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THE PAUL WELLSTONE MENTAL

HEALTH AND ADDICTION EQUITY ACT

OF 2007

HEARING

BEFORE THE

SUBCOMMITTEE ON HEALTH

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

ON

H.R. 1424

JUNE 15, 2007

Serial No. 110–57

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov
COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR., New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

DIANA DEGETTE, Colorado

Vice Chairman

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

G.K. BUTTERFIELD, North Carolina

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

BARON P. HILL, Indiana

JOE BARTON, Texas

Ranking Member

RALPH M. HALL, Texas

J. DENNIS HASTERT, Illinois

FRED UPTON, Michigan

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff

GREGG A. ROTHSCHILD, Chief Counsel

SHARON E. DAVIS, Chief Clerk

BUD ALBRIGHT, Minority Staff Director

(II)
(III)

SUBCOMMITTEE ON HEALTH

FRANK PALLONE, JR., New Jersey, Chairman

HENRY A. WAXMAN, California

EDOLPHUS TOWNS, New York

BART GORDON, Tennessee

ANNA G. ESHOO, California

GENE GREEN, Texas

Vice Chairman

DIANA DEGETTE, Colorado

LOIS CAPPS, California

TOM ALLEN, Maine

TAMMY BALDWIN, Wisconsin

ELIOT L. ENGEL, New York

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

JOHN D. DINGELL, Michigan (ex officio)

NATHAN DEAL, Georgia,

Ranking Member

RALPH M. HALL, Texas

BARBARA CUBIN, Wyoming

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

STEVE BUYER, Indiana

JOSEPH R. PITTS, Pennsylvania

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

JOE BARTON, Texas (ex officio)

(V)

C O N T E N T S

Page

Hon. Frank Pallone, Jr., a Representative in Congress from the State of

New Jersey, opening statement .......................................................................... 1

Hon. Nathan Deal, a Representative in Congress from the State of Georgia,

opening statement ................................................................................................ 2

Hon. Lois Capps, a Representative in Congress from the State of California,

opening statement ................................................................................................ 3

Hon. Heather Wilson, a Representative in Congress from the State of New

Mexico, opening statement .................................................................................. 5

Hon. Tammy Baldwin, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 6

Hon. Mike Ferguson, a Representative in Congress from the State of New

Jersey, opening statement ................................................................................... 7

Hon. Jan Schakowsky, a Representative in Congress from the State of Illinois, opening statement ....................................................................................... 8

Hon. Sue Wilkins Myrick, a Representative in Congress from the State of

North Carolina, opening statement .................................................................... 9

Hon. Hilda L. Solis, a Representative in Congress from the State of California, opening statement ........................................................................................ 10

Hon. John Sullivan, a Representative in Congress from the State of Oklahoma, opening statement .................................................................................... 10

Hon. Gene Green, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 11

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

opening statement ................................................................................................ 12

Hon. Marsha Blackburn, a Representative in Congress from the State of

Tennessee, opening statement ............................................................................ 13

Hon. Tom Allen, a Representative in Congress from the State of Maine,

opening statement ................................................................................................ 14

Hon. Tim Murphy, a Representative in Congress from the Commonwealth

of Pennsylvania, opening statement ................................................................... 14

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 15

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, prepared statement ...................................................................................... 16

WITNESSES

Hon. Patrick J. Kennedy, a Representative in Congress from the State of

Rhode Island ......................................................................................................... 17

Prepared statement .......................................................................................... 19

Hon. Jim Ramstad, a Representative in Congress from the State of Minnesota .................................................................................................................... 21

Prepared statement .......................................................................................... 23

James E. Purcell, president and chief executive officer, Blue Cross & Blue

Shield of Rhode Island ......................................................................................... 24

Prepared statement .......................................................................................... 27

Answers to submitted questions ...................................................................... 85

Edwina Rogers, vice president, health policy, the ERISA Industry Committee 32

Prepared statement .......................................................................................... 33

Answers to submitted questions ...................................................................... 94

Marley Prunty-Lara, board member, Mental Health America ............................ 36

Prepared statement .......................................................................................... 38

James A. Klein, president, American Benefits Council ........................................ 40

Prepared statement .......................................................................................... 42

Answers to submitted questions ...................................................................... 77
Page

VI

Howard H. Goldman, M.D., professor of psychiatry, University of Maryland

School of Medicine ................................................................................................ 46

Prepared statement .......................................................................................... 48

Answers to submitted questions ...................................................................... 67
(1)

H.R. 1424, THE PAUL WELLSTONE MENTAL

HEALTH AND ADDICTION EQUITY ACT OF

2007

FRIDAY, JUNE 15, 2007

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON HEALTH,

COMMITTEE ON ENERGY AND COMMERCE,

Washington, DC.

The subcommittee met, pursuant to call, at 12:13 p.m., in room

2123, Rayburn House Office Building, Hon. Frank Pallone, Jr.,

(chairman) presiding.

Present: Representatives Green, Capps, Allen, Schakowsky, Solis,

Matheson, Deal, Wilson, Ferguson, Myrick, Sullivan, Murphy, Burgess, and Blackburn.

Staff present: Carrie Annand, Yvette Fontenot, Christie

Houlihan, Purvee Kempf, Jodi Seth, Bridgett Taylor, Lauren

Bloomberg, Nandan Kenkeremath, and Chad Grant.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. PALLONE. I call the hearing of the subcommittee to order.

Good morning. Today, we are holding a hearing on H.R. 1424,

the Paul Wellstone Mental Health and Addiction Equity Act of

2007. My colleagues and the chief sponsors of H.R. 1424, Congressman Patrick Kennedy of Rhode Island and Jim Ramstad of Minnesota, are here with us this morning. Thank you for being here.

To their great credit, they have been the most vocal proponents

in Congress for requiring parity in insurance coverage of mental

health conditions; and together they have crisscrossed the country

to bring national attention to their cause and develop support for

the legislation. To date, they have garnered 268 cosponsors and

have demonstrated that this is not a partisan issue; and I want to

thank them again for all they have done.

To establish the pressing need for this legislation, we will be

hearing from witnesses about the current problems individuals confront when they seek insurance coverage for mental health and addiction treatment services. It will be made clear that, in spite of

widespread recognition that mental illness and substance abuse are

treatable illnesses, there exists glaring inequities between health

insurance coverage for mental health and that for other medical

conditions.
2

Health insurance plans often impose stricter treatment limits

and higher out-of-pocket expenses on mental health care than on

care for other illnesses. This discrimination prevents many from

getting the treatment they need to function normally. As a Nation,

we can no longer afford to ignore this disparity in coverage, because the cost to families and to society in general is simply too

high.

On February 26 I hosted a forum in Trenton, NJ, on mental

health parity with Congressman Kennedy, mental health professionals, advocates and individuals who experienced discrimination

when they sought mental health services for themselves or their

families. Their stories demonstrated to me the pain and anguish

that accompanies mental illness when it goes untreated. Their personal accounts reveal that denying treatment for a mental illness

can be just as life threatening as denying surgery to a cancer or

heart patient.

The inequities extend across all age groups. For instance, it is estimated that over two-thirds of children with mental health conditions do not get the treatments they need.

In my own State of New Jersey, we have what is considered a

limited mental health insurance parity statute. It requires that all

biologically based mental illnesses be covered on a par with all

other illnesses. It does not provide parity for what have been called

nonbiological-based such as post-traumatic stress disorder, substance abuse, and eating disorders. Fortunately, thanks to the efforts of advocates and enlightened legislators, a measure for full

parity has cleared many hurdles and is making its way towards

passage in the New Jersey State Legislature.

But many other States are moving on their own towards more

comprehensive coverage and now 26 mandate mental health coverage with full parity. I believe that any legislation we pass on the

Federal level should recognize the value of these stronger State

laws and serve as a Federal floor of covered benefits, beneath

which no State law should sink.

The Kennedy-Ramstad bill recognizes this by not preempting existing State laws with greater protections. This sets that legislation

apart from the Senate bill sponsored by Senators Kennedy and

Enzi, legislation that is certainly a major step forward but not

quite as comprehensive. Of course, I haven’t figured out yet, there

are two Kennedys here on two sides of the aisle, but we won’t get

into that too much.

The Kennedy-Ramstad bill also sets a high standard by requiring

coverage of disorders offered to Members of Congress and their

staffs through the Federal Employees Health Benefits Program.

Our witnesses today will report on the costs associated with providing this more comprehensive mental health parity.

Employers have experienced cost increases of less than 1 percent

as a result of implementing full parity laws. In fact, it appears that

the cost of doing nothing is far greater for individuals, families, our

health care system, and economy; and this will also be discussed

in more detail by our witnesses.

In conclusion, it seems that almost every day a major news story

breaks that has as its root an untreated mental health problem. A

college student shoots his classmates, a mother drowns her own
3

children, kidnapping, suicides, drug and alcohol addiction. The next

day’s story is about the State’s deteriorated mental condition—I

should say about the subject’s deteriorated mental condition, which

many people knew about, and the failure or inability of that person

to get mental health counseling and treatment.

By putting mental health on a par with other conditions, we will

be improving the availability and affordability of health care for

those with mental health and substance abuse conditions. This will

not only reduce these horrific public incidents but also the everyday pain and anguish of many of our constituents and their families who suffer in silence.

I want to thank our witnesses and our Members for coming today

and look forward to their comments. But I really couldn’t conclude

without thanking both of you. I saw when I—I know Jim wasn’t

able to come that day in Trenton. He tried, but he wasn’t able to.

But Patrick was there, and it was—the fact that Patrick was willing to tell his own story so effectively, the fact that so many other

people were there to back him up. If I could just use that Trenton

example of how Patrick and Jim have been going around the country, raising attention, both media and otherwise, to this. It is really

because of your efforts and your willingness to do that and spend

so much time, that we are at the point I think where we are going

to be able to pass this and send it to the President. You really

should be very proud, both of you, of what you have done; and I

mean that sincerely. Thank you.

I will yield now to the ranking member, Mr. Deal.

OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. DEAL. Thank you, Mr. Chairman.

I want to thank our colleagues for taking time out of their schedules to be with us. I realize this is a piece of legislation both of you

have worked on for a very long time, and we appreciate your presence.

During last year we had hearings in the subcommittee on mental

illness, and we discussed not only the prevalence of the problem

and the treatment for mental illness but also the difficulty some

patients had in accessing care. We heard compelling testimony

about the debilitating effects of some of these illnesses, in addition

to the advances in research. It became clear to me that improvements should be made to increase the access to mental health services, and I am glad we are taking the opportunity to today to explore that issue.

While I do believe people suffering from mental health disorders

do need access to the appropriate type and level of treatment, legislation should be balanced in how it addresses this serious problem.

I have always been concerned about the impact of insurance coverage requirements on the cost of health insurance. While no one

mandate may increase the cost of insurance in a sizable way, they

can have a cumulative effect of making coverage prohibitively expensive. I am sure this will be a point of discussion in the testimony of our witnesses, and I certainly look forward to hearing your

thoughts on this issue.
4

I would also be concerned with any legislation which had the unintended consequence of employers not providing any coverage for

all for other serious mental illnesses. Another troubling consequence could be, because employer-sponsored insurance is voluntary, increasing mandates could lead employers to stop offering

benefits altogether. I realize these are reservations often raised in

regards to legislation like the bill before us, and I hope that the

witnesses can shed some light on these issues.

Improving access to mental health treatment is certainly a worthy goal. However, as we seek this target, there are a number of

questions which must be addressed, such as what diseases and disorders ought to be covered in legislation and the broader impact of

these changes on the insurance market. For this reason, I think

this will be a good hearing, and we will give the opportunity to the

committee to explore these issues in more detail.

My son happens to be a superior court judge in our State and

handles the drug court for the two counties that our circuit is composed of. He was in town yesterday, along with mental health court

advocates and family courts and drug courts from our State; and

one of the things that they obviously all face is not only funding

problems to keep those alternatives, which are very, very successful—in fact, the recidivism rate coming through the drug court has

been 5 percent or less for a number of years now.

We are attempting and have begun the process of a mental

health court, but it has huge problems of being able to obtain necessary funding. So it is a very broad picture, and I thank both of

you for your time and efforts to be here today.

Thank you, Mr. Chairman.

Mr. PALLONE. Thank you.

I recognize the gentlewoman from California, Mrs. Capps.

OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mrs. CAPPS. Thank you, Chairman Pallone.

The ranking member just made a comment about mental health

court that prompted my interest, so I am going to be contacting

him.

Thank you, Chairman, for holding this important hearing. I am

very proud to be a cosponsor of the Paul Wellstone Mental Health

and Addiction Equity Act of 2007, and I will be even prouder when

it is passed by Congress and signed into law. That is when we will

truly honor the memory of its namesake.

It is so fitting today that our first two witnesses are the bill’s coauthors. Last month, it was also encouraging to take part in Mental Health Parity Day and meet with the men and women across

the country who dedicate themselves to improving the lives of others. Really at the heart of this bill and this discussion today is the

fact that there exists an unreasonable difference in the way we

treat mental health conditions as opposed to all other health conditions. To a health professional—and there are a few of us in this

subcommittee and many across the country that know that there

should be no distinction in the importance of treating any state of

ill health, whether it be heart disease, kidney disease, brain disease or a mental health disease. All parts of the body, including the
5

mind and the brain, are vital to our ability to function; and it is

so sad that there has existed this distinction for mental health because of stigma and misunderstanding.

H.R. 1424 will begin to finally break down barriers for accessing

life-saving mental health treatment. And I say life-saving deliberately, because as we are going to hear from these witnesses

today, mental health conditions can indeed be just as life-threatening as other health conditions. We must put an end to the discrimination being practiced by insurers when they offer coverage for

some health conditions and not others. And I know that some people today might refer to the Senate compromise on mental health

parity. But frankly, I don’t feel it goes far enough.

I strongly support the passage of language in H.R. 1424, which

our dedicated colleagues and champions for mental health, Patrick

Kennedy and Jim Ramstad, have worked so hard for so long to perfect.

Many employees aren’t as fortunate as Members of Congress and

our staff, who have access to Federal health benefits. Many employees have no choice at all which insurance plan they may access. They are lucky to have one, and so they take it without questioning. When someone gets a job and is offered health insurance,

they pretty much have to take what the company has chosen for

them. And it is not fair, I believe, to say, well, we are going to

cover some parts of your health care, but we will pick and choose

which parts of your body to cover. I believe that is bad for business.

I know it is bad health care.

So again, I look forward to discussing the bill before us, and I

am excited for the prospects of finally passing this legislation during this session of Congress. I yield back.

Mr. PALLONE. Thank you. The gentlewoman from New Mexico,

Mrs. Wilson.

OPENING STATEMENT OF HON. HEATHER WILSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW MEXICO

Mrs. WILSON. Thank you, Mr. Chairman. And I also wanted to

thank my colleagues, Mr. Kennedy and Mr. Ramstad, for your leadership on this issue, and for being willing to take up the charge

over such a long period of time and make it personal to people, as

I think that getting beyond the stigma of mental illness is part of

what we need to do to make sure that we achieve parity, so that

diseases of the brain are treated in the same way and thought of

in the same way as diseases of the heart or the lungs or the kidneys or anything else.

I come to this debate, and I have been a supporter in the past,

a cosponsor in the past of the mental health parity legislation here

in the House really based on my experience as the former cabinet

secretary for child welfare in the State of New Mexico, where on

any night we had about 1,600 kids in foster care. And generally,

they were physically healthy and emotionally a wreck. And we

aren’t talking about kids who are a little bit depressed on the bus

on the way to school. We are talking about severe mental illness

among children. And getting those children adopted is hard

enough, but making sure that they still have access to the nec-
6

essary medical and insurance coverage is certainly a challenge.

And mental health parity would go a long way to helping families

be able to get the care that they need for their children.

There is a different version of this bill, and Mrs. Capps just mentioned it, that was introduced in the Senate. It was introduced and

has been supported for a long time by my colleague, the senior Senator from New Mexico, Pete Domenici. And that bill does represent

I think—it is an agreement—represents an agreement that was developed over a period of about 2 years between—again in negotiations with various stakeholders in the mental health community

and so on. I actually have a slight preference for the Senate bill,

but I would like to see this bill get to conference so that we can

get something done and move forward.

Again, I thank my colleagues from Rhode Island and Minnesota

for your leadership on this issue, and I thank the chairman for

holding this hearing today. Thank you.

Mr. PALLONE. Thank you. Ms. Baldwin of Wisconsin.

OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN

Ms. BALDWIN. Thank you, Mr. Chairman. And I am very, very

encouraged by the fact that we are holding this hearing today. I

am proud to be an original cosponsor of H.R. 1424, the House Mental Health Parity bill, and I am delighted that this committee is

holding this hearing and the bill’s two main sponsors are here with

us today. Congressmen Kennedy and Ramstad, you have shown

such tremendous leadership on this issue, and I thank you both for

that.

All Americans deserve access to affordable, comprehensive health

care to meet both their physical and mental needs, and I believe

that Americans should be provided with comprehensive coverage

for mental health services. Mental illness and substance abuse are

tangible, treatable health problems, just like hypertension, cancer,

heart disease. Yet millions of hardworking men and women still

find that their health plans place strict limits on coverage for mental health benefits.

I am very much looking forward to our discussion with our witnesses today, and I hope that we can take this opportunity to dispel some misconceptions about mental health parity. Often we hear

those opposed to parity say that requiring mental health parity will

increase utilization of mental health benefits and mental health

costs. But we know from experience in States which already have

mental health parity laws that this is not the case. And I look forward to hearing our witnesses talk more about that.

Lastly, I wanted to share an excerpt from a letter that I recently

received from a constituent. Her name is Lisa, and she is from

Madison, Wisconsin. Lisa is a registered nurse and a survivor of

mental illness. Specifically, she has an eating disorder. And she

writes, and I quote, ‘‘I strongly believe I would not have suffered

from a severe eating disorder for 7 years, putting myself, my

friends, and my family through hell had I had parity of insurance

coverage.’’ There are many causes and contributing factors to each

sufferer’s eating disorder, and it does not develop overnight. I was
7

one of the lucky ones to have even some health insurance for treatment of my serious eating disorder. However, it was grossly inadequate, geared more towards stabilizing the resultant physical consequences, and not the underlying cause. Only those who themselves can afford or whose families can afford this great expense

have a good chance of recovery.

Unfortunately, Lisa’s story is not unique. As we will hear today,

millions of Americans face horribly restrictive barriers when they

seek care for mental illness. This is not right, and this is why we

need to ensure that every American has access to adequate mental

health care by ensuring mental health parity.

And again, thank you to the witnesses today. I look forward to

the testimony. Thank you, Mr. Chairman.

Mr. PALLONE. Thank you. Mr. Ferguson.

OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. FERGUSON. Thank you, Mr. Chairman. Thanks for convening

this hearing and for your leadership on this issue. This legislation

will undoubtedly deliver much needed treatment and care to thousands and thousands of people for which it is long overdue. I particularly want to thank Mr. Ramstad and Mr. Kennedy, our colleagues and friends, for joining us. There are few people in this

body who don’t have enormous respect and have noticed the incredible leadership and sacrifices that you have both made on behalf

of this cause. I have had an opportunity to work with you on many

different issues, but on this issue you two have no equal, except

maybe each other, in your leadership and the work and devotion

that you have made toward this issue. And you have our admiration for that.

Addiction and mental illness are afflictions that have long been

stigmatized and brushed aside by our society and our institutions.

And I would submit that every family, every family has been

touched by mental illness in some way, large or small, in some way

or another. And for too long people have been told that they must

fend for themselves while battling these diseases. Those battling

their debilitating effects have not been able to receive the stability

of care that is available when adequate insurance coverage is in

place. And the Paul Wellstone Mental Health and Addiction Equity

Act is an idea whose time had come a long time ago. And it is time

to deliver what people battling addiction and mental illness have

long needed and wanted, and that is help.

I have been a cosponsor of mental health parity efforts in the

past. I am happy to be here today to add my support as a cosponsor

during this Congress. And I look forward to the testimony of our

witnesses and both of our panels today, and certainly look forward

to working with my colleagues on this committee on both sides of

the aisle to pass this important legislation.

I yield back. Thank you, Mr. Chairman.

Mr. PALLONE. Thank you. The gentlewoman from Illinois.
8

OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Ms. SCHAKOWSKY. Thank you, Mr.Chairman. I too want to thank

our wonderful panel of witnesses for sharing their experience and

expertise with us, particularly those witnesses who are willing to

share their personal experience, including of course Representatives Kennedy and Ramstad, whose leadership has been informed

by personal experience. And you do honor to our friend Paul

Wellstone. He and his wife Sheila were great personal friends of

mine, and I know he will be very proud when this bill is signed—

or would have been very proud when this bill is signed into law.

The courage that you two demonstrate telling your personal stories of struggle and hope will serve as models for others who have

been touched by mental illness. And what family has not been?

Each of you serve as proof that with adequate support and appropriate treatment people with mental illness can live to their full potential and make unique contributions to society.

Your stories also point to the tremendous value of mental health

treatment. We have come a long way in our understanding and

treatment of mental illness, but the barriers to obtaining coverage

remain. Approximately 15 percent of Americans are affected by a

clinically significant mental disorder in any given year, with 2 to

3 percent experiencing a severe mental illness. Many of them are

struggling to access effective treatment that could greatly reduce

their suffering and increase their participation in occupational,

educational, social and civic realms.

Science has dispelled several myths that have been used to justify unequal coverage of mental disorders and mental health treatments. The arguments that mental illnesses are not real illnesses

and mental health treatments are not real treatments have been

dispelled by research into mental disorders and their treatment.

Growing evidence also suggests that the myth that if mental health

care were available as a standard benefit then everyone would use

it and it would bankrupt the system, and that has been dispelled

by economic analyses and actual experience.

Today we know that mental disorders are real and complex, with

biological, psychological, and social contributors. Rigorous scientific

evaluations have found a range of mental health treatments to be

effective, including numerous medications and psychotherapies

sometimes showing greater effectiveness than many medical treatments. For example, there is a 90 percent cure rate for panic disorder, which is a very debilitating condition. A variety of mental

disorders actually have a number of effective treatment options

available, making cost-effective choices possible.

Several studies and the experience of numerous States have

demonstrated that the provision of mental health parity results in

only modest cost increases. Illnesses such as schizophrenia, bipolar

disease, major depression, anorexia nervosa, alcohol dependence,

and many other disorders are potentially life-threatening conditions that can cause serious impairment and tremendous suffering

for affected individuals and their families and friends. These illnesses are not moral or personal failures, and affected individuals

should not be punished for suffering from them.
9

The time has long passed that we do this. I am so proud to be

a supporter of H.R. 1424, and look forward to its passage and this

discussion of it today. Thank you.

Mr. PALLONE. Thank you. Mrs. Myrick of North Carolina.

OPENING STATEMENT OF HON. SUE WILKINS MYRICK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH

CAROLINA

Mrs. MYRICK. Thank you, Mr. Chairman, for holding the hearing

today. And I also thank our colleagues for all their hard work and

their willingness to speak out. This issue of mental health insurance parity is not a new one, and I think this hearing is a good

opportunity for members to have questions answered about how it

will impact of course the insurance market, but also the lives of the

patients who have the brain disease.

For some time I have emphasized the need for Americans to realize that severe mental illnesses are really brain diseases, diseases

that impact your brain rather than your heart or your kidneys.

They are diagnosable, treatable, and biological in nature.

There are several fronts in the battle to recognize and treat these

diseases. There is the awareness fight, which has been very difficult, to help people realize that diseases like bipolar, schizophrenia, depression aren’t moral failings; they are diseases that can be

treated once they are diagnosed. There is a scientific fight in which

experts attempt to map the different changes in the brain and the

genome and that impact the onset and the severity of the illnesses,

and there is the treatment fight. These diseases are expensive and

frustrating and often difficult to diagnose and treat. Doctors don’t

always have the latest scientific treatment standards at hand to

treat each patient with the right dose or the right medicine or the

cocktail or the right therapy. And from personal experience, we

have had that experience in our family of trying to find the right

way to do it. Patients with a mental illness aren’t always willing

to seek help from professionals. And then of course there is always

the question of insurance and how much does it cost.

Untreated mental illness costs our country billions of dollars

each year. It costs patients the ability to work, function in society.

It costs our families a lot of heartache, and bleeds so much from

our public system in the forms of homelessness, incarceration, illegal drug use. The list goes on.

It should also be noted that those who have health insurance,

but lack sufficient mental health coverage, sometimes bankrupt

themselves and their families, and they eventually end up on Medicaid. And we know that that costs us a lot over the long run.

In many ways, having a severe mental illness is no less serious

than having cancer, and oftentimes it poses a more serious threat

to the patient’s life and ability to function. But let’s not underestimate the gravity of the decision to create a Federal mental health

parity structure. The health insurance market is notoriously complicated, and those who have a brain disease and don’t have insurance don’t benefit from mental health parity mandates. That is a

whole ’nother issue. And if there is any incentive for insurance providers to drop coverage based upon the perceived expense or imposition of parity laws, those who have some mental health coverage
10

may eventually find themselves without it. And that is why I am

glad we are having the hearing today to discuss all these options.

It is also important to note States have control over their benefits as well and a lot of employee plans under their jurisdiction,

and we need to look into that as well. I know the agreement that

is reached on the Senate side. I think it is very important they

have that kind of agreement, especially with the problems that we

have today. And so I want to hear from people relative to the

House bill and what that brings as well. And again I thank the

gentlemen from Rhode Island and Minnesota for all your years of

dedication.

Thank you, Mr. Chairman.

Mr. PALLONE. Thank you. Ms. Solis.

OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. SOLIS. Thank you, Mr. Chairman. And I really appreciate

the fact that you are having this hearing, and want to welcome

Congressman Kennedy and Congressman Ramstad also. I know

you guys, both of you, have worked so tirelessly on this issue, at

least in the last 7 years that I have been here in the House, and

I want to thank you for continuing the fight that Senator Wellstone

began. And I did have the pleasure of working with him shortly.

But as a State legislator, because even in the State of California

back in 1999, we passed a mental health parity bill for this same

reason that you are here today. And I would just say that it works,

it works well, it is something that is proven. And for a district like

mine, where we have so many young people that we are finding in

the juvenile justice system and then eventually leading into the

county jail system, and I know Congressman Kennedy knows fully

well what that means. And in many terms our sheriff there, Lee

Baca, has said that he is really not a caretaker for criminals, but

more of a caretaker of the mentally ill. And it is unfortunate, but

that is a fact and it is a reality, and we as a country need to do

something about it.

And I am particularly concerned because of communities of color.

Because the ratio of suicide for Latinos, Latinas, and Asian American women is very high, and we are not doing enough to detect

that early on and providing tools for their families, and also for

school districts, where I think intervention really needs to take

place as well.

So I am very happy to be a cosponsor of the bill, and look forward to hearing from both of you, and can’t wait to see a signature

from the President on the bill. Thank you, and I will yield back the

balance of my time.

Mr. PALLONE. Thank you. Mr. Sullivan of Oklahoma.

OPENING STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA

Mr. SULLIVAN. Thank you, Mr. Chairman. And I would like to

thank Congressman Kennedy and Congressman Ramstad for testifying today on H.R. 1424, the Mental Health Addiction Equity Act
11

of 2007, and I am pleased to be an original cosponsor of this very

important legislation. At the end of March, Congressman Kennedy

and I held a field hearing in Tulsa, Ok, to examine the effects of

mental health disorders on Tulsans and the need for mental health

and addiction parity. Hearing from families, scientific experts, businesses in Tulsa, all of whom have been affected by mental health

disorders, drove home the point that mental illness touches many

lives and the need for mental health parity could not be more important.

My home State of Oklahoma currently ranks No. 1 in the Nation

in the number of people struggling with mental illness and addiction disorders, almost one-fourth of the population of the State.

While many States, including Oklahoma, already have mental

health parity laws in place, it is vital that Congress enact Federal

legislation which levels the playing field for the 54 million Americans suffering from mental illnesses. The simple fact is mental illnesses are biologically-based brain disorders, and need to be treated by insurance companies like any other physical illness.

According to the Government Accountability Office, nearly 90

percent of health plans impose financial limitations and treatment

restrictions on mental health and addiction care. This legislation,

which would help an estimated 113 million Americans receive fair

mental health and addiction treatment, requires group health

plans that offer mental health and addiction benefits to do so on

the same terms as they do for other diseases. This means closing

the loopholes in the past laws that have allowed insurance companies to continue to charge higher copayments and deductibles to individuals seeking mental health treatment, and eliminating annual

caps on inpatient/outpatient care.

One of the most important aspects of this bill is that it ensures

that the health plans must cover the same range of mental illnesses and addictions that Members of Congress and other Federal

employees and their dependents receive under the Federal Employee Health Benefit Plan.

And a lot of people talk about this as costing a lot of money,

which is not true. The economic cost of untreated mental illness in

America is more than $100 billion each year, and the cost of addiction is $400 billion each year. Mental health parity will bring these

costs down and offer new hope to millions of Americans suffering

from mental illness.

I look forward to hearing your testimony, and also I want to say

that you two are doing something that really is going to help people’s lives. We vote on a lot of stuff around here, and this is truly

going to have an impact on millions of people’s lives. You guys are

heroes. You are doing a great job. Thank you.

I yield back.

Mr. PALLONE. Thank you. I recognize our vice chairman, Mr.

Green.

OPENING STATEMENT OF HON. GENE GREEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. GREEN. Thank you, Mr. Chairman. I would like to ask unanimous consent to place a full statement into the record, and I will

just paraphrase it to save time.
12

One, like my colleagues, I want to thank our colleagues from

Rhode Island and Minnesota for being so diligent in working on

this bill for so many years. I am proud to be a cosponsor of it. And

I will just briefly talk about the need for it.

Sixty percent of employers in my district that provide insurance

come under Federal law and not State law. We have 26 States who

have full mental health coverage, but a number of other ones only

have partial, which includes the State of Texas. And I was proud

as a State senator to even get that much in the late 1980s.

I am glad the bill uses a DSM-IV, so that doctors and not insurance companies will make the decision on illnesses. In our experience in the Houston area, with the Katrina evacuees traumatized,

it is so needed to make sure we have mental health services available, whether you are in New Orleans or Houston or anywhere else

in the country, particularly in a disaster.

And I will say a caveat, in an earlier career, before I ran for Congress, I did mental health work as an attorney. And it is half mental health work and half counseling to find reasonable placement

and family for my clients. And seeing the clients who were in the

public system, as opposed to the few who had private insurance, it

was so amazing.

And so that is why this bill is so important, and I yield back my

time.

Mr. PALLONE. Thank you. Mr. Burgess.

Mr. BURGESS. Thank you, Mr. Chairman. I want to welcome our

colleagues, thank them for being here. In the interests of time, I

am going to submit my statement for the record, reserve time for

questions.

Mr. PALLONE. Thank you. The gentleman from Utah.

OPENING STATEMENT OF HON. JIM MATHESON, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH

Mr. MATHESON. Well, thanks, Mr. Chairman, and I am so glad

you are holding this hearing today. And I really want to first just

extend my appreciation to our colleagues, Mr. Ramstad and Mr.

Kennedy. I appreciate your leadership on this issue and your commitment, and I hope we can make progress. I know you do, too. I

look forward to hearing from both panels, actually, and I hope we

can get some insight that will help this committee move forward.

I also hope that we hear recommendations on how best to achieve

a balance between the important goal of mental health parity, and

also assuring that we continue to improve access for all Americans

to affordable and comprehensive health care.

As you know, Mr. Chairman, I am an original cosponsor of this

bill, and have been a cosponsor in previous Congresses as well. I

look forward to seeing if this committee can pass legislation in this

area. I believe the provision of mental health care is an important

responsibility of health care plans. And mental health care should

not be treated in a significantly different manner than other illness, and those who suffer from mental illness should be able to

obtain necessary services and medications.

It was in 1999 the Surgeon General reported mental health illnesses are largely biologically based disorders, similar to other

medical conditions. And the Surgeon General has reported that
13

mental health treatments are highly effective. It is simply common

sense to cover these treatments so that those who suffer from these

illnesses can return to being fully productive members of our society.

It is my hope this committee will work on this tough legislation.

I think it is a crucial step forward in the fight to assure every

American’s access to high quality health care. And I appreciate the

time, Mr. Chairman, and I will yield back.

Mr. PALLONE. Thank you. The gentlewoman from Tennessee.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

Mrs. BLACKBURN. Thank you, Mr. Chairman. Thanks for holding

the hearing, and welcome to all of our witnesses that are here with

us today. And I do want to thank our colleagues for their willingness to work on the legislation and to come before us today.

When I was in the State senate and dealing with issues that

came before us in judiciary committee, I started to look at some of

the root causes for teen violence, for gangs, for abusiveness, for the

drug court problems that we had. And repeatedly as I delved into

that root cause it came back to some form of mental illness and

mental health. And as I studied a little bit more on the issue and

I moved on to Congress I certainly became aware of the cost to our

health care system. When you look at it in aggregate of what it

costs the American health care system with emergency room visits,

and days lost from work, and additional costs to the criminal justice system, we are talking hundreds of billions of dollars.

This is not an isolated problem. It is not a segmented problem.

Many times it is the basis for other forms of health and wellness.

And currently 46 States have some type of mental health coverage

that is enacted into law. And they vary considerably, including

equal coverage or a minimum mandated mental health benefit, depending upon the State. And 26 States have laws that require

some type of mental health parity or something that is broader

than the Mental Health Parity Act passed in 1996. And some laws

apply primarily to serious mental illness and may not assure coverage for current circumstance. Many private market health plans

also include some type of mental health benefit on a voluntary commercial basis, not necessarily required by State or Federal laws.

Now while this seems like a patchwork, indeed what it does show

is an awareness over the past couple of decades that there is a connection between the physical and the mental health. As we move

forward on this discussion, I hope that we are going to keep an eye

toward what happens in the free market and look for a decision of

how to cover mental health benefits as we can leave options to the

insurer and the insured. So I am looking forward to discussing how

a Federal mandate requiring that mental health coverage be given

parity does not usurp personal freedom and unnecessarily trump

State laws that are currently in existence.

Thank you again to our witnesses and to our Chairman, and I

yield back.

Mr. PALLONE. Thank you. Mr. Allen of Maine.
14

OPENING STATEMENT OF HON. TOM ALLEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF MAINE

Mr. ALLEN. Mr. Chairman, thank you for calling this important

hearing on mental health parity. And to our colleagues, Patrick

Kennedy and Jim Ramstad, thank you for your courage and your

determination to drive this issue. You are doing it extraordinarily

well.

Through this piece of legislation, we have an opportunity to improve the lives of millions of Americans suffering from mental illness and addictions, and I believe we must work together to

strengthen current law to improve access to mental health treatment and services.

The effects and implications of mental illness are broad. Poor

mental health manifests itself as more than an emotional condition. It can also cause or exacerbate physical conditions, such as

substance abuse, obesity, and heart disease. If our goal is to reduce

health care spending and improve health care outcomes, covering

treatment for mental illness differently than physical illness is illogical and ineffective.

Mental illness and addictions left untreated increase indirect societal costs. Lack of access to mental health treatment due to lack

of insurance coverage costs our economy more than $100 billion a

year through absenteeism, turnover and retraining expenses, lower

productivity, and increased medical costs.

Treatment of mental illness has come a long way. Mental health

providers deliver better care for patients through use of evidencebased practices and, as we have heard and will hear today, improved coverage for mental health does not greatly increase total

health care spending.

Many States, including my home State of Maine, have acted

independently to provide individuals with more comprehensive

mental health benefits. The Paul Wellstone Mental Health and Addiction Equity Act appropriately allows States to continue to provide exemplary care to their citizens. States that go above and beyond Federal requirements should not be held back.

I look forward to working with my colleagues to create a strong

mental health parity bill that truly ensures equal coverage for

physical and mental illness. I thank our witnesses and, Mr. Chairman, yield back the balance of our time.

Mr. PALLONE. Thank you. Mr. Murphy,

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

Mr. MURPHY. Thank you, Mr. Chairman, for holding this important meeting. And I appreciate Mr. Kennedy and Mr. Ramstad for

being here, too, for through this issue we have developed real

friendships and respect for the work you have done. I speak here

also as the co-chair of the Mental Health Caucus and as the only

child and family psychologist serving in Congress, and as a person

who has held in my arms those patients who have tried to commit

suicide while waiting for an ambulance or have gone to their funerals. But I have also gone to their graduations and received notes

from them when they have had their children as their life has
15

turned around. And it is important to know that these are very

real instances, despite what those who may oppose this bill continue to send out false information that it is not treatable, it is a

matter of fantasy and pretend, or that its costs outweigh the benefits.

I tell you from a person who has studied this throughout my life,

and as a practicing psychologist for over 25 years, and has written

books and published articles on the subject, mental illness is real.

It is debilitating. It costs money. And it can cause health care costs

to double when it is untreated.

Mental illness can be treated successfully, oftentimes better than

many other medical problems. And to do so is cost-effective. When

a factory looks at buying a machine for its assembly line, it doesn’t

just look at the direct costs of what that machine is, but it also

looks at what it would cost to buy a cheaper machine when it is

less effective, less efficient, less safe. We also need to put this same

sort of reasoning when it comes to buying health care plans. We

can all buy something cheaper up front, but it will cost more in the

long run for employee training, absenteeism, presenteeism, workers

comp costs, injuries, and deaths.

We also need to know that mental illness is not something that

one treats just by encouraging one to pull themselves up by their

bootstraps on one extreme, nor is it something where a person is

doomed to victimhood all their life with some sad lifelong sentence.

Indeed, it is something that we can treat, but we cannot treat it

if we remain mired in the Salem witch trials mentality of centuries

gone by where we think if we ignore something or torture something that somehow it will get better.

This is an opportunity to change the direction of health care to

save money and to save lives. It is both cost-effective and compassionate. I can think of no better marriage of ideas from all levels

than looking at an issue of mental health parity. Many Fortune

500 companies have examined it, have concluded that it saves

money for them, and we need to deal with this in a rational way,

finally, to help those who otherwise we place behind the shadows

of victimhood. And it is time that we stop ignoring them. To all of

those people we need to reach out our hearts, we need to understand this carefully, and we need to pass this bill.

Thank you, Mr. Chairman.

Mr. PALLONE. Thank you. I believe that concludes the members’

opening statements.

Any other statements for the record will be accepted at this time.

[The prepared statements of Mr. Dingell and Ms. Eshoo follow:]

PREPARED STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF MICHIGAN

I welcome all of our witnesses here today to help shed light on the issue of Mental

Health Parity and specifically H.R. 2414 introduced by Representatives Patrick Kennedy and Jim Ramstad. The devotion and passion that they have shown on this

issue is truly impressive.

More than 54 million Americans, about 20 percent of Americans, have a mental

disorder in any given year. And 22 million Americans struggled with drug and alcohol dependence in 2005. Fewer than 8 million, however, sought treatment for their

mental disorders and less than 10 percent of Americans sought treatment for their

substance abuse problems.
16

Part of the reason for this is the lack of health insurance or an absence of coverage for mental health or substance abuse disorders. People cannot afford to pay

the costs associated with seeking medical care without insurance so they forgo necessary treatment. Not only does this lack of treatment have detrimental effect on

the individual but it also has ripple effects on their families, our community and

economy.

Inadequately-treated mental illness and substance abuse not only harm a person’s

mental and emotional health, but it can also lead to other serious chronic and acute

medical conditions. For example, studies indicate depression greatly increases the

risk of developing heart disease and makes a person four times more likely to have

a heart attack. And untreated alcoholism can lead to chronic diabetes. At the economic level, employees who are depressed are twice as likely to miss work for health

reasons as employees who are not depressed, and be less productive when on the

job. In addition, there is a 23 percent unemployment rate among American adults

with depression, compared to 6 percent of the general population.

Despite the effects of mental illness and substance abuse, these disorders can be

addressed with treatment. Eighty percent of those who seek treatment for clinical

depression are successful. Behavioral healthcare treatments and psycho-pharmacological treatments for panic and bipolar disorders range in the 80 percent success

rate, while treatments for schizophrenia, depression, and obsessive-compulsive disorders range in the 60 percent success rate.

When one considers all of this information, we understand how important it is

that people have access to the same health care coverage to treat their mental

health problems as they do to treat their physical health problems.

I applaud this legislation for taking the simple step of requiring health plans to

impose no more restrictive treatment limitations and financial requirements in its

mental health and substance abuse benefits than are applied in its medical and surgical benefits. In addition, this legislation ensures the right of States to further protect their citizens. It’s a question of fairness.

PREPARED STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA

Mr. Chairman, thank you for holding this important hearing on H.R. 1424, the

Paul Wellstone Mental Health and Addiction Equity Act. The fact that this bill has

268 bipartisan cosponsors in the House is a testament to the wide support and need

for mental health parity legislation.

Representatives Patrick Kennedy and Jim Ramstad are our Nation’s champions

of this legislation and I thank them for their extraordinary leadership. I was proud

to host them in my congressional district this year for a field hearing on the need

for mental health and addiction parity. This issue is critically important to my constituents and I’m proud to be an original cosponsor of H.R. 1424.

Mental health and addiction disorders touch nearly every family in America. They

account for over one-fifth of all lost days of work or school productivity, and they

affect children, teenagers, adults and seniors. Approximately 54 million Americans

suffer from mental illnesses, and 26 million from addictions. A high percentage of

Americans are battling co-occurring mental illnesses and addictions.

Mental illnesses and addictions have historically not been well understood. Because their visible symptoms are changes in personality and behavior, mental

health disorders have often been perceived as personal or moral failings. New technologies developed in the last few decades such as MRI’s and PET scans have allowed scientists to peer inside the brain and clearly establish the physiological and

biological basis of these diseases. The mapping of the human genome has also illustrated that strong genetic markers for mental disorders and addictions exist. In

spite of these facts, public health policy has not kept up with science.

Most Americans face barriers to mental health care and addiction treatment not

encountered in accessing other forms of health care. According to a 2000 report published by the Government Accountability Office, most employer-sponsored health

plans include more expensive financial requirements (such as copayments and

deductibles), treatment limitations (such as limits on the number of covered outpatient visits or days in the hospital), or excluded diagnoses related to mental

health or addiction disorders.

H.R. 1424 will improve the health of Americans by granting greater access to

mental health and addiction treatment and prohibit health insurers from placing

discriminatory restrictions on treatment. Specifically, the bill prohibits treatment

limits or the imposition of financial requirements on mental health and substancerelated disorder benefits in group health plans which are not similarly imposed on
17

substantially all medical and surgical benefits in any category of items or services

under such plans.

The legislation also requires the Comptroller General to study the effect of the

bill on various aspects of the health care system, including the cost of and access

to health insurance coverage, the quality of health care, Medicare, Medicaid, and

State and local mental health and substance abuse treatment spending, as well as

spending on public services.

I look forward to the testimony of our witnesses.

Mr. PALLONE. So we will now turn to our panel, with our two

Congressmen and sponsors of this legislation, and we will begin

with Mr. Kennedy.

STATEMENT OF HON. PATRICK J. KENNEDY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF RHODE ISLAND

Mr. KENNEDY. Thank you, Mr. Chairman. First, thank you, Mr.

Chairman, and Ranking Member Deal, and all the committee members for your very, very generous comments regarding myself and

Mr. Ramstad. They were very generous, and believe me, are reciprocated many times over for many of you who we worked with on

the hearings that we did around the country. We couldn’t have

done those hearings without your support and the work that you

did in organizing them for us as we traveled the country. And as

evidenced by your opening statements, you basically stole our thunder, because you basically told the story of why we need this bill

better than we could really say it ourselves.

Each of you laid out in your own statements very effectively why

we need this legislation, and I think it is very poignant that you

all addressed this in very different ways, from economic arguments,

to how it affects the criminal justice system, to how it affects our

health care system, how it affects a whole panoply of areas in our

society.

I thought Mrs. Blackburn’s comment that this is not an issue

that can be isolated and segmented, but it affects all of society was

right on target. Ranking Member Deal’s point, with his son running the drug courts, was right on target.

The fact of the matter is this is a public health issue that we

have criminalized. And our court system has become the—we have

basically—as Sheriff Baca said in the words of Ms. Solis, I run the

largest mental health clinic in the country. I run the Los Angeles

County jails. That was in the words of Sheriff Baca.

In our health care system, as was mentioned by Mr. Murphy, in

terms of the costs, we had the head of our emergency rooms often

talk about up to 80 percent of the costs on any given weekend in

our Trauma 1 centers, the costs of those patients, where those patients were there because of drugs and alcohol. But they were

never transparently there for drugs and alcohol, they were there

because of auto accidents that were as a result of drugs and alcohol. They were there as a result of gun shootings and fights, all of

which were the result of drugs and alcohol. They were there as a

result of other accidents that were a result of drugs and alcohol.

And all of those accidents, and so forth, were written up as contusions, lacerations, concussions and intubations, all of which get reimbursed by insurance. And of course they are all symptoms of a

deeper problem which doesn’t get covered by insurance. And that
18

brings us back to why we need prevention. And that is why we

need this bill passed. Because if we had the real issue covered, we

could avoid those other costs that are so acute and end up bringing

people to the emergency room far too often, adding so much cost

to our health care system.

And then of course I think Mr. Murphy said it so well in terms

of the costs to our business community. He made the analogy with

the machine in a business. Making that same analogy, someone

may say, well, it will cost more to implement parity. Of course we

have here today someone who will testify to the fact that it won’t.

But the fact is even if it does, as Mrs. Blackburn said, we haven’t

taken it into account in terms of the overall savings in the aggregate, how it will save us money in the aggregate. And he said, well,

if you put in a machine in a business that turns out more widgets,

but it costs more to put it in, but in the net of the business you

make more money, do you ask how much it cost to put the machine

in if at the end of the day you make more money? No. Because you

are looking at the bottom line. And so if it costs more to put these

benefits in but at the end of the day you get a better return on

your investment because you get better productivity from your

workers, isn’t that worth the investment? And that is what we

heard in Pittsburgh, from Alberto Colombi from PPG in Pittsburgh.

And then we heard, from those out in San Francisco, we heard

from Kevin Hines, who has survived a jump from the Golden Gate

Bridge. Every year we have 34,000 Americans, twice the number

of Americans that are murdered, twice the number of Americans

that are murdered attempt—or actually successfully take their

lives. To think that we see the news every night and see the number of people that are murdered, to think that twice that number

actually successfully take their lives every year. And this was one

gentleman who actually tried but failed. He is getting married this

fall, Kevin Hines is. And he is happy now because he is getting

treatment. And he is a sign of success.

And you know what, 90 percent of the people who attempt suicide are suffering from a mental disorder that is treatable. That is

treatable. We could avoid those suicides in 90 percent of the cases

where the mental illness is treatable. And that is an avoidable cost

that could be addressed if we had mental health parity.

And finally, this is an issue fundamentally of civil rights. Nobody

chooses to be born with a particular genetic makeup or a brain

anatomy any more than they choose to be born with a particular

skin color or gender. And so nobody deserves to be denied opportunities based upon such immutable characteristics.

And so when everyone here starts to talk about the cost of extending this coverage, let me just tell you about the story of Amy

Smith. She is a young woman who said that for 40 years she was

wandering the streets, muttering to herself, in and out of jails, because she suffered from schizophrenia and addiction. She said finally one day she got access to treatment. Now she holds down a

job and she pays taxes. But she says I lost the opportunity to live

my life, to live out my dreams as an American because I didn’t get

access to treatment. And that is a cost of our current system that

you can’t measure when you consider the costs of not having parity.
19

You can’t measure that in financial terms. But that is a cost that

you have to consider when you are taking it into account. You also

have to consider the cost in the loss of lives. And when you think

about cost-effectiveness you have to think about telling people like

Amy Smith and millions like her when you think about keeping

health care costs down, are they going to have to pay with their

lives to keep the health care costs down? Because that is what you

are essentially going to have to say if you say we don’t want mental

health parity because it costs too much. If you do that, you might

as well say to cancer patients why not roll back coverage for cancer

patients because that will also bring down costs. And I don’t think

any of you up there would want to roll back coverage for cancer.

Because essentially you would have to be doing the same thing for

cancer as you would do for mental health if you were to decide that

you don’t want to cover mental health parity. Because effectively

you would be asking to be doing the same thing.

Jim and I have both been the beneficiary of mental health treatment, and we are both here because of it. And we are fortunate to

be covered under the Federal Employees Health Benefit Plan. And

if it is good enough for Members of Congress, it ought to be good

enough for the rest of the country. And that is what this legislation

says. And I hope that you have a chance to pass it out of this committee in the near future.

Thank you.

[The prepared statement of Mr. Kennedy follows:]

TESTIMONY OF HON. PATRICK J. KENNEDY, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF RHODE ISLAND

Chairman Pallone, Ranking Member Deal, and my distinguished colleagues,

thank you for inviting me to testify today, and, especially, for your commitment to

ending insurance discrimination.

And of course, I must single out my great friend and the strongest champion for

Americans with mental illnesses and addictions, Jim Ramstad. For years he has led

this fight, leaning into the stiff wind of his own leadership without regard for the

political consequences, speaking up for what he knows is right. We all owe him a

debt of gratitude, nobody more than I. Jim, it has been an honor to stand with you

in these efforts, and a greater privilege to be your friend.

This issue is first and foremost one of fundamental fairness. Marley Prunty-Lara,

who you will hear from, paid her health insurance premiums just like everyone else.

But when she got sick and needed her insurance coverage, she didn’t get it. That

is just not fair. And it nearly cost Marley her life.

There is no way to justify denying Marley, and millions of others, the full benefit

of the health insurance they pay for.

In the attached exhibit, you can see the visual evidence that these diseases are

physiological brain disorders. Some brain diseases, like Parkinson’s, affect the motor

cortex, the basal ganglia, the sensory cortex, and the thalamus. Other brain diseases, like depression, affect the limbic cortex, hypothalamus, frontal cortex, and

hippocampus.

There is no way to justify providing full coverage to treat certain structures of

the brain, but to erect barriers to the treatment of other structures.

This discrimination is not only unjustifiable, it is enormously costly. Representative Ramstad and I have traveled across this country holding informal field hearings

on this subject—14 in total.

We’ve heard from chiefs of police, like Sheriff Baca in Los Angeles who says he

runs the largest mental health provider in the United States: the L.A. County Jail.

According to the Justice Department, more than half of inmates in jails and prisons

in this country have symptoms of a mental health problem. Two-thirds of arrestees

test positive for one of five illegal drugs at the time of arrest, according to the National Institutes of Health.

That’s a cost of our insurance discrimination.
20

We’ve heard from hospital presidents and emergency room doctors, like Dr. Victor

Pincus. He said that 80 percent of the trauma admissions at Rhode Island Hospital,

a level-one trauma center, were alcohol and drug related. Eighty percent.

The physical health care costs go beyond the emergency room. Research shows,

for example, that a person with depression is four times more likely to have a heart

attack than a person with no history of depression. Health care use and health care

costs are up to twice as high among diabetes and heart disease patients with comorbid depression, compared to those without depression, even when accounting for

other factors such as age, gender, and other illnesses. Not surprisingly then, one

study found that limiting employer-sponsored specialty behavioral health services

increased the direct medical costs of beneficiaries who used behavioral healthcare

services by as much as 37 percent.

These are costs of our insurance discrimination.

In our field hearings, we’ve heard from enlightened business leaders and insurance executives who understand that skimping on mental health and addiction

treatment only winds up driving up other costs. That’s why Bob Hulsey from the

Williams Companies in Tulsa, Rep. Sullivan’s district, said of parity, ‘‘I absolutely

believe that it helps the business.’’

Rick Calhoun, an executive in the Denver office of CB Richard Ellis, a Fortune

500 company, made a similar point. Mr. Calhoun said that the cost of treating mental illness is 50 percent of the cost of not treating it. As he said, ‘‘This is a nobrainer. How could we not cover it?’’

Untreated mental health and addiction cost employers and society hundreds of

billions of dollars in lost productivity. The World Health Organization has found

that these diseases are far and away the most disabling diseases, accounting for

more than a fifth of all lost days of productive life. Depressed workers miss 5.6

hours per week of productivity due to absenteeism and presenteeism, compared to

1.5 hours for non-depressed workers. Alcohol-related illness and premature death

cost over $129.5 billion in lost productivity per year.

These are the costs of our insurance discrimination.

All of these costs are preventable, and wasteful. But none are as tragic as the individual costs. We heard testimony from anguished parents like Kitty Westin and

Tom O’Clair, who had to bury their children because their mental illnesses and addictions went untreated.

We heard testimony from people like Amy Smith, who said when she runs into

people she knew 25 years ago, they’re stunned she’s still alive. She was in and out

of jail and emergency rooms, unable to connect with other people, muttering to herself on the street, and unemployed. For 45 years, she says, she was a drain on society. Then she finally got the treatment she needed and now she’s a taxpayer, holding down a good job.

Amy Smith lost decades of her life because she didn’t get treatment. If you want

to know the costs of our insurance discrimination, Amy Smith can describe them:

‘‘I would have been able to pursue my dreams for my life, which were things like

driving a car, or holding down a real job, or getting married, or volunteering in the

community, any of those things. I think my life would have been a lot different if

I had had those services a lot earlier.’’

So many Americans have lost their dreams, lost years, and even lost their lives—

unnecessarily. In Palo Alto we met Kevin Hines. He is a gregarious, outgoing person

and is engaged to be married this summer. In 2001 he jumped off the Golden Gate

Bridge, one of very few to survive that fall. Thirty-thousand people succeed where

Kevin fortunately failed and take their own lives each year. How many of them

would, like Kevin, be starting families, contributing to their communities, holding

jobs, and realizing their potential if only they had access to treatment?

Mr. Chairman, I’m happy to provide the transcripts from the field hearings I have

referenced to be included in the record of this hearing, as well as our report, ‘‘Ending Insurance Discrimination: Fairness and Equality for Americans with Mental

Health and Addictive Disorders.’’

We will hear arguments that, even if worthwhile, equalizing benefits is just too

costly. The truth, however, is that the cost of doing the right thing and equalizing

benefits between mental health and addiction care on the one hand and other physical illnesses on the other hand is negligible. This is not speculation.

In 2001, we brought equity to mental health and addiction care in the Federal

Employees Health Benefits Program (FEHBP), which covers 9 million lives, including ours as Members of Congress. A detailed, peer-reviewed analysis found that implementing parity did not raise mental health and addiction treatment costs in the

FEHBP. Since our bill specifically references the FEHBP to define the scope of our

bill, this analysis provides strong evidence that our legislation will similarly have
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negligible impact on costs. This finding is consistent with virtually every study of

state parity laws as well.

But frankly, the very fact that we need to debate how much it costs to end insurance discrimination is offensive. Nobody is asked to justify the cost-effectiveness of

care for diabetes or heart disease or cancer. Tell Marley Prunty-Lara, Kitty Westin,

Tom O’Clair, Amy Smith, or Kevin Hines, or the millions of others who live with

these diseases that to keep health care costs down for everyone else, they will not

have to pay with their lives. Why them?

People might say that there is a component of personal responsibility here, especially with addiction. That’s true. I’m working hard every day at my recovery, and

it’s reasonable to ask of me. But it’s also true that we don’t deny insurance coverage

to people genetically predisposed to high cholesterol who eat fatty foods. We don’t

deny insurance coverage to diabetics who fail to control their blood sugar.

At the end of the day, this is about human dignity and whether we deliver on

the promise of equal opportunity that is at the heart of what it means to be American. Nobody chooses to be born with particular genetics and anatomy, any more

than they choose to be born with a particular skin color or gender. And nobody

should be denied opportunities on the basis of such immutable characteristics. Anybody who pays their health insurance premiums is entitled to expect their plan to

be there when they get sick, whether the disease is in their heart, their kidneys,

or their brain.

Unlike any other country in the world, this one was founded on principles—the

ideas of equality and freedom and opportunity. The history of America is the history

of a country striving to live up to those self-evident truths. In pursuit of those values we’ve fought a civil war, chipped away at glass ceilings, expanded the vote, renounced immigration exclusion laws, and recognized that disabilities need not be

barriers. Led by one of our own colleagues, a generation of peaceful warriors forced

America to look in a mirror and ask itself whether its actions matched its promise,

and they changed history.

It is time, once again, to ask that question: are our actions matching our promises? And once asked, the answer is clear. Jim and I know, personally, the power

of treatment and recovery. We are able to serve in Congress because we have been

given the opportunity to manage our chronic diseases. Every American deserves the

same chance to succeed or fail on the basis of talent and industriousness. That’s the

American Dream, and it shouldn’t be rationed by diagnosis.

Thank you.

Mr. PALLONE. Thank you so much. Mr. Ramstad.

STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MINNESOTA

Mr. RAMSTAD. Thank you, Chairman Pallone, Ranking Member

Deal, distinguished committee members and friends all. Thank you

for holding this important hearing, and thank you for your kind

and supportive comments.

On July 31, 1981, I woke up from my last alcoholic blackout

under arrest for a variety of offenses, woke up in a jail cell in Sioux

Falls, SD, and I am alive and sober today only because of the access that I had to treatment. Too many people don’t have that access to treatment that Patrick Kennedy and I had. It is a national

disgrace that 270,000 Americans had the doors slammed shut to

the treatment centers last year alone. It is a national tragedy that

last year alone 150,000 of our fellow Americans died as a direct result, as a direct result of chemical addiction. Nobody knows as an

indirect result how many heart failures, how many liver failures,

how many other causes, how many accidents that weren’t documented.

It is also a national tragedy that 34,000 Americans, as Patrick

mentioned, committed suicide last year as a direct result of depression. And it is a national crisis, really a crisis that untreated addic-
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tion and mental illness, according to SAMHSA, cost our economy

over $550 billion last year alone.

When you think of the costs, as I know you all do, that can’t be

measured in dollars and cents, the human suffering, the broken

families, the shattered dreams, the ruined careers, destroyed lives

and so on. It is time to end the discrimination against people suffering the ravages of mental illness and chemical addiction. It is

time to end the higher copayments, higher deductibles, out-of-pocket costs, and limited treatment stays, discriminatory barriers to

treatment that don’t exist for other diseases.

According to the GAO, 90 percent of health plans currently impose financial limitations and treatment restrictions on mental

health and addiction care that are not imposed on other illnesses.

Ninety percent of plans impose these discriminatory barriers that

they don’t impose on other illnesses. It is really time to treat mental illness and chemical addiction under the same rules as other

medical illnesses. Because if you believe what the American Medical Association espoused back in 1956, that addiction and mental

illnesses are a disease, then you can’t justify discriminating against

those diseases.

The Paul Wellstone Mental Health and Addiction Equity Act will

give Americans suffering from addiction and mental illness greater

access to treatment by prohibiting health insurers from putting discriminatory restrictions on treatment. It will end the discrimination against people who need treatment for mental illness or chemical addiction. And we have all the empirical data in the world to

show that increasing access to treatment is not only the right thing

to do, but it is a cost-effective thing to do. And I would be happy

to share any of the 20-some studies that we have that independently corroborate the fact that parity, where it has been employed,

with respect to the Federal Employees Benefit Plan, for example,

and you are going to hear testimony, I believe, in the second panel,

actually saves dollars. This doesn’t cost dollars, as those critics

would maintain. We have got the proof, the empirical data, including all the actuarial studies, to prove that equity for mental health

and addiction treatment will save billions of dollars nationally,

while not raising anyone’s premiums not more than one-half of 1

percent.

Let me put it to you this way. For the price of a cheap cup of

coffee a month, 16 million people in health plans could receive

treatment for their mental illness or chemical addiction. That is

right from the Milliman & Roberts study, an independent actuarial

firm. Furthermore, it is well documented that every dollar spent on

treatment saves $12 in health care and criminal justice costs alone.

And that study doesn’t even take into account savings in social

services, lost productivity, absenteeism, injuries in the workplace,

and so forth. And you are going to hear from a CEO today how

much money was saved and how cost-effective parity was in his experience. And we heard that at hearing after hearing across the

country from employers, enlightened employers who have already

enacted parity and who have already brought parity into their

plans and who are saving money.

Let me conclude by repeating as strongly as I can, it is time to

end the discrimination against people who need treatment for men-
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tal illness and addiction. It is time to prohibit health insurances

from placing discriminatory restrictions on treatment. It is time to

provide greater access to treatment. It is time to get this bill to the

President who, by the way, endorsed parity in 2002 in Albuquerque, NM, in a speech there when he was with Senator Domenici.

It is time to pass the Paul Wellstone Mental Health and Addiction Equity Act. The American people really can’t afford to wait

any longer.

Thank you again, Mr. Chairman.

[The prepared statement of Mr. Ramstad follows:]

STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MINNESOTA

Chairman Pallone, Ranking Member Deal, thank you for holding this important

hearing.

On July 31, 1981, I woke up in a jail cell in Sioux Falls, SD, under arrest as the

result of my last alcoholic blackout.

I’m alive and sober today only because of the access I had to treatment, as well

as the grace of God and support of many recovering people the past 25 years. I’m

living proof that treatment works and recovery is possible.

But too many people don’t have access to treatment. It’s a national disgrace that

270,000 Americans were denied addiction treatment last year. It’s a national tragedy that last year alone, 150,000 of our fellow Americans died from chemical addiction and 30,000 Americans committed suicide from depression. And it’s a national

crisis that untreated addiction and mental illness cost our economy over $550 billion

last year.

And think of the costs that can’t be measured in dollars and cents—human suffering, broken families, shattered dreams, ruined careers and destroyed lives.

It’s time to end the discrimination against people suffering the ravages of mental

illness and chemical addiction. It’s time to end the higher copayments, deductibles,

out-of-pocket costs, and limited treatment stays—discriminatory barriers to treatment that don’t exist for other diseases. It’s time to treat mental illness and chemical addiction under the same rules as physical illness.

The Paul Wellstone Mental Health and Addiction Equity Act will give Americans

suffering from addiction greater access to treatment by prohibiting health insurers

from placing discriminatory restrictions on treatment.

It will end the discrimination against people who need treatment for mental illness or chemical addiction.

Expanding access to treatment is not only the right thing to do; it’s also the costeffective thing to do. We have all the empirical data, including actuarial studies, to

prove that equity for mental health and addiction treatment will save billions of dollars nationally while not raising premiums more than one half of one percent. In

other words, for the price of a cheap cup of coffee per month, 16 million people in

health plans could receive treatment for their mental illness or chemical addiction.

Furthermore, it’s well-documented that every dollar spent on treatment saves up

to $12 in health care and criminal justice costs alone. That does not even take into

account savings in social services, lost productivity, absenteeism and injuries in the

workplace.

Let me conclude by repeating as strongly as I can: It’s time to end the discrimination against people who need treatment for mental illness and addiction. It’s time

to prohibit health insurers from placing discriminatory restrictions on treatment.

It’s time to provide greater access to treatment. It’s time to pass the Paul Wellstone

Mental Health and Addiction Equity Act.

The American people cannot afford to wait any longer for Congress to act.

Mr. PALLONE. I want to thank you again. You explained everything so well why we need to pass this bill. It certainly is our intention to move on it as quickly as we can. And my understanding

is, we don’t have any questions because I don’t think there is anything we can ask you. You basically said it all.
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Mr. KENNEDY. If I could say the sooner that you can move on it,

I know the Senate is going to be moving on unanimous consent.

Obviously, we have an opportunity to set the bar if we move on it

before they do.

There has—many of you on both sides of the aisle have made the

point on State’s rights which I think is a really strong point. States

ought to have the opportunity to experiment and certainly should

not be preempted by the Federal Government, and we would have

a much stronger position going into it if we were to pass our bill

first, I think.

Mr. PALLONE. I know it has got to go to several committees, but

it is already out of two of them, right, is my understanding.

OK. We are going to try our best, and I agree with you on the

preemption. That was certainly brought home to me when we had

the hearing in Trenton. That was maybe 50 percent of the debate

that day, if I remember. So really, thank you again; we appreciate

it.

Mr. BURGESS. I would ask unanimous consent if Mr. Ramstad

would make that Millerman & Roberts study available to the committee.

Mr. RAMSTAD. Thank you. I would be happy to.

Mr. PALLONE. Welcome. Thank you for being here. Starting from

my left is Mr. James Purcell, who is president and chief executive

officer of Blue Cross and Blue Shield of Rhode Island.

Ms. Edwina Rogers, who is vice president of health policy for the

ERISA Industry Committee. Then we have Ms. Marley PruntyLara; I don’t know if I am pronouncing it properly. And then we

have Mr. James Klein, who is president of the American Benefits

Council. And, finally, Dr. Howard H. Goldman, who is a professor

of psychiatry at the University of Maryland School of Medicine.

As you know, we have 5-minute opening statements. We will put

your statements in the record. If you would like to give us some

additional material later, you can do that as well, and then we will

take some questions.

So we will start with Mr. Purcell.

STATEMENT OF JAMES E. PURCELL, PRESIDENT AND CHIEF

EXECUTIVE OFFICER, BLUE CROSS & BLUE SHIELD OF

RHODE ISLAND

Mr. PURCELL. Thank you very much. It is a pleasure to be here,

Chairman Pallone, Ranking Member Deal and members of the

committee.

Representing the health insurer at hearings like this, we are

usually the skunk at the lawn party. Typically, we are testifying

against mandates for a variety of reasons, most often because they

increase the cost of health insurance; and many times, they are

anecdotally driven and they, quite frankly, sometimes don’t improve the quality of care that is rendered.

Here, I believe this to be an exceptional case, and that is why

I am here testifying in favor of this legislation.

My comments here today reflect my experience and the experience of my Blue Cross plan in the State of Rhode Island. This experience involves both behavioral and physical health. The two are
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inextricably inclined. You can’t separate one from the other and

think that you are providing good health care, because you are not.

My statement, I will say, only reflects the position of Blue Cross

and Blue Shield of Rhode Island. It does not reflect the other positions of other Blue Cross plans nor does it affect the position of

Blue Cross Association.

We are an independent local nonprofit plan closely regulated by

the State of Rhode Island, and our vision is to improve the lives

of our members by improving their health. That is our bottom line.

On our members’ behalf and in recognition of the leadership of our

senior Congressman, Patrick Kennedy, and your invitation, I am

here today about a simple message.

Unlike most mandates, this doesn’t cost much, if anything. Even

if you just look at the cost of the claims expense associated with

behavioral health care that we cover, it is 3.6 percent of the total

bill, and that doesn’t even take into account the savings on the

physical side associated with early intervention for all of the reasons that we have heard from the other witnesses.

I am of the passionate view that without full integration of behavioral and physical health, we cannot fully achieve our vision of

improving our members’ lives by improving their health; and unfortunately, without a meaningful behavioral health parity bill on a

Federal level, I think we demonstrate to ourselves that it is just

not going to happen.

I submit this testimony mindful of the insurers’ special role in

all of this.

We have a very difficult balance between maximizing coverage

for our members, improving reimbursement to providers and trying

to keep health insurance premiums at a reasonable level. Some

could argue, it is not at a reasonable level anymore, but we do everything that we can to try to minimize the increases associated

with this. This is a very delicate, very difficult balance, and we are

in the middle of it. So that is our job. That is what we do.

Like most insurers, we are not generally supportive of mandates

with regard to coverage. But here I quite frankly think, given what

we have observed in the State of Rhode Island with our mental

health parity law and what we have observed in our own plan, we

can demonstrate to you that this has dramatically improved the

quality of care that our members get, and it has not significantly

increased the cost of that care.

One of the things I would strongly urge the committee is with

regard to the effective date of the bill. Six months is too little time.

If we want to do it and do it right, you have to give plans time to

do the system changes. Some plans are going to have to create networks, negotiate contracts.

It took a long time to implement the FEP program parity. So

here, please, I would ask you first of all, you might want to consider extending the effective date to 11/09. I think that would allow

plans to do a good job and, still, you would implement the parity.

Second, I would be less than candid if I didn’t address two issues

that I have some concerns about. And I think these are details that

it looks like you wish to cover. I just want to make sure it does.

And those are the issues with regard to medical management and

out-of-network coverage.
26

One of the things that we can do to ensure quality-of-care access

and do something about costs, medical management and network,

the network gives us the contractual right to do these things. And

if we have an adequate network so that we have adequate access,

there should be no reason to have complete open access to added

network coverage. I can’t guarantee to my members that they are

receiving quality of care if they can go anywhere that they want

to.

So somewhere within this we have to ensure that if there is adequate access to care within the network, if members choose to go

out of the network, they pay an additional amount for that so that

there is an incentive to say that we can guarantee their quality.

Since the initial passage of Rhode Island’s partial mental parity

in 1994, we have continued to ratchet up our coverage. We have

done many things with regard to coverage as set forth in my testimony. I will not go through that here, but in essence, through the

combination of State statute and how we have changed—voluntarily changed our coverage, we have, in essence, de facto parity in

our State.

And in 2006, we increased office visits from a maximum of 30 to

a maximum of 50. We voluntarily did that. Why on earth would we

do that? Because those very few people that need in excess of 30

office visits really, really need it. And when do they run out of the

30? Right at the——

Mr. PALLONE. I have got to tell you are over by a minute so you

are going to have to summarize.

Mr. PURCELL. I will summarize it. It doesn’t break the bank. I

think it gives better care. I think the experience in Rhode Island

demonstrates that, and I would urge its passage.

The prepared statement of Mr. Purcell follows:]
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30
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Mr. PALLONE. Ms. Rogers.

STATEMENT OF EDWINA ROGERS, VICE PRESIDENT, HEALTH

POLICY, THE ERISA INDUSTRY COMMITTEE (ERIC)

Ms. ROGERS. Good afternoon, Chairman Pallone and Ranking

Member Deal. Thank you for the opportunity to testify today.

I am going to speak from the plan sponsor perspective representing companies that pay for health coverage for tens of millions of

Americans. My testimony will focus on concerns about the Kennedy-Ramstad Mental Health Parity bill, H.R. 1424.

ERISA members are in favor of expanding coverage, but this

bill’s approach is fundamentally flawed, we believe. The bill fails

to incent better coverage options. It creates mandates, micromanaging the distribution of benefits, creating costly administrative

quagmires and failing to keep up with integrations and demands

widely accepted in the market.

Today, major employers offer benefits to the employees on a voluntary basis to attract and keep employees, improve morale and

productivity, and because they take pride in providing for the employees’ life security.

Congress developed ERISA so that major employers could create

uniform national plans that fit the needs of their employees regardless of where they live, work or receive their health care. ERISA

was created as a floor upon which States could create—was not created as a floor. ERISA was meant to be the ceiling.

As Congress considers a bill that would burden employers by

forcing them to increase coverage and dissolving their plan flexibility, look to ERISA for guidance. Rather than leaving plan sponsors

at the mercy of various State laws, Congress could make a parity

law that preempts conflicting State laws, giving employers clear

guidance on how to become compliant on a national level.

Plan sponsors are concerned about the accreditation of mental

health providers and facilities, as well as their accountability and

transparency, and must be able to designate which facilities and

treatments are bona fide and which should not be covered.

Plan sponsors are moving away from a system of trust, don’t verify in demanding metrics in transparency for all medical providers,

data that lets employers and patients know the cost of an episode

of care and make informed decisions on where to get quality treatment. A bill to promote mental health and substance abuse treatment would fail in its mission if it did not include such provisions

for the mental health community.

Proponents of the mental health mandate claim it would lower

health care costs, but the bill includes provisions anticipating cost

increases. New ERISA members stated that simply implementing

this bill, ignoring the costs associated with actually covering the

benefits, would cost millions of dollars. One member company cited

preexisting contracts with more than 150 plans, all of which would

require amendment or renegotiation.

Other major employers mentioned that a 2 percent increase

would be more than $10 million for them and that every 1 percent

of health care costs shifted to employees translates to about $70

annual costs per employee.
33

Historically, it was employers who developed consumeristic strategies, demanded transparency, urged adoption of health IT and evidence-based medicine, proposed paying for performance, initiated

patient-centered medical homes and began sponsoring disease management and drug therapy programs, and the list goes on.

The current health care systematic actively discourages employers from participation with the regulatory structure so burdensome

that it effectively requires them to operate two businesses, One to

operate their core business and one to administer benefits. As employers are moving to simplify the system and leveling the playing

field, this bill moves in the wrong direction complicating coverage

and increasing financial burdens.

The bottom line is that legislation, this legislation will likely reduce coverage and not improve quality for major employers. Plan

sponsors have to reduce coverage or further shift costs. In mandating how plan designs and how they offer their voluntary benefits,

this legislation will hurt plan sponsor flexibility and force one-sizefits-all policies.

The bill will open floodgates of State mandates and substance

abuse mandates which will be extremely costly and burdensome, if

not impossible, to comply with. The scope of benefits being managed is clearly written in favor of mental health groups.

Those pushing for legislation are not taking into account the extremely volatile financial situation of current voluntary benefit

plans. Further, the bill does not even approach the issue of mental

health providers and facilities keeping up with the necessities and

innovations of today’s health care markets—transparency of quality

and pricing data, use of health information technology and performance-based reimbursement systems.

If Congress wants to increase mental health and substance abuse

coverage, it should address the transparency, accountability, and

affordability and the education issues, not create new mandates.

Thank you, Mr. Chairman.

[The prepared statement of Ms. Rogers follows:]

TESTIMONY OF EDWINA ROGERS

Good morning, and thank you Chairman Pallone and Ranking Member Deal for

the opportunity to testify at this hearing.

I am Edwina Rogers, vice president for health policy at The ERISA Industry Committee (ERIC). ERIC is a non-profit trade association committed to the advancement

of employee health, retirement, and compensation plans of America’s largest employers. We represent exclusively the employee benefits interests of major employers. ERIC is engaged in policy affecting our members’ ability to deliver benefits,

their cost and their effectiveness, as well as the role of employee benefits in America’s economy.

Today I will speak from a plan-sponsor perspective, representing companies that

pay for health coverage for tens of millions of Americans. My testimony will focus

on issues of concern in the Kennedy-Ramstad Mental Health Parity bill, H.R. 1424.

ERIC members are broadly in favor of expanding coverage, but the approach contained within H.R. 1424 is fundamentally flawed. The bill fails to incentivize better

coverage options, instead injecting government into the world of voluntary benefits,

creating mandates, micromanaging the distribution of benefits, failing to protect

plan sponsors from burdensome and costly administrative quagmires, and failing to

keep up with innovations and demands already widely accepted in the private

health benefits marketplace.
34

VOLUNTARY BENEFITS AND ERISA PREEMPTION

Today major employers offer health, pension, and other benefits to their employees on a voluntary basis. They pay the exorbitant costs associated with these benefits in order to attract and keep employees, to improve morale and productivity, and

because major employers take pride in providing for their employees’ life security.

Major employers operate in multiple states—some in all 50—and their employees

have common needs that are often not shared with arbitrarily-drawn regions, states,

or localities. Congress developed the Employee Retirement Income Security Act of

1974 (ERISA) so that major employers could create uniform national plans that fit

the needs of their employees, regardless of where the employees lived, worked, or

received healthcare. ERISA was not created as a ‘‘floor’’ upon which states could create differing, conflicting laws; this would have made voluntarily sponsoring a plan

extremely expensive and burdensome. ERISA is meant to be the ceiling—the Department of Labor regulates the operations of employer-sponsored benefit plans in

every state, regardless of the laws various states create.

As Congress considers a bill that would burden those employers who have chosen

voluntarily to offer mental health and/or substance abuse benefits by forcing them

to increase coverage and dissolving their plan flexibility, they should look to ERISA

for guidance. Rather than leaving plan sponsors at the mercy of various state laws,

Congress could choose to pass a mental health parity law that preempts conflicting

state laws, giving employers clear guidance on how to be compliant on a national

level. We should all be moving to support a uniform national system. Instead, by

allowing states to craft their own laws, and not including preemption language, the

Kennedy-Ramstad bill would further disincentivize plan sponsors from offering any

mental health coverage at all. Further, there is no indication that legislators will

not simply continue to expand on employer healthcare mandates, for mental and

medical care, continuing to drive up costs and push employers closer to one-size-fitsall plans.

PLAN FLEXIBILITY AND ACCOUNTABILITY

Major employers have used logic, experience, and experimentation to create plans

that offer affordable coverage that works for their employees. Many plans have determined that certain conditions should be covered, while other conditions (particularly some that are listed in that mental illness handbook authored by the mental

health lobby, the Diagnostic and Statistical Manual of Mental Disorders, DSM-IV)

are not valid. Because plan sponsors were able to make these judgments, engage

in medical management, and design plans that covered the conditions they chose,

many plan sponsors currently offer extremely generous mental health and substance

abuse coverage.

The soundness of some conditions endorsed by the mental health lobby is not the

only issue plan sponsors are wary of when purchasing mental health care—plan

sponsors are also concerned about the accreditation of mental health providers and

facilities, as well as their accountability and transparency. Must employers pay preposterously high rates to treat imagined detriments like jet lag, shyness, or other

ailments treated with ‘‘folk’’ remedies or possibly unnecessary medications from

unaccredited professionals? Plan sponsors need the flexibility to define which treatments, focusing on evidence-based medicine, should be covered. They must be able

to define a network of providers within (and outside) their preferred network. Plan

sponsors must be able to designate which mental health facilities are bona fide and

which should not be covered under their plan offerings.

If mental health and substance abuse treatment are mandated to have the same

financial and treatment rules as medical coverage, they should also have the same

accountability standards. Plan sponsors are moving away from a system of ‘‘trust,

don’t verify,’’ and beginning to demand metrics and transparency from all medical

providers—data that lets employers and patients know the costs of an episode of

care, and helps them make informed decisions on where to get treatment through

reporting on quality measures. A bill to promote mental health and substance abuse

treatment would fail in its mission if it did not include accountability and transparency provisions for the mental health community, if not also including valuebased purchasing language and urging these providers, facilities, and programs to

begin using health information technology. It would be a mistake to impose a host

of new elements into the healthcare coverage equation without also requiring those

elements to comply with the innovations and advances (in both quality and cost efficiency) already made standard in the rest of the healthcare community. ERIC members overwhelmingly reject the one-way street of information from the mental health

community—while the bill demands plan design details and claims information from

ERISA plans, it does not require any transparency from the mental health and sub-
35

stance abuse community. A balanced bill must include accountability provisions that

include transparency of price and quality data.

OUT OF CONTROL COSTS

Proponents of the mental health mandate claim that it will lower healthcare costs,

but the bill includes very clear provisions anticipating cost increases. No doubt the

bill’s backers believe that they are making a concession in offering a one-year exemption if, six months into a compliant program, a plan sponsor finds that costs

are rising at more than an additional two percent in the initial year or one percent

in subsequent years due to the mandate. This demonstrates a critical lack of understanding of the financial strains US employers are currently facing. While trying to

stay globally competitive, employers have been burdened with double-digit

healthcare inflation costs, and are under severe pressure to curb these costs—or to

cut benefits. Employers have gone to great lengths to lower costs by one or two percent, and any instant infusion of greater costs could be catastrophic for workers’ coverage. Numerous ERIC members have stated that simply implementing this change

in their plans administratively, ignoring the costs associated with actually covering

this benefit, would cost millions of dollars, requiring extensive revision to pre-existing plans. One member company cited pre-existing contracts with more than 150

plans, all of which would require amendment or renegotiation. Other major employers mentioned that a two percent increase would be more than $10 million, and that

every one percent of healthcare costs shifted to employees translated to about $70

annual cost per employee.

If the Federal Government steps in, fencing off mental health benefits and mandating that employers provide them, the prices of mental health services are sure

to rise. Creating an instant, massive increase in demand will certainly dry up the

supply, making mental health providers and facilities an even rarer commodity than

they already are. It is highly probable that this legislation will lead to an unnecessary rise of utilization, which will in turn lead to a lack of mental health and substance abuse services, denying care to those who need it most. Creating an artificial

demand will disrupt the market, drive up prices, and lead to shortages.

Employers, not government, started all the major healthcare quality and efficiency improvement innovations in the past decade. Employers developed

consumerist strategies, demanded transparency, urged adoption of health IT and

evidence-based medicine, proposed paying for performance, initiated patient centered medical homes, began sponsoring disease management and drug therapy programs, and the list goes on. It took the government ten years just to decide that

plan sponsors who offer more coverage to early retirees than to those eligible for

Medicare are not engaging in age-discrimination. Now the government, at the urging of a lobby that has specific financial interests in the outcome, is purporting to

dictate to the business community how to offer health benefits and save money—

something is certainly amiss here. If in fact proponents of mental health parity can

prove that it lowers plan costs and improves employee health, they do not need to

force this ‘‘reform’’ by legislative fiat. Rather, this would be an issue of education

and advocacy, not government interference and employer mandates.

Just this week the employer community proposed a new platform for life security

that could serve to expand all manner of health coverage to many more individuals

and small businesses, without harming the current employer-sponsored system.

ERIC’s New Benefit Platform for Life Security envisions competing expert thirdparty administrators who manage employers’ voluntary contributions, as well as individuals’ contributions, and provide affordable, effective, and innovative retirement

and healthcare security benefits. These administrators will allow major employers,

small businesses, and individuals all to purchase fully portable coverage at equal

rates. This private market system, coupled with tax parity, an individual mandate,

and subsidies for low-income individuals, embodies a revolutionary step forward in

expanding access and coverage to all Americans, while improving our global competitiveness.

The current healthcare system actively discourages employers from participation

with a regulatory structure so burdensome that it effectively requires an employer

to operate two businesses, in which one operates the employer’s core business and

the other provides and administers benefits. As employers are moving to simplify

the system and build a level playing field, this bill moves in the wrong direction,

complicating providing coverage and increasing financial burdens on plan sponsors

and beneficiaries.

The government specializes in micro-mismanagement and reducing coverage; between crowd-out by entitlement programs, ill-conceived healthcare mandates, and

other botched attempts, the government has failed to address with any real success
36

the more than 40 million uninsured Americans. This is partially because government has failed to address costs before pushing for coverage—instead of deregulating and making the individual and small business healthcare market more affordable, they have continued to pile on cost-drivers. Instead of enacting tort reform, allowing small businesses to band together for purchasing clout, or allowing insurance

to be purchased over state lines, government continues to regulate how voluntary

benefits are provided, further incentivizing plan sponsors to cut back coverage. If

this bill is enacted, some ERIC members have stated they will reduce coverage, increase employee contributions, and implement treatment limits on medical care.

WHAT TREATMENT IS COVERED?

In defining the minimum scope of the new mandated benefits, this legislation

works in a very round-about way. The bill reads that if a plan offers any related

benefit, it must cover all the mental health and substance abuse benefits (with significant enrollment) covered by the Federal Employees Health Benefit (FEHB). The

FEHB implemented mental health parity in 2001—and according to a 2005 study

by HHS, has seen cost increases due to it. More than 56 percent of FEHB beneficiaries are enrolled in Blue Cross Blue Shield plans. This, in essence, means that

Blue Cross plans will always be in compliance, while other plans will be forced to

conform to the models adopted by Blue Cross. This has serious implications for plan

competition and flexibility, and may lead to increased costs (and decreased participation and coverage).

The legislation does not clearly define how much enrollment in FEHB is necessary

such that a condition or substance is mandated to be covered. It also does not designate which conditions or substances might require ‘‘emergency care’’ that would

surely incur substantially increased costs. These facets of the legislation leave the

door wide open for price-fixing, as any mental health or substance abuse group that

can convince a particular plan to adopt coverage for a particular condition or substance can thus force all other plans to adopt it—and can charge vastly different

rates to Blue Cross than to other plans.

It is doubtful that this was the intention of the legislation—in the rush to legislate, the bill’s backers may have been attempting to avoid the pitfalls of using the

overtly lobbyist-driven DSM IV. However, the option selected is only slightly better—perhaps an omen to alert Congress that plan design is best left to plan sponsors, not outside actors who have financial incentives to overcharge ERISA plans.

The bottom line is that this legislation will very likely reduce coverage, not improve quality or increase coverage. Plan sponsors, already stretched thin, will have

no avenue to deal with their increased costs other than to reduce coverage or to further shift costs to employees. In mandating how plans design and offer their voluntary benefits, this legislation will reduce plan sponsors’ flexibility and force onesize-fits all policies on diverse and varying pools of workers. The bill will open floodgates of state mental health and substance abuse mandates, which will be extremely

costly and burdensome, if not impossible, to comply with. The scope of benefits being

mandated is hazy, but clearly written in favor of mental health interest groups, and

leaves room for serious vice. Those pushing this legislation are not taking into account the extremely volatile financial situations of current voluntary benefit plans.

Further, the bill does not even approach the issue of mental health and substance

abuse treatment providers and facilities keeping up with the necessities and innovations of today’s healthcare market—transparency of quality and pricing data, use of

information technology, and performance-based reimbursement systems. If Congress

wants to increase mental health and substance abuse coverage, it should address

transparency, accountability, and affordability and education issues, rather than

creating a new mandate.

Mr. PALLONE. Thank you. Ms. Prunty-Lara.

STATEMENT OF MARLEY PRUNTY-LARA, BOARD MEMBER,

MENTAL HEALTH AMERICA

Ms. PRUNTY-LARA. Thank you very much for this invitation.

I am here before you for one simple reason: because I am dedicated to the proposition that mental health matters. It matters because many lose their dignity and sometimes their lives in the

struggle for mental wellness. It matters to me because mental ill-
37

nesses compromised my mental health so profoundly that it put my

life and dreams in jeopardy.

My name is Marley Prunty-Lara, and today I am here to testify

in support of a bill to establish simple fairness in insurance coverage for people with mental health conditions.

I serve on the National Board of Directors for Mental Health

America, formerly the National Mental Health Association. I work

to improve mental health care policies, not simply because I have

a mental illness, but because I know treatment works.

I have passionately lived within the prison of mental illness and

have experienced the incalculable emancipation that accompanies

wellness. I am here today because effective treatment saved my

life. I am also here because the opportunity of health should not

be something granted only to the lucky and privileged few.

When I was diagnosed with bipolar disorder at the age of 15, I

never imagined the pain I would endure as a result of my illness.

Before adequate treatment, I intimately knew the harrowing, sinister suicidal depression no one likes to talk about. I knew the

mania that could obscure the world and deprive me of sleep for

days. It would fill my mind with racing thoughts and grandiose

ideas, most of them unfeasible and left abandoned, incomplete.

Living with this disease has meant not only enduring the disabling lows and exhilarating highs, but also fighting for insurance

coverage, educational accommodations and appropriate health care.

I have experienced firsthand the narrow mindedness insurance

companies and some in the business industry show toward mental

illness.

During my teen years, as my mom searched for a psychiatrist

available to treat me in South Dakota, a rural State with limited

mental health resources, we were told we would have to wait 4 to

5 months before I could get an initial appointment. I did not have

that long to live.

We found help 350 miles away in another State. And I was hospitalized for 2 months. However, the treatment facility was not covered by my mother’s insurance, forcing my parents to take a second

mortgage out on their home in order for me to receive the care that

I urgently needed.

Had I suffered a spinal cord injury requiring long-term hospitalization, my insurance company would have paid for my care,

but because my hospitalization involved a disease of the mind, my

insurance company deemed it unworthy of equitable coverage.

I am one of the lucky ones. My family was able to take out a

mortgage to afford my inpatient care. However, many in this country currently face a question with no easy answer. What happens

when the insurance benefits run out and you are not better yet?

My family did everything we were supposed to. My mother, a

CPA, an ardent advocate on behalf of her daughter, had a good

paying job and health insurance. She was adept at handling our insurance claims, and we exhausted our efforts to receive treatment

within the coverage system.

I did not chose my disease.

I ask those who oppose this legislation what are people to do

when they don’t have the options my family had, when parents

must choose between watching their children deteriorate or giving
38

up custody to obtain insurance benefits? At what point do we decide collectively to end the suffering of millions?

For children struggling to cope with a mental illnesses, wellness

should not depend on luck, on whether a family’s particular health

plan provides ample and equitable mental health coverage. In my

case, it has proven far cheaper to treat my mental illnesses with

medication and proper psychiatric care than to have me in and out

of hospitals and emergency rooms. I understand the power of successful treatment because I am living it.

Congress enacted a parity law in 1996, but it requires only partial parity. Current law still permits discrimination based on mental health conditions, and it is routine in practice. Both current law

and practice are untenable. Americans agree that partial fairness

is unacceptable. In a survey conducted by International Communications Research, an independent research company, and paid for

by Mental Health America——

Mr. PALLONE. I hate to interrupt you because I am—you are really telling an important story—because you are over a minute.

Ms. PRUNTY-LARA. Let me just conclude.

I implore this committee to act soon to adopt H.R. 1424. I urge

you further to reject amendments that would weaken it. Kay

Jamison once said this gap between what we know and what we

do is lethal.

The time is right and the time is now to enact comprehensive

Federal parity. I leave with you that charge and hope today. Please

remember my name, my face, and my story as you work and decide

to pass this vital legislation.

America is waiting. Thank you.

Mr. PALLONE. Thank you, and I wanted you all to know that we

do put your entire statement in the record even if I ask you to summarize at the end.

Thank you.

[The prepared statement of Ms. Prunty-Lara follows:]

TESTIMONY OF MARLEY PRUNTY-LARA

Good morning. I am here before you for one simple reason—because I am dedicated to the proposition that mental health matters. It matters because many lose

their dignity, and sometimes their lives, in the struggle for mental wellness; it matters to me because illness compromised my mental health so profoundly that it put

my life and dreams in jeopardy.

My name is Marley Prunty-Lara and today I am here to testify in support of a

bill to establish simple fairness in insurance coverage for people with mental health

conditions. I serve on the national Board of Directors for Mental Health America,

formerly the National Mental Health Association. I work to improve mental health

care policies, not simply because I have a mental illness, but because I know that

treatment works. I have passionately lived within the prison of mental illness and

have experienced the incalculable emancipation that accompanies wellness. I am

here today because effective treatment saved my life. I am here today because the

opportunity of health should not be something granted only to the lucky and privileged few.

When I was diagnosed with bipolar disorder at the age of 15, I never imagined

the pain I would endure as a result of my illness. Before adequate treatment, I intimately knew the harrowing, sinister, suicidal depression no one talks about. I knew

the mania that would obscure the world and deprive me of sleep for days. It would

fill my mind with racing thoughts and grandiose ideas; most of them unfeasible and

left abandoned incomplete. Living with this disease has meant not only enduring

the disabling lows and exhilarating highs but also fighting for insurance coverage,

educational accommodations, and appropriate health care.
39

1 Interviews were conducted via telephone and the Internet from October 10 to November 1,

2006 among a nationally representative sample of 3,040 respondents age 18 and older. <http:/

Continued

I have experienced first hand the narrow-mindedness insurance companies and

some in the business community show toward mental illness. During my teen years,

as my mom searched for a psychiatrist available to treat me in South Dakota, a

rural state with limited mental health resources, we were told we would have to

wait four to five months before I could get an initial appointment. I did not have

that long to live. We found help, 350 miles away, in another state, and I was hospitalized for two months. However, the treatment facility was not covered by my

mother’s insurance; forcing my parents to take a second mortgage out on their home

in order for me to receive the care that I urgently needed. Had I suffered a spinal

cord injury requiring long-term hospitalization, my insurance company would have

paid for my care; but because my hospitalization involved a disease of the mind, my

insurance company deemed it unworthy of equitable coverage.

I am one of the lucky ones; my family was able to take out a mortgage to afford

my in-patient care. However, many in this country currently face a question with

no easy answer: What happens when the insurance benefits run out and you’re not

better yet? My family did everything we were supposed to; my mother, a C.P.A., had

a good-paying job and health insurance. She was adept at handling our insurance

claims and we exhausted our efforts to receive treatment within the coverage system. I did not choose my disease. I ask those who oppose this legislation: what are

people to do when they don’t have the options my family had; when parents must

choose between watching their children deteriorate and giving up custody to obtain

insurance benefits? At what point to we decide collectively to end the suffering of

millions?

For children struggling to cope with a mental illness, wellness should not depend

on luck, on whether a family’s particular health plan provides ample and equitable

mental health coverage. In my case, it has proven far cheaper to treat my mental

illness with medication and proper psychiatric care, than to have me in and out of

hospitals and emergency rooms. I understand the power of successful treatment because I am living it.

We live in a time where discrimination ought not be tolerated, in any form,

against any people. Having a mental illness should neither determine one’s fate nor

limit one’s potential. As our country faces the challenges of war, of returning veterans changed forever by the trauma of combat, Congress must reaffirm its commitment to the principles of justice and the pursuit of happiness by enacting comprehensive mental health parity legislation. It is not enough to simply continue to

say, ‘‘We must change,’’ veterans, active-duty military personnel, and their families;

employers; teachers; doctors; and those that are struggling—are all counting on

Congress to be the difference, to make prevention, treatment, and recovery believable realities.

The costs of mental health and substance use conditions are unavoidable. Our

only decision is how we pay for them. Society can either invest in treating mental

health and substance use conditions or pay a greater price through homelessness,

lost productivity, suicide, and an increased reliance on the criminal justice system.

Enacting a comprehensive mental health parity law sends a strong message to people across this country that mental health is fundamental to overall good health.

It sends a message to those living with a mental illness that their disease is just

as real as cancer and diabetes. Enacting mental health parity sends a message to

the business community that we value the health of their employees and their bottom line. I believe that treatment access follows dollars; by eliminating a barrier to

treatment, we provide an incentive for providers to enter the mental health field.

Congress enacted a parity law in 1996. However, that law required only partial

parity. Current law still permits discrimination based on mental health conditions,

and it is routine in practice. Both current law and practice are untenable. Federal

law must demand fairness in health coverage on behalf of people with or at risk

of mental health conditions. Americans agree that ‘‘partial’’ fairness is unacceptable.

In a survey conducted by International Communications Research, an independent

research company, and paid for by Mental Health America, 89 percent of Americans

asserted that insurance plans should cover mental health treatments at the same

level as treatments for general health problems. 74 percent believe that insurance

plans should cover substance abuse treatments at the same levels as treatments for

general health issues and 89 percent of employees and employers want health insurance coverage for mental health treatments to be equitable to general health treatments. 1
40

/www.mentalhealthamerica.net/index.cfm?objectid=2BCEA7D2–1372–4D20-

C8A54A26522099D8>

I implore this committee to act soon and adopt H.R. 1424. I urge you further to

reject amendments that would weaken it. I ask you to consider my testimony not

solely as one person’s story, but as a microcosm of millions of Americans. We are

people whose treatment has been cut short by arbitrary treatment limits, not only

annual, day, and visit limits, but even lifetime caps on outpatient visits. Consider

your son or daughter, with health insurance, being told that their treatment for cancer would not be covered because their diagnosis required more chemotherapy treatments than their plan allowed. Imagine finding out that your broken leg, which

could be healed with appropriate care, would have to fester un-cast because your

insurance provider denied your claim on the basis that a broken leg could be managed on its own. Many with mental health conditions face these realities every day.

The Paul Wellstone Mental Health and Addiction Equity Act seeks to remedy the

incorrigible and nonsensical practices of the insurance industry. The industry has

failed to act alone. The time has come for accountability and justice.

It is imperative that help be available to those that seek it. Sanctioned discrimination toward those with mental illness must end. H.R. 1424 provides fundamental

protections against the range of discrimination experienced by people like me.

Please do not dilute it. Please adopt it with utmost expediency. Insurance must not

stand in the way of goals and dreams and normalcy; rather it should be the means

by which one achieves health. Kay Jamison once said, ‘‘The gap between what we

know and what we do is lethal.’’ The time is right and the time is now to enact

comprehensive Federal parity. I leave with you that charge today. Remember my

name; remember my face; remember my story. America is waiting. Thank you.

Mr. PALLONE. Mr. Klein.

STATEMENT OF JAMES A. KLEIN, PRESIDENT, AMERICAN

BENEFITS COUNCIL

Mr. KLEIN. Thank you very much, Mr. Chairman.

I am testifying today on behalf of the American Benefits Council.

Our member companies are primarily very large national employers, as well as health plans and other organizations that design

and administer health coverage of all sizes, 100 million Americans

overall, in health and retirement plans.

Today, I would like to pose and then answer four questions.

The first question is: why are mental health benefits so important? The second is: can employers, insurers, mental health providers and patient advocates reach consensus on mental health parity?

Third, does H.R. 1424, the Kennedy-Ramstad bill which is the topic

of today’s hearing, meet the criteria needed for consensus? And

fourth, if parity is so vital, why doesn’t the proposed legislation

apply to numerous federally sponsored health plans?

The answer to the first question, why are mental health benefits

so important, is quite obvious. There probably is not a single person in this hearing room who has not been affected by mental illness either personally, or as we heard from the compelling witnesses today, Ms. Prunty-Lara, Congressman Kennedy and Congressman Ramstad, or through a family member or a friend.

For me personally, just a few months ago, a young woman who

was a friend of my teenage daughter took her own life after struggling with mental illness. Ms. Prunty-Lara is one of the happy

cases. My daughter’s friend was not. This issue touches us all.

U.S. employers believe in the value of mental health coverage

and spend vast sums to provide it to their workers and family

members. Employer opposition over the past decade to expanding

current parity law does not reflect lack of support for mental
41

health benefits for all of the reasons noted earlier that providing

mental health benefits can save employers money.

Rather, the concern and opposition is based on concern over a

highly prescriptive legislation that dictates the details of health

plans that denies employers the opportunity to manage plans in

ways that are permitted for medical and surgical benefits, and that

it allows States to impose varying standards.

Mr. Chairman and members of the subcommittee, that is not

parity. That is a proposed set of rules that treats mental health

benefits vastly differently than health coverage for other conditions.

This raises the second question: Can employers and insurers,

mental health providers and patient advocates reach consensus on

parity? The answer is an emphatic ‘‘yes,’’ and it has already been

done.

Over the past several months, Senators Kennedy, Enzi and

Domenici brought together the major stakeholders on this issue on

a process that addressed all parties’ primary concerns. The American Benefits Council was privileged to work on behalf of employers

during this effort. The resulting bill, which passed the Senate

Health Committee by a strong, bipartisan 18 to 3 vote, may not be

anyone’s ideal, but it resolves the mental health debate in a way

that patients, providers, employers and insurers can all be proud

and satisfied.

The Senate bill retains private employers’ flexibility to design the

plans they pay for, just like the Federal Government does for the

plan it sponsors. It protects medical management and ensures uniformity between Federal and State parity requirements. Even more

important than what the collaborative process means for achieving

mental health parity legislation is that it can serve as a model to

be emulated as Congress seeks consensus on much broader health

care reform challenges.

With that in mind, let me pose the third question: Does H.R.

1424 meet the criteria for consensus? Regrettably, my answer must

be ‘‘no.’’ My written statement describes more fully the deficiencies

of the House bill, but the essence of our concern is that it approaches for employers—employer and health plan priorities in exactly the opposite way that the Senate bill resolves this.

First, H.R. 1424 requires that if a health plan covers any mental

health or substance-related disorder benefits, that it must cover all

conditions described in this DSM-IV volume that identifies such

disorders. My point here is not to make a value judgment as to

whether some health conditions are more worthy of coverage than

others. My point is to say that Congress should not do so either.

Wisely, Federal law does not impose such prescriptive rules on coverage for other physical conditions, and it is not justified for mental

health benefits either.

Second, unlike the Senate bill, the House bill does not protect

medical management practices to ensure that patients are receiving appropriate care. Health care providers, consumer groups and

purchasers are actively promoting evidence-based measures of

quality care. The House bill would stymie these efforts as it relates

to mental health conditions.

I will quickly sum up.
42

Third, the House bill mandates coverage for mental health disorders by out-of-network providers if the plan covers out-of-network

coverage for certain categories of medical and surgical services.

This goes even disposing beyond the rules governing the Federal

employers’ benefit plans.

Fourth, the House bill authorizes States to expand enforcement

and remedy schemes, either creating special rules applicable only

to mental health benefits, which seems patently unfair, or arguably

creating a whole new set of State-by-State enforcement-of-remedy

standards for all types of health benefits, which is clearly beyond

the scope of the mental health parity bill.

ERISA’s uniform framework should not be dismantled and certainly not as an afterthought on the mental health parity bill.

And finally, the American Benefits Council asks why, if parity is

so vital, does the proposed legislation treat people different depending on the plan from which they receive coverage. More specifically,

why impose parity requirements on health plans sponsored by private employers and State and local governments when full parity

is not required in Medicare, Medicaid, veterans health care and

TRICARE for active and retired military personnel.

I cannot answer that question. Only Congress can explain why

there is already parity in FEHBP, which covers Federal employees,

including Members of Congress and their staff, but the proposed

legislation completely ignores these other vital health programs.

Surely the elderly, the poor, and those who have bravely put their

lives at risk for this Nation should not be overlooked.

Basic fairness, not to mention leadership by example, dictates

that Congress should not impose requirements on private employers and State and local governments when it has not yet extended

the same requirements to all health plans that the Federal Government itself designs and pays for.

Thank you very much for the opportunity to testify.

[The prepared statement of Mr. Klein follows:]

TESTIMONY OF JAMES A. KLEIN

Mr. Chairman and members of the Health Subcommittee, thank you for the opportunity to share our views with you today on the Paul Wellstone Mental Health

and Addiction Equity Act of 2007. My name is James Klein and I am president of

the American Benefits Council.

The American Benefits Council’s members are primarily major employers and

other organizations that collectively sponsor or administer health and retirement

benefits covering more than 100 million Americans. Most of the Council’s members

are very large companies that have employees in most or all 50 states and provide

extensive health coverage to active employees and retirees. Our membership also includes organizations that provide benefits services to employers of all sizes, including small employers who often face the greatest challenges in providing health coverage for their workers.

EMPLOYERS RECOGNIZE THE IMPORTANCE OF BEHAVIORAL HEALTH CARE

The American Benefits Council’s members highly value and have long recognized

the importance of effective health coverage for the treatment of both physical and

behavioral disorders. Indeed, because of the importance our members place on these

services, we have repeatedly urged Congress that the current Federal parity requirements not be expanded in a way that would add to plan costs or increase the

complexity of plan administration. Doing so could unintentionally risk a reduction

in coverage for these or other benefits provided to employees and their families.

We also recognize that much has changed in the behavior health care field over

the past decade since the enactment of the current Federal mental health parity re-
43

quirements in 1996. Better medical evidence on behavioral health conditions has become available and better treatment options have advanced during this period. In

a great many cases, the way in which behavioral health conditions are covered by

health plans has also changed, particularly with the emergence of health plan administrators that specialize in the management of behavioral health care services

in a wide range of outpatient and inpatient settings.

As the field of behavioral health care has changed during this time, it has become

increasingly clear that the ability of employers to provide access to affordable and

appropriate health care services, including for behavioral health conditions, depends

on the ability of health plans to do an effective job in the medical management of

health benefits. This involves often challenging tasks to try to ensure that plan participants get the right care and effective care under the terms of their plans and

for the health conditions they have. Employers have a strong interest and an enormous stake in seeing that these tasks are performed well, not only because employers are the primary payers for the health care coverage for millions of American

workers, but also because of the importance they place in maintaining a healthy and

productive workforce.

SENATE PARITY LEGISLATION DEVELOPED THROUGH INCLUSIVE PROCESS

Before I address the concerns we have with the House mental health parity bill,

H.R. 1424, let me see if I can dispel the myth that employers are simply irrevocably

opposed to any legislation in this area or that employers somehow do not understand or appreciate how vitally important effective behavioral health care is for millions of Americans.

Over the past several months, the three Senate sponsors of mental health parity

legislation—Senate HELP Committee Chairman Edward Kennedy, HELP Committee ranking member Senator Mike Enzi and Senator Pete Domenici, who is a longtime champion of mental health parity and an author of the original legislation enacted a decade ago—have taken a fresh approach to trying to resolve the difficult

and important issue of changing the current law Federal parity requirements.

Under their joint leadership, a new bill was developed, S. 558, through a balanced,

candid and extensive process that has given all the major stakeholders on this

issue—employers, health plans, behavioral health care providers and patient advocates—the opportunity to have their priority concerns addressed.

The American Benefits Council has been privileged to have participated in this

process with the three Senate sponsors as a representative of employer interests.

While these discussions have been demanding and have required much give and

take on all sides, we also think that it has unquestionably resulted in a bill that

is a bipartisan in the best sense of the term. In fact, we believe it could serve as

a model for how Congress might be able to tackle other similarly challenging health

policy issues, ones which members of this subcommittee must frequently work to resolve, too.

The Senate parity measure is not perfect. No true compromise proposal ever is.

But the Senate parity measure is the only one of its kind which includes among its

supporters a leading coalition of mental health parity proponents as well as a broad

range of organizations representing employers and insurers. We hope this good faith

effort sends an important message that employers will support legislation where

their priority concerns are addressed in a thoughtful manner and with a careful attention to details, even when our preferred outcome would be no new legislation or

an even better bill.

Unlike previous parity measures considered by the Senate or the parity bill which

has been introduced here in the House of Representatives, the Senate proposal does

not mandate that plans cover specific mental health benefits. It leaves those decisions up to employers and, in the case of fully insured health plans, the Senate bill

permits States to continue to determine whether to require any particular benefits.

In addition, the Senate bill includes a provision making clear that medical management of these important benefits may not be prohibited and preserves flexibility for

employers and health plans in the formation of networks of health care providers

who deliver these services. These provisions are vitally important because they

allow employers to appropriately design and manage the health coverage they offer

to meet their employees’ needs.

Finally, and most importantly, several of the key provisions of the Senate parity

bill are subject to a rule which is intended to ensure uniformity between the Federal

parity requirements and those established by the States, while maintaining the traditional role of the States to regulate the business of insurance in all other respects.

Major, multi-state employers, in particular, rely upon the uniform Federal framework established by the Employee Retirement Income Security Act (ERISA). It is
44

crucial to these employers, who provide health coverage to over 70 million Americans, that this framework not be eroded.

EMPLOYER CONCERNS WITH THE HOUSE MENTAL HEALTH PARITY BILL

Unfortunately, we do not see the same balanced approach in the House parity bill

to the issues of key concern to employers and we would urge that several changes

be made to the legislation as it is considered further by this subcommittee and the

other committees of jurisdiction in the House of Representatives. The primary issues

which we believe need to be addressed are the following:

FLEXIBILITY NEEDED IN COVERED BENEFITS

Under the House parity bill, if a health plan provides ‘‘any’’ mental health or substance-related disorder benefits, then the plan must cover all of the same mental

health and substance disorder benefits as are provided to Federal employees under

the Blue Cross and Blue Shield standard option health plan (the most heavily enrolled health plan offering under the Federal Employee Health Benefits Program).

Plans offered to Federal employees are required to cover all conditions listed in the

so-called DSM-IV manual, the diagnostic manual used by mental health care professionals to identify and categorize all disorders in this area. So, while the benefit

mandate is stated somewhat differently than it has been in previous mental health

parity bills, the basic requirement in the House bill is to cover all mental health

and substance-related disorders if a plan covers any services at all in this area. Of

course, the vast majority of plans do provide such services.

Employers have several concerns about this sort of requirement. First, it is not

necessary to achieve the purposes of the legislation, which is to provide parity in

any financial requirements and treatment limits which a plan applies to the benefits

it covers. Requiring a plan to provide coverage for all of the conditions which are

identified in the diagnostic manual used by health care providers is not ‘‘parity’’, it

is simply a benefits mandate. It also requires much more specificity of coverage than

is required for any non-behavioral health conditions. Such a requirement would

send an immediate message to employers that they no longer have any discretion

over decisions about what benefits they cover for their employees in this area of

their plan, except the decision to provide no coverage for these conditions at all,

which is an unacceptable alternative.

In addition, state laws currently govern which benefits are required to be covered

for fully insured health coverage, so this is a matter that can be, and often is, decided by the states for the health plans which they regulate. In terms of self-insured

health plans which are regulated under Federal law, there are no similar requirements applied to any other broad category of health conditions or services which are

typically covered by employer-sponsored health plans, in recognition that this is an

important area of discretion for employers when they voluntarily choose to provide

health coverage to their employees.

PROTECTION REQUIRED FOR MEDICAL MANAGEMENT PRACTICES

Another major concern with the House bill is that, unlike previous mental health

parity bills considered by Congress or the current Senate measure, there is no specific protection for plan medical management practices. It is very important to protect the ability of plans to appropriately manage coverage for mental health conditions and substance-related disorders as part of any Federal parity legislation. Proposed treatments for these conditions should, whenever possible, be consistent with

standards for evidence-based care. Ultimately, to quote the conclusion of an April

11, 2007 op-ed column in the New York Times by Maia Szalavitz, ‘‘we need parity

in evidence-based treatment, not just in coverage—for mental health conditions.

One of the most important developments now occurring in the health care field

is in the preparation of measures by numerous clinical specialty groups to help define appropriate care and expected outcomes for patients for a wide range of conditions. Purchasers, health care providers, consumer groups and many others are actively working in several different forums to reach consensus on evidence-based

measures of quality health care. While much more needs to be done to achieve a

fully transparent and more accountable health care system, there can be little doubt

that the movement to achieve consistent measures of quality care is a major step

in the right direction and can help drive overall health system reform.

We need to be careful to ensure that neither State nor Federal laws undercut or

diminish efforts by plans to try to ensure that the health care services received by

plan participants are medically necessary and appropriate for their conditions. Some

health plans contract with managed behavioral health care organizations for this
45

purpose while others perform medical management services as part of their core

plan operations. Either way, it is essential to safeguard these important activities

so that plans are able to both protect themselves and their participants from unnecessary costs as well as to try to ensure that coverage is provided for quality health

care services. Indeed, an August 2006 report by the Congressional Research Service

on the impact of health parity laws cited evidence that there was little adverse impact in the Federal Employee Health Benefits Program in terms of access, quality

or cost of care because the parity requirements for mental health benefits covered

under that program were coupled with the management of care by plans offered to

Federal employees.

DISCRETION NEEDED FOR OUT-OF-NETWORK COVERAGE

A third significant concern that employers have with the House bill is that it

mandates coverage for mental health and substance-related disorders by out-of-network providers if a plan provides coverage for substantially all medical or surgical

services on an out-of-network basis in any of three different categories (emergency

services, inpatient services or outpatient services). Again, this requirement limits

important plan discretion and exceeds what is required under the Federal Employee

Health Benefits Program where parity is required only for services provided on an

in-network basis.

We would recommend that the House bill be modified to conform to either the

FEHBP requirement or the comparable provision in the Senate parity bill which includes a Federal standard that calls for parity in plan financial requirements and

treatment limitations for any out-of-network mental health coverage provided by a

plan, but the Senate provision does not require plans to offer out-of-network coverage. The Senate bill also preserves the traditional role of the States to regulate

fully insured health plans in this area, so it does not interfere with State laws

which may require insurers to offer out-of-network health coverage.

CHANGES NEEDED TO PROVISIONS RELATED TO STATE LAWS

Finally, we have significant concerns with the provisions in the House parity bill

which would authorize States to provide ‘‘greater consumer protections, benefits,

methods of access to benefits, rights or remedies—than those in the legislation. This

is extraordinarily broad language and arguably gives States the ability to develop

parity laws, at least for fully insured health plans, that could differ significantly

from the Federal standards provided and that are determined to be even ‘‘greater’’

than those in the House bill.

More troubling, however, is that the House bill provision on the relationship to

State laws would give States broad authority to enact greater ‘‘consumer protections...methods of access to benefits, rights and remedies than any applicable Federal standards. This provision appears to go far beyond a mental health parity requirement in that it opens the door for the States to develop separate enforcement

and remedy schemes, a matter of frequent review by the United States Supreme

Court which has ruled unanimously that the Federal remedy scheme included in

ERISA is exclusive for all health benefits covered by employer-sponsored benefit

plans.

Moreover, if the bill is intended to only change enforcement and remedy schemes

for mental health coverage, then there is no justification for a separate set of rules

for just one category of benefits. If, in fact, this provision is intended to permit

states to create a new enforcement and remedy scheme for all benefits, then such

a fundamental change in the law should not be an adjunct to a bill whose purpose

is to address mental health parity.

The uniformity ERISA establishes for employer-sponsored coverage, including its

enforcement and remedy scheme, is based on sound public policy and is something

employers consider crucial to their voluntary decision to offer health coverage to

their employees. Federal preemption is not unlimited, but where it does apply it fosters uniform administration of covered benefits and reduces costly burdens of complying with differing State laws which would occur in the absence of ERISA’s uniformity provisions.

If Congress believes that changes are needed in this area, is should be fully debated on its own merits rather than included as one of many provisions of a mental

health parity bill.

HOUSE AND SENATE PARITY BILLS FAIL TO APPLY TO MEDICARE OR MEDICAID

One of the most glaring omissions of both the House and Senate parity bills is

that they fail to apply the same requirements to the mental health benefits provided
46

to millions of elderly and low-income Americans who are covered under Medicare

and Medicaid. While we are aware that separate legislation sponsored by Rep. Pete

Stark, H.R. 1663, would partially address this situation by requiring parity for benefits covered by Medicare, nearly all of the debate and focus concerning mental

health parity over the past decade in Congress has been around employer-sponsored

health coverage.

We believe it is simply indefensible for Congress to impose parity requirements

on employer-sponsored health coverage while ignoring the same issues in the programs where it has direct responsibility. Failing to do so would mean that if either

the House or Senate bills were to be enacted, mental health parity would be the

law for employer-sponsored coverage and, through previous action by Executive

Order, for coverage offered to Federal employees (including members of Congress),

but not for those covered under Medicare or Medicaid.

This committee has jurisdiction over Medicare outpatient services covered under

Part B and the Medicaid program. We would be in a very different place in this

debate if the fundamental policy decision had been made long ago that mental

health parity was not simply something that Congress was seeking to apply solely

to employer-sponsored health coverage, but was being done as part of a more omnibus effort to achieve the same standards in all Federal health programs as well.

Such an approach would send a substantially different message to employers that

sponsor health benefits for their employees and it is an approach that we strongly

urge be done before you compel private sector employers to make changes to their

plans.

Again, I appreciate the opportunity to testify today and share our views with you

on these important issues. The American Benefits Council has played a constructive

and highly engaged role in the multi-stakeholder negotiations that helped shape the

Senate mental health parity bill. We and our allies on this issue are prepared to

do the same with the House bill if a similar approach is taken to making what we

believe are important and needed changes to ensure a more balanced proposal.

Employers understand the importance of quality mental health coverage for their

employees and to maintaining a productive, healthy workforce. We also fully understand the strong sentiment in Congress to change current Federal mental health

parity requirements. We believe the candid discussions among all the major stakeholders which were used to develop the Senate bill have demonstrated that employers and insurers are prepared to engage seriously in resolving this longstanding

issue, provided that the process is respectful of the priority needs of all the parties

involved. As this legislation moves forward, we urge that you consider the merits

of this approach so that a consensus measure can ultimately be considered by the

House of Representatives.

Mr. PALLONE. Dr. Goldman.

STATEMENT OF HOWARD H. GOLDMAN, M.D., PROFESSOR OF

PSYCHIATRY, UNIVERSITY OF MARYLAND, SCHOOL OF MEDICINE

Dr. GOLDMAN. Thank you very much for the invitation to speak

here today.

I am Howard Goldman. I am a professor of psychiatry at the

University of Maryland School of Medicine. I served as the senior

scientific editor of the Surgeon General’s report, and I was the

principal investigator of the evaluation of behavioral health parity

for Federal employees.

My testimony today focuses principally on that evaluation. The

comments are derived from papers that were published in the New

England Journal of Medicine and the Journal of Pediatrics, and

they are also based on an editorial written by two health economists that accompany our paper in the New England Journal of

Medicine.

The parity policy in the Federal Employees Health Benefits Program began on January 1, 2001, and it offered comprehensive insurance coverage for all mental disorders, including substance
47

abuse, all of the conditions in the international classification of diseases.

The terms were the same for behavioral disorders as they were

for general medical conditions when the treatment was provided by

in-network providers under the managed care arrangements.

Our study compared seven Federal plans with a matched set of

plans that did not change benefits or management and did not

have parity. We compared use and spending by enrollees in these

plans for the 2 years before parity, 1999 and 2000, with the 2 years

afterwards in 2001 and 2002.

We observed the proportion of Federal employees, retirees and

their dependents who use behavioral health services. We looked at

how much they spent and how much of this spending was out of

their own pockets.

The study found, one, that the policy was implemented very

smoothy and without any of the Federal plans dropping out of the

Federal Employees Health Benefit Program, which is something

that has been feared by some in their testimony today.

Two, there was a significant decline in out-of-pocket spending in

the Federal plans compared to the nonparity plans, which indicates

that parity coverage resulted in improved insurance protection

against financial risks. After all, that is the principal objective of

health insurance, and we have heard about this tremendous financial burden that a mental disorder can impose.

Three, the savings to Federal plan members was not associated

with significant increases in use and spending attributable to parity. In fact, for the most part, increases that we did observe in use

and total spending in the Federal plans were no greater than use

and spending increases in the comparison plans. This was true for

adults just as it was for children and adolescents.

In our published paper, we concluded that these findings suggest

that parity of coverage of mental health and substance abuse services, when coupled with management of care, is feasible and can

accomplish its objective of greater fairness and improved insurance

protection without adverse consequences for health care costs.

In their editorial, the two health economists note that the purpose of the parity policy was to provide better financial protection

to everyone who has health insurance. The coverage is not only for

people who have currently a mental disorder, but any one of us

who might have a mental disorder in the course of the year.

The economists state that the article by Goldman, et al, provides

the first controlled study of parity in two decades. The compelling

evidence presented suggests that in today’s environment, parity

and health insurance coverage is both economically feasible and socially desirable.

The policy performed just as insurance should. It reduced the

cost of out-of-pocket payments with a small increase in plan payments. This could result in very small increases in insurance premiums without leading to an increase in use of services. The CBO

estimates a premium impact for group plans of 0.4 percentage

points, and that is the same increase in premium, very small, that

we observed for Federal employees.

Furthermore, there is a concern raised about mandated benefits.

We conclude that by reducing financial risk, parity improves the
48

well-being of insured people without distorting the market for mental health services. Legislation is the way to accomplish that social

good because parity coverage offered by only one or two plans

would result in those plans attracting a disproportionate group of

people with persistent mental illness. This is referred to as adverse

selection, and it is only through a parity policy such as that which

is offered that we can avoid the financial risks associated with adverse selection.

For decades, advocates for parity relied only on an argument of

fairness to gain support for their cause. Now they can argue that

parity promotes social well-being and economic efficiency in the

form of better insurance benefits for all of us.

Thank you, Mr. Chairman, Ranking Member and Members of

Congress.

[The prepared statement of Dr. Goldman follows:]

TESTIMONY OF HOWARD H. GOLDMAN, M.D.

Thank you for the invitation to address you today. I am Howard H. Goldman, MD,

PhD, professor of psychiatry at University of Maryland School of Medicine in Baltimore. I served as the senior scientific editor of the Surgeon General’s Report on

Mental Health and was the principal investigator of the evaluation of behavioral

health insurance parity for Federal employees.

My testimony today focuses on that evaluation and its findings and conclusions.

My comments are derived from our report posted on a Department of Health and

Human Services Web site as well as from published papers. I have appended papers

by our research team published in the New England Journal of Medicine (1) and

pediatrics (2). I will also refer to an editorial published with our paper in the New

England Journal of Medicine, written by two health economists (3) and also appended to the testimony as well.

The parity policy in the Federal Employees Health Benefits [FEHB] program

began on January 1, 2001 and offered comprehensive insurance coverage for mental

disorders, including substance use disorders, on terms that were identical to the coverage of general medical conditions, when the treatment was provided by in-network

providers.

Our study compared 7 FEHB plans with a matched set of plans that did not

change benefits or management and did not have parity. We compared use and

spending by enrollees in these plans for the 2 years before parity [1999 and 2000]

and for the 2 years after parity began [2001 and 2002]. We observed (i) the proportion of Federal employees, retirees and their dependents who used behavioral health

services, (ii) how much they spent for behavioral health services, and (iii) how much

of the spending was out of their own pockets.

The study found that:

1. The policy was implemented smoothly and without plans dropping out of the

FEHB program.

2. There was a significant decline in out-of-pocket spending in the FEHB plans

compared to the non-parity plans. This indicates that parity coverage resulted in improved insurance protection against financial risks—the principal objective of health

insurance.

3. This savings to FEHB plan members was not associated with significant increases in use and spending attributable to parity. In fact, for the most part increases in use and total spending in the FEHB plans were no greater than use and

total spending increases in the comparison plans. This was true for adults as well

as for children and adolescents. (2)

In our published paper we concluded that ‘‘these findings suggest that parity of

coverage of mental health and substance abuse services, when coupled with management of care, is feasible and can accomplish its objectives of greater fairness and

improved insurance protection without adverse consequences for health care costs.’’

(1; p. 1386)

In their editorial, ‘‘Better Behavioral Health Care Coverage for Everyone,’’ in the

New England Journal of Medicine, two health economists (Glied and Cuellar) note

that the purpose of the parity policy was to provide better financial protection to
49

everyone who has health insurance. The coverage is not only for individuals who

already have a mental disorder but it is for all of us. (3)

The economists state that ‘‘the article by Goldman et al.—provides the first controlled study of parity—in two decades. The compelling evidence presented suggests

that in today’s environment, parity in health insurance coverage is both economically feasible and socially desirable.’’ (3; p. 1415)

The parity policy performed just as insurance should, it reduced costs from outof-pocket payments with a small increase in plan payments. This could result in

very small increases in insurance premiums, without leading to an increase in the

use of services. CBO estimates a premium impact for group plans of a 0.4 percentage point increase (4), a figure which is identical to our estimate based on the

FEHB experience.

Furthermore, in response to concerns raised about a mandated benefit, we conclude that by reducing financial risk parity improves the well-being of insured people, without distorting the market for mental health services.

Legislation is the way to achieve this social good, because parity coverage offered

by only one or two plans would result in those plans probably attracting a disproportionate share of people with persistent mental illness. This is what is referred

to as ‘‘adverse selection.’’

In fact, parity provides the best protection for insurers and self-insured companies

from experiencing adverse selection. When they offer parity benefits at the same

time, they can avoid a shift of high-cost individuals into their plans.

For decades advocates for parity relied only on an argument of fairness to gain

support for their cause. Now they can argue that parity promotes social well-being

and economic efficiency—in the form of better insurance benefits for all of us.

References

HH Goldman et al. ‘‘Behavioral Health Insurance Parity for Federal Employees,’’

New England Journal of Medicine 354(13):1378–1386, March 30, 2006.

Stazrin et al. ‘‘Impact of Full Mental Health and Substance Abuse Parity for Children in the Federal Employees Health Benefits Program,’’ pediatrics 119:452–459,

2007.

Glied and a Cuellar. ‘‘Better Behavioral Health Care Coverage for Everyone,’’ New

England Journal of Medicine 354(13):1415–1416, March 30, 2006.

Congressional Budget Office cost estimate, S. 558, Mental Health Parity Act of

2007, March 20, 2007. CBO.gov/ftpdocs/78xx/doc7894/s558.pdf.

Some additional comments and potentialquestions/answers:

Quality. We also looked at indirect measures of quality of behavioral health care

in the FEHB plans during this same period. Parity was accomplished without increases in hospitalization of patients and without a decline in the measures of quality of care that we studied, such as likelihood of receiving follow-up care for depression or being referred for substance abuse treatment.

What is included in the term ‘‘behavioral health services’’?This term refers to all

use of health care services for any of the disorders (including substance use disorders) in the diagnostic and statistical manual or the mental disorders chapter in

the International Classification of Disease (ICD). It includes specialty mental health

services such as psychotherapy as well as visits to a general medical provider, when

a mental disorder diagnosis is recorded. It also includes the use of all medications

for which behavioral health conditions are an indication. When medications might

be used for a mental disorder or a general medical condition, use and spending were

included only if accompanied by a mental disorder diagnosis in the record. This is

the broadest definition of use and spending, designed to capture the impact of parity.

There was no use or spending for (oft-parodied) trivial behavioral conditions under

managed care plans.

It is probably worth noting that the ICD contains a wide range of general medical

conditions, such as scrapes and bruises, rashes, sprains, and the common cold, just

as it includes sleep disorders, mild phobias and mild learning problems. Managed

care arrangements and ‘‘medical necessity’’ criteria control un-necessary use and

spending for trivial cases of general medical conditions and mental disorders alike.

Can you say anything about the impact of parity on spending for general medical

care?

Unfortunately our study did not include such analyses.

Adverse selection. Adverse selection occurs when plans offer different benefits and

individuals select plans with coverage they expect to use. These plans are said to

experience ‘‘adverse selection’’ resulting in higher costs on average than other plans

that do not offer special benefits. Without a parity mandate plans that wish to offer

better benefits attract to them a group of users with high costs, resulting in adverse

economic consequences for the plan and its other members. If all plans offer the
50

same benefits (such as under a mandate) they can avoid adverse selection. Left to

the incentives of market pressures, plans either offer the same extremely limited

set of benefits or a few plans offer better benefits and risk selection, while the other

plans have a selective advantage and lower costs. For everyone to enjoy the benefits

of parity and the cost-neutral experience of parity in the FEHB program, there must

be a mandate for parity coverage, and the benefits should be standardized. This is

why the two health economists who commented in the New England Journal of

Medicine (Glied and Cuellar) concluded that a legislative mandate was required to

achieve the economic efficiency demonstrated by the FEHB experience with behavioral health insurance parity. In this instance a mandate promotes market efficiency—or at least avoids the market failure associated with adverse selection. Ironically, a mandate may help insure employers and plans against financial risks when

they try to offer better benefits to their employees.

SUMMARY OF THE KEY POINTS FROM THE SUBCOMMITTEE HEARING TESTIMONY FOCUS- ING ON BEHAVIORAL HEALTH INSURANCE PARITY IN THE FEDERAL EMPLOYEES

HEALTH BENEFITS PROGRAM

The parity policy in the Federal employees health benefits (FEHB) program began

on January 1, 2001 and offered comprehensive insurance coverage for mental disorders, including substance use disorders, on terms that were identical to the coverage of general medical conditions, when the treatment was provided by in-network

providers.

The most important positive finding in the evaluation was a significant decline

in out-of-pocket spending in the FEHB plans compared to the non-parity plans. This

indicates that parity coverage resulted in improved insurance protection against financial risks

Furthermore, this savings to FEHB plan members was not associated with significant increases in use and spending attributable to parity. In fact, for the most part

increases in use and total spending in the FEHB plans were no greater than use

and total spending increases in the comparison plans.

Goldman et al. concluded: ‘‘These findings suggest that parity of coverage of mental health and substance abuse services, when coupled with management of care,

is feasible and can accomplish its objectives of greater fairness and improved insurance protection without adverse consequences for health care costs.’’ (1; p. 1386)

these findings were true for children as well as adults. (2)

Glied and Cuellar, two health economists state: ‘‘the article by Goldman et al.—

provides the first controlled study of parity—in two decades. The compelling evidence presented suggests that in today’s environment, parity in health insurance

coverage is both economically feasible and socially desirable.’’ (3; p. 1415)

The parity policy performed just as insurance should, it reduced costs from outof-pocket payments with a small increase in plan payments. This could result in

very small increases in insurance premiums, without leading to an increase in the

use of services. CBO estimates a premium impact for group plans of a 0.4 percentage point increase (4), a figure which is identical to our estimate based on the

FEHB experience.

Legislation is the way to achieve the benefits of parity, because it helps to avoid

‘‘adverse selection.’’

References: (1). HH Goldman et al. ‘‘Behavioral Health Insurance Parity for Federal Employees,’’ New England Journal of Medicine 354(13):1378–1386, march 30,

2006. (2). Stazrin et al. ‘‘Impact of Full Mental Health and Substance Abuse Parity

for Children in the FEHB Program,’’ Pediatrics 119:452–459, 2007. (3) Glied and

Cuellar. ‘‘Better Behavioral Health Care Coverage for Everyone,’’ New England

Journal of Medicine 354(13):1415–1416, march 30, 2006. (4) Congressional Budget

Office cost estimate, S. 558, Mental Health Parity Act of 2007, March 20, 2007.

CBO.gov/ftpdocs/78xx/doc7894/s558.pdf.

Mr. PALLONE. Thank you very much.

We will have questions from the members, and I should point out

that if you can’t answer the question or you want to get back to

us in writing, that is certainly permissible, but we would like you

to try to answer today obviously.

I am going to start with myself for 5 minutes, and I wanted to

ask of Ms. Prunty-Lara and possibly Mr. Purcell, as well; it deals

with the preemption.
51

Let me start with Ms. Prunty-Lara.

Over the last few years, several States have enacted very strong

parity laws, Rhode Island, Mr. Purcell’s State, along with some others such as Washington, Oregon—I won’t go through the list—have

strong mental health parity laws.

Do you have concerns about legislation that would preempt

States’ stronger mental health parity laws and what would that

mean for patients?

Ms. PRUNTY-LARA. I believe, for the 130 million people covered

by health insurance plans, that they have the right and the honor

and they deserve the dignity of being provided with equitable mental health coverage at the same level that a lot of people who have

fully funded insurance plans at the State level are also offered.

To disregard what States have already achieved and throw that

by the wayside, I think is irrefutably wrong, frankly. I think that

we need to institute a baseline of sorts so that we have equitable

coverage for as many people as possible in terms of mental health

care.

For me personally, in the State of Minnesota we have a stronger

parity law, and so we need to let that stand as it is so that we don’t

adversely affect those people who are currently influenced by the

parity laws already in existence.

Mr. PALLONE. Let me ask, Mr. Purcell, what are your thoughts

on passing a Federal law that would preempt Rhode Island’s more

protective mental health parity law?

Mr. PURCELL. I would be against it. I am here only because

Rhode Island was innovative enough and perhaps courageous

enough to pass a law, and we were able to operate under it and

see the results; and hopefully, those results help you have a context

in terms of understanding what may happen if you pass your law.

So this is the old federalism argument, and I think it makes abundant sense to have the preemption issue handled the way the

House bill does throughout the Senate bill.

Mr. PALLONE. OK.

One of the major differences between the House and the Senate

bills is that while the Senate legislation allows insurers to define

what they cover in terms of mental health treatment, the House

bill sets the standard for coverage. In the House bill, mental health

conditions must be covered to the same extent they are covered for

the Federal employees and Members of Congress.

Critics of the House bill charge that this would open insurers up

to paying for every problem under the sun, but the simple fact of

the matter is that insurers still have many tools by which to manage the coverage and care provided to the enrollees. With medical

benefits, clients don’t have to provide every covered benefit to anyone who wants it; they only do so if it is medically necessary. And

that would continue to apply here.

So I wanted to ask again the two of you, Mr. Purcell and Ms.

Prunty-Lara, do you believe that, the way the Senate bill works,

I understand, we would—we might not achieve parity because we

permit insurers to cover only depression, but not autism, or cover

alcoholism, but not bipolar as part of the parity law.
52

Is there a reason any of these illnesses is less deserving of coverage than, say, heart disease or diabetes? This is what we are trying to get to with the House version.

I will start with you.

Ms. PRUNTY-LARA. I think the problem, with not explicitly stating that we need to cover what is considered diagnosable, is that

you end up with a system in which there is discrimination by diagnosis. And that is inherently wrong. My disease is no less deserving of coverage than that of a heart condition or that of a broken

leg or that of autism or cerebral palsy or MS. And it is just as real

and just as painful, even if you can’t see it.

So my hope is that you not allow the discrimination to continue

on the basis of diagnosis and on the basis that post-traumatic

stress disorder or an eating disorder would not be considered medically necessary. Because I assure you, the pain is real.

Mr. PALLONE. Mr. Purcell.

Mr. PURCELL. Of course, the devil is in the details with regard

to the Senate definition. It depends upon when the exception is

going to be so big it can eat up the rule. I assume it would not be

that big. Nonetheless, it does seem to me that using the FEP definition gives you much more context. If you are going to mandate

parity, at least you have to mandate what coverages have parity.

And you have the example in FEP where you have seen, based

on Dr. Goldman’s study, it does not appear to have significantly increased costs, if at all. So while we can have some red herrings

about some of the more fringe, V-type DSM types of diagnoses,

such as jet lag or gray hair, that is beside the point.

We have got to bring it back to the middle and even though you

can describe a completely unrealistic or facetious coverage, the true

idea here is to get people coverage. This is all about the people, so

I think you have got an example that works.

So I would be in favor of the House version on that.

Mr. PALLONE. Thank you.

Mr. Deal.

Mr. DEAL. Thank you, Mr. Chairman.

Mr. Klein, you held up the book, and I assume that is the diagnostic and statistical manual; is that correct?

Mr. KLEIN. That is right.

Mr. DEAL. Who compiled that?

Mr. KLEIN. My understanding is, that is a compilation from various health care provider groups that identified the panoply of

mental health and behavioral disorders.

Mr. DEAL. I have been given some information that indicates

that it does include a wide variety of things, and you can always

find some things that sound ridiculous on their face. One of them

that sounded a little ridiculous to me is a mathematical disorder.

It may or may not be a significant mental disorder.

My concern is the breadth of coverage, if we require coverage of

all of those potential manifestations.

Dr. Goldman, did you find anything, as it related to such a

broad, expansive coverage, perhaps even to contrast it outside of

the study you did, that you referred to, with States that have more

narrowly limited their parity to biologically based or serious mental

illnesses as State statutes would sometimes define it.
53

Could you tell us whether that is a problem or not?

Mr. GOLDMAN. In our experience, studying Federal employees

parity policy, we didn’t see utilization of these so-called and often

parity-trivial disorders. Utilization was not governed by diagnostic

criteria, but was governed by management decisions that were

made about the necessity of service.

It is considered now an old-fashioned way to make the determination of who should get what care, to do it on the basis of diagnosis or diagnosis alone, that we have the tools of management

that allow us to make much more precise decisions about allocating

the sources based on medical necessity.

Mr. DEAL. And that is in the context of a managed care environment?

Mr. GOLDMAN. Yes. The managed care environment was the environment in which the parity policy was implemented in the Federal employees plan. And that was true of most of the State parity

policies as well.

I should note that if you look within the international classification of diseases, of which the DSM has simply one chapter on mental disorders, you will see in the other chapters a wide range of

conditions. Everything from scrapes and sprains and skin tags and

colds to more serious conditions. And in the current health care environment, we use management of care in order to make appropriate allocation decisions.

Parity would extend that mechanism for cost containment to

mental disorders without having to refer to specific conditions.

Mr. DEAL. I think the concern is that we also allow health insurance policies to further refine and define the benefits and the conditions for which those benefits attach.

Mr. Klein, in that regard, and also in regard to any, perhaps,

State studies or variations among the States, do you have any comment you would like to make on that?

Mr. KLEIN. No. I read Dr. Goldman’s excellent study and encourage it to everyone.

It is so crucial to keep in mind that perhaps the major reason—

I will let him speak to it—that the cost increases didn’t occur under

the Federal Employees Health Plan was because there was this

medical management that I was referring to earlier; and Mr. Purcell also spoke about how important that is. Because the issue really isn’t, as I said before, making a value judgment of which of these

conditions is worthy or not of being covered.

The fact of the matter is, not all treatment regimens are equally

successful. And there are countless studies in the journals that

show people with the same diagnosis in two different parts of the

country may get radically different kinds of treatment; and in order

to ensure high-quality outcomes for patients, it is absolutely essential to have these medical management tools. And that is something that is protected under the House—the Senate bill, but not

under the House bill.

Mr. DEAL. Would you care to comment on that?

Ms. ROGERS. I agree with what Mr. Klein just said about best

practices are extremely important, and the major employers are

really forcing their providers to use best practices. And they focus
54

on the cost drivers and are able to manage them, and that is actually the future, it is the direction we should be doing in.

We should also be going in the direction of making health benefits more portable, and I think this is a step in the other direction

where you still have all of these different State mandates. And in

order to get to a system where health plans are portable, because

the workers are much more mobile these days than they used to

be, since we are in a global economy, you need to move closer in

the direction of one system—and this moves, in the other direction.

And we also need to move in the direction of simplicity, and this

does not move in that direction.

Mr. DEAL. Thank you all for being here.

My time is out. I am over my time. But thank you all for being

here.

Mr. PALLONE. Thank you.

Mrs. Capps.

Mrs. CAPPS. Thank you.

I want to thank you, Ms. Prunty-Lara, for very powerful testimony. It is the most eloquent statement I have ever heard by a

consumer of mental health care and someone who has lived and

does live with bipolar disorder. My brother does as well. And the

pain and suffering that you described is also shared, as you said,

by all the family members.

I am glad you are on the board of the Mental—I still call it the

Mental Health Association—the national board; and there is a very

active local chapter in Santa Barbara, and I am going to tell them

what a good spokesperson you are for various issues as well.

You talked about the lack of equity for physical versus mental

health as being a form of discrimination. And I want you to describe that connection.

It is like a revictimization, in a way, that the family really does

get in on, a pain and suffering caused by the denial of treatment,

sometimes over and over again. And I think for our part here, that

this stigma of bias becomes systemic when it is promoted; and the

status quo, we here in the Government are kind of perpetuating as

well. That is why I think it is so timely that we have this legislation before us.

Talk a little bit more, if you would.

But I also want to turn to Mr. Purcell, you were cut off, and I

think you had some more things to say, and I will give you a

minute or so to complete that.

Ms. PRUNTY-LARA. First of all, I want to comment that there is

nothing in the Kennedy-Ramstad version of this bill that precludes

medical management. So I want to make that perfectly clear. That

is in this legislation. There is nothing to preclude it.

I also want to submit some comments from James T. Hackett,

who testified before this committee in 2002. And he talked about

the Federal law that currently allows health insurance discrimination against people with mental illness, discrimination in duration

of needed treatment, discrimination in cost-sharing burdens and

discrimination by diagnosis, as I said.

There is also a discrimination in ideals, a discrimination that

says that your illness isn’t good enough, that we somehow stigmatize the treatment of mental health conditions and we say that
55

it is not equitable, that it is not real enough as a broken leg. And

as some Members of Congress have commented, there is a disparity, there is a difference in how we are going to treat them. And

I am sorry, there is not. It hurts the same, it feels the same, it deserves the same principal of equality and justice and accountability

to your employees and their beneficiaries.

Mrs. CAPPS. Thank you very much.

Mr. Purcell, I really—I am going to remember it the way you distinguished between mental and physical health. You call it behavioral and physical health. That is very clear, health covering both

of them, or disease, a lack of health, as evidenced in different ways.

I also was struck by your description, and I want you to expand

on this in whatever time I have, but the relationship between mental health problems and their spillover, the correlation between

mental and physical health, because I think that is one way that

we can help to document the cost of not treating mental health.

Mr. PURCELL. I have an example in my written testimony about

how gray the line is between an obese diabetic who has depression

and an eating disorder. Where does the physical health component

end and the behavioral component begins? And of course nobody

knows.

What we are trying in Rhode Island, we have a pilot program to

achieve integration of behavioral and physical health by collocating

and integrating behavioral and physical health. The whole idea

here is to get people in early for office visits. Office visits don’t cost

anything in the greater scheme of things. When we increase from

30 visits to 50 visits a year, it costs almost nothing. But as I was

going to say, the few people that run out of 30 really need the care.

And when do they run out? Right around the holidays. And where

do they go? They go to the emergency room. Is that cost-effective?

Never.

We have more trouble getting people to go to office visits than

having them abuse it. And the key here is if you can get them to

office visits, you keep them from becoming chronically ill for the

most part. And it is tremendously cost-effective both on the behavioral and physical side.

I hope that answers your question.

Mrs. CAPPS. If I had more time, I would get into how do you get

them in earlier, because that means someone has to refer; or there

used to be an acknowledgment—I used to work in the school district, and I know that is a good place for young people to get started.

Mr. PURCELL. Collocation for primary care doctors. That is the

way to do it.

Mrs. CAPPS. Collocation for primary care?

Mr. PURCELL. That is right.

Mrs. CAPPS. Excellent. Thank you.

Mr. PALLONE. Mrs. Myrick.

Mrs. MYRICK. Thank you, Mr. Chairman, and thank all of you for

being here.

Ms. Rogers, I wanted to ask you a question. You said that one

of your objections to the House bill is that the nature of psychiatric

medical care requires flexibility in benefit design. Do you see what

you call trust, don’t verify, that culture of psychiatric care, chang-
56

ing as it becomes more obvious that these are biological-treated illnesses? And then how do you see the status changing in the future—and aren’t there professional societies like APA that have

treatment and quality standards that could, A, benefit design plans

for companies so that they end up paying for quality care?

Ms. ROGERS. Thank you for the question. In our opinion, it appears that on the physical side that they are much further down

the road with regard to having best practices that have been

pushed out to the primary care physicians and also the specialists.

And they are starting to get used to the idea of reporting on quality

measures. I know that Medicare is pushing it with the hospitals

and also with the physicians.

Mrs. MYRICK. Right.

Ms. ROGERS. And also with transparency of their costs, efficiency

measures. And we just think that that is key for the future, coupled with health information technology. And we see the mental

health community much further behind on that side. So it just

seems like they need a push or a nudge, and that they need to be

included in the fold with regard to those advancements.

Mrs. MYRICK. Don’t you think that would actually come if working together with the companies and the different groups to incorporate that type of thing? Because they haven’t had the same

length of experience in doing this that you have with the other

physical illnesses. Am I making sense?

Ms. ROGERS. Yes, you are making sense. Well, remember, the

majority of our members have stigma-free mental health. They

don’t have ‘‘parity’’ according to this bill, but they have very generous benefits. But they do feel like that there are quite a few providers, more so on the mental health side than they see on the physical side, that are less willing to provide the information that they

would like to see.

Mrs. MYRICK. So it is less willing.

Ms. ROGERS. Yes.

Mrs. MYRICK. That is why there needs to be more cooperation.

Ms. ROGERS. And we just look at this as an education issue. We

don’t see this as a big legislative, regulatory issue.

Mrs. MYRICK. I see.

Ms. ROGERS. But more of an education issue that the private sector has been pushing for for quite a while. And especially our members on both sides, on the mental health side and also on the physical health side. It just seems like on the mental health side they

are further behind, and they are not as well organized and represented.

Mrs. MYRICK. OK. Thank you.

Marley?

Ms. PRUNTY-LARA. If I may just respond, as an organization,

Mental Health America is working to further evidence-based practices, but it is very hard to do when you don’t have parity, because

you don’t have the same number of providers, and you don’t have

the same access to treatment to formulate those evidence-based

practices.

I would also like to respond about Government interference into

parity regulation. It is not a question of education, because the private sector has failed. They have not implemented parity. And it
57

has been 11 years since Paul Wellstone stood on the floor of the

Senate with Pete Domenici and called for the enactment of the

1996 partial parity law. These discriminatory practices are, for the

best interests of the American people, to be eliminated. Federal law

subsidizes employers through the Federal Tax Code for providing

health insurance to employees, allowing the cost of insurance as an

ordinary business expense. It is wholly appropriate for Congress to

condition entitlement to such benefits on employers providing

health benefits in a nondiscriminatory manner. This Congress has

the right to demand that mental health be covered equally.

Mrs. MYRICK. Yes. Go ahead. Pardon me, I am almost out of

time, but quickly go ahead.

Mr. KLEIN. No, I was just going to say that I don’t believe that—

I think we are beyond the issue of parity. I mean, the Senate bill

has already embraced it. The point is you don’t need such tightly

prescriptive type of parity that is called for in the House bill in

order to encourage the type of quality improvement outcomes that

we are looking for.

Mrs. MYRICK. Very good. I appreciate that. Thank you all.

Mr. PALLONE. Thank you.

Ms. Baldwin.

Ms. BALDWIN. Thank you, Mr. Chairman.

There has already been some discussion, considerable discussion,

about differences between the House bill and the Senate bill and

use of the DSM-IV definitions in the House bill. But I want to

probe for some additional clarity on that. So at the risk of being

redundant, I do want to pursue that subject a little bit more.

Dr. Goldman, I want to discuss how mental illness should be defined in a model mental health parity law. And as I hinted, I have

serious concerns about the Senate bill, which allows insurers basically to pick and choose which illnesses they want to cover, and I

don’t think that is right. In the House bill, mental illness is defined

based on DSM-IV. And it is my understanding that this is the diagnostic manual used by mental health and addiction professionals,

and that it is widely accepted. Is this correct?

Mr. GOLDMAN. That is correct.

Ms. BALDWIN. Do you think that there is any medical basis for

allowing insurers to decide what is a mental health illness and

what is not?

Mr. GOLDMAN. I think, as I said before, we have other mechanisms to make sure that we allocate resources efficiently and effectively according to need, and that we don’t use diagnosis as a way

of excluding care on the general medical side. And the spirit of parity is to do the same for the behavioral disorders. So it is really

a matter of not needing to focus on diagnosis for purposes of exclusion, but allowing management to deal with the cost concerns.

Ms. BALDWIN. So I am concerned that allowing insurers the type

of discretion that I described earlier would lead to discrimination

based on diagnosis. For example, an insurer might decide that one

mental illness or another is simply too costly, too therapy-intensive

or too complex, and they won’t cover it. We know that insurers use

nonmedical criteria to make their coverage determinations now,

and so what is to stop them from doing the same thing if we were
58

to pass a very weak mental health parity law? Do you think that

this would pose a potential threat to patient health?

Mr. GOLDMAN. If I base my remarks entirely on the experience

that we had with the Federal Employees Health Benefit Program,

we showed that all of the upside benefits that you want in terms

of the social good, avoiding discrimination, and doing so by improving insurance protection can be done without reference to restrictions on the basis of disorders, I would have to substantially agree

with your point.

Ms. BALDWIN. Thanks.

Mr. Purcell, I thank you for testifying today and sharing the experiences of Blue Cross/Blue Shield of Rhode Island in providing

mental health parity. It is also useful to have the data about how

things work, and we appreciate you sharing that with us.

Under Rhode Island’s mental health parity law, are insurers required to provide parity for conditions which are not medically necessary?

Mr. PURCELL. No.

Ms. BALDWIN. I have certainly heard arguments from those opposed to this bill that insurers would be forced to provide parity for

a whole host of conditions which are not necessarily medically necessary. And it is my understanding that H.R. 1424 also includes

language that says that there will be parity only for medically necessary treatment. Is that your understanding of the bill as well?

Mr. PURCELL. That is what I have been told, and that is the tiein with medical management.

Ms. BALDWIN. Yes.

Mr. PURCELL. Just because there is coverage for a condition does

not necessarily mean it is medically necessary, because there has

to be a linkage here. And you can come up—again, labels don’t help

here. If somebody comes in because they are excessively shy, that

may not necessarily in and of itself be a behavioral disorder, but

there may be an underlying function, there may be an underlying

depression that causes that. And an office visit that is covered will

allow a practitioner, using medical necessity means, to determine

if that is so or not. And if there is, it deserves treatment, because

down the road that patient is going to be healthier, their life is

going to be better. And that is what this is all about.

So I think as long as we are able to use traditional medical management tools for utilization review for medical necessity, we can

take care of that problem using a little common sense. I don’t have

a problem with it.

Ms. BALDWIN. Thank you.

Mr. Chairman, I yield back my remaining 16 seconds.

Mr. PALLONE. Mr. Sullivan.

Mr. SULLIVAN. Thank you, Mr. Chairman. And I guess my questions will be towards Ms. Rogers and Mr. Klein. And we had a

hearing in Tulsa, we had a company—Williams Company has 4,000

employees, and they said that they felt that having parity in their

plans reduced costs, and it was good for their business.

I have three questions for you. Do you—for both of you. Do you

know any companies that have dropped mental health benefits in

response to State requirements that they equalize benefits? If so,
59

what percentage of covered lives in that State lost their benefits as

a result?

Mr. KLEIN. Congressman, I am not aware of specific companies.

I am sure logic would seem to indicate that there would be some,

but I don’t know of any. And certainly among my member companies, which are primarily large ones, that hasn’t happened. But, of

course, it is possible any time costs go up in one area, other

changes may be made to the health plan.

I also think, and I am so glad that you posed the question the

way you did, about that there is actually cost savings relative to

parity, because I think that it is inconsistent for people to argue,

as several have done today, that insurers and employers will save

money by providing mental health benefits, which is correct, if

done properly, but then argue that employers and insurers are excluding certain coverages in order to save money. I mean, employers and insurers have every financial incentive to make sure that

people are getting the appropriate coverages. So those two comments that have been made seem to me at complete odds with one

another.

Ms. ROGERS. Thank you for the question.

I have talked to members of our trade association that did drop

coverage, and the way they explained it to me was that they are

mainly self-insured plans, but even though they are large self-insured, they have large pockets of employees in various States, and

so they might have some insured plans, especially HMOs. And I

have been told by numerous companies that when they are subject

to State mandates that they feel that are too burdensome, like, for

example, they also mentioned the issue of raising the mandatory

age where you have to keep a dependent child on in some States,

like New Jersey to 26, and I think maybe Colorado might be close

to 30, that they did get out of their more managed care plans in

those States that subject them to the State mandates, and they

just fell back on their ERISA preemption.

Mr. SULLIVAN. Thank you.

I have another question for both of you. Members of Congress

and Federal employees have full equity for mental health and addiction treatment in our health insurance plans. As we heard from

Dr. Goldman, a thorough study found that equalizing benefits did

not increase costs. Why then would you suggest that covering the

same diseases would be a big cost increase for your members?

Mr. KLEIN. Well, I will take that one. First of all, the Federal

Employees Health Benefit Plan only provides parity for in-network

services, and it doesn’t require it for out-of-network services.

The second part of that, again, gets back to this issue of medical

management. And I think we can actually resolve something here

today, because there is a little disagreement between Ms. PruntyLara and me on this question of whether or not the House bill

interferes with that medical management. The Senate bill explicitly

prohibits interference with medical management. The House bill is

simply silent on the issue. So if the intention—and I am getting the

sense that the intention is, amongst the supporters of the House

bill, that it should not interfere with medical management, which

everyone has indicated is so crucial—then I think a wonderful

amendment, when this bill comes to be marked up here, would be
60

to make that very clear, as the Senate bill does. That would go a

long way toward encouraging, giving greater confidence that this

very important practice that ensures quality outcomes will be protected.

Mr. SULLIVAN. And then a final question, I guess, Ms. Rogers, I

guess. Why do you think that passing this bill will somehow result

in major cost increases, even though parity did not increase costs

to the Federal employee program, or in several States, including

mine, Oklahoma, Vermont, Maine, New Hampshire, Maryland,

Texas, Minnesota, Connecticut or Rhode Island or any other State

studied?

Ms. ROGERS. I think that because we surveyed our member companies, and their responses were—some of them were quite specific. Some of them said that their estimates are close to $2 million

just to implement all the changes that they need to do to comply

with the House bill. And then others said even though they have

very generous mental health benefits, they are not identical to

what would be mandated, and they feel like that they can’t——

Mr. SULLIVAN. Have you ever surveyed them about lost productivity in the workforce or anything like that? We lost $100 billion

last year in America. That is pretty significant.

Ms. ROGERS. Yes. No, that is usually an issue in our surveys,

but, remember, I keep saying that our members have very generous mental health benefits. They all do. And they call them stigmafree mental health benefits. But they are not financial parity on

the medical side. There is not the same system. And they do have

the ability to medically manage them, and they want to be able to

keep that ability.

Mr. SULLIVAN. I guess we all have to have someone to fight.

Mr. Purcell, I really appreciated your comments. And you are

very thoughtful. And you, as a CEO of Blue Cross and Blue Shield,

I learned something from what you said, and I appreciate it. Thank

you.

Mr. PURCELL. Hopefully it is not inconsistent with a CEO to be

thoughtful.

Mr. SULLIVAN. No, I think it is well thought out. Thank you. I

yield back.

Mr. PURCELL. Thank you.

Mr. Matheson.

Mr. MATHESON. Thank you, Mr. Chairman, and thanks to the

panel.

It has been an interesting discussion. To follow up on the line of

questioning Mr. Sullivan led with, Dr. Goldman, you talk about

your study with how the cost was affected in the Federal Employee

Health Benefit Plan when mental health parity was implemented.

We have also heard about the HHS study that found increased

costs. Can you talk about the differences in the findings and give

us some insight into that?

Mr. GOLDMAN. I am not sure I know about the HHS study that

is different from our study. Ours was the HHS-sponsored study,

and what they did find was that there was a small premium increase of less than one-half of 1 percentage point of total premium

impact, and that resulted not from an increase of utilization, but

a shift of costs onto the plan and away from the out-of-pocket costs
61

of people who used services. So it was just due to an improved insurance coverage, the financial protection associated with the parity benefit. That is a very small increase in premium.

And I believe that that is what you will find on the HHS Web

site, and it is very similar to the CBO estimate for the Senate bill,

and it is similar to our estimate for the Federal Employees Health

Benefit Program.

Mr. MATHESON. Can you also provide insight into that discussion

on the past set of questions on how I think Mr. Klein indicated the

Federal Employee Benefit Plan, that the savings were not necessarily as realistic for the rest of the marketplace because of the

way the plan is structured?

Mr. GOLDMAN. If I understand, and of course Mr. Klein can answer for himself, but I think the point was that for Federal employees parity applied to in-network benefits only where care was managed. Now, we saw people move from out-of-network providers to

in-network providers in order to follow their financial incentive.

People do behave rationally with respect to their insurance coverage. And so where they had the option, they moved. Many of

them chose to move to get the parity coverage by going in network

and having managed care, but they did have the choice. You all

still have the choice, as Federal employees under this plan, to go

out of network. Usually out-of-network benefits are unmanaged,

but the coverage is usually inferior; that is, the cost-sharing arrangements are much higher.

Mr. MATHESON. Right.

Mr. GOLDMAN. And the issue is whether if you mandate parity

on out of network, whether the cost controls will be sufficient, and

that is one of the hardest things. Our study can only speak to a

situation in which in-network benefits are on a par.

Mr. MATHESON. OK. That is helpful.

Mr. GOLDMAN. Is that also with you?

Mr. KLEIN. Yes.

Mr. MATHESON. Mr. Purcell, I was going to ask you, I am from

a State where we have partial parity at this point, and since you

have been involved in the transition that took place in your State,

do you have advice you could give to insurers in other States who

have not yet made that transition about how to most effectively

have a smooth transition toward full parity?

Mr. PURCELL. Well, I think most often the characterization is

that insurers are standing in the way of this. Quite frankly, the

more business we get, the better it is for us. So in some respects,

this is good business. But what you have to do is you have to get

out to the business community and bring the word, with some

backup, because they expect some proof, that this is not going to

dramatically increase your costs.

And why is it good business for you? And it is good business for

you, exactly what Mr. Sullivan said. You can really track the increase in productivity, the lowering of absenteeism, and the biggest

monster in the corner, which is presenteeism in which you have

people who are depressed or suffering from other behavioral disorders coming to work, and maybe they are being there a quarter

of the time. And there are ways you can measure this. And if you

can bring that measure to the employer, the business community,
62

and say this will actually help, I think that is your key, because

once you have got them convinced, they won’t have to pay any

more premium, but they also won’t viscerally react, oh, no, another

mandate, this is enough, I have had enough. Because Ranking

Member Deal had a great point. How many ornaments do you hang

on the tree before you weigh the tree down? And that is always the

issue with mandates. Each mandate is just a little bit, but you die

by a thousand cuts. Here this one, I think, is substantively different. So that is why I think if you do that, I think you stand your

best chance of getting it done.

Mr. MATHESON. Thanks.

Mr. Chairman, I yield back.

Mr. PALLONE. Thank you.

Mr. Burgess.

Mr. BURGESS. Thank you, Mr. Chairman.

Mr. Purcell, let me ask you a little bit about the medical management issue, and I guess you also referred to utilization review.

Now, you made the comment that that was not in the House bill

that is before us, but that language is in the Senate bill.

Mr. PURCELL. What I understand——

Mr. BURGESS. You had three things that would improve the bill

before us. One was date of implementation, second was medical

management, and the third was the out of network.

Mr. PURCELL. My understanding is that the House bill is silent

on the issue. Whether it does provide the medically necessary, and

therefore by implication that allows medical management, I suppose I could make that argument as a good lawyer. I would much

prefer that it affirmatively say that you can employ appropriate

medical management techniques in order to assure medical necessity.

Mr. BURGESS. Do you think this is important for the overall performance of the program?

Mr. PURCELL. I very much do.

Mr. BURGESS. Dr. Goldman, let me ask you, in your paper from

the New England Journal, in the abstract under the conclusion

line, it says, when coupled with management of care, implementation of parity in insurance benefits for behavioral health care can

improve insurance protection without increasing costs. Is that

phrase, ‘‘when coupled with the management of care,’’ is that the

same thing that Mr. Purcell is referring to as far as the medical

management that he would like to see incorporated in the legislation?

Mr. GOLDMAN. It is.

Mr. BURGESS. And so would you agree with that statement, that

perhaps the bill could be improved by incorporating either language like the Senate or an amendment that would incorporate the

concept of medical management utilization review?

Mr. GOLDMAN. You are the experts on draft language, but our

study indicates that you want to have the care managed if you

want to have the same experience.

Mr. BURGESS. You want to have the care management as part of

the total program?

Mr. GOLDMAN. If you wish to have the same financial impact.
63

Mr. BURGESS. And I would assume that—and, Dr. Goldman, I

guess in full disclosure, I am a simple country doctor, so I have

done this only for the past couple of years.

Mr. GOLDMAN. I am a complicated urban man.

Mr. BURGESS. Let me ask you this, because this is something

that has bothered me for some time. When managed care really

burst upon the scene in the mid–1990’s, my perception as a practicing OB-GYN in suburban Dallas, TX, was it didn’t do a thing for

the practice of psychiatry, at least in my world. And Ranking Member Deal also kind of implied that the health insurance policies

sometimes kind of defined the conditions of the world in which we

live. Do you see a potential for some problems here?

Mr. GOLDMAN. For many professionals managed care is a mixed

blessing. There are down sides in terms of having your work observed by other people. Some people don’t like to have their professional judgments second-guessed by other professionals. But when

it comes to this issue of whether the allocation decisions should be

made on the basis of arbitrary diagnostic criteria versus individualized management, I think we have learned that we can improve

people’s insurance protection if we rely on managed care rather

than on arbitrary diagnostic criteria and our nominal benefits. So

there are problems.

Mr. BURGESS. Right.

Mr. GOLDMAN. But they are the same problems that occur in

general medicine. I don’t know very many providers of general

medical care that don’t have their problems as well with managed

care.

Mr. BURGESS. And we could talk about that at length, but we

don’t have time.

Mr. GOLDMAN. Yes, we could. We want it to be just as unpleasant perhaps —for some on both sides of this issue.

Mr. BURGESS. Perhaps.

Let me ask you this, and I appreciate your position as well, but,

as you kind of look at the evolution of insurance and insurance

benefits, at least over the time I was in clinical practice, I mean,

we had the time when all of obstetric benefits weren’t covered, and

then slowly those were incorporated in. There have been other

things that have been slowly incorporated into the insurance world.

Would you see this as just part of the—perhaps the normal evolution of insurance benefits that we just might otherwise expect to

see happen?

Ms. ROGERS. Yes, I do agree with that. As people learn more, and

there is more information out about mental health issues, I think

that you will see more and more issues being covered.

Now, I never said that we were against mental health parity.

Our issues lie with having one Federal system for major multinational employers who are trying to compete globally. That is our

main concern. And so that gives us a lot of heartache, this particular bill does, because of that.

Mr. BURGESS. Let me just interrupt you. Does the Senate bill

give you less heartache?

Ms. ROGERS. Far less; yes, it does.

Mr. BURGESS. Let me move to one last thing, because I just have

to get this out. Mr. Klein, you said it is just an issue of fundamen-
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tal fairness that Medicare and Medicaid, I presume SCHIP, veterans benefits, should provide the same parity that we are talking

about imposing upon the private sector. Did I grasp that concept

correctly?

Mr. KLEIN. That is correct.

Mr. BURGESS. And, Dr. Goldman, your contention would be

should we take that step, we would, in fact, save money for Medicare, Medicaid, SCHIP, veterans health care. Is that correct?

Mr. GOLDMAN. I think what I would say is we could improve insurance coverage and not have a big cost impact.

Mr. BURGESS. Has anyone—we have to live and die by the CBO

here, and the Congressional Budget Office refuses to allow us to

dynamically score things. We always used to have to score things

on what the direct cost is. Have any of you looked at that to any

degree?

Mr. KLEIN. Congressman, I have not looked at it lately, but

memory seems to serve me that back in 1996, when the initial parity law was enacted, that there was, I think, some CBO calculation

around that issue. I would be happy to check into that. And it obviously would need to be updated, but I think there might have been

some sometime back.

Mr. PALLONE. Mr. Burgess, you are over.

Mr. Murphy.

Mr. MURPHY. Thank you, Mr. Chairman.

Ms. Rogers, let us say you are the CEO of a company, or maybe

even vice president of a division, and one of your employees who

has been around for a while has just been promoted himself to

maybe high-level executive of sales. And you notice, you hear reports that what is happening is his performance is beginning to deteriorate pretty significantly, restless, perhaps falling asleep in

meetings, absent-minded, distractable, moody, irritable, perhaps

even leading to loss of sales and productivity. Would you want to

have him evaluated?

Ms. ROGERS. Well, I don’t know if I would require that this person be evaluated.

Mr. MURPHY. You spent a lot of money over the years training

this person.

Ms. ROGERS. I think that I would—most of our members have

counselors on staff, and it would be more appropriate for that type

of person to talk to this senior salesperson.

Mr. MURPHY. Like an employee assistance person or something?

Ms. ROGERS. Yes.

Mr. MURPHY. Let us say they recommended this person have

some medical evaluation, and there is a lot of things that could relate to that. It could be a tumor, it could be narcolepsy, could be

a diabetic, could be depressed.

Ms. ROGERS. That is true.

Mr. MURPHY. It could be jet lag. What do you do if there is a diagnosis of jet lag? You specifically referred to that in your——

Ms. ROGERS. Yes, I do.

Mr. MURPHY. Do you know what the treatment is for jet lag?

Ms. ROGERS. I would assume that it would be make sure that

you are hydrated, because flying dehydrates——
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Mr. MURPHY. You adjust your flight schedule. It is not a psychiatric treatment. But the DSM-IV—I am trying to help you understand, because it comes up so much among some people trying

to be a little psychiatric diagnosis. They use that one, or shyness,

et cetera. Just because it is in the DSM-IV doesn’t mean it is a psychiatric treatment. You have to label everything. If a person shows

up and they say, well, the good news is we don’t have to spend

hundreds of thousands on other things for you, it is jet lag, instead

of talking to a psychiatrist, you talk to the person who books their

flights.

Here is another thing, too, I want you to know, because this is

so important when it comes to providing things for mental health

services, and that has to do with a lot of times people are not providing mental health services, but they will have like—they are

screened by a general practitioner or someone. And a good example

of where this can break down is I think in the use of Paxil, psychiatric medication for depression. Tragically, it is associated with

a higher risk of suicide and other complications. But I know when

I have talked to students in medical school and other things, the

highest risk for suicide comes when the patient starts to get better.

They lose their social supports, they start to get better, they feel

energized. And what happens so often is that 75 percent of psychiatric drugs are prescribed by nonpsychiatrists. When you have

heart disease, you double the chance of depression. If you don’t

treat the depression, you double the cost of the treatment, the illness. And many times cardiologists say, all right, looks like you

have a terrible heart disease, I am going to describe Prozac for you,

too. But that person never goes on to get the treatment they need

where you can really reduce costs.

And the point being made by Mr. Purcell, et cetera, is when this

is done—I wouldn’t say managed care, I would say care management, because I hate that word ‘‘managed care.’’ it really is helping

to manage a person. It is making sure the right things get done.

And I would hope that as you look at some of the studies that you

refer to, it is so important to look at who is doing the treatment

and how it is done. It could be a big cost if it is done wrong. But

when we look at these things, shyness and other things like that

caffeine withdrawal, those are simply labels to say if you have caffeine withdrawal, the treatment is stop drinking so much coffee; jet

lag, talk to the person who books your flights.

But when you are dealing with depression and bipolar illness

and other things, you got to keep this in mind. I think that, and

I hope the business community pays attention, too, and that is that

these are real employees they invest thousands of dollars in training and all these other things for, and if we look at this in the big

picture, what is the proper treatment and the proper diagnosis, it

is as important as saying if someone else had some other medical

problems, you want to get the proper treatment.

I would go back to this. If that great sales manager did have a

tumor, and you only sent him to the employee assistance program

that says, Joe’s just kind of moody, he has been a bad employee,

get rid of him, I don’t think we would want that. If he did have

narcolepsy or diabetes or something, we would want that treatment.
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And so I see us looking at mental health parity as something

where you are really bringing the experts in to make decision. You

manage that case so they just aren’t going off somewhere and making sure, for example, they don’t get some folk treatment. Someday

I would like to find out what you mean by that, too. But I think

the idea is you get the experts together to get more effective and

cost-effective treatment. And that is part of that, so——

Ms. ROGERS. Yes. And I think we agree more so than disagree.

And personally, I am a big advocate of mental health benefits, and

I spend a lot of money on them myself. My dad has psychosis. I

have two children that are premature. And none of the experts I

have been to even take insurance. So you might want to look at

that issue.

Mr. MURPHY. Probably not covered.

Ms. ROGERS. Well, I do have mental health benefits through Blue

Cross, but they don’t take my insurance, so I just have to pay for

it personally. So, that is an issue, too.

But, remember, I mentioned that our members have very generous mental health benefits. In all of our surveys we couldn’t find

complaints from employees that felt like they were not covered for

everything that they needed to be covered. These are America’s

largest employers, 25,000 employees and up.

Mr. MURPHY. Well, then there is a lot of those employers who

really say they have a cost savings, and not a loss.

Thank you, Mr. Chairman.

Mr. PALLONE. Thank you. And let me thank all of you. I know

this is such an important issue, and we do really want to deal with

it effectively, and your testimony was very helpful to us as we proceed.

I would also mention that the members have the option of submitting additional questions to you within the next 10 days or so,

and the clerk would notify you of that. So just keep that in mind

and respond in writing if you get those requests.

And without further ado, again I want to thank you. And I hope

that we can move in an expedited fashion on the legislation. This

hearing is adjourned.

[Whereupon, at 2:34 p.m., the subcommittee was adjourned.]

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