you ask it, because that is a fair question and

one that needs to be answered.

I think there is a certain shroud of mystery surrounding the increases. Some of the costs are certainly justified and easily quantifiable and understandable, and others I don’t think are. But the

most compelling evidence and the most I think compelling justification for this legislation from a cost standpoint came from the Family Research Council.

Listen to this. The Family Research Council—a very credible organization and credible study—found that, ‘‘Alcohol and drug addiction in economic terms cost the American people $246 billion

last year. American taxpayers paid over $150 billion for drug-related criminal and health care costs alone.’’

$150 billion for criminal justice and health care costs alone. That

is more than we spent on education, transportation, agriculture,

energy space and foreign aid combined. Think of that. And that is

what the insurance companies need to realize, need to understand.

That is what most small business people understand, the cost if

they don’t do it is much greater than any 29 cent increase per premium if they provide help.

Ms. SCHAKOWSKY. Add in some of that foreign aid, because we

are right now discussing a very substantial amount, several billion

dollars to Colombia possibly to fight the drug war, and yet it seems

to me that this is a more cost-effective way to address the problem.

I am not necessarily posing it as an either or.

Mr. RAMSTAD. I don’t think there is any question, we need both.

We need to emphasize the supply side and the demand side. If you

look over the last 12 years in America, two-thirds on the average

of the resources have gone to the supply side, one-third to the other

side. As General McCaffrey explained not long ago, this single-step

parity for substance abuse treatment would do more than any

other measure to cut down on the drug problem in America.

We have got to treat the people already addicted. We are emphasizing the supply side and new Border Patrol agents and keeping

the drugs out. What about the 26 million Americans right now living and working, as the chairman pointed out, who are already

hooked, who are already addicted? We have got to deal with them,

because those numbers are increasing. If we don’t deal with the

problem of addiction, if we don’t treat these people already addicted, we are never going to see an improvement in this situation.

Ms. SCHAKOWSKY. Let me ask you a more specific question.

Many private insurers that currently cover substance abuse

treatment only cover expenses associated with detoxification but

don’t cover expenses associated with ongoing support services. How

would your bill respond to the need for ongoing support services?

39

Mr. RAMSTAD. Well, again, a person who is a diabetic or who has

heart disease or lung disease, much of that is up to the providers,

the diagnosis, the evaluation. For some people, long-term treatment is necessary and is desirable. For others—I spent 28 days in

St. Mary’s, it was then called St. Mary’s Rehabilitation Center in

Minneapolis, undergoing treatment for alcoholism. Then I went to

recovery groups. I have been going to recovery groups every week

for 18 years. Others go to 6-month programs and halfway houses.

That is pretty much a decision that needs to be made by the professionals, the chemical dependency, chemical treatment professionals.

Ms. SCHAKOWSKY. Thank you.

Mr. RAMSTAD. Thank you for your cosponsorship and help on this

bill.

Mr. MICA. I would like to recognize the gentleman from Indiana,

Mr. Souder.

Mr. SOUDER. It is good to see you here this morning. I don’t have

a lot of questions, but I am pleased we have been able to work together on this bill.

I commend you for your persistence and your leadership. Clearly,

in keeping the bill moving forward, had you not been willing to

speak in conference, work with the leadership, continue to push for

hearings in many places and try to hear the different concerns that

people had, this legislation would not be getting a hearing today.

We would not be continuing to gain cosponsors in the House. I

want to congratulate you for that, first off.

I also think you have accommodated a number of concerns that

are most frequently raised, which I am sure we will hear today and

which have come through in the testimony, about the costs and

about accountability. We all know that unless people are accountable with this, they can easily burn up a lot of dollars through drug

and alcohol treatment when it is not a personal decision to go. I

think everybody is concerned about that. You may want to make

a few additional comments on that. I am sorry I missed the first

part.

I also think that, as we work through drug-free schools, which

is a prevention program over in the Education Committee, as we

work with the question of Colombia, because if we don’t address

the amount of supply of illegal narcotics then the price will go

down, which means people use it more. We have all those different

things. But we also can’t neglect the treatment side. Because, ultimately, if our prevention works and if our interdiction works, you

still have a large pool of not only those addicted to cocaine and heroin but to alcohol who are not being reached, and ultimately a lot

of the problems, whether it is work productivity or crime in our society, are related to those two things.

I mostly wanted to commend you at this point and thank you for

your work. If you wanted to comment on any of those points

further——

Mr. RAMSTAD. Thank you, Mr. Chairman. Thank you, Mark.

You know, you have truly been a leader here, and your efforts

in putting this bill together have been very, very appreciated. We

wouldn’t have had 98 cosponsors last year if it weren’t for your

40

leadership. We wouldn’t have 50 cosponsors this year if it weren’t

for your leadership. I appreciate working together with you.

I want to work with all of you. We think we have enough caveats, regulations here, so there aren’t going to be abuses. We don’t

want abuse. We don’t want money wasted. This is about saving

money and saving lives.

Certainly some of the things you brought into the bill have been

very important in that regard. John Kasich, a cosponsor of this bill

with me, who has been very helpful from the dollar and cents

standpoint, John Kasich understands this problem, and certainly

you understand it and other members of this committee. That is

very refreshing.

Many of you have heard me say this many times in conference,

I wish we could turn Congress into one big AA meeting where people say what they mean and mean what they say. I think this

panel does that. That is why I am confident that, working together,

we can get this done.

Mr. MICA. Thank you.

Mr. Kucinich.

Mr. KUCINICH. Thank you, Mr. Mica.

To Mr. Ramstad, I want to add my voice to those of you on the

committee who are thanking you for the work you have done. People ask me, Mr. Chairman, about serving in the House of Representatives and about the people I serve with, and what I have

found in the 3 years now that I have been here is that we are very

fortunate to be serving with each other. We have people here of

depth and of character, people who are willing to share their deepest experiences, not with just us but with the Nation. And, through

you, people all over this country are going to be given an opportunity to transcend themselves, to become bigger and better than

they are and through their experience to help a Nation lift itself

up.

So, I think all of us owe you a debt of gratitude for your courage,

for your willingness to make your story parts of America’s story

and to help the Nation recover. So I thank you. I look forward to

working with you on this.

Mr. RAMSTAD. Thank you, Dennis.

Mr. MICA. Mr. Ose.

Mr. OSE. No questions.

Mr. MICA. We certainly thank our colleague again for his leadership, for his testimony today, and for his hard work in bringing

this very troubling issue before the Congress and the American

people. We thank you. We will excuse you at this time. Thank you,

Mr. Ramstad.

Mr. RAMSTAD. Thank you again.

Mr. MICA. We will move forward with the hearing. Our second

panel today is one individual who is going to offer her personal testimony, and I will call forward as the witness Susan Rook.

Susan Rook is a media consultant. Susan has covered most of the

breaking news stories of the last decade. She joined CNN in January 1987 and became a nationally prominent news anchor while coanchoring crime news with Bernard Shaw. She was chosen to pioneer the network’s daily interactive town meeting, a show that we

know as Talk Back Life.

41

On Talk Back Life, Susan became the first journalist to juggle

both a live studio audience, newsmaker guests and a nationwide

high-tech audience into a quick-based interview and discussion program.

She lives now in Washington, DC, and she has been willing to

come forward today and share with us some of her personal experience with addiction and treatment.

I must say, first of all, that we welcome you. This is an investigations and oversight subcommittee of Congress. We had congressional Members. We don’t swear them in. We will swear you in and

ask you at this time if you would stand, please, raise your right

hand.

[Witness sworn.]

Mr. MICA. The witness answered in the affirmative.

We are pleased to have you join us. We look forward to your testimony, and you are recognized.

STATEMENT OF SUSAN ROOK, MEDIA CONSULTANT

Ms. ROOK. Thank you, Mr. Chairman. Thank you, all of you, for

the privilege and the opportunity to speak to you today.

You mentioned my work on CNN. As a journalist, I have always

looked for stories that needed to be told. For two decades I have

reported on the so-called war on drugs. Well, today I am here to

give you a live report from the lines. I am an alcoholic and an addict. I am in recovery. I am alive today because I was able to get

access to the medical treatment that was required to treat my disease.

An overdose landed me in the emergency room. Without access

to drugs and alcohol, I started the withdrawal process. I turned to

this nurse that was there and I said, ‘‘Why can’t I hold a glass of

water without spilling it? Why do I feel so sick?’’ and I really was

very physically sick. I asked her what was going on.

She looked at me with a mixture of disgust and pity on her face,

and she said ‘‘Because you are a drunk and a junkie. You are

detoxing. What do you think is happening to you?’’ Until that moment, I did not know.

I thought I knew what drunks and junkies looked like, and I certainly didn’t fit that picture.

I am here today because I may not fit your picture of what a

drunk and a junkie looks like. I want you to see the face of addiction, and I want you to see the face of recovery.

Until the comment from that nurse, I didn’t know that I had

crossed the line from being a social drinker to being an addict. Current scientific evidence shows that there is a line that people with

chemical dependency cross. Certainly that initial use is voluntary,

but that use triggers a biological reaction that changes my biology,

making it unable for me to stop.

The right to have the choice of whether to have a drink or not

drink, or have just one drink, disappears. The obsession and compulsion are the most powerful things I have ever seen or experienced. I could not moderate my use of drugs and alcohol, and I

could not stop.

Treatment interrupted that compulsion, and it gave me the opportunity for sobriety.

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Top management came to the hospital, and they gave me a

choice. I could either stay in the hospital for the 72 hours required

for what was listed as a suicide attempt and go back to work, or

I could immediately go into alcohol and drug treatment. I chose

treatment.

Shaken by the look of pity by that nurse and armed with the

knowledge that I have a disease for which there is no cure but

there is the possibility of recovery, I went off to treatment.

About a week into treatment insurance ran out. I was scared.

Physically, I was still very sick. Trying to negotiate the maze of the

insurance company, that familiar hopelessness reappeared.

CNN management and an effective and committed employee assistance program coordinator stepped in and told me if I was willing to complete the entire 28-day treatment program, CNN would

pay for anything that insurance did not cover. I stayed in treatment and have been abstinent from drugs and alcohol ever since.

Two things made the difference for me. I was lucky enough to

work for a company that treated my disease as a disease and gave

me access to the same kind of medical care that they would give

anyone who has another brain disease, like Parkinson’s.

CNN did that. The insurance company did not. According to the

Hay Group study, substance abuse benefits have decreased 75 percent in the last 10 years. I called where I went to treatment,

Ridgeview, outside of Atlanta. I called Ridgeview yesterday and I

said, say, do you guys still offer that 28-day treatment program?

They said, no, managed care won’t allow it. We don’t even have it.

If I got into treatment today, I couldn’t go and get the comprehensive medical care, even fully paying for it myself or my company paying for it, because it is not there.

As you go into your business today, I ask you to look around you.

Studies show that 7 out of 10 people are affected by this disease,

1 in 10 people have it. I want you to wonder how many people are

living a double life, as I did when I was giving you the news and

when you watched me and when I was doing all the things that

you mentioned in the bio. I was drinking and using illegal drugs,

and chances are you certainly didn’t know it, and nobody else did.

As you go in your cars to go home and go about your business,

I want you to look around you and wonder, who is in that car next

to me? This is the face of addiction.

I applaud your efforts to reduce the supply of drugs coming into

this country. I think that is a very important component of this,

and I urge you to put greater emphasis on demand reduction techniques like treatment and prevention.

Mr. Chairman, you have the power to lead this country in moving the conversation of alcoholism and drug addiction from a moral

arena to a medical arena where it belongs, and I ask you to use

that power to do that.

Please make treatment a visible component of our Nation’s drug

policy. This is the face of addiction. Can you afford to ignore it?

This is the face of recovery.

Thank you for seeing it.

Mr. MICA. Thank you for your testimony and your coming forward and giving us your difficult experience.

[The prepared statement of Ms. Rook follows:]

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Mr. MICA. I want all the Members—also, I have heard her saying

that I have the power to change this. As chairman, I want you to

vote in lockstep with me.

Mrs. MINK. Yes, sir. Yes, sir.

Mr. MICA. I wish it was that easy. Sometimes I feel like I am

drowning in a sea trying to get—and failing—in trying to get the

attention of the Congress and the American people, and it is a tremendous drain on our society. The cost is just unbelievable, not

only in dollars and cents, but in human tragedies, as you have

cited.

One of the difficulties we have is trying to sort out how we can

do things that will be most effective, and the question before us

today is do we mandate insurance coverage for substance abuse

and chemical dependency. When I say mandate, bring the Federal

Government into the arena. And then there is the question of the

effectiveness of what is done.

You almost sort of presented a dream case today because most

of the cases—you are very fortunate. It sounds like you went into

a treatment plan, you had 7 days’ coverage and then, through the

largesse of your employer, they went on and covered you, and you

have since maintained recovery.

But the unfortunate story we hear is so many of the treatment

programs are not working. You feel, though, that the 7 days—you

went on to 28 days—were adequate at least for you. If you had

stopped at 7, what do you think the outcome would have been?

Ms. ROOK. I don’t think I would be sober today if I had simply

detoxed. The obsession and compulsion are incredibly powerful.

When I was talking to the insurance company, and I really thought

that I was going to have to leave, I was scared. I was scared. But

that 28—what that 28 days bought me was a little bit of time and

distance, a little bit of foundation, of security and safety. That was

completely invaluable. I mean, I can’t even measure that.

Mr. MICA. Mrs. Mink.

Mrs. MINK. Yes, thank you very much for your very compelling

testimony.

In reference to the 28 day treatment, if we at least did that in

terms of our insurance coverage, do you feel that that would be an

adequate first step, if we weren’t able to move to a more comprehensive type of coverage?

Ms. ROOK. First, let me address the issue of mandating health

care. The parity legislation is actually about being straight with

people who are getting health care. A $10,000 cap does nothing.

What I would really love to see is insurance companies look at people and say, you know what, we are actually pretending to give you

insurance coverage, but here is the deal: We are not.

So if you are going to use this coverage, you need to be aware

of it. I would like honesty in the advertising. I wonder how many

companies are paying for something that they are actually not getting?

I was lucky enough to work for a company that stepped in and

said we will do the difference. But I wonder how many companies

and business people out there think, I am looking out for my employees, and then bump up against that cap?

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I am not a proponent of Federal mandates. I don’t want the Federal Government to step in and say everyone who is an addict or

alcoholic, you need to trot into treatment for 28 days. I don’t want

the Federal Government messing in lives like that. I didn’t want— I would not want it messing in mine. So I am not advocating that.

I am advocating, one, truth in advertising; two, an opportunity

and a commitment on the Federal level to have treatment as an

available option for the people who want it; and, third, it is cost

effective. When you put somebody in jail—so a 28-day program at Hazelden, for example, is about $15,000. When I went through, it

was about $20,000. So for a month it is $39,000 to keep someone

in prison.

Now, when they get out of prison, do you want them making

their decisions drunk or sober? The decision to go in and check

with the parole officer, the decision of whether or not to really go

look for a job or, hmm, let’s just boost that car and toss the kid

out who is in the back seat. How do you want people to make their

decisions?

That is actually what my request is. Not a blanket Federal mandate of going in and actually doing things, but a commitment on

the Federal level that when treatment is available and people can

get into it, it works.

Mrs. MINK. Thank you very much.

Mr. MICA. Mr. Barr, our vice chairman.

Mr. BARR. Thank you, Mr. Chairman.

I appreciate the hearing; and I appreciate, Ms. Rook, your being

here and our colleagues before you and the witnesses that will

come after. The only thing I would caution would be I guess it all

depends on what mandate means. I mean, the legislation—and I

am not saying I am for or against the legislation, because I need

to look at it a great deal more carefully. But to say that it doesn’t

include mandates is simply, I think, inaccurate, unless one uses a

very unusual definition of mandates, because it does mandate that

group health plans shall do certain things and cannot do other

things. So there are mandates in it.

I think we need to look at it, to weigh the mandates. Obviously,

there are a lot of laws that provide for a lot of mandates, but it

does contain some mandates. What we have to weigh up here is the

policy, the cost, and the policy decisions. Do we want to remove any

flexibility that insurance companies might have for making sometimes legitimate perhaps economic decisions? They may have a legitimate reason to treat certain types of coverage somewhat different than others, based on history.

I do think that saying we should remove this, the moral component, completely may not be the best way to cast this argument,

because we do want to send a message to people that alcohol is bad

and the use of drugs is bad, and not to say, well, it is OK and we

can’t have any stigma at all attached to it.

So I think, from my standpoint, I just stay away from saying we

ought to remove any moral component. I think it is important to

have a moral-ethical component. That should be reflected in the

policies that Congress sends. That is just my reaction.

I do appreciate your being here and appreciate your work in the

media very much. Thank you.

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Ms. ROOK. Thank you, sir.

You mentioned legitimate economic decisions. I am very compassionate to the insurance companies looking and saying we don’t

want to increase costs. I am compassionate to the employers who

look and worry and say I don’t want to increase costs. But here is

the deal: If people aren’t sober, the insurance cost that isn’t going

up over here comes over here. So you are going to have to go back

to your voters and explain why you are going to have to build more

prisons, and they are going to have to pay for it.

Mr. BARR. Well, I certainly try to and think I succeed fairly well

at listening to my constituents, and they are a compassionate constituency. They believe in fairness. They also believe in tough law

enforcement. They don’t like drugs. They don’t like alcoholism either. They want to strike a balance, and that is what I try and do,

also. Because there are some very good reasons for what you are

saying. But to me it isn’t simply that, well, we have alcoholics and

drug addicts out there. Therefore, we must mandate that they be

taken care of.

I think it is a little more complex than that. We need to weigh

in a lot of different factors. The economics of it, you are right, may

in the great cosmic scheme of things, everything we do irons out

in the end. We save some money here, we cause further problems

over here. But we still have to make those decisions.

I will look very carefully, Mr. Chairman, at this legislation. I

think it is important. I appreciate it coming up, and I appreciate

your being here.

Ms. ROOK. Thank you, sir.

Mr. MICA. The gentleman from Arkansas, Mr. Hutchinson.

Mr. HUTCHINSON. Thank you, Mr. Chairman.

I do not have any questions. I just want to express my appreciation for your testimony today and for sharing your story with us.

Let me thank the chairman also, just for having this hearing, because I had not focused on the legislation, and this allows us to do

so. I look forward to doing that and hopefully moving this forward.

Thank you for your testimony today.

Ms. ROOK. You are welcome.

Mr. MICA. Mr. Ose, the gentleman from California.

Mr. OSE. Ms. Rook, thank you for coming. I appreciate it.

I want to explore a little bit the insurance side of the thing, because we have a lot of debate going on here in the House about access and availability and what have you.

Clearly, CNN offers a health insurance program for its employees. Do they give you a choice, or is it just kind of this is the program, period?

Ms. ROOK. I don’t know what they do now. I left CNN 2 years

ago.

Mr. OSE. When you were there.

Ms. ROOK. When I was there, we got a choice. Employees could

look and say, I want this plan, this plan or this plan. I don’t know

what they are doing now. I would imagine it is the same. They

have got a really good commitment to quality of life for their employees.

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Mr. OSE. So CNN gave you a choice, and the final decision, the

employee would pick which of those programs best suited their

needs.

Ms. ROOK. Yes.

Mr. OSE. It wasn’t crammed down, if you will—— Ms. ROOK. No.

Mr. OSE. And then the amount of cost, if you will, the premium

reflected the services or the benefits that were in each of the programs I imagine.

Ms. ROOK. Yes. I had the Cadillac deluxe plan. I don’t remember

what it was or what the insurance company was, but I checked the

one that said, yes, you get everything covered, whatever you want.

Mr. OSE. OK.

Ms. ROOK. And substance abuse coverage was $10,000.

Mr. OSE. Was capped at $10,000.

Ms. ROOK. Yes.

Mr. OSE. And if I understand your point today, it is that, No. 1,

the cap is too low, and, secondarily, businesses should be offering

the substance abuse treatment because from your perspective it is

a disease over which you don’t have any control.

Ms. ROOK. Yes.

Mr. OSE. I am accurate on that?

Ms. ROOK. Yes. Not just the cap is too low, but let’s be straight

about it. People think they are buying insurance, and they are not.

It would be like if I have breast cancer and I go in and they say

you can get treated for your breast cancer, but only $10,000, which

will not cover much. Just be straight about what you are offering

the people. That is not insurance. That is a double bind.

Mr. OSE. That is the part—I don’t mean to be argumentative, but

that is the part I don’t quite understand. You are able to cite the

provisions very clearly today, and from where I sit $10,000 worth

of coverage is better than zero coverage, even though it doesn’t address the problem in its entirety. But the ultimate decision as to

which of those programs—I presume some of the other programs

had zero for substance abuse treatment. The ultimate decision for

that, which plan you chose, was left by CNN in the lap of the employee, if I understand you correctly.

Ms. ROOK. Yes, correct.

Mr. OSE. Thank you, Mr. Chairman.

Mr. MICA. The gentleman from Indiana, Mr. Souder.

Mr. SOUDER. I wanted to followup, too, because our legislation

doesn’t mandate any particular line of coverage, and while 28 days

may have been essential for you, a smaller program may have been

enough for other people, and, in fact, some people can go through

three or four programs. Part of the goal of this legislation is to

make sure there is at least a minimal option.

Could you describe—you said you have been drug and alcohol

free. Could you explain to us a little bit—because many people

stumble. When you are battling it, it is not easy just to go cold turkey, even if it is 28 days, and suddenly not be tempted by the sin

and the same problems you had before. Could you explain a little

bit about how you felt previous, why you went into this treatment,

and what gave you the strength to then be free after 28 days? That

is a pretty amazing story.

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Ms. ROOK. I didn’t go in willingly. I went in because I overdosed

and ended up in the hospital. I didn’t think that I had a problem.

Everybody that I knew drank and did drugs. My social life, my private life, was very—was completely separate from the life on CNN,

completely separate.

I did not know that I had an option of not drinking or not doing

drugs. I didn’t know that that was even possible.

Treatment interrupted that and made me see, oh, look, sobriety

is even possible. It never occurred to me that other people didn’t

live like I lived. It just didn’t occur to me.

What I got in treatment was a group of medical professionals

skilled in what they do who were suggesting things for me to do

in my recovery in the 28-day program and my recovery when I left

treatment, when I actually left the facility. They made the decisions. They made the suggestions. And I guess that is one of the

things that I am requesting that you look at, who is actually making the decision. Is it a clerk at an insurance company who is saying what is best or is it a professional? And you are absolutely

right. Not everybody needs 28 days. You can do it in less. If something else works, great. Explore all of those options. But a trained

professional making that is, to my mind, the way to go, instead of

like a clerk.

Mr. SOUDER. Are you part of an accountability group and did

your company do anything that further held you accountable that

if you did not change—tell me a little bit about that. It is still dramatic. Most people who go through programs struggle and often

they make some progress each time they go through, but it is a

real battle.

Ms. ROOK. I think Hazelden has a study that 50 percent of people who go to treatment are abstinent for their first year, and 80

percent are sober their first year, with one slip in between. I will

tell you, if you had those kind of results with heart disease, adult

onset diabetes and asthma, you would be doing pretty good.

Personally, I do a personal program of recovery. I am not going

to talk about that in front of the cameras. I will be glad to talk

about that with any of you in private.

I learned what I need to do to stay sober in treatment, and I do

it. I am really clear. I did a lot of drugs. I drank a lot. I am really

clear. I pick up, I am dead.

Mr. SOUDER. Thank you.

Mr. RAMSTAD. If the gentleman would yield very briefly.

Mr. MICA. You are recognized, Mr. Ramstad.

Mr. RAMSTAD. Susan is right; and Mr. Mike Conley, who is chairman of the Board of Trustees of Hazelden, will be able to elaborate

on that, I am sure. Recidivism, as the American Medical Association studies have shown for chemical addiction, it is amazingly the

same as for diabetes. The amount of recovery or recidivism, depending on whether you want to look at the glass half full or

empty, is about the same as it is for diabetes. Recovery rates after

treatment for addiction compare very favorably to most other diseases, are about the same as for diabetes, as was said.

Mr. MICA. Thank you, Ms. Rook. Thank you for coming forward

and providing us with your personal testimony today. Mrs. Mink

and I said that you are very fortunate to be in recovery and

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through a treatment program that has been so successful for you

personally. Unfortunately, we had over 15,200 who died from druginduced deaths last year, and we have millions who are not covered, who are hopeless and a tremendous burden on their families,

destroying their lives and not success stories. We are pleased that

you would come forward and tell a little bit about your personal experience and maybe give some hope to those other individuals out

there.

We do have a vote in progress and just a few minutes left. We

are going to excuse you and thank you again for your testimony.

The subcommittee will stand in recess until 12:15. We will call

our third panel at that time.

[Recess.]

Mr. MICA. I would like to call the subcommittee back to order.

I would like to call at this time our third panel. The witnesses

on that panel consist of Mr. Michael Conley, who is chairman of

the Board of Trustees of the Hazelden Foundation; Dr. Michael

Schoenbaum, who is an economist with the RAND Corp.; Mr.

Kenny Hall, who is an addiction specialist with Kaiser

Permanente; Captain Ronald Smith, M.D. and Ph.D., who is vice

chairman of the Department of Psychiatry at the National Naval

Medical Center; Mr. Peter Ferrara, general counsel and chief economist for the Americans for Tax Reform; and Mr. Charles N. Kahn

III, who is president of the Health Insurance Association of America.

I would like to welcome all of our witnesses. As I mentioned to

our previous panel witness, this is an investigations and oversight

subcommittee of Congress, and we do swear in our witnesses. If

you would all stand, please, to be sworn.

[Witnesses sworn.]

Mr. MICA. The witnesses answered in the affirmative, and we are

pleased to have each of you with us this afternoon looking at this

question of substance abuse treatment parity. We will start right

off with Mr. Michael Conley, who is chairman of the Board of

Trustees of the Hazelden Foundation.

Now since we have a large number of panelists, we are going to

run the light and try to stick to it. It is 5 minutes for an oral presentation. If you have a lengthy statement or additional report or

information you would like to be made part of the record, it will

be included in the record by unanimous consent request. So we just

ask your compliance with that set of time limits. We will put those

complete documents in the record.

With that, let’s recognize Mr. Michael Conley, chairman of the

Board of Trustees of the Hazelden Foundation.

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STATEMENTS OF MICHAEL CONLEY, CHAIRMAN OF THE

BOARD OF TRUSTEES, THE HAZELDEN FOUNDATION; MICHAEL SCHOENBAUM, ECONOMIST, RAND CORP.; KENNY

HALL, ADDICTION SPECIALIST, KAISER PERMANENTE; CAPT.

RONALD SMITH, M.D., PH.D., VICE-CHAIRMAN, DEPARTMENT

OF PSYCHIATRY, NATIONAL NAVAL MEDICAL CENTER;

PETER FERRARA, GENERAL COUNSEL AND CHIEF ECONOMIST, AMERICANS FOR TAX REFORM; AND CHARLES N.

KAHN III, PRESIDENT, HEALTH INSURANCE ASSOCIATION

OF AMERICA

Mr. CONLEY. Thank you, Mr. Chairman and members of the subcommittee.

Good afternoon. My name is Mike Conley. I am here today as

chairman of the Board of the Hazelden Foundation, as a retired

health insurance executive, profoundly concerned with the negative

trends that I see in the chemical dependency reimbursement systems, and as a grateful recovering alcoholic. I would like to thank

you for the opportunity to testify before your subcommittee and

would like to request that my entire written statement be included

in the record.

Mr. MICA. Without objection, so ordered.

Mr. CONLEY. Thank you.

I am testifying on behalf of the Partnership for Recovery, a coalition of nonprofit alcohol and drug treatment providers that include

four of the Nation’s leading treatment centers, the Betty Ford Center, Caron Foundation, Hazelden Foundation, and Valley Hope Association, collectively representing 250,000 individuals who completed treatment for alcohol or drug addiction.

Today I would like to focus my remarks on three key areas: one,

that addiction is a treatable disease; two, that good treatment is a

cost-saving tool in the workplace; and, three, that H.R. 1977, the

Substance Abuse Treatment Parity Act, is an important first step

toward fully utilizing treatment benefits to society.

My testimony reflects the strong need for a balanced approach

between demand and the supply side strategies, including treatment, prevention, interdiction and criminal justice measures.

Mr. Chairman, as a former businessman and health insurance

executive, I know that good substance abuse treatment is a costsaving tool in the workplace. A significant number of American

workers abuse substances, and some of them—some of this occurs

at work. Most current drug users age 18 and older are employed—

in fact, 73 percent. The costs of alcohol and illicit drug abuse in the

workplace, including lost productivity, medical claims and accidents, is estimated to be as high as $140 billion a year. Moreover,

the societal costs are staggering. Fortunately, the tools for addressing the problem are available, as many enlightened employers have

discovered.

A couple of examples, Chevron Corp. found that for every $1

spent on treatment, nearly $10 is saved. Northrup Corp. saw productively increase 43 percent in the first 100 employees to enter an

alcohol treatment program. After 3 years of sobriety, savings per

rehabilitated employee approached $20,000. Oldsmobile’s Lansing,

MI, plant saw the following results 1 year after employees with alcoholism problems received treatment: Lost man-hours declined by

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49 percent, health care benefit costs by 29 percent, absences by 56

percent.

Despite the significant efforts of this subcommittee as well as

others to improve the outlook for drug-free workplaces, small businesses unfortunately fall far behind when it comes to addressing

substance abuse. The data is clear. Most small businesses will at

some point be faced with an employee who has a substance abuse

problem. Given that small businesses represent a large majority of

employers, the work site is one of the most effective places to reach

Americans. In short, good treatment and recovery policies are

sound business investments for large and small employers alike.

We believe that H.R. 1977 is the landmark legislation that takes

an important first step toward giving people suffering from the disease of alcoholism and drug addiction increased access to treatment. This legislation does not mandate that health insurers offer

substance abuse treatment benefits. It does prohibit health plans

from placing discriminatory caps, financial requirements or other

restrictions on treatment that are different from other medical and

surgical services. H.R. 1977 will help eliminate barriers to treatment without significantly increasing health care premiums, and

you will hear about it in a minute, but the RAND study did show

that this could be made available to employees for $5.11 a year or

43 cents a month.

Mr. Chairman, my statement details what the Partnership believes are some of the key ingredients for a public policy that effectively addresses the essence of the addition problem: Acceptance of

the disease as a critical public health issue and a public policy with

a balanced emphasis on treatment and prevention as well as interdiction and criminal justice.

Our Federal drug policy should also recognize that all persons,

regardless of their illness, should be treated with human dignity.

H.R. 1977 goes right to the heart of the need for fair and equitable

treatment for people suffering from this disease, and we believe it

is a step in the right direction.

And if I can just speak strictly for myself as a recovering alcoholic, it breaks my heart to know that so many people out there

who need help are not getting help because of the system. They are

not statistics. They are living, breathing people like me, a recovering alcoholic, with a potential of being important contributors to

their families, workplaces and communities. You folks have the

power to help get this back on track, and I sincerely appreciate

your letting me share this with you today. Thank you.

Mr. MICA. Thank you for your testimony.

[The prepared statement of Mr. Conley follows:]

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Mr. MICA. We will hear all of the witnesses and then go through

for questions.

I recognize next Dr. Michael Schoenbaum, who is an economist

with RAND Corp. Welcome, and you are recognized, sir.

Mr. SCHOENBAUM. Thank you.

I am an economist at RAND. I am here today in place of my colleague at RAND, Roland Sturm, who ruptured his Achilles tendon

and was unable to come. He has prepared a written statement, and

I would ask that be entered into the record.

Mr. MICA. Without objection, so ordered.

Mr. SCHOENBAUM. Thank you.

[The prepared statement of Mr. Sturm follows:]

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Mr. SCHOENBAUM. RAND is a nonprofit institution which helps

improve policy and decisionmaking through research and analysis.

This statement is based on research funded by the Robert Wood

Johnson Foundation and the National Institute on Drug Abuse.

The opinions and opinions expressed are mine and do not necessarily reflect those of RAND or of the research sponsors.

As we have heard today, substance abuse imposes major economic burdens to society, and empirical studies document that

some treatment programs can be effective. However, largely because of cost concerns, treatment for substance abuse has been excluded from recent Federal and State legislation mandating parity,

equal coverage for mental health and other medical conditions.

These concerns stem from assumptions that do not reflect current

treatment delivery systems under managed care.

We examined—in the research that I am going to present, we examined the use and costs of substance abuse treatment in 25 managed care plans that currently offer unlimited substance abuse benefits with minimal copayments—parity level benefits—to their enrollees. However, in those plans, care is managed and services

must be preauthorized and received through a network provider to

be fully covered. I will note that the plans in our study did cover

a comprehensive range of substance abuse treatment services.

Our research indicated that providing unlimited substance abuse benefits in these plans cost employers slightly more than $5 per

plan member per year. The actual number is $5.11 per member per

year. A $10,000 annual cap on substance abuse benefits reduces the

cost of providing substance abuse treatment coverage by only 6

cents per member per year. A $5,000 annual cap reduces the cost

by 78 cents per member per year, compared with the cost of providing unlimited managed substance abuse treatment benefits.

To put these numbers in perspective, if we assume that a typical group health insurance premium is approximately $1,500 per member per year, substance abuse benefits under unlimited coverage

represent three-tenths of 1 percent of this cost. Furthermore, the

potential savings associated with benefit limits is even smaller relative to unlimited but managed benefits. A $5,000 benefit limit, for

instance, reduces the overall cost of providing health insurance by

less than $1 per member per year.

We conclude in this study that limiting benefits saves very little

but can affect a substantial number of patients who do need additional care. Patients who lose insurance coverage are likely to end

treatment prematurely or switch to public sector coverage which

may increase costs in other areas.

In sum, parity for substance abuse treatment in employer-sponsored health plans is not very costly under comprehensively managed care, which is the standard arrangement in today’s marketplace. However, I do want to note for the record that the results

of our study do not apply to unmanaged indemnity plans, and also

the employers in our study were relatively large employers, so the

results may not hold for individuals or for smaller groups buying

insurance.

Thank you.

Mr. MICA. Thank you.

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We will now recognize Mr. Kenny Hall, who is an addiction specialist with Kaiser Permanente.

Mr. HALL. Mr. Chairman, I would like to thank you and your

committee for allowing me to speak on a matter that is very dear

to my heart, and that is adequate treatment for individuals seeking

treatment for chemical dependency.

Before I go on, I have to apologize to the committee. I have a 2

flight that I must take back to California. I am really committed

to my clients to be there tomorrow, so I actually apologize—— Mr. MICA. Are you leaving from National?

Mr. HALL. Yes.

Mr. MICA. No problem. Go right ahead.

Mr. HALL. What I am going to present this afternoon is a study

from a pilot project that was conducted by Kaiser Permanente in

California in 1994 in offering treatment to Medicaid clients and the

results of that particular pilot project.

For the last 3 years, I have been blessed to be part of an organization which I believe has become a pioneer and innovator in the

arena of chemical dependency treatment and recovery. That organization, I am proud to say, is Kaiser Permanente in California. I am

part of an incredible team of professionals with the Kaiser Vallejo

Chemical Dependency Recovery Program which is on the northern

end of San Francisco Bay in Solano County.

Kaiser Permanente is the oldest health maintenance organization in the country, a pioneer in the concept of prepaid, capitated

health care over 50 years ago. Kaiser Permanente is also the Nation’s largest nonprofit HMO, with almost 9 million members, 6

million members within the California division.

Kaiser Permanente is a staff group model HMO with all

Permanente Medical Group physicians and other health care professionals providing services exclusively to Kaiser members within

Kaiser’s own hospitals and outpatient clinics. This greatly enhances their ability to operate in an integrated and cooperative

manner, which significantly improves the overall quality of care offered.

Kaiser Permanente’s California Division is also distinguished

from many other managed care organizations in that it provides a

very comprehensive chemical dependency treatment benefit which

is part of the basic health plan benefit for all members. Chemical

dependency services are provided within the integrated organizations, not by a carve-out company. The benefit includes various levels of care, from inpatient detoxification through day treatment,

which is partial hospitalization, and intensive outpatient programming to long-term follow through treatment. It also includes family

and codependency treatment, as well as adolescent treatment program. These services are provided at multiple sites and are generally accessible for initial evaluation and treatment within 24

hours. Services are well integrated with other hospital and outpatient medical services, and efforts are made to assist all primary

care physicians within Kaiser Permanente to identify and refer

chemically dependent patients and their family members in a timely and effective manner.

In 1989, the county’s public hospital closed and since that time

the county health department had been involved in discussions

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with the private hospitals in the county over reimbursement for

publicly funded and indigent health care.

The largest of those hospitals is a part of Kaiser Permanente.

Other private hospitals and large physician groups as well as a

number of previously unaffiliated private physicians were also participants in these discussions and planning processes. As the California Department of Health Services became more encouraging of

public-private partnerships and managed care arrangements, the

Solano Partnership Health Plan was created.

SPHP, which began operations in 1994, was a Partnership of all

public and private health care providers in the county and was constituted as an independent health authority. SPHP contracted with

the State government to provide a capitated health plan for all— approximately 40,000—Medicaid recipients within the county.

Based on negotiations to determine ‘‘fair shares’’ of recipients,

10,000 of those clients were assigned to Kaiser Permanente and enrolled as members.

When the agreement was reached to enroll 10 Medicaid recipients as Kaiser members, concerns were raised by Kaiser physicians

about the exclusion of chemical dependency benefits in the agreement. Kaiser physicians had come to rely on the services of their

own chemical dependency program and were loathe to give up the

prerogative to utilize it with this group of patients.

I want to highlight the result of this study. After 2 years, we had

gained sufficient data in working with this particular population,

and there was a striking result. The results indicated a 50 percent

reduction in hospital days utilized, from 117 days during the 6

months before treatment to 58 days during the post-treatment period. What that meant, in the beginning, our Medicaid clients utilized the services at a much larger proportion than our commercial

users did, but after a couple of years it leveled out to the same

level. There was this pent-up urge for treatment, and these clients

were able to utilize these services that were denied to them for so

long. As a consequence, the medical savings that Kaiser experienced was very, very significant.

In closing, I would like to say it must be reiterated that the

strongest arguments for the provision of high quality, universally

accessible chemical dependency treatment services is a personal

benefit of the recipients of these services. After spending 20 years

addicted to heroin and traveling the path that addiction leads one

down, I can personally attest to the influence that chemical dependency can have on one’s life. It has been 15 years since my last

shot of heroin. The protracted suffering produced by chemical dependency can be eliminated by successful treatment enhancing the

health and quality of life of patients, families and society.

Thank you very much, Mr. Chairman.

Mr. MICA. Thank you.

[The prepared statement of Mr. Hall follows:]

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Mr. MICA. We will now recognize Captain Ronald Smith, vice

chairman of the Department of Psychiatry with the National Naval

Medical Center.

Dr. SMITH. Thank you.

My name is Ronald Earl Smith. My remarks do not represent

necessarily the Navy’s position. They are my opinion as a physician, and some of this is the Navy’s position.

I am a Navy captain and doctor of medicine. I am currently a

consultant in psychiatry, addictions, and psychanalysis at the National Naval Medical Center, the Pentagon and the U.S. Congress.

I teach and supervise residents, interns and medical students at

the Uniformed Services University. I am certified by the American

Board of Internal Medicine, the American Board of Emergency

Medicine, the American Board of Psychiatry and the American Society of Addiction Medicine. I have a doctorate in the philosophy of

psychoanalysis.

It has been my honor, pleasure and pain to work in the field of

addiction for about 27 years. This work has been in academic centers, in emergency rooms, critical care units, psychiatry wards and

addiction units. I have worked in private practice, in the military,

the Federal and State systems.

Over these years, it has been my sad experience to watch our

culture decrease money for active primary treatment in addiction

and mental illness. The limited funds remaining after budget cuts

have been moved to other forms of institutionalizations, primarily

jails and prisons. Instead of hospital beds for treatment, our culture builds prison beds. The bulk of the homeless population within

5 miles of this Capitol are there because of inadequately treated

substance abuse and mental illness.

I have watched mental health units close in my private hospital

in Newport Beach, CA. It closed 35 beds for mental health because

the funds were not there. Five years ago in the national capital

area—and this is in our own military system—we had three inpatient units, one at Walter Reed, one at Bethesda and one at Andrews. We now have two outpatient units, and this is a result of

money being cut back.

We know that treatment works. The Navy—I will ask that my

statement be submitted for the record, but I want to talk just candidly about my experience. We know that treatment works. The

Navy is not exactly in the humanitarian business, and we wanted

sober pilots in our planes on carrier decks, and we got in the treatment business for that reason. The submariners, we wanted them

to be sober and clear-headed, and 85 percent of those pilots who

later go on to fly for Northwest and American and fly you in and

out of this town are sober because of the treatment programs in the

Navy. The pilots actually do the best.

We treated 220 physicians over the time that I was there in Long

Beach, and 80 plus percent of those remain sober. And we wanted

sober doctors in the Navy taking care of the pilots, and we insist

on that.

These diseases—sooner or later, the Federal Government picks

up the tab. Sooner or later, it goes up in Social Security, it goes

up in Social Security disability, it goes up in prison beds. Sooner

or later, people within a culture which believes that we ought to

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take care of one another, and we do, and ultimately the bill is

passed onto the Federal system.

Now why ask private insurance for help with this? Simply because they can do it pretty well. But I think in my experience they

kind of need a nudge to say go ahead and do it. I do believe that

the health care—that they do it well, but in my private practice in

Newport Beach it became harder and harder to get care. Plans

which promised 50 outpatient beds, you had to beg for 4 and 10,

particularly in the matters of substance abuse. The reality was

that the funds were withdrawn.

All of us are responsible—the Navy for decreased units, the Federal Government for decreased funding in Social Security for

healthcare. It is very hard to get someone treated in an inpatient

unit through the Social Security system.

Private industry I don’t think is any more responsible than all

of us in this room. But this is a culture with a paradigm shift that

is, in the age of deinstitutionalization of the mentally ill and substance addicted, to homelessness or to lock them up. We are doing

the reverse of what was done in the enlightenment when we began

to take better care of one another, and we need to notice that. This

committee needs to notice that. Private industry needs to notice

that.

Now, the reality is that it is treatable. The reality is that an alcoholic affects seven people really. It is the most important thing

since Social Security. Because you treat 16 million alcoholics, you

treat 100 million Americans. The children get off Ritalin for ADD.

The work compensation goes down. The prison beds empty out. The

courtrooms empty out. It is just efficient, and it is humane, and it

is kind of wonderful, and it is a hell of a lot of fun to treat it in

the early stages.

But, as a critical care physician, an 18-year-old paraplegic because he was drunk on a motorcycle is probably as expensive a way

to burn dollars as we can do it. AIDS is a terribly expensive way

to die. There is probably no more expensive way to die, and this

is preventable stuff.

All we are asking the private insurance industry to do is help us

out. The Southern Bell study was not quoted. They opened the door

for treatment for mental health and substance abuse, and that portion goes up a little bit, but guess what happens to the total health

bill? It goes way down, and it takes a while to realize that. Wall

Street shows real immediate response and when you have to show

profit on Wall Street you sometimes won’t take that long delay. It

takes 3 or 4 years to go down, but it does.

Thanks for letting me speak.

Mr. MICA. Thank you. Without objection, the balance of your

statement will be made a part of the record.

[The prepared statement of Dr. Smith follows:]

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Mr. MICA. I would like to recognize Mr. Peter Ferrara, who is the

general counsel and chief economist with Americans for Tax Reform.

Mr. FERRARA. Thank you, Mr. Chairman.

Americans for Tax Reform strongly opposes any government

mandate requiring health insurers to cover substance abuse treatment. There are several reasons for this position.

First, the American people ought to be free to decide what they

want in their health policy coverage. If they want substance abuse

treatment coverage in their health policies, they can buy it in the

marketplace. Insurers will be more than happy to provide the coverage the market demands. But if they don’t want the coverage or

don’t want to pay the cost, the government should not force them

to buy it.

Let us think about this for a minute. Is this any way to decide

what is in people’s health insurance policies? You have these committees in Washington and you have these various interests that

come before them, and then this small committee decides for every

American in the country this is what benefits you will have in your

health policy, and these are the benefits you will pay for, and you

will learn to like it.

I would submit that a central planning approach is neither efficient nor does it have the proper respect for the freedom of choice

that the American people should have.

We have heard a lot of testimony today about how efficient and

cost effective this kind of coverage is. Well, let me submit that

those who buy the health insurance in America don’t agree with

that position. They are the ones who should be deciding.

Now, all this discussion about how efficient and cost effective it

is should be submitted to the insurance companies and should be

submitted to the employers and should be submitted to the purchasers of health insurance across the country, and maybe they

will change their minds and they will buy it, but that is the way

that the system ought to work. We should not have a group in

Washington dictating to the American people what the benefits are

in their health insurance policies.

Second, if the government mandates the inclusion of this coverage in health insurance policies, that will raise the cost of health

insurance. This additional cost burden on working people is objectionable in itself. Indeed, in our view, this cost increase is quite

analogous to a tax increase to fund increased government spending

for substance abuse treatment.

Of course, there is one difference with the tax increase. You can

avoid the increase by just refusing to buy health insurance at all,

and that is what many people will do if you impose this type of

mandate on health insurance policies. More working people will decide they don’t want to buy it, more small businesses will decide

that they are going to drop it, and the result is an increase in the

number of uninsured.

The decision of how much to tax the American people for substance abuse treatment programs should be made in the regular

budget process. It should not be made by this committee through

a back door health insurance mandate. If it is so cost effective, then

you should do it openly and directly. And maybe you should have

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more government programs for substance abuse treatment and

maybe you should cut some other government spending to pay for

it, but then we can judge this openly as part of the general political

process and we can hold people accountable for their taxing and

spending policies. And if it is so cost effective, then it is not going

to cost you anything, and we have heard all this testimony about

how much it is going to save you. Well, you investigate that and

find out if that is true, and that then is part of your budget control

policy.

But as a matter of health policy, what you should be doing in

health policy is quite the opposite of what you are considering here

today. One of the few helpful things that Congress could do with

health policy is to enact legislation removing all government mandates on what benefits are included in health insurance policies.

This would reduce the cost of health insurance, and it would enable

more people to buy the essential health coverage that they really

need. It would reduce the number of uninsured, and so it would go

a great ways toward helping to address that problem and expand

the freedom of choice for the American people.

Thank you very much.

Mr. MICA. Thank you.

[The prepared statement of Mr. Ferrara follows:]

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Mr. MICA. I would like to recognize Charles Kahn, and he is

president of the Health Insurance Association of America. Welcome, and you are recognized.

Mr. KAHN. Thank you, Mr. Chairman and Mr. Ramstad.

I am Charles N. Kahn III, president of the Health Insurance Association of America [HIAA]. Our members provide health, longterm care, disability, dental and supplemental coverage to more

than 123 million Americans.

I am pleased to be able to address your committee today on this

issue of parity for substance abuse in health coverage. The costs of

addiction and substance abuse are enormous, but they are costs of

mandated benefits, and I think that the argument has been made

today, and a very compelling one, that services to help those overcome substance abuse work, are essential and provide a societal

good as well as an economic good.

My issue with this matter is not substance abuse. It is a question

of health policy and insurance—and Federal policy toward insurance. An increasingly persuasive body of evidence shows beyond

any reasonable doubt that mandated coverage for treatment or

services not historically covered in other major medical plans do increase costs and that these costs are passed on to consumers in the

form of higher premiums, increased cost sharing or both. And these

higher costs resulting from benefit mandates lead directly to more

uninsured Americans.

I think this is very important to make the point that many employers provide coverage for services like those provided today.

Others don’t.

I think if we go back to Ms. Rook’s testimony, I think—I don’t

want to be a victim here, but in some ways her characterizations

of insurance were unfortunate. The fact is that CNN purchases her

health insurance, probably pays the whole price for it. They made

the choice as to what the benefits were. The insurer offers a product to—or a set of products to CNN, and they decide how much

they want to spend for their employees.

Second, under the law, under the ERISA law there are requirements for CNN to make the benefits available, a description of

those benefits available to employees. And for those of you who are

going through open season in FEHBP right now, if you look at the

book, it tells you how many days you get under substance abuse.

I have sympathy, and who cannot empathize with her situation,

but on the other hand the company made a decision about the

health plans, and the company probably made a very sound decision for an important employee with an employee assistance program, but that was not necessarily—but I guess I am a bit taken

aback that necessarily the insurer is held responsible for what is

an employer decision.

Let me make a few points about that.

First, we have a voluntary health insurance program in this

country. In a voluntary system, costs do matter. Employers are not

required to offer coverage to their workers, and individuals are not

required to sign up for coverage. Yet the private employer-based

system in this country provides coverage to nearly 160 million

Americans, and another 13 million buy their insurance privately.

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We all know that health insurance costs are continuing to climb,

and that is driving up premiums to both employers and consumers,

and each year employers must decide whether or not it will still be

economical to provide any health insurance coverage. And I make

the point any health insurance coverage, whether it is for substance abuse or basic med-surg coverage, and that their employees

must decide whether they want to continue to enroll.

A recent study showed that, of the uninsured, 20 percent of them

have access to employer-based coverage and because of cost sharing

have chosen not to take that coverage.

A recent study by Doctors Gail Jensen and Michael Morrisey

showed that the number of State mandates has increased 25 fold

during the last two decades, making health insurance disproportionately more expensive for small businesses and causing as many

as one in four Americans to lose their insurance.

According to Jensen and Morrisey, chemical dependency alone increased insurance premiums by 9 percent on average. I am not arguing against coverage for chemical dependency. If that is what the

employer or the premium payer wants to purchase, then they ought

to purchase it. But the mandate for this cannot be isolated.

First, there are many mandates. The Federal Government has

begun to adopt more mandates and, as time proceeds, I can envision the cumulative effect being very great on the total cost of

health insurance.

The second point I would like to make is that the RAND study,

which I am sure represents the value of these types of services as

well as the services provided by Kaiser Permanente, are in a managed care environment. And going back to my cumulative—my concern about the cumulative effect of mandates, we also have with—

and I will call it the assault from our standpoint by Congress on

this—the Nation’s health insurance system with the patient protection legislation. The State legislatures are doing the same, and

what the trial attorneys are about to do in class action suits

against the insurance industry and the managed care industry,

they are basically dismantling managed care.

And so the techniques and opportunities managed care offers I

would argue are not necessarily going to be around, and the costs

of mandates are clearly higher for small business and others who

tend to buy plans with more choice, PPO plans and other kinds of

plans where you don’t have the tight control of managed care.

Mr. Chairman, my time has expired, and I will conclude with

just a thought that, in isolation, who can argue against coverage

for substance abuse? I am not making that argument. I am making

the argument that public policy that leads to mandating coverage

is in a sense nothing more than a tax, as Peter described. And at

the end of the day it is not going to help us get more Americans

covered, which we see generally as a public good and something

that we all ought to be seeking. We need to provide other kinds of

ways of providing these services, and hopefully those can be found

through other public policy.

Mr. MICA. Thank you for your testimony.

[The prepared statement of Mr. Kahn follows:]

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Mr. MICA. Mr. Hall, you are going to have to leave, so we have

2 or 3 minutes here before we excuse you. I will ask a couple of

questions, and then we will let you scoot and catch that plane.

You had indicated that when your coverage, I guess Kaiser

Permanente, had gotten into offering some of this treatment, that

there was sort of a pent-up demand and that quite a few folks took

advantage of that. Were there substantial increases in that first

year or two from this increased usage? Was that reflected in cost,

premium costs?

Mr. HALL. I am trying to understand your question. When you

say substantial usage——

Mr. MICA. You testified—you said when you first got into this

coverage, I thought you said that there was some pent-up demand

or there were some more people taking advantage.

Mr. HALL. A particular population utilizing it at a higher rate.

Mr. MICA. Right. Was there—were there substantial costs involved in that?

Mr. HALL. No. Because part of our program has a cap on what

everyone pays when they come into our treatment facility which is

like a $5 cap.

Mr. MICA. You testified that there was this pent-up demand, and

people were taking advantage of it. And then it leveled out?

Mr. HALL. Yes.

Mr. MICA. With that demand with the treatment, how were the

costs covered? Who absorbed that?

Mr. HALL. Kaiser Permanente did. We weren’t reimbursed by the

State.

Mr. MICA. But you did say that, after a period of time, there was

a reduction, I think you said 50 percent of hospital days. Can you

clarify that?

Mr. HALL. Medical utilization during the 6 months prior to treatment was compared to utilization during the period 6 months posttreatment. And the results indicated a 50 percent reduction in hospital beds—in other words, hospitalization.

Mr. MICA. Well, those are my major questions to you.

Mr. Ramstad, did you have any questions for Mr. Hall at this

time?

Mr. RAMSTAD. No, I just want to thank you, Kenny, for coming

all of the way from California for this hearing today and all of your

important work in this area. You have been a key leader nationally

in this area, and I appreciate all of your efforts.

Mr. HALL. Thank you. Congressman Ramstad, I thank you for

your courage also in this area.

Mr. MICA. We may have additional questions for all panelists. I

am going to excuse you. Did you have a final comment that you

wanted to make?

Mr. HALL. If I can get permission from the committee, I promised

a young lady who was part of that initial pilot program that I

would read a letter that she would like me to read for the record.

Mr. MICA. Read it or submit it for the record.

Mr. HALL. I would like to read it.

Hello, my name is Diana. I participated in the Valleho Chemical Recovery Program in November, 1996. As of November 10, 1999, I will have 3 years drug free.

I could never express my gratitude on a piece of paper. There are so many wonderVerDate 11-MAY-2000 09:00 Nov 08, 2000 Jkt 000000 PO 00000 Frm 00099 Fmt 6633 Sfmt 6633 C:\DOCS\66251.TXT HGOVREF1 PsN: HGOVREF1
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ful aspects of this program. The qualified and dedicated staff are the best. This program is the best thing that ever happened to me. And through this program comes

the most important aspect, my children have their mother back. I owe this to Kaiser’s chemical dependency recovery program and its irreplaceable staff. Forever

gratitude, Diana D.

Mr. MICA. Thank you. We will excuse you at this time. Thank

you again for your participation.

Some of our other witnesses, I have heard so much about

Hazelden treatment and you also said that you represent, sir, several other very prominent treatment facilities, Betty Ford and others, Mr. Conley?

Mr. CONLEY. Yes.

Mr. MICA. And I guess you have a pretty good success rate. What

is your success rate?

Mr. CONLEY. Collectively, as a group, we look at a success rate

varying from 51 to 75 percent abstinence from alcohol and drugs

after 1 year.

Mr. MICA. You also have a pretty hefty price tag. These clinics

that were cited or treatment centers are some of the highest in the

Nation; is that correct?

Mr. CONLEY. Well, I don’t know if I can comment on the others.

I can comment on Hazelden. The going retail rate if you are in for

28 days of treatment, $15,000. The net effect of the cost is somewhat lower because we do get patient aid out for those that don’t

have the insurance and so forth to handle it.

Mr. MICA. What is your average treatment cost for your patients?

Could you give us a range?

Mr. CONLEY. The average for the full 28 days would be right

around the $15,000 range. But after we factor in on the average

the patient aid we give out, I would guess—and I won’t swear to

it—I guess it would be around $11,500, $12,000, or something like

that.

Mr. MICA. Of the patients that you see, what percentage would

you say have insurance coverage that covers all or part of that?

Mr. CONLEY. I think it would depend on what part of Hazelden

they went to, if they went to the primary care for adults or adolescents. I believe we are reimbursed 30 to 50 percent of the patients

go through and get some reimbursement. I can get you those numbers. I don’t have it.

Mr. MICA. I think we would like to have those for the record, and

maybe alcohol and also drug dependency if they are broken out in

that fashion.

[The information referred to follows:]

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Mr. MICA. You heard some testimony from our last two witnesses

that felt that this coverage should be left as an option and it does

result in an indirect tax increase or fee increase for everyone when

it is imposed or mandated. How would you respond to that criticism if we were to adopt a Federal parity requirement?

Mr. CONLEY. Well, I used to be in that end of the business, and

my company was a member of HIAA at one time, so I have a certain amount of sympathy for that position. But I guess the question

I really have to say is we haven’t had these mandates, and as I

look at society now, I see a $146 million price tag to the work site.

I see prisons full. I just see this as something that has to be done.

I respectfully disagree, I guess, with their position.

Mr. MICA. We heard the gentleman from Americans for Tax Reform oppose this as an additional mandate which would, in fact, increase costs, which would also diminish the number of people who

have health care coverage. As the cost goes up, we have X number

of people, 43, 44 million now, uninsured now with no coverage. We

would have actually fewer people covered because of the increased

costs mandated.

Mr. CONLEY. Uh-huh.

Mr. MICA. What do you think about that?

Mr. CONLEY. I would make two comments to that.

No. 1, the incremental cost of this benefit, if the RAND study is

right, isn’t going to be so high that it is going to drive people out.

That is my first reaction.

My second reaction, and I would invite HIAA members to think

about this, is the cost shift to employers in other areas. For instance, if people were treated effectively, the productivity, the absenteeism, the workers comp claims, the liability, the risk exposure, would be less. So what you are doing, in effect, is you are robbing Peter or cutting back on the treatment end, but that cost is

being shifted to employers. And I think it would be a fascinating

study to see what happened after a year or two if the macro health

costs would go up and drive people out of the market. I don’t think

that is the case.

Mr. MICA. Your people under treatment are all there voluntarily?

Mr. CONLEY. Pretty much, although some are through interventions from employers or families. So when I say voluntarily, they

may not be jumping for joy that they are going to Hazelden.

Mr. MICA. One of the problems, Captain Smith, we adopted a policy of deinstitutionalization of mentally ill or people who have substance abuse problems. Many were forced into treatment and actually almost incarcerated into some of these programs some years

ago against their will. And today we—that is not allowed. It is not

permitted.

And we do have—you can—just as you said, you can walk blocks

from here and you will see otherwise healthy human beings who

have been victimized by chemical dependency and substance abuse,

and we have no way to get them off the streets, no way to get them

into these programs, and they will not voluntarily go. That is the

bulk of our homeless population right now. What do we do?

Dr. SMITH. That is a superb question. Whenever human rights

and individual choices interface with government control and the

very Constitution, those are significant questions. Do we round up

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everybody and make them take lithium? No. But treated in the

early stages—and this is my astonishment. My colleagues never

complain about paying the bill for a paraplegic from a motorcycle

accident or about AIDS bills. They don’t complain about liver transplants.

When you are treating that stage, the ball game is gone. But you

can treat it early and so efficiently, and I think $15,000—do you

have any idea how long it takes to spend $15,000 in an intensive

care unit? I was an internist. I was there. Half of the people in ICU

are there because of drugs or alcohol at the wrong time. And we

can run through $15,000 in about 12 hours.

And you can treat—this is the reason that the Navy got into the

business. You have $2.5 million in a pilot, and our pilots like to

drink, and you train him that much, you get a return on investment that is significant. It is the same for IBM or the insurance

companies. They train these executives. These are good people.

All we are saying is, let’s shift the money to an earlier stage.

Let’s let industry help us with this. If these guys would open up

their doors to chemical dependency and mental health, the total

budget would go down. It has been done too many times by Kaiser,

Northrup, Southern Bell, but they are not saying come in and we

will treat you. And if they were we would not be having these hearings.

What is the responsibility of the Federal Government to say hey,

help, it is not working? And if you want to know it is not working,

look at the largest mental health hospital in this country today is

the L.A. County jail.

The prison beds I don’t need to tell you that the decline in substance abuse beds, adolescent beds comes like this, the jail cells go

up like that. They cross right there. Where do we want to turn it

around? I think this is a wonderful way because I think these guys

can do it well, but I do think that you have to say help us in the

early stages. Once it gets to homelessness and the liver is gone, it

is a done deal.

Mr. MICA. I heard some conflicting testimony today on the costs.

One of our witnesses and a Member of Congress and some others

testified to a less than 1 percent cost increase were projected. I believe the last witness, Mr. Kahn, talked about a 9 percent increase.

Could you explain what that was for?

Mr. KAHN. The researchers that I was quoting looked at State

legislation that had been put in place and made comparisons between States that did and didn’t have such legislation, and that is

the difference that they came up with. That was directly attributable to that benefit requirement.

Mr. MICA. It was.

Mr. RAMSTAD. Would the gentleman yield?

Mr. MICA. Go ahead.

Mr. RAMSTAD. Those studies reflected mental health parity cost,

not substance abuse treatment parity.

Mr. KAHN. That——

Mr. MICA. This gentleman in the back in the audience is not

sworn. If you want to comment, we will be glad to have you be

sworn and comment.

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If you want to provide the testimony, Mr. Kahn, you are recognized.

Mr. KAHN. The study is included, and I can make it for the

record. It refers to the amount and explains the methodology

and——

Mr. MICA. Specifically substance abuse and parity legislation.

Mr. KAHN. Yes, and that is explained in here.

Mr. MICA. Can you identify the title?

Mr. KAHN. It is the Mandated Benefit Laws and Employer-Sponsored Health Insurance.

Mr. MICA. Without objection, that report will be made a part of

the record.

[NOTE.—The report entitled, ‘‘Mandated Benefit Laws and Employer-Sponsored Health Insurances,’’ may be found in subcommittee files.]

Mr. RAMSTAD. Who commissioned that study?

Mr. KAHN. We commissioned the study, but it was done by a professor at Wayne State and the University of Alabama at Birmingham.

Mr. RAMSTAD. It flies in the face of the RAND Corp. study, the

California study, the Rutgers study, the Columbia University

study, the Minnesota study, States that I am familiar with, so I

would truly like to sit down and talk to you about that because I

have some serious questions about that study.

Mr. KAHN. I would not necessarily argue that this study is in

contradiction to the other studies. This study is looking broadly at

all types of coverage in given States. If you look at very specific

types of coverage, you can find that there are savings or the cost

is marginal. Our problem is that when you do a one-size-fits-all

mandate, are you mandating that on fee-for-service coverage, on

PPO coverage as well as on managed care coverage? That might be

sort of tightly controlled and that makes a difference.

The amount of flexibility that an insurer has in determining

what—under what circumstances benefits will be provided is critical to the cost, and I think even in the testimony on the RAND

study there was precertification and other hurdles that had to be

overcome for someone to get the treatment.

Mr. RAMSTAD. If I may just ask, I didn’t support Dingell-Norwood, and this is not Dingell-Norwood, and I am usually with the

groups represented by the last two witnesses, and I have a lot of

respect for them. But per your definition, every bill is a mandate.

Every bill in Congress from the beginning required someone to do

something or not to do something.

I want to point out that this bill does not mandate an employerplan-covered substance abuse treatment. As Susan put it so well,

if you say you cover it, cover it.

And to answer your question, and Susan is not here so I would

take the liberty of answering the question, Chip, that you raised.

CNN was totally unaware of the cap until Susan was in that detox

center. They were told and they thought they bought the Cadillac

package, the whole package. And treatment, if it were as available

as most plans say, we wouldn’t be here today.

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Let me ask you a question. Why do most plans offer chemical dependency treatment but not make it accessible? Why not tell people

what the definition of medically necessary care is?

Mr. KAHN. It is hard for me to imagine, although I am sure if

you say it is the case it’s the case, but a major corporation in this

country that I am sure has a staff of more than 10 or 15 people

in their human resources department that are overseeing health

benefits, and I assume that they are self-insured, so probably the

carrier was in a sense administering the benefit, and for them to

say that they didn’t understand their benefits, I don’t think that

is the insurer’s problem, I think that is CNN’s problem. And I

would argue that they were probably in violation of the ERISA

laws if they were not making clear what those restrictions were to

their employees from the git-go when those employees made an annual choice as to their plan.

Second, I can’t sit here and argue against the success of this kind

of treatment. I wouldn’t sit here and argue against the success of

drug treatment for cholesterol and the effect that has on heart disease.

I take Pravachol and watch my diet so I know in terms of my

heart disease that there are treatments that deal with that. I am

not going to argue about that. But I would be concerned—— It is fine to say, let’s mandate this. We could have a hearing at

which I could make the same argument that drug coverage ought

to be mandated because every person with heart disease ought to

have through their insurance coverage access to Pravachol or other

kinds of cholesterol drugs which are high-cost drugs. I could make

the same argument, and we can come here and show all of the costsaving value of people taking cholesterol drugs rather than at the

end stage needing whatever they get—bypass or whatever.

I am not arguing the utility of it, but the fact is that if you go

down this road of requiring it here, before you know it you are

going to have to require drug benefits and you are going to have

to require other things. Because all of the compelling arguments

that are being made here can be made about many of the things

that are offered in our wonderful health care system.

Mr. RAMSTAD. I know Captain Smith is anxious to respond.

Dr. SMITH. The response I had—and I love so much of what Mr.

Kahn said, but what the bill is asking, as I understand it, is if you

have a myocardial infarction, you are going to have to pay 10 percent of what the care is. If you get in a crisis with drugs, they will

ask you to pay at least 50 percent of the cost. The bill is asking

for parity. I have a much better success rate with substance abuse

than your cardiologist does with cardiovascular disease because I

have been in both businesses.

What the bill is asking, look, just treat this one the same. The

reason that people don’t demand high levels for substance abuse

treatment is the denial. If someone has alcoholism, he doesn’t have

the disease so he doesn’t care what the number is. It is one of those

few instances because of denial inherent in the disease—that is

what treatment does. It breaks through the denial.

You are asking a sick brain to decide how much we need to treat

it. How much money is needed to treat it? And nobody is going to

sit there—and particularly an alcoholic. His spouse may read it

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carefully, but the alcoholic is not going to care how much money

there is in the policy for alcohol treatment because he doesn’t have

it because of the denial.

And those are the points that I would make.

Mr. MICA. Mr. Ferrara wanted to comment.

Mr. FERRARA. Mr. Chairman, you have heard testimony today

about it is going to cost less than 1 percent, cost 9 percent increase

in costs. And you know what? You don’t know. I know you don’t

know. You know you don’t know. You are not going to know because that is the wrong question to ask. That is a central planning

question we are never going to know.

That is why the decision needs to be left up to the marketplace

where, A, you have people putting out their own money directly

and have to be convinced directly of the benefits that they are

going to get back and they will very carefully evaluate and make

their own choice; and, B, different people can make different

choices so some people might try it. Wow, it reduced our costs or

General Motor’s costs and Kaiser Permanente’s costs. And then

other people do it, and that is the right way to do this. You don’t

try to have a committee in Washington make the decision for everybody.

I am not making an argument for or against a particular kind

of treatment or for or against a kind of bill. I am making an argument on process. This decision needs to be left up to the people

buying the health insurance. If there are some effects on the government and the government budget, maybe this is a decision that

you need to make explicitly in the budget process. But don’t engage

in these activities where you shift the cost off budget onto other

people and then you hide it from accountability.

And in the situation where quite—I don’t mean this negatively— you don’t know what you are doing because in this kind of model

you don’t know, sitting here in Washington. This needs to be made

on a decentralized basis by people across the country who are putting their own money on the table and will do so when they are

clear they are going to get the benefit back.

Mr. MICA. Dr. Schoenbaum.

Mr. SCHOENBAUM. Yes, I would like to respectfully disagree with

what Mr. Ferrara just opened with, that we don’t know and can

never know what the costs are of legislation such as this. Respectfully, we do know, at least on average and under some assumptions

that we can articulate and that seem fairly reasonable, approximately what the costs are that we can expect from legislation like

this.

In the RAND study we looked at data from behavioral—from the

third largest behavioral carve-out insurance carrier in the country,

I assume a member of HIAA. Of people with private insurance in

this country, 75 percent received their coverage for substance abuse

and mental health services through a carve-out company.

RAND has negotiated an agreement with United Behavioral

Health, the third largest behavioral carve-out company in the country, for unrestricted access to their claims and utilization data.

Those are the data that we based our study on. We identified the

plans in that study that provide unrestricted, although managed,

substance abuse treatment benefits. That I would argue is the

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standard of care, the standard of practice that is currently prevailing in this country—managed carve-out health insurance.

Under those circumstances, across the range of employers that

we looked at, which were in a number of different industries, had

employees in 38 different States, we were quite clear about the cost

of providing unlimited substance abuse treatment benefits. Threetenths of 1 percent of members in an employed population use any

substance abuse treatment benefits in a year. Of those, the number

who use—the fraction who used a fairly high amount in a given

year is yet smaller.

So it stands to reason that, under practice patterns like that, we

are not talking about enormous amounts of money for providing

the benefit. The issue is that managing services, utilization review,

the practices, the technologies that the carve-out companies have

developed for targeting services to the people who need them are

a more effective way of allocating care than benefit limits which

have the unfortunate feature that they affect the people who need

the largest amount of services.

Mr. MICA. Let’s see. Has everyone had a shot at this?

Mr. FERRARA. Do I get to respond briefly?

Mr. MICA. Captain Smith, did you want to respond? And then we

will go back to Mr. Ferrara.

Dr. SMITH. I would just say to Mr. Ferrara, these are the best

people in the world, but it has been left to the marketplace to solve

this problem. That is why the beds are gone. That is why your beds

are now in prison. That is why you have homelessness all over this

country. The marketplace has had its shot at it, and by my value

system it has failed miserably.

Now are they going to spontaneously open the doors? No, I don’t

think that they are. I think Congress has to say, hey, help us, open

up the doors. They have no problems asking us to build more prison beds. They have no problem when someone is fired and becomes

homeless. That is a high consumer of health care cost to the private insurer, and ultimately it is the Federal system that picks up

the tab. You are saying, help us when this disease is treatable

cheaply.

Thank you.

Mr. FERRARA. Captain Smith says this is a great deal, and it

works out wonderfully, and I tried to explain it, and they are not

buying it, so please Mr. Smart Federal Government, you force them

to do it, tell all of these people they are wrong. If Mr. Schoenbaum

is right and Captain Smith is right, go make the case to the employers and to the insurance companies and tell them about all the

great money that they are going to save, and if they think you are

right, they will risk their money on it. The point is, who is going

to make this decision, not who is right or wrong, and the decision

needs to be made by the people buying the health insurance.

Mr. MICA. Their point is that they are not saving the money by

instituting this. Or if it is not required by the Federal Government

for coverage, what happens is that the rest of us are picking it up

as taxpayers in some more costly fashion.

Mr. FERRARA. If that is the case, you need to examine your substance abuse health treatment programs and deal with it in the

context of the Federal budget. If there are government savings and

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government effects or broad or societal effects, then deal with it explicitly in the budget process where you consider it overall against

all of the considerations of how much taxes you are going to raise

and other demands in the budget, and then you make your priorities. That is where it needs to be decided. Don’t hide it by saying

we are going to make someone else pay for it. They ought to be

able to decide what is in their health insurance policy and what is

not.

If you are convinced after doing a thorough investigation, gee,

this is extremely cost effective and the employers don’t take into

account all of the costs that accrue to them and insurance companies don’t take into account all the costs that are going to accrue

to them, that is when you have a government program to do it.

Mr. MICA. Mr. Ramstad, do you have additional questions?

Mr. RAMSTAD. I don’t, Mr. Chairman.

Mr. MICA. Well, we haven’t solved the problem of parity for those

afflicted with substance abuse or what are our national legislative

direction will be on this issue today, but we have aired some opinions and heard some good testimony I think from a number of folks

and hopefully moved the debate a little bit forward and possibly a

legislative resolution.

We will keep the record open for 10 additional days for additional

statements. We may have some additional questions for some of

those who have testified before us today.

If there is no further business to come before the subcommittee—

Mr. Ramstad——

Mr. RAMSTAD. Just one last word, Mr. Chairman. I want to

thank all six witnesses on this panel, including the two who vehemently disagree with my legislation, because this is the way that

the process should work. Thank you for coming forward and being

part of this discourse.

Mr. MICA. In conclusion, I did want to thank each of the witnesses who are on this panel and the other witnesses and Members

of Congress who testified today. I appreciate again your helping us

make the process work.

As I said, there being no further business to come before the subcommittee this afternoon, this meeting is adjourned.

[Whereupon, at 1:20 p.m., the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]

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