[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

                         EPIDEMIC OF ADDICTION?



                               before the


                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION


                            OCTOBER 21, 1999


                           Serial No. 106-138


       Printed for the use of the Committee on Government Reform

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


66-251                     WASHINGTON : 2000



                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                      Carla J. Martin, Chief Clerk
                 Phil Schiliro, Minority Staff Director

   Subcommittee on Criminal Justice, Drug Policy, and Human Resources

                    JOHN L. MICA, Florida, Chairman
BOB BARR, Georgia                    PATSY T. MINK, Hawaii
MARK E. SOUDER, Indiana              ROD R. BLAGOJEVICH, Illinois
STEVEN C. LaTOURETTE, Ohio           JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
DOUG OSE, California                 JANICE D. SCHAKOWSKY, Illinois

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
           Sharon Pinkerton, Staff Director and Chief Counsel
              Steve Dillingham, Professional Staff Member
                Mason Alinger, Professional Staff Member
                          Lisa Wandler, Clerk
                    Cherri Branson, Minority Counsel

                            C O N T E N T S

Hearing held on October 21, 1999.................................     1
Statement of:
    Conley, Michael, chairman of the Board of Trustees, the 
      Hazelden Foundation; Michael Schoenbaum, economist, RAND 
      Corp.; Kenny Hall, addiction specialist, Kaiser Permanente; 
      Capt. Ronald Smith, M.D., Ph.D., vice-chairman, Department 
      of Psychiatry, National Naval Medical Center; Peter 
      Ferrara, general counsel and chief economist, Americans for 
      Tax Reform; and Charles N. Kahn III, president, Health 
      Insurance Association of America...........................    51
    Ramstad, Hon. Jim, a Representative in Congress from the 
      State of Minnesota.........................................    27
    Rook, Susan, media consultant................................    41
    Wellstone, Hon. Paul, a U.S. Senator in Congress from the 
      State of Minnesota.........................................     5
Letters, statements, et cetera, submitted for the record by:
    Conley, Michael, chairman of the Board of Trustees, the 
      Hazelden Foundation, prepared statement of.................    53
    Ferrara, Peter, general counsel and chief economist, 
      Americans for Tax Reform, prepared statement of............    83
    Hall, Kenny, addiction specialist, Kaiser Permanente, 
      prepared statement of......................................    71
    Kahn, Charles N., III, president, Health Insurance 
      Association of America, prepared statement of..............    87
    Mica, Hon. John L., a Representative in Congress from the 
      State of Florida, letter dated Novemebr 12, 1999...........    97
    Mink, Hon. Patsy T., a Representative in Congress from the 
      State of Hawaii, letter dated October 20, 1999.............     9
    Ramstad, Hon. Jim, a Representative in Congress from the 
      State of Minnesota, prepared statement of..................    31
    Rook, Susan, media consultant, prepared statement of.........    43
    Smith, Capt. Ronald, M.D., Ph.D., vice-chairman, Department 
      of Psychiatry, National Naval Medical Center, prepared 
      statement of...............................................    79
    Sturm, Roland, Ph.D., RAND Corp., prepared statement of......    61

                         EPIDEMIC OF ADDICTION?


                       THURSDAY, OCTOBER 21, 1999

                  House of Representatives,
Subcommittee on Criminal Justice, Drug Policy, and 
                                   Human Resources,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2154, Rayburn House Office Building, Hon. John L. Mica 
(chairman of the subcommittee) presiding.
    Present: Representatives Mica, Barr, Souder, Hutchinson, 
Ose, Mink, Kucinich, Tierney, and Schakowsky.
    Staff present: Sharon Pinkerton, staff director and chief 
counsel; Steve Dillingham and Mason Alinger, professional staff 
members; Lisa Wandler, clerk; Cherri Branson, minority counsel; 
and Jean Gosa, minority staff assistant.
    Mr. Mica. I would like to call this hearing to order this 
morning. We do have a full schedule, and so we will go ahead 
and proceed.
    The subject of today's hearing is Substance Abuse Treatment 
Parity: A Viable Solution to Our Nation's Epidemic of 
Addiction, is the question that is asked and before our 
subcommittee. I am pleased that we have three panels of 
witnesses who are providing testimony.
    I will start today's hearing with an opening statement and 
then yield to our ranking member and other Members who will be 
joining us, but we do want to go ahead and proceed since we do 
have a lengthy schedule.
    The Subcommittee on Criminal Justice, Drug Policy, and 
Human Resources convenes today to discuss our country's war on 
drugs from a perspective that is different from that of 
previous hearings. Recently, we have held a number of hearings 
on topics that impact the supply of drugs in our Nation. Our 
hearings have ranked from international narcoterrorism 
developments in Colombia to interdiction operations and 
resource needs across our southwest border. Last week, we held 
an important and insightful hearing on what is being done 
through our now federally funded media campaign to reduce the 
demand for drugs.
    Today, we will examine another important component of 
national efforts to reduce the demand for drugs. We will focus 
on drug treatment and funding options that might be affordable 
and make a difference in the drug war. Treatment generally 
receives less coverage in the press and is often misunderstood. 
We will examine carefully how treatment might be used to reduce 
drug-related deaths and destruction.
    Today, we will hear more about the positive consequences of 
successfully treating drug abuse. We are especially grateful to 
our witness who has come forward to tell us about her personal 
experiences. Her testimony will illustrate how some people with 
alcohol and illicit drug addictions have broken those terrible 
chains and regained control of their lives.
    We all agree that the number of such positive outcomes from 
addiction should be increased to the greatest extent possible. 
Accordingly, drug treatment benefits and funding options 
deserve our close attention.
    Since 1996, Congress increased Federal spending from $13 
billion to almost $17.8 billion for drug control programs and 
activities. Most of this increased funding has been targeted 
toward reducing demand. Of the $4 billion increase, 26 percent 
was set aside for improving treatment options.
    However, despite the commitment of more dollars and an 
emphasis on treatment and reducing the demand for drugs, 
alarming trends demonstrate the need for further action. We 
know, for example, that from 1993 to 1997 the number of 
Americans reporting heroin use rose from 68,000 to 725,000--
more than quadrupling.
    With an estimated 26 million Americans addicted to drugs 
and alcohol, the human toll is ever present. In mid-August, 
drugs claimed the life of a young 13-year-old in central 
Florida. The soon-to-be eighth grader, Jonathan Hilaire, died 
of a cocaine overdose while visiting Disney World in Orlando.
    How can this happen? What can be done to save these young 
lives? I think we can all agree that more action is needed.
    Mrs. Mink, I don't know if you saw, we have the most recent 
statistics on drug-induced deaths; and it has now climbed to 
over 15,000, I think it is 15,200, which is a 7.8 percent 
increase over last year.
    In fact, combating substance abuse requires the best 
efforts of our Federal, State and local governments; our 
families and communities; our social and religious 
institutions; and our employers and private sector businesses.
    In recent years, some observers have adopted the view that 
drug addiction should be considered as a brain disease, because 
of accompanying biological changes that occur in the brain. 
Others argue that addiction is primarily a behavioral disorder, 
often as the result of personal or character weaknesses over 
which individuals can and should exercise personal control.
    These differing views also must factor in the realization 
that we expect the criminal justice system to respond to drug-
related crimes--and to encourage law-abiding behaviors. This 
responsibility often includes the treatment of offenders for 
drug addictions. Numerous studies indicate that the longer a 
person stays in an attempt program, the better the outcome will 
be. Treatment options enforceable under the law provide added 
leverage to ensure an abuser's participation.
    Today, we will discuss options for including substance 
abuse treatment in employee health plans.
    Too often, we stereotype drug addicts as being people 
unable to hold down regular jobs. A Bureau of Labor Statistics 
report released earlier this year reports that more than 70 
percent of those using illicit drugs and 75 percent of 
alcoholics do, in fact, hold down regular jobs. This represents 
a significant portion of the country's substance abusers. Many 
of these employees have, or may acquire, access to some form of 
employer-provided health care coverage.
    Today, it has been estimated that only about 2 percent of 
substance abusers are fortunate enough to be covered by health 
plans that provide for adequate treatment. I recognize that a 
handful of States already have passed legislation that includes 
substance abuse parity provisions. I also fully realize that 
unwise Federal mandates can disrupt markets, cause 
inefficiencies, and have other unintended negative 
consequences. For these reasons, any new Federal mandates 
should be considered only under exceptional circumstances of 
demonstrated need.
    In light of the impact of drugs on our lives and 
livelihood, we must consider all appropriate and promising 
measures. If affordable and effective, employee access to 
substance abuse treatment through employee health plans might 
be a viable weapon in reducing the demand for drugs in this 
country. The National Institute for Drug Abuse [NIDA] estimates 
that drug treatment reduces use by 40 to 60 percent and 
significantly decreases criminal activity after treatment.
    In addition to preventing human misery, promoting substance 
abuse treatment potentially could have significant economic 
    The costs of both drug and alcohol addiction to society--
including costs for health care, substance abuse prevention, 
treatment for addiction, combating substance-related crimes and 
lost resources resulting from reduced worker productivity and 
deaths--are enormous. Estimates range from $67 billion annually 
up to $246 billion--almost a quarter trillion dollars.
    The Substance Abuse and Mental Health Administration 
[SAMHSA], claims that dollars spent on substance abuse 
treatment can have tremendous savings--saving society as much 
as $4 to $7 for each dollar that is wisely invested in 
effective drug treatment. If accurate, spending a comparatively 
small percentage of our business dollars for prevention and 
treatment--an amount less than what would be needed to recoup 
the costs of lost productivity due to addictions--might be a 
wise and cost-effective investment.
    Legislative proposals for providing substance abuse 
treatment in employee health plans have taken varying 
approaches. The different proposals introduced in this Congress 
focus on providing insurance benefits for substance abuse 
treatment that are equal to benefits for other medical and 
surgical care. While these bills promote access to substance 
abuse treatment through employee health plans, consensus has 
not been reached regarding the scope of coverage and the cost 
that employees and employers must bear.
    The panels of witnesses before us this morning will discuss 
treatment successes, studies, legislative proposals and 
possible treatment payment options.
    In some instances, comparisons will be made to the Mental 
Health Parity Act of 1996 and how that law has impacted 
employers, insurers, treatment providers, participants and 
others. The act imposed a national minimum benefit standard for 
mental health benefits on employer-sponsored health insurance 
for the first time.
    Key questions we must consider are whether the approach 
taken with mental health treatment benefits is working and 
whether this approach is fully applicable to alcohol and 
substance abuse treatment benefits.
    Our first two panelists are very respected Members of 
Congress. We are very pleased to have one individual leader on 
this subject from the U.S. Senate and another fellow colleague 
of ours who has been a champion in the House of 
Representatives. Each has worked long and hard to promote 
substance abuse treatment parity at a national level. We look 
forward to hearing their thoughts and proposals on the subject, 
and I will introduce them in just a minute as our first panel.
    The panelist on our second panel has graciously agreed to 
come and share her personal story of addiction. Her remarks 
will serve to enlighten us about the difficulties faced by 
those who struggle to overcome substance abuse, and we will 
hear her personal success in meeting that challenge.
    Our third panel is made up of experts from the field who 
will discuss the costs and benefits of treatment and their 
ideas and concerns regarding substance abuse treatment parity 
in health care plans.
    These officials, experts, and persons with firsthand 
knowledge of addiction and treatment will give us a better 
understanding of this critical issue and how we might promote 
effective substance abuse treatment in our efforts to combat 
addiction and illegal narcotics. We look forward to hearing 
this testimony.
    I am pleased at this time to yield to our ranking member on 
the panel, the distinguished gentlelady from Hawaii, Mrs. Mink.
    Mrs. Mink. Thank you, Mr. Chairman. I especially want to 
commend you for holding these hearings on substance abuse 
treatment. I want to thank Senator Wellstone and Representative 
Ramstad for coming and taking the time to give us their own 
perspective on this very important issue.
    Mr. Chairman, we all know that there are a wide variety of 
approaches toward this drug menace in our country. Law 
enforcement, interdiction, and prevention programs are all 
important. However, when the individual becomes addicted to 
drugs, we must have in place access to treatment.
    The Office of National Drug Control Policy reports that 50 
percent of the adults and 80 percent of the children who need 
substance abuse treatment do not receive it. That is really the 
heart of our hearing today. Numerous studies show that 
treatment is both effective and cost effective in saving lives. 
Therefore, Congress, I feel, should move quickly to require 
private coverage. This is certainly one area which, if we 
ignore, vast numbers of people who are uninsured may not be 
able to get the treatment that they need.
    I hope that as a result of the hearings today, Mr. 
Chairman, that we will not only have a greater understanding of 
the problem, but come closer to finding a solution so that 
those individuals who need treatment have access to them out of 
national policy as well as State and local.
    Thank you very much, Mr. Chairman.
    Mr. Mica. Thank you.
    We will allow other Members to submit their opening 
statements or statements for the record. We will leave the 
record open for at least 10 days for submissions.
    I would like to proceed now with our first panel which 
consists of two very distinguished Members of Congress, one 
from the Senate and one from the House, two leaders who have 
fought to bring the problem of chemical dependency to the 
forefront of the Congress and the Nation.
    The first individual I will recognize is a leader from the 
Senate side. He is the senior Senator from Minnesota. His 
committees include Health, Education, Labor and Pension 
Committee. He is also on Foreign Relations, Small Business, 
Indian Affairs and Veterans Committee. In the 105th Congress, 
he was the author of the Substance Abuse Treatment Parity Act 
of 1997. In the 106th Congress, he was the sponsor of the 
Fairness in Treatment, the Drug and Alcohol Addiction Recover 
Act of 1999.
    We certainly applaud your leadership on these issues and 
welcome you to our panel over on the House side this morning. 
We would like to recognize you at this time.


    Senator Wellstone. Thank you, Chairman Mica and Ranking 
Member Mink, for the opportunity to speak to this subcommittee 
on the important issue of parity for alcohol and drug addiction 
    I want to thank my colleague, Jim Ramstad. It has been 
productive and really a very rewarding experience to work with 
him on this legislation, and I think he has really been one of 
the leaders in the country because he has used his own very 
empowering and personal experience as a successful and I think 
as a highly respected representative who speaks out about what 
he has been through, and I think his voice is terribly 
    I also want to thank Michael Conley, the chairman of the 
Board of Trustees of Hazelden from Minnesota.
    You mentioned Susan Rook, Mr. Chairman. I would like to 
thank Susan for her courage as well.
    And I want to make a quick apology to the panelists. There 
are a lot of people here, and you speak and you leave, and it 
almost seems like you don't care. I am not even going to get a 
chance to hear Jim's testimony. I have two committees and a 
vote that is coming up in the next 20 minutes, and so I will 
try to be brief.
    I have introduced a full parity bill, S. 1447, and 
basically what we are talking about is full parity or ending 
discrimination in insurance coverage for drug and alcohol 
addiction, and I am pleased to say that this bill was 
introduced with Senator Daschle, who is our minority leader in 
the Senate, Senators Kennedy, Moynihan, Inouye and also Senator 
    The bill provides, and this is I think really the key 
point, for nondiscriminatory coverage of drug and alcohol 
addiction treatment service by private health insurers. The 
bill does not require that drug and alcohol be a part of any 
health care benefits package. It doesn't require that. So in 
that sense there is no mandate whatsoever. It prohibits 
discrimination by health plans who offer such benefits but all 
too often place restrictions on the treatment that are 
different from other medical services.
    It is my full intention to move this bill forward in the 
Senate, and I am looking forward to working with you all on the 
House side. I want to applaud the administration's efforts 
during the last year to recognize the need for this coverage 
for Federal employees. I think that was a positive step 
    I want to applaud the work of General McCaffrey and to 
recognize his efforts to end drug addiction; and the point that 
he makes which is he will not be successful if we just focus on 
the supply side, although we must, but we must also focus on 
the demand side and you mentioned that as well, Mr. Chairman.
    I will gloss over the statistics. I think we all know them. 
The disease, I use that word deliberately, of alcohol and drug 
addiction, costs our Nation $246 billion annually, $1,000 for 
every man, woman and child; and the fact of the matter is that 
it doesn't tell us anything in personal terms about broken 
dreams and broken lives and broken families and all of the 
people who, if they had treatment like Congressman Ramstad, 
could live such a productive life, could do so much for our 
country and do so much for our community.
    I would like to thank Congresswoman Mink for her statistics 
on those who don't receive the coverage. Therefore, I am not 
going to go over those figures at all.
    The question that is posed in the title of the subcommittee 
hearing is this: Is substance abuse treatment parity a viable 
solution to the Nation's epidemic of addiction? The answer, Mr. 
Chairman, is yes. Not only is it viable, but it is necessary. 
At this point the crisis of drug and alcohol addiction in this 
country warrants solutions from all sectors of our society, all 
levels of government, the insurance industry, education and 
health care as well.
    Now, most private health insurance plans that cover alcohol 
and drug treatment, this is the problem, set discriminatory and 
unrealistic annual lifetime and visit limits on the treatment, 
and these limits fly directly in the face of the scientific 
recognition of addiction as a chronic, recurrent condition.
    As a result of these limits, most people who seek treatment 
who seriously want to end their addiction can't get the 
treatment. I think Congresswoman Mink made this point very 
well. That is really what this is about. Proper medical 
treatment for the disease of addiction is an essential part of 
this recovery.
    When privately insured individuals have no benefits, or 
when you have a plan which does not provide any coverage for 
this addiction, quite often the public sector has to pick it 
up. That is what happens. Or, I am very sorry to say that all 
too often children and sometimes adults basically wind up in 
correctional facilities for their treatment program, which is 
wrong--and that kind of treatment is terribly inadequate.
    Now there will be others who talk about the cost issue, 
just to mention that the RAND study is extremely important. As 
a matter of fact, the costs for full parity for drug and 
alcohol treatment addiction are very low, but the costs for 
failure for treatment are terribly high. That is what we want 
to say.
    Finally, let me conclude this way. I want to emphasize the 
research. I want to emphasize the data, and the scientific 
evidence, the work that is being done at NIH, the National 
Institute on Drug Abuse and the National Institute on Alcohol 
Abuse and Alcoholism which basically say that treatment is 
effective. We know from this research that addiction causes 
long-lasting changes in the brain, changes that in fact 
contribute to relapse. We are talking about a chronic and 
relapsing disease that can be treated if there is that 
treatment, and what we want to do in this legislation is not a 
mandate but just end the discrimination.
    Now, the principle of ending this discrimination in 
insurance coverage for treatment has received strong support 
from the White House, from General McCaffrey, former Surgeon 
General C. Everett Koop, former President and Mrs. Gerald Ford, 
the U.S. Conference of Mayors, Kaiser Permanente Health Plans 
and many leading figures in medicine, business, government, 
journalism and entertainment who have successfully fought this 
battle of addiction with the help of treatment.
    We had hearings last year in the Senate which were very 
helpful, and that is why I appreciate these hearings. We had 
hearings in the Senate Appropriations Committee and in the 
Committee on Labor, Education and Pensions which highlighted 
all of the recent major advances in scientific information 
about the disease, the biological causes of addiction, and the 
effectiveness and low cost of treatment, and the many painful 
personal stories of people, including children, who have been 
denied treatment. That is part of the record of the Senate.
    It is time for this disease to be treated with fairness, 
and it is time to end the discrimination against those with 
this disease. I commend this subcommittee for holding this 
hearing today. I commend you for bringing this important issue 
to light. And, most important of all, Mr. Chairman, by forming 
an alliance between those who support supply and demand side 
solutions, we as a country will be able to help millions of 
Americans affected by this disease. I think that is what this 
hearing is about.
    I thank my colleague, and again I apologize to other 
Congressmen that have come in that I have to leave, but thank 
you very much.
    Mr. Mica. Senator, before you scoot, and I know that you 
have to get away, if we could get just one or two quick 
questions. There are about eight States I think that have 
adopted similar measures. I am not really that familiar with 
what each State has to what you are proposing, including 
    One of the constant things that we hear is that there may 
be significant additional costs in premiums to the insurance 
insurers and those paying the premiums. To your knowledge, in 
the eight States or Minnesota, has there been any significant 
difference in costs since they passed these parity 
    Senator Wellstone. I appreciate the question, and Jim may 
have the exact figures. It is a perfect question to ask and a 
perfect question for me to answer.
    Actually, in Minnesota we have done both the mental health 
and substance abuse in ending discrimination, and all of the 
reports have been that it is extremely cost effective, hardly 
any rise in premiums. But there is also, and you may have it, 
Jim, the estimates of the savings for the State. In other 
words, these costs are no longer dumped on the public sector, 
and the productivity of people who have been treated adds to 
the cost effectiveness.
    So the reports that we have out there show very strong 
support both by Democrats and Republicans, and we have not had 
that problem at all.
    I think Ronald Sturm is going to be testifying for RAND 
Corp. about the study of the costs nationally.
    The interesting thing is that in this particular area every 
study I have seen, every analysis that I have seen, including 
independent analyses, points out that not only can the 
treatment be effective but it is quite cost effective as well.
    In Minnesota--one problem is that we can't get self-insured 
plans. That is the whole ERISA question, in which case people 
look to us in Congress to try to pass some kind of legislation 
that will deal with this discrimination.
    Mr. Mica. Mrs. Mink.
    Mrs. Mink. Mr. Chairman, I don't know if you are putting 
this letter from General McCaffrey into the record.
    Mr. Mica. We would be so glad to. Without objection, so 
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    Mrs. Mink. And in response to your inquiry, which I think 
is very critical, in this report it says that the studies show 
that the average premium increase is only 0.2 percent, so it is 
very minimal. So I don't think that it is a cost factor. There 
is some hang-up someplace else.
    Senator Wellstone. I think, Congresswoman Mink, and I leave 
on this, and you will find this in the hearing today and many 
of you already know it, you have this disconnect or lag between 
the scientific evidence, the data, and the perceptions that 
people have, both about what we are talking about, also about 
the nature of this disease and also about the treatment and the 
cost of it. The consequences are really tragic of our not 
trying to end this discrimination and getting some coverage for 
    Thank you very much.
    Mr. Mica. Thank you, Senator, and we will let you scoot.
    I would like to now recognize our champion on this issue, 
someone who is really the leading force in our conducting this 
hearing today, who has been just tireless in trying to bring 
this issue before Congress. As we all know, this is a tough 
venue, but there are individuals among us who will take an 
issue and just hammer away and work at it, and Jim Ramstad, who 
has himself had problems and is a survivor from chemical 
dependency, I have heard him talk about it, has turned a 
difficult personal experience into something very positive for 
himself and also for our country and has been the leader since 
he came to Congress on this issue.
    He is also on the Ways and Means Committee and on the 
Health and Trade Subcommittees and House Law Enforcement Caucus 
and Medical Technology Caucus, and he is in the author in the 
105th Congress of the Substance Abuse Treatment Parity Act of 
1997 and sponsor of the Substance Abuse Parity Act of 1999 in 
the 106th Congress. And, again, just an untiring champion. And 
we thank you for your persistence and are pleased now to 
recognize you.


    Mr. Ramstad. Thank you very much, Mr. Chairman, Ranking 
Member Mink, and members of the distinguished panel. I 
appreciate your leadership and in particular, Mr. Chairman, 
your kind words. Also, I want to thank Sharon, Mason, and Steve 
from your staff for helping put this hearing together, as well 
as Megan from my staff.
    Mr. Chairman, members, we are talking about the epidemic of 
addiction in America, dealing with an epidemic, and I use that 
term advisedly because 26 million Americans are presently 
addicted to drugs and/or alcohol. Of these addicted, 16 million 
people are covered by health insurance plans, but only 2 
percent of these 16 million, as the chairman pointed out, can 
access effective treatment.
    That is because of, as Senator Wellstone explained, 
discriminatory caps, artificially high deductibles, limited 
treatment stays and copayments that don't apply to any other 
diseases. In short, only 2 percent of alcoholics and addicts 
covered by health plans are accessing treatment because of 
discrimination, discrimination against people with addiction.
    Now every day we all hear talk around here of the goal of a 
``drug-free America.'' But we will never even come close to a 
drug-free America until we knock down these barriers of 
discrimination, these barriers to chemical dependency 
treatment. We can build all of the fences on our borders, all 
of the prison cells that money can buy, hire border guards, 
other drug enforcement officers, but simply dealing with the 
supply side of the drug problem will never solve it.
    Mr. Chairman, your words in your opening statement were 
very refreshing. You recognized the need to deal with the 
demand side, to deal with treatment as well as the supply side.
    The American Medical Association first recognized in 1956 
that chemical addiction is a disease, and it is a fatal disease 
if not treated properly. If we are serious about reducing 
illegal drug use in America, we must address the disease of 
addiction by putting chemical dependency treatment on par with 
treatment for other diseases. If you believe what the American 
Medical Association told the Congress and the country in 1956, 
then you can't justify the discrimination. And that is why 
Senator Wellstone and I introduced the Substance Abuse 
Treatment Parity Act named after Harold Hughes in the Senate 
and Bill Emerson in the House with whom many of us served. 
Their recoveries from addiction certainly inspired thousands of 
chemically dependent people, including myself. We now have 50 
co-sponsors in the House for this legislation.
    And this the bill that we are bringing forward would enable 
16 million Americans to receive treatment without significantly 
increasing health care premiums. It is the right thing for 
Congress to do, and it is clearly the cost effective thing to 
    I am a recovering alcoholic, and I know that the treatment 
works, and I know firsthand the value of treatment. I have been 
in recovery for over 18 years, and I am absolutely alarmed by 
the dwindling access to treatment in America. Over the last 10 
years, over 50 percent of the treatment beds are gone. Even 
more alarming is the fact that 60 percent of the adolescent 
treatment beds in America have disappeared in the last 10 
    Why do we have youth violence? Why do we have so many 
problems with juvenile crime? Let's look and treat the 
underlying cause--addiction. Any police officer will tell you 
that 80 percent of it is related directly to addiction. Now, 
over half of the treatment beds are gone for adults, 60 percent 
for adolescents. Why? Because only 2 percent of the alcoholics 
and addicts covered by health plans are able to access 
    It is time, Mr. Chairman and members of this panel, to 
reverse this alarming trend. It is time to end the 
discrimination against people with alcoholism and drug 
dependency. It is time to provide access to treatment by 
prohibiting the discriminatory caps, the high deductibles, the 
copayments that don't apply to any other disease.
    We have all of the empirical data, including actuarial 
studies, to prove that parity for chemical dependency treatment 
will save billions of dollars nationally while not raising 
premiums, as you explained, more than two-tenths of 1 percent 
in the worst-case scenario. Dr. Roland Sturm is here, the 
senior economist with the RAND Corp., to testify on the cost 
savings from parity for treatment. Because that is the first 
question I asked when I was approached by people with addiction 
and others from my district to champion this legislation. The 
first thing I asked, what is it going to cost in terms of 
increased premiums?
    In addition to savings billions of dollars, every dollar 
spent for treatment saves $7 in health care costs, criminal 
justice costs, lost productivity, injury, sub par work 
performance, and so forth. A number of studies have shown that 
health care costs alone are 100 percent higher for untreated 
alcoholics and addicts compared to people like me who have had 
the benefit of treatment. Think of that. Health care costs for 
these 26 million untreated alcoholics and addicts today in 
America are 100 percent higher than they are for people like me 
and Ms. Rook, who will testify shortly, who have had the value 
of treatment.
    Mr. Chairman, I would like to address one last point which 
has been raised in opposition to this critical legislation, and 
that is the argument that it imposes a mandate. H.R. 1977, the 
Substance Abuse Treatment Parity Act, does not require 
insurance companies or health plans to cover anyone for 
treatment of chemical dependency. It simply bans discrimination 
by saying that addiction must be treated like any other 
disease. Plus there is an exemption option. If the sky fell in 
and for some reason health care costs increased 1 percent or 
greater, then the parity requirement is off. No parity. And of 
course businesses with 50 employees or fewer are exempted under 
this legislation.
    Let me just say in closing, Mr. Chairman and Members, that 
I truly do appreciate this hearing today. The fact that you 
accommodated my requests for many of the witnesses here today, 
you are going to hear from some incredible people, and I hope 
many of you can hear their testimony. They are vital 
stakeholders in the battle against drugs and alcohol addiction, 
recovering physicians and people, employers and insurance 
company representatives. They know, like the American Medical 
Association told us in 1956, that we are dealing with a 
disease. If you believe that, if you accept that, then there is 
no way that we can justify the continued discrimination against 
people with addiction. We cannot justify discrimination against 
this disease.
    We also know and I know firsthand that this disease, if not 
treated, is fatal. It is a fatal disease we are dealing with. 
And I am very grateful as a recovering alcoholic, because I 
know, Mr. Chairman, without any doubt at all if it weren't for 
treatment, I would be dead. I would not be here because of the 
quantities of alcohol that I was consuming over a 12-year 
period of time.
    I didn't want to be an alcoholic. I had two uncles who died 
of this addiction. One was a doctor who did very well on my 
mother's side of the family. The other was a very successful 
businessperson, my uncle George in Alaska, who died after 
making millions of dollars in the construction business, who 
died on Skid Row in Anchorage drinking wine out of a brown 
paper bag.
    I didn't want to be an alcoholic. Nobody chooses to be an 
alcoholic. There are various components to this disease, and I 
trust that this panel understands the disease nature of 
    I truly hope that each one of you will work hard with me, 
with Mark Souder, with others who are championing this 
legislation because, believe me, it is not my battle alone. We 
have 50 cosponsors bridging the ideology gap in the House, from 
some of the most conservative friends and Members on the far 
right to some of our most liberal friends on the far left, and 
a lot of us who are more centrist.
    This is not a political issue. It should not be partisan. 
It is a human issue, a life-or-death issue.
    And, Mr. Chairman, again, let me express my gratitude to 
all of you for holding this hearing today and working together 
in a bipartisan, common-sense, pragmatic way to move this 
legislation forward. Thank you.
    Mr. Mica. Jim, I thank you for your very compelling 
testimony and, again, your leadership on this issue. You do so 
I think from the heart and from personal experience in trying 
to bring some hope and resolution to the great personal problem 
that you have had and so many others have experienced.
    [The prepared statement of Hon. Jim Ramstad follows:]

    [GRAPHIC] [TIFF OMITTED] T6251.019
    [GRAPHIC] [TIFF OMITTED] T6251.020
    Mr. Mica. I would like to see if you have any questions, 
any questions from our side? Go ahead, Mr. Hutchinson.
    Mr. Hutchinson. Thank you, Mr. Chairman.
    I want to express my appreciation to Representative Ramstad 
for his compelling testimony and personal experiences he 
shared. I doubt that there are many Members of Congress who do 
not have some family member somewhere who has been impacted by 
    In my life, I have had a nephew, and I have very close 
family members that have had substance abuse problems, and it 
can be fatal. For my nephew, it was not a matter of access to a 
treatment facility, it was a matter of it not being successful, 
and he ultimately committed suicide.
    I am certainly struck by your testimony. There has been a 
decline in adolescent treatment beds, and I would like for you 
to elaborate why you see that is the case. Is it simply a lack 
of resources and people cannot afford these beds? And then what 
obstacles are you running into getting this legislation 
    Mr. Ramstad. Thank you for the comments and for sharing 
your own family experience.
    Each week on the average I get two to three calls from 
people, mostly in Minnesota, but sometimes elsewhere, recently 
in Oklahoma, Florida, from people with sons or daughters, 
families who are suffering the ravages of addiction. Virtually 
all of these people, most of them, although the one in Oklahoma 
didn't, most are covered by insurance plans. One or two of the 
parents are gainfully employed and covered for substance abuse 
treatment. But because of the limitations placed on the plans, 
they are not able to access treatment.
    I wish I had all day, and I would like to share with you a 
couple of those statements.
    A family in Eden Prairie, a family in a town in Oklahoma 
and a family in Florida who have been absolutely devastated, 
and at least two of those families had insurance, but the main 
problem is only 2 percent of the 16 million people covered 
under health plans are able to access treatment because of the 
limited treatment stays, on the average from 2 to 7 days.
    Dr. Smith, a Navy Captain, is going to testify later today. 
He is the expert. He knows more about addiction than anyone in 
this country. He will tell you that no one can get meaningful 
treatment in 2 to 7 days. The artificially high copayments and 
the caps that don't apply to any other disease are what we are 
trying to overcome and eliminate.
    Mr. Hutchinson. This is a disease, but it is related to 
behavior as well. Is there a comparison where other diseases 
that are impacted by behavior is covered, but for this there 
are all of these caps?
    Mr. Ramstad. I am not sure that I understand your question. 
Another disease that is caused by----
    Mr. Hutchinson. For example, I can see people objecting 
saying--and I think it is perhaps through a lack of 
understanding--that substance abuse relates to behavior. You 
start with a weakness, it leads to a disease, and so why should 
everyone who is on a health plan subsidize someone else's poor 
behavior habits. I am thinking this through in my own mind. You 
have heart disease, also, but that is related to behavior 
because you have not--perhaps not eaten correctly.
    Mr. Ramstad. A good example is lung cancer caused by 
smoking. We were told by the AMA about the direct link, the 
cause-effect link, causal relationship between smoking and lung 
cancer, but we don't discriminate against lung cancer patients 
like we do alcohols or addicts.
    I think the American Medical Association, based on the 
chromosome research--and there are experts following me in the 
testimony today who can testify as to the disease concept, but 
I think they would question--I don't think that I am a weak 
person. I never thought of myself as a weak person. But when I 
had a beer or a glass of wine I responded differently from my 
nonaddicted mother and sister, from other friends who are not 
alcoholics or addicts. It is partly physical and partly 
psychological and partly emotional.
    Mr. Hutchinson. I yield back the balance of my time.
    Mr. Mica. We only have 4\1/2\ minutes before this vote.
    Mrs. Mink. Yes, I just want to say that I am certainly 
impressed by your testimony, and if I am not already a 
cosponsor, I will become one.
    Mr. Ramstad. You are and thank you. Thank you for your 
cosponsorship. I should have pointed that out.
    Mr. Mica. Mr. Tierney.
    Mr. Tierney. The cutoff point at 50 employees or less, how 
many people does that leave out and was that strictly a 
decision over what you could gather support with?
    Mr. Ramstad. That was the pragmatic part of the bill, and 
we made some other changes too.
    Many changes we have made are positive. One provision 
addressing faith-based treatment centers is appropriate. I am 
close to a faith-based treatment center sponsored by an 
Assembly of God Church in south Minneapolis, and I go there 
frequently and share my story and listen to the kids' stories, 
and their results are about the same as Hazelden or Fairview 
Recovery Services or Turning Point or any of the other programs 
that I am familiar with.
    Mr. Tierney. Would that add a significant cost or is there 
just the perspective of people that would add a cost that makes 
you back off that on the bill?
    Covering employees of 50 or less, would that add to the 
cost of this whole operation, or is it just that people 
perceive that so you want to stay away from it politically?
    Mr. Ramstad. In working with the various groups in putting 
this bill together and getting last year 98 cosponsors and this 
year 50 already, we had to give and take a little bit. I would 
just as soon not see that exemption, but to get the bill moving 
and to bring in conservatives and others, we compromised.
    Mr. Mica. We are down to about 3 minutes. If you want to 
come back, Jim.
    Mr. Ramstad. I would be happy to come back.
    Mr. Mica. We will come back. In 15 minutes we will be back 
    Mr. Mica. We will call the subcommittee meeting back to 
order here. I did not have a chance to ask questions and will 
do so at this time.
    Mr. Ramstad, one of the concerns is that, again, the 
potential cost, increasing costs. I asked Senator Wellstone 
about this, and you did tell me that you have a trigger in your 
Substance Abuse Parity Act. That 1 percent premium increase 
would allow companies to, I guess, exempt themselves from this. 
Could you tell us how that would work, specifically?
    Mr. Ramstad. How the exemption option would be utilized?
    Mr. Mica. Right.
    Mr. Ramstad. It is simply an option on the part of 
    Mr. Mica. They have to experience a 1 percent, and then it 
is triggered?
    Mr. Ramstad. Exactly. Then the option is up to them.
    Mr. Mica. All right. What about ERISA plans. Are they 
    Mr. Ramstad. ERISA plans, yes, similarly.
    Mr. Mica. All right. And, as I mentioned, we have eight 
States that have now adopted some type of parity provision, 
somewhat similar in requirements. Why do you believe the 
Federal Government should get into this particularly mandated 
requirement, as opposed to allowing each State to pursue its 
own legislative remedy?
    Mr. Ramstad. Well, for several reasons. I reviewed my good 
friend Chip Kahn's testimony last night. Chip is not supporting 
this legislation on behalf of the Health Insurance Association 
of North America, but he will after we educate him as to the 
cost effectiveness. I haven't spent enough time with Chip yet.
    But as Chip's testimony pointed out, Mr. Chairman, even he 
recognizes that the State laws are inconsistent and incomplete. 
In his statement he notes that among the States with substance 
abuse parity laws, quoting from his testimony, requirements 
vary as to who is eligible for the expansion of benefits and 
what benefit levels are required to be covered. Because of 
those inconsistencies, we are not realizing the full cost 
    To complete the answer to the question that you posed to 
Senator Wellstone and he deferred to me, and there will be more 
extensive testimony from the representative of RAND Corp., but 
let me put it this way so everybody can understand. For less 
than the price of a cup of coffee per month, we can treat 16 
million addicts in America. That is the bottom line. For less 
than the cost of a cup of coffee per month, increase in 
premiums, two-tenths of 1 percent, we can treat 16 million 
Americans addicted to drugs and/or alcohol today.
    The RAND Corp. study found that removing the annual limit 
of $10,000 per year on substance abuse treatment is estimated 
to increase insurance payments by 6 cents per member per year. 
The RAND Corp. study also found removing a limit of $1,000 
increases payments by $3.40 per year, or 29 cents per month. I 
don't know any coffee you can buy for 29 cents.
    Mr. Mica. Thank you.
    Let me see, Mr. Barr was here and was about to ask a 
question. Then we will go to Ms. Schakowsky. Mr. Barr.
    Mr. Barr. Thank you, Mr. Chairman. Starbucks' coffee costs 
considerably more, which is what I drink.
    Mr. Ramstad. It sure does.
    Mr. Barr. But I guess you get what you pay for.
    Jim, you used a lot of statistics this morning, and one 
that I am not sure that I caught correctly was one you 
mentioned, in talking about law enforcement, 80 percent is 
related to addiction. Is that the figure--I have heard the 
figure from a lot of law enforcement people that 80 percent of 
the crime they see is drug-related, which is not to me 
necessarily the same as addiction. A lot of that is drug 
trafficking, money laundering, sales, so-called recreational 
use and so forth.
    Is that what you meant by the 80 percent, or is there 
    Mr. Ramstad. I was alluding to the Columbia University--the 
recent 10-year comprehensive study of crime in America 
conducted by the Institute of Criminal Justice at Columbia 
University in New York City, and their finding, exhaustive 
research, is that 80 percent of all criminal activity in 
America is related directly or indirectly to drugs and/or 
alcohol addiction, to drugs and/or alcohol.
    Mr. Barr. I think I would be a little bit suspect with 
    Mr. Ramstad. I can also show you six other studies that 
corroborate the Columbia University study. More importantly, or 
just, I think, Bob, as importantly, come and ride with me in 
north Minneapolis or south Minneapolis or St. Paul or my 
district, certain parts, and any police officer will tell you--
and I spent 1,600 hours riding in squads since 1984 and 
chronicled every hour--every cop tells you the same thing.
    Mr. Barr. I am not saying 80 percent of the crime is drug 
related--it's not. I understand that. That was pretty much the 
figure when I was the prosecutor and so forth. I don't accept 
the fact that it is addiction-related. I think it is drug-
related. It may be how broadly one defines ``addiction.'' I may 
not agree with how they conducted their studies using the term 
    But to me somebody that sells a joint of marijuana is 
violating the law, and that is a crime that is related to 
drugs. It is not necessarily a crime related to addiction. I 
don't think that everybody that uses drugs is addicted to them. 
I think a lot of people choose to use drugs, and the same as a 
lot of people, I understand that some people--I think a lot of 
people choose to use alcohol. If one says that people can't 
choose not to be--don't choose to be an addict or an alcoholic, 
one also has to accept the fact that a lot of people, even 
those who grow up in families with a history of alcoholism, 
choose not to become alcoholics.
    So it plays both ways. I think we have to be very careful 
in the use of some of these statistics. I am not saying you are 
not being careful, but one really has to look at the terms on 
which these studies are based. I think it might very well be 
valid to say that 80 percent of crime is drug related. To me, 
that is not necessarily if we simply took care of those who are 
suffering true addiction, the crime problem would go away. I 
don't think that would happen.
    Mr. Ramstad. Certainly you believe the statistics from the 
American Medical Association, and they have been corroborated 
as well by other studies, by 10 or 12 studies that I have seen, 
that there are approximately 26 million--obviously you can't 
quantify it to the person, but approximately 26 million people 
in America today addicted to drugs and/or alcohol. That is a 
fact. One out of 10 Americans is addicted to drugs and/or 
alcohol. Nobody disputes that, that I know of.
    Mr. Barr. There are an awful lot of people, far too many 
people, that use drugs and alcohol.
    Mr. Ramstad. I am talking about those addicted. You are 
right, there are recreational users, I hate that term, but that 
is what everybody understands, that aren't chemically dependent 
people. I know a lot of people. Most of my friends will have a 
beer or glass of wine. They don't have disastrous consequences. 
They are not chemically dependent. They can stop after one 
glass of wine or two, or a beer or two. They are not addicts, 
chemically dependent.
    I didn't choose to be chemically dependent. I wish I 
weren't. I would love to have a beer after running my 3 miles. 
Of course, that would defeat the run, but playing tennis or 
whatever. I didn't choose to be chemically dependent, any more 
than I choose to be a male versus a female. It is not something 
I chose.
    I think if you look at the research and the report to the 
Nation, to the Congress, in 1956 by the American Medical 
Association that explains the disease nature, and then look at 
the followup research that has been done, the Bill Moyer series 
last year on public television that went to identifying the 
genes and the chromosomes that are different from people like 
me, who are chemically dependent, and people like my sister, 
the commissioner of corrections in Minnesota, who is not.
    Mr. Barr. Thank you.
    Mr. Ramstad. Thank you for your question.
    Mr. Mica. Thank you.
    The gentlelady from Illinois.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Mr. Ramstad, I am proud to be a cosponsor of your 
legislation and couldn't agree more on whether we want to 
dispute some dollars. It seems to me everyone, all experts in 
the field, are in agreement that it is the most cost-effective 
way to deal with this issue, is through treatment and 
    I wanted to ask you a question about the 1 percent waiver. 
Is that in our bill because you are confident that most won't 
achieve that 1 percent? We certainly don't want to set barriers 
that are going to----
    Mr. Ramstad. You know, when I talk to small businessmen and 
women back home, most of them realize, who have programs that 
cover chemically dependent employees, they realize the value in 
this. They would be willing to pay increased premiums to have 
their people treated. They realize that absenteeism drops 
markedly when people are treated; productivity increases 
dramatically when people are treated who are chemically 
    The empirical reason for that--I explained the political 
reason to get the bill moving. The empirical reason for that is 
some small employers are having trouble getting insurance, as 
we all know, and we don't want to put another burden. We want 
to give the employers the option if costs for, let's say, I 
said before, if the roof fell in and costs did increase more 
than 1 percent because of parity, we want to give them that 
option to be exempted.
    Ms. Schakowsky. When we say premiums have increased because 
of parity, in your discussions with the insurance industry has 
there ever been clear documentation or justification or 
explanation of why insurance premiums go up? It is kind of a 
mystery I think in many cases.
    Mr. Ramstad. That is why Mr. Kahn is here today, to answer 
that question. I hope you ask it, because that is a fair 
question and one that needs to be answered.
    I think there is a certain shroud of mystery surrounding 
the increases. Some of the costs are certainly justified and 
easily quantifiable and understandable, and others I don't 
think are. But the most compelling evidence and the most I 
think compelling justification for this legislation from a cost 
standpoint came from the Family Research Council.
    Listen to this. The Family Research Council--a very 
credible organization and credible study--found that, ``Alcohol 
and drug addiction in economic terms cost the American people 
$246 billion last year. American taxpayers paid over $150 
billion for drug-related criminal and health care costs 
    $150 billion for criminal justice and health care costs 
alone. That is more than we spent on education, transportation, 
agriculture, energy space and foreign aid combined. Think of 
that. And that is what the insurance companies need to realize, 
need to understand. That is what most small business people 
understand, the cost if they don't do it is much greater than 
any 29 cent increase per premium if they provide help.
    Ms. Schakowsky. Add in some of that foreign aid, because we 
are right now discussing a very substantial amount, several 
billion dollars to Colombia possibly to fight the drug war, and 
yet it seems to me that this is a more cost-effective way to 
address the problem. I am not necessarily posing it as an 
either or.
    Mr. Ramstad. I don't think there is any question, we need 
both. We need to emphasize the supply side and the demand side. 
If you look over the last 12 years in America, two-thirds on 
the average of the resources have gone to the supply side, one-
third to the other side. As General McCaffrey explained not 
long ago, this single-step parity for substance abuse treatment 
would do more than any other measure to cut down on the drug 
problem in America.
    We have got to treat the people already addicted. We are 
emphasizing the supply side and new Border Patrol agents and 
keeping the drugs out. What about the 26 million Americans 
right now living and working, as the chairman pointed out, who 
are already hooked, who are already addicted? We have got to 
deal with them, because those numbers are increasing. If we 
don't deal with the problem of addiction, if we don't treat 
these people already addicted, we are never going to see an 
improvement in this situation.
    Ms. Schakowsky. Let me ask you a more specific question.
    Many private insurers that currently cover substance abuse 
treatment only cover expenses associated with detoxification 
but don't cover expenses associated with ongoing support 
services. How would your bill respond to the need for ongoing 
support services?
    Mr. Ramstad. Well, again, a person who is a diabetic or who 
has heart disease or lung disease, much of that is up to the 
providers, the diagnosis, the evaluation. For some people, 
long-term treatment is necessary and is desirable. For others--
I spent 28 days in St. Mary's, it was then called St. Mary's 
Rehabilitation Center in Minneapolis, undergoing treatment for 
alcoholism. Then I went to recovery groups. I have been going 
to recovery groups every week for 18 years. Others go to 6-
month programs and halfway houses. That is pretty much a 
decision that needs to be made by the professionals, the 
chemical dependency, chemical treatment professionals.
    Ms. Schakowsky. Thank you.
    Mr. Ramstad. Thank you for your cosponsorship and help on 
this bill.
    Mr. Mica. I would like to recognize the gentleman from 
Indiana, Mr. Souder.
    Mr. Souder. It is good to see you here this morning. I 
don't have a lot of questions, but I am pleased we have been 
able to work together on this bill.
    I commend you for your persistence and your leadership. 
Clearly, in keeping the bill moving forward, had you not been 
willing to speak in conference, work with the leadership, 
continue to push for hearings in many places and try to hear 
the different concerns that people had, this legislation would 
not be getting a hearing today. We would not be continuing to 
gain cosponsors in the House. I want to congratulate you for 
that, first off.
    I also think you have accommodated a number of concerns 
that are most frequently raised, which I am sure we will hear 
today and which have come through in the testimony, about the 
costs and about accountability. We all know that unless people 
are accountable with this, they can easily burn up a lot of 
dollars through drug and alcohol treatment when it is not a 
personal decision to go. I think everybody is concerned about 
that. You may want to make a few additional comments on that. I 
am sorry I missed the first part.
    I also think that, as we work through drug-free schools, 
which is a prevention program over in the Education Committee, 
as we work with the question of Colombia, because if we don't 
address the amount of supply of illegal narcotics then the 
price will go down, which means people use it more. We have all 
those different things. But we also can't neglect the treatment 
side. Because, ultimately, if our prevention works and if our 
interdiction works, you still have a large pool of not only 
those addicted to cocaine and heroin but to alcohol who are not 
being reached, and ultimately a lot of the problems, whether it 
is work productivity or crime in our society, are related to 
those two things.
    I mostly wanted to commend you at this point and thank you 
for your work. If you wanted to comment on any of those points 
    Mr. Ramstad. Thank you, Mr. Chairman. Thank you, Mark.
    You know, you have truly been a leader here, and your 
efforts in putting this bill together have been very, very 
appreciated. We wouldn't have had 98 cosponsors last year if it 
weren't for your leadership. We wouldn't have 50 cosponsors 
this year if it weren't for your leadership. I appreciate 
working together with you.
    I want to work with all of you. We think we have enough 
caveats, regulations here, so there aren't going to be abuses. 
We don't want abuse. We don't want money wasted. This is about 
saving money and saving lives.
    Certainly some of the things you brought into the bill have 
been very important in that regard. John Kasich, a cosponsor of 
this bill with me, who has been very helpful from the dollar 
and cents standpoint, John Kasich understands this problem, and 
certainly you understand it and other members of this 
committee. That is very refreshing.
    Many of you have heard me say this many times in 
conference, I wish we could turn Congress into one big AA 
meeting where people say what they mean and mean what they say. 
I think this panel does that. That is why I am confident that, 
working together, we can get this done.
    Mr. Mica. Thank you.
    Mr. Kucinich.
    Mr. Kucinich. Thank you, Mr. Mica.
    To Mr. Ramstad, I want to add my voice to those of you on 
the committee who are thanking you for the work you have done. 
People ask me, Mr. Chairman, about serving in the House of 
Representatives and about the people I serve with, and what I 
have found in the 3 years now that I have been here is that we 
are very fortunate to be serving with each other. We have 
people here of depth and of character, people who are willing 
to share their deepest experiences, not with just us but with 
the Nation. And, through you, people all over this country are 
going to be given an opportunity to transcend themselves, to 
become bigger and better than they are and through their 
experience to help a Nation lift itself up.
    So, I think all of us owe you a debt of gratitude for your 
courage, for your willingness to make your story parts of 
America's story and to help the Nation recover. So I thank you. 
I look forward to working with you on this.
    Mr. Ramstad. Thank you, Dennis.
    Mr. Mica. Mr. Ose.
    Mr. Ose. No questions.
    Mr. Mica. We certainly thank our colleague again for his 
leadership, for his testimony today, and for his hard work in 
bringing this very troubling issue before the Congress and the 
American people. We thank you. We will excuse you at this time. 
Thank you, Mr. Ramstad.
    Mr. Ramstad. Thank you again.
    Mr. Mica. We will move forward with the hearing. Our second 
panel today is one individual who is going to offer her 
personal testimony, and I will call forward as the witness 
Susan Rook.
    Susan Rook is a media consultant. Susan has covered most of 
the breaking news stories of the last decade. She joined CNN in 
January 1987 and became a nationally prominent news anchor 
while co-anchoring crime news with Bernard Shaw. She was chosen 
to pioneer the network's daily interactive town meeting, a show 
that we know as Talk Back Life.
    On Talk Back Life, Susan became the first journalist to 
juggle both a live studio audience, newsmaker guests and a 
nationwide high-tech audience into a quick-based interview and 
discussion program.
    She lives now in Washington, DC, and she has been willing 
to come forward today and share with us some of her personal 
experience with addiction and treatment.
    I must say, first of all, that we welcome you. This is an 
investigations and oversight subcommittee of Congress. We had 
congressional Members. We don't swear them in. We will swear 
you in and ask you at this time if you would stand, please, 
raise your right hand.
    [Witness sworn.]
    Mr. Mica. The witness answered in the affirmative.
    We are pleased to have you join us. We look forward to your 
testimony, and you are recognized.


    Ms. Rook. Thank you, Mr. Chairman. Thank you, all of you, 
for the privilege and the opportunity to speak to you today.
    You mentioned my work on CNN. As a journalist, I have 
always looked for stories that needed to be told. For two 
decades I have reported on the so-called war on drugs. Well, 
today I am here to give you a live report from the lines. I am 
an alcoholic and an addict. I am in recovery. I am alive today 
because I was able to get access to the medical treatment that 
was required to treat my disease.
    An overdose landed me in the emergency room. Without access 
to drugs and alcohol, I started the withdrawal process. I 
turned to this nurse that was there and I said, ``Why can't I 
hold a glass of water without spilling it? Why do I feel so 
sick?'' and I really was very physically sick. I asked her what 
was going on.
    She looked at me with a mixture of disgust and pity on her 
face, and she said ``Because you are a drunk and a junkie. You 
are detoxing. What do you think is happening to you?''
    Until that moment, I did not know.
    I thought I knew what drunks and junkies looked like, and I 
certainly didn't fit that picture.
    I am here today because I may not fit your picture of what 
a drunk and a junkie looks like. I want you to see the face of 
addiction, and I want you to see the face of recovery.
    Until the comment from that nurse, I didn't know that I had 
crossed the line from being a social drinker to being an 
addict. Current scientific evidence shows that there is a line 
that people with chemical dependency cross. Certainly that 
initial use is voluntary, but that use triggers a biological 
reaction that changes my biology, making it unable for me to 
    The right to have the choice of whether to have a drink or 
not drink, or have just one drink, disappears. The obsession 
and compulsion are the most powerful things I have ever seen or 
experienced. I could not moderate my use of drugs and alcohol, 
and I could not stop.
    Treatment interrupted that compulsion, and it gave me the 
opportunity for sobriety.
    Top management came to the hospital, and they gave me a 
choice. I could either stay in the hospital for the 72 hours 
required for what was listed as a suicide attempt and go back 
to work, or I could immediately go into alcohol and drug 
treatment. I chose treatment.
    Shaken by the look of pity by that nurse and armed with the 
knowledge that I have a disease for which there is no cure but 
there is the possibility of recovery, I went off to treatment.
    About a week into treatment insurance ran out. I was 
scared. Physically, I was still very sick. Trying to negotiate 
the maze of the insurance company, that familiar hopelessness 
    CNN management and an effective and committed employee 
assistance program coordinator stepped in and told me if I was 
willing to complete the entire 28-day treatment program, CNN 
would pay for anything that insurance did not cover. I stayed 
in treatment and have been abstinent from drugs and alcohol 
ever since.
    Two things made the difference for me. I was lucky enough 
to work for a company that treated my disease as a disease and 
gave me access to the same kind of medical care that they would 
give anyone who has another brain disease, like Parkinson's.
    CNN did that. The insurance company did not. According to 
the Hay Group study, substance abuse benefits have decreased 75 
percent in the last 10 years. I called where I went to 
treatment, Ridgeview, outside of Atlanta. I called Ridgeview 
yesterday and I said, say, do you guys still offer that 28-day 
treatment program? They said, no, managed care won't allow it. 
We don't even have it.
    If I got into treatment today, I couldn't go and get the 
comprehensive medical care, even fully paying for it myself or 
my company paying for it, because it is not there.
    As you go into your business today, I ask you to look 
around you. Studies show that 7 out of 10 people are affected 
by this disease, 1 in 10 people have it. I want you to wonder 
how many people are living a double life, as I did when I was 
giving you the news and when you watched me and when I was 
doing all the things that you mentioned in the bio. I was 
drinking and using illegal drugs, and chances are you certainly 
didn't know it, and nobody else did.
    As you go in your cars to go home and go about your 
business, I want you to look around you and wonder, who is in 
that car next to me? This is the face of addiction.
    I applaud your efforts to reduce the supply of drugs coming 
into this country. I think that is a very important component 
of this, and I urge you to put greater emphasis on demand 
reduction techniques like treatment and prevention.
    Mr. Chairman, you have the power to lead this country in 
moving the conversation of alcoholism and drug addiction from a 
moral arena to a medical arena where it belongs, and I ask you 
to use that power to do that.
    Please make treatment a visible component of our Nation's 
drug policy. This is the face of addiction. Can you afford to 
ignore it? This is the face of recovery.
    Thank you for seeing it.
    Mr. Mica. Thank you for your testimony and your coming 
forward and giving us your difficult experience.
    [The prepared statement of Ms. Rook follows:]

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    Mr. Mica. I want all the Members--also, I have heard her 
saying that I have the power to change this. As chairman, I 
want you to vote in lockstep with me.
    Mrs. Mink. Yes, sir. Yes, sir.
    Mr. Mica. I wish it was that easy. Sometimes I feel like I 
am drowning in a sea trying to get--and failing--in trying to 
get the attention of the Congress and the American people, and 
it is a tremendous drain on our society. The cost is just 
unbelievable, not only in dollars and cents, but in human 
tragedies, as you have cited.
    One of the difficulties we have is trying to sort out how 
we can do things that will be most effective, and the question 
before us today is do we mandate insurance coverage for 
substance abuse and chemical dependency. When I say mandate, 
bring the Federal Government into the arena. And then there is 
the question of the effectiveness of what is done.
    You almost sort of presented a dream case today because 
most of the cases--you are very fortunate. It sounds like you 
went into a treatment plan, you had 7 days' coverage and then, 
through the largesse of your employer, they went on and covered 
you, and you have since maintained recovery.
    But the unfortunate story we hear is so many of the 
treatment programs are not working. You feel, though, that the 
7 days--you went on to 28 days--were adequate at least for you. 
If you had stopped at 7, what do you think the outcome would 
have been?
    Ms. Rook. I don't think I would be sober today if I had 
simply detoxed. The obsession and compulsion are incredibly 
powerful. When I was talking to the insurance company, and I 
really thought that I was going to have to leave, I was scared. 
I was scared. But that 28--what that 28 days bought me was a 
little bit of time and distance, a little bit of foundation, of 
security and safety. That was completely invaluable. I mean, I 
can't even measure that.
    Mr. Mica. Mrs. Mink.
    Mrs. Mink. Yes, thank you very much for your very 
compelling testimony.
    In reference to the 28 day treatment, if we at least did 
that in terms of our insurance coverage, do you feel that that 
would be an adequate first step, if we weren't able to move to 
a more comprehensive type of coverage?
    Ms. Rook. First, let me address the issue of mandating 
health care. The parity legislation is actually about being 
straight with people who are getting health care. A $10,000 cap 
does nothing. What I would really love to see is insurance 
companies look at people and say, you know what, we are 
actually pretending to give you insurance coverage, but here is 
the deal: We are not.
    So if you are going to use this coverage, you need to be 
aware of it. I would like honesty in the advertising. I wonder 
how many companies are paying for something that they are 
actually not getting?
    I was lucky enough to work for a company that stepped in 
and said we will do the difference. But I wonder how many 
companies and business people out there think, I am looking out 
for my employees, and then bump up against that cap?
    I am not a proponent of Federal mandates. I don't want the 
Federal Government to step in and say everyone who is an addict 
or alcoholic, you need to trot into treatment for 28 days. I 
don't want the Federal Government messing in lives like that. I 
didn't want--I would not want it messing in mine. So I am not 
advocating that.
    I am advocating, one, truth in advertising; two, an 
opportunity and a commitment on the Federal level to have 
treatment as an available option for the people who want it; 
and, third, it is cost effective. When you put somebody in 
jail--so a 28-day program at Hazelden, for example, is about 
$15,000. When I went through, it was about $20,000. So for a 
month it is $39,000 to keep someone in prison.
    Now, when they get out of prison, do you want them making 
their decisions drunk or sober? The decision to go in and check 
with the parole officer, the decision of whether or not to 
really go look for a job or, hmm, let's just boost that car and 
toss the kid out who is in the back seat. How do you want 
people to make their decisions?
    That is actually what my request is. Not a blanket Federal 
mandate of going in and actually doing things, but a commitment 
on the Federal level that when treatment is available and 
people can get into it, it works.
    Mrs. Mink. Thank you very much.
    Mr. Mica. Mr. Barr, our vice chairman.
    Mr. Barr. Thank you, Mr. Chairman.
    I appreciate the hearing; and I appreciate, Ms. Rook, your 
being here and our colleagues before you and the witnesses that 
will come after. The only thing I would caution would be I 
guess it all depends on what mandate means. I mean, the 
legislation--and I am not saying I am for or against the 
legislation, because I need to look at it a great deal more 
carefully. But to say that it doesn't include mandates is 
simply, I think, inaccurate, unless one uses a very unusual 
definition of mandates, because it does mandate that group 
health plans shall do certain things and cannot do other 
things. So there are mandates in it.
    I think we need to look at it, to weigh the mandates. 
Obviously, there are a lot of laws that provide for a lot of 
mandates, but it does contain some mandates. What we have to 
weigh up here is the policy, the cost, and the policy 
decisions. Do we want to remove any flexibility that insurance 
companies might have for making sometimes legitimate perhaps 
economic decisions? They may have a legitimate reason to treat 
certain types of coverage somewhat different than others, based 
on history.
    I do think that saying we should remove this, the moral 
component, completely may not be the best way to cast this 
argument, because we do want to send a message to people that 
alcohol is bad and the use of drugs is bad, and not to say, 
well, it is OK and we can't have any stigma at all attached to 
    So I think, from my standpoint, I just stay away from 
saying we ought to remove any moral component. I think it is 
important to have a moral-ethical component. That should be 
reflected in the policies that Congress sends. That is just my 
    I do appreciate your being here and appreciate your work in 
the media very much. Thank you.
    Ms. Rook. Thank you, sir.
    You mentioned legitimate economic decisions. I am very 
compassionate to the insurance companies looking and saying we 
don't want to increase costs. I am compassionate to the 
employers who look and worry and say I don't want to increase 
costs. But here is the deal: If people aren't sober, the 
insurance cost that isn't going up over here comes over here. 
So you are going to have to go back to your voters and explain 
why you are going to have to build more prisons, and they are 
going to have to pay for it.
    Mr. Barr. Well, I certainly try to and think I succeed 
fairly well at listening to my constituents, and they are a 
compassionate constituency. They believe in fairness. They also 
believe in tough law enforcement. They don't like drugs. They 
don't like alcoholism either. They want to strike a balance, 
and that is what I try and do, also. Because there are some 
very good reasons for what you are saying. But to me it isn't 
simply that, well, we have alcoholics and drug addicts out 
there. Therefore, we must mandate that they be taken care of.
    I think it is a little more complex than that. We need to 
weigh in a lot of different factors. The economics of it, you 
are right, may in the great cosmic scheme of things, everything 
we do irons out in the end. We save some money here, we cause 
further problems over here. But we still have to make those 
    I will look very carefully, Mr. Chairman, at this 
legislation. I think it is important. I appreciate it coming 
up, and I appreciate your being here.
    Ms. Rook. Thank you, sir.
    Mr. Mica. The gentleman from Arkansas, Mr. Hutchinson.
    Mr. Hutchinson. Thank you, Mr. Chairman.
    I do not have any questions. I just want to express my 
appreciation for your testimony today and for sharing your 
story with us. Let me thank the chairman also, just for having 
this hearing, because I had not focused on the legislation, and 
this allows us to do so. I look forward to doing that and 
hopefully moving this forward. Thank you for your testimony 
    Ms. Rook. You are welcome.
    Mr. Mica. Mr. Ose, the gentleman from California.
    Mr. Ose. Ms. Rook, thank you for coming. I appreciate it.
    I want to explore a little bit the insurance side of the 
thing, because we have a lot of debate going on here in the 
House about access and availability and what have you.
    Clearly, CNN offers a health insurance program for its 
employees. Do they give you a choice, or is it just kind of 
this is the program, period?
    Ms. Rook. I don't know what they do now. I left CNN 2 years 
    Mr. Ose. When you were there.
    Ms. Rook. When I was there, we got a choice. Employees 
could look and say, I want this plan, this plan or this plan. I 
don't know what they are doing now. I would imagine it is the 
same. They have got a really good commitment to quality of life 
for their employees.
    Mr. Ose. So CNN gave you a choice, and the final decision, 
the employee would pick which of those programs best suited 
their needs.
    Ms. Rook. Yes.
    Mr. Ose. It wasn't crammed down, if you will----
    Ms. Rook. No.
    Mr. Ose. And then the amount of cost, if you will, the 
premium reflected the services or the benefits that were in 
each of the programs I imagine.
    Ms. Rook. Yes. I had the Cadillac deluxe plan. I don't 
remember what it was or what the insurance company was, but I 
checked the one that said, yes, you get everything covered, 
whatever you want.
    Mr. Ose. OK.
    Ms. Rook. And substance abuse coverage was $10,000.
    Mr. Ose. Was capped at $10,000.
    Ms. Rook. Yes.
    Mr. Ose. And if I understand your point today, it is that, 
No. 1, the cap is too low, and, secondarily, businesses should 
be offering the substance abuse treatment because from your 
perspective it is a disease over which you don't have any 
    Ms. Rook. Yes.
    Mr. Ose. I am accurate on that?
    Ms. Rook. Yes. Not just the cap is too low, but let's be 
straight about it. People think they are buying insurance, and 
they are not. It would be like if I have breast cancer and I go 
in and they say you can get treated for your breast cancer, but 
only $10,000, which will not cover much. Just be straight about 
what you are offering the people. That is not insurance. That 
is a double bind.
    Mr. Ose. That is the part--I don't mean to be 
argumentative, but that is the part I don't quite understand. 
You are able to cite the provisions very clearly today, and 
from where I sit $10,000 worth of coverage is better than zero 
coverage, even though it doesn't address the problem in its 
entirety. But the ultimate decision as to which of those 
programs--I presume some of the other programs had zero for 
substance abuse treatment. The ultimate decision for that, 
which plan you chose, was left by CNN in the lap of the 
employee, if I understand you correctly.
    Ms. Rook. Yes, correct.
    Mr. Ose. Thank you, Mr. Chairman.
    Mr. Mica. The gentleman from Indiana, Mr. Souder.
    Mr. Souder. I wanted to followup, too, because our 
legislation doesn't mandate any particular line of coverage, 
and while 28 days may have been essential for you, a smaller 
program may have been enough for other people, and, in fact, 
some people can go through three or four programs. Part of the 
goal of this legislation is to make sure there is at least a 
minimal option.
    Could you describe--you said you have been drug and alcohol 
free. Could you explain to us a little bit--because many people 
stumble. When you are battling it, it is not easy just to go 
cold turkey, even if it is 28 days, and suddenly not be tempted 
by the sin and the same problems you had before. Could you 
explain a little bit about how you felt previous, why you went 
into this treatment, and what gave you the strength to then be 
free after 28 days? That is a pretty amazing story.
    Ms. Rook. I didn't go in willingly. I went in because I 
overdosed and ended up in the hospital. I didn't think that I 
had a problem. Everybody that I knew drank and did drugs. My 
social life, my private life, was very--was completely separate 
from the life on CNN, completely separate.
    I did not know that I had an option of not drinking or not 
doing drugs. I didn't know that that was even possible.
    Treatment interrupted that and made me see, oh, look, 
sobriety is even possible. It never occurred to me that other 
people didn't live like I lived. It just didn't occur to me.
    What I got in treatment was a group of medical 
professionals skilled in what they do who were suggesting 
things for me to do in my recovery in the 28-day program and my 
recovery when I left treatment, when I actually left the 
facility. They made the decisions. They made the suggestions. 
And I guess that is one of the things that I am requesting that 
you look at, who is actually making the decision. Is it a clerk 
at an insurance company who is saying what is best or is it a 
professional? And you are absolutely right. Not everybody needs 
28 days. You can do it in less. If something else works, great. 
Explore all of those options. But a trained professional making 
that is, to my mind, the way to go, instead of like a clerk.
    Mr. Souder. Are you part of an accountability group and did 
your company do anything that further held you accountable that 
if you did not change--tell me a little bit about that. It is 
still dramatic. Most people who go through programs struggle 
and often they make some progress each time they go through, 
but it is a real battle.
    Ms. Rook. I think Hazelden has a study that 50 percent of 
people who go to treatment are abstinent for their first year, 
and 80 percent are sober their first year, with one slip in 
between. I will tell you, if you had those kind of results with 
heart disease, adult onset diabetes and asthma, you would be 
doing pretty good.
    Personally, I do a personal program of recovery. I am not 
going to talk about that in front of the cameras. I will be 
glad to talk about that with any of you in private.
    I learned what I need to do to stay sober in treatment, and 
I do it. I am really clear. I did a lot of drugs. I drank a 
lot. I am really clear. I pick up, I am dead.
    Mr. Souder. Thank you.
    Mr. Ramstad. If the gentleman would yield very briefly.
    Mr. Mica. You are recognized, Mr. Ramstad.
    Mr. Ramstad. Susan is right; and Mr. Mike Conley, who is 
chairman of the Board of Trustees of Hazelden, will be able to 
elaborate on that, I am sure. Recidivism, as the American 
Medical Association studies have shown for chemical addiction, 
it is amazingly the same as for diabetes. The amount of 
recovery or recidivism, depending on whether you want to look 
at the glass half full or empty, is about the same as it is for 
diabetes. Recovery rates after treatment for addiction compare 
very favorably to most other diseases, are about the same as 
for diabetes, as was said.
    Mr. Mica. Thank you, Ms. Rook. Thank you for coming forward 
and providing us with your personal testimony today. Mrs. Mink 
and I said that you are very fortunate to be in recovery and 
through a treatment program that has been so successful for you 
personally. Unfortunately, we had over 15,200 who died from 
drug-induced deaths last year, and we have millions who are not 
covered, who are hopeless and a tremendous burden on their 
families, destroying their lives and not success stories. We 
are pleased that you would come forward and tell a little bit 
about your personal experience and maybe give some hope to 
those other individuals out there.
    We do have a vote in progress and just a few minutes left. 
We are going to excuse you and thank you again for your 
    The subcommittee will stand in recess until 12:15. We will 
call our third panel at that time.
    Mr. Mica. I would like to call the subcommittee back to 
    I would like to call at this time our third panel. The 
witnesses on that panel consist of Mr. Michael Conley, who is 
chairman of the Board of Trustees of the Hazelden Foundation; 
Dr. Michael Schoenbaum, who is an economist with the RAND 
Corp.; Mr. Kenny Hall, who is an addiction specialist with 
Kaiser Permanente; Captain Ronald Smith, M.D. and Ph.D., who is 
vice chairman of the Department of Psychiatry at the National 
Naval Medical Center; Mr. Peter Ferrara, general counsel and 
chief economist for the Americans for Tax Reform; and Mr. 
Charles N. Kahn III, who is president of the Health Insurance 
Association of America.
    I would like to welcome all of our witnesses. As I 
mentioned to our previous panel witness, this is an 
investigations and oversight subcommittee of Congress, and we 
do swear in our witnesses. If you would all stand, please, to 
be sworn.
    [Witnesses sworn.]
    Mr. Mica. The witnesses answered in the affirmative, and we 
are pleased to have each of you with us this afternoon looking 
at this question of substance abuse treatment parity. We will 
start right off with Mr. Michael Conley, who is chairman of the 
Board of Trustees of the Hazelden Foundation.
    Now since we have a large number of panelists, we are going 
to run the light and try to stick to it. It is 5 minutes for an 
oral presentation. If you have a lengthy statement or 
additional report or information you would like to be made part 
of the record, it will be included in the record by unanimous 
consent request. So we just ask your compliance with that set 
of time limits. We will put those complete documents in the 
    With that, let's recognize Mr. Michael Conley, chairman of 
the Board of Trustees of the Hazelden Foundation.

                     ASSOCIATION OF AMERICA

    Mr. Conley. Thank you, Mr. Chairman and members of the 
    Good afternoon. My name is Mike Conley. I am here today as 
chairman of the Board of the Hazelden Foundation, as a retired 
health insurance executive, profoundly concerned with the 
negative trends that I see in the chemical dependency 
reimbursement systems, and as a grateful recovering alcoholic. 
I would like to thank you for the opportunity to testify before 
your subcommittee and would like to request that my entire 
written statement be included in the record.
    Mr. Mica. Without objection, so ordered.
    Mr. Conley. Thank you.
    I am testifying on behalf of the Partnership for Recovery, 
a coalition of nonprofit alcohol and drug treatment providers 
that include four of the Nation's leading treatment centers, 
the Betty Ford Center, Caron Foundation, Hazelden Foundation, 
and Valley Hope Association, collectively representing 250,000 
individuals who completed treatment for alcohol or drug 
    Today I would like to focus my remarks on three key areas: 
one, that addiction is a treatable disease; two, that good 
treatment is a cost-saving tool in the workplace; and, three, 
that H.R. 1977, the Substance Abuse Treatment Parity Act, is an 
important first step toward fully utilizing treatment benefits 
to society.
    My testimony reflects the strong need for a balanced 
approach between demand and the supply side strategies, 
including treatment, prevention, interdiction and criminal 
justice measures.
    Mr. Chairman, as a former businessman and health insurance 
executive, I know that good substance abuse treatment is a 
cost-saving tool in the workplace. A significant number of 
American workers abuse substances, and some of them--some of 
this occurs at work. Most current drug users age 18 and older 
are employed--in fact, 73 percent. The costs of alcohol and 
illicit drug abuse in the workplace, including lost 
productivity, medical claims and accidents, is estimated to be 
as high as $140 billion a year. Moreover, the societal costs 
are staggering. Fortunately, the tools for addressing the 
problem are available, as many enlightened employers have 
    A couple of examples, Chevron Corp. found that for every $1 
spent on treatment, nearly $10 is saved. Northrup Corp. saw 
productively increase 43 percent in the first 100 employees to 
enter an alcohol treatment program. After 3 years of sobriety, 
savings per rehabilitated employee approached $20,000. 
Oldsmobile's Lansing, MI, plant saw the following results 1 
year after employees with alcoholism problems received 
treatment: Lost man-hours declined by 49 percent, health care 
benefit costs by 29 percent, absences by 56 percent.
    Despite the significant efforts of this subcommittee as 
well as others to improve the outlook for drug-free workplaces, 
small businesses unfortunately fall far behind when it comes to 
addressing substance abuse. The data is clear. Most small 
businesses will at some point be faced with an employee who has 
a substance abuse problem. Given that small businesses 
represent a large majority of employers, the work site is one 
of the most effective places to reach Americans. In short, good 
treatment and recovery policies are sound business investments 
for large and small employers alike.
    We believe that H.R. 1977 is the landmark legislation that 
takes an important first step toward giving people suffering 
from the disease of alcoholism and drug addiction increased 
access to treatment. This legislation does not mandate that 
health insurers offer substance abuse treatment benefits. It 
does prohibit health plans from placing discriminatory caps, 
financial requirements or other restrictions on treatment that 
are different from other medical and surgical services. H.R. 
1977 will help eliminate barriers to treatment without 
significantly increasing health care premiums, and you will 
hear about it in a minute, but the RAND study did show that 
this could be made available to employees for $5.11 a year or 
43 cents a month.
    Mr. Chairman, my statement details what the Partnership 
believes are some of the key ingredients for a public policy 
that effectively addresses the essence of the addition problem: 
Acceptance of the disease as a critical public health issue and 
a public policy with a balanced emphasis on treatment and 
prevention as well as interdiction and criminal justice.
    Our Federal drug policy should also recognize that all 
persons, regardless of their illness, should be treated with 
human dignity. H.R. 1977 goes right to the heart of the need 
for fair and equitable treatment for people suffering from this 
disease, and we believe it is a step in the right direction.
    And if I can just speak strictly for myself as a recovering 
alcoholic, it breaks my heart to know that so many people out 
there who need help are not getting help because of the system. 
They are not statistics. They are living, breathing people like 
me, a recovering alcoholic, with a potential of being important 
contributors to their families, workplaces and communities. You 
folks have the power to help get this back on track, and I 
sincerely appreciate your letting me share this with you today. 
Thank you.
    Mr. Mica. Thank you for your testimony.
    [The prepared statement of Mr. Conley follows:]

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    Mr. Mica. We will hear all of the witnesses and then go 
through for questions.
    I recognize next Dr. Michael Schoenbaum, who is an 
economist with RAND Corp. Welcome, and you are recognized, sir.
    Mr. Schoenbaum. Thank you.
    I am an economist at RAND. I am here today in place of my 
colleague at RAND, Roland Sturm, who ruptured his Achilles 
tendon and was unable to come. He has prepared a written 
statement, and I would ask that be entered into the record.
    Mr. Mica. Without objection, so ordered.
    Mr. Schoenbaum. Thank you.
    [The prepared statement of Mr. Sturm follows:]

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    Mr. Schoenbaum. RAND is a nonprofit institution which helps 
improve policy and decisionmaking through research and 
analysis. This statement is based on research funded by the 
Robert Wood Johnson Foundation and the National Institute on 
Drug Abuse. The opinions and opinions expressed are mine and do 
not necessarily reflect those of RAND or of the research 
    As we have heard today, substance abuse imposes major 
economic burdens to society, and empirical studies document 
that some treatment programs can be effective. However, largely 
because of cost concerns, treatment for substance abuse has 
been excluded from recent Federal and State legislation 
mandating parity, equal coverage for mental health and other 
medical conditions. These concerns stem from assumptions that 
do not reflect current treatment delivery systems under managed 
    We examined--in the research that I am going to present, we 
examined the use and costs of substance abuse treatment in 25 
managed care plans that currently offer unlimited substance 
abuse benefits with minimal copayments--parity level benefits--
to their enrollees. However, in those plans, care is managed 
and services must be preauthorized and received through a 
network provider to be fully covered. I will note that the 
plans in our study did cover a comprehensive range of substance 
abuse treatment services.
    Our research indicated that providing unlimited substance 
abuse benefits in these plans cost employers slightly more than 
$5 per plan member per year. The actual number is $5.11 per 
member per year.
    A $10,000 annual cap on substance abuse benefits reduces 
the cost of providing substance abuse treatment coverage by 
only 6 cents per member per year. A $5,000 annual cap reduces 
the cost by 78 cents per member per year, compared with the 
cost of providing unlimited managed substance abuse treatment 
    To put these numbers in perspective, if we assume that a 
typical group health insurance premium is approximately $1,500 
per member per year, substance abuse benefits under unlimited 
coverage represent three-tenths of 1 percent of this cost. 
Furthermore, the potential savings associated with benefit 
limits is even smaller relative to unlimited but managed 
benefits. A $5,000 benefit limit, for instance, reduces the 
overall cost of providing health insurance by less than $1 per 
member per year.
    We conclude in this study that limiting benefits saves very 
little but can affect a substantial number of patients who do 
need additional care. Patients who lose insurance coverage are 
likely to end treatment prematurely or switch to public sector 
coverage which may increase costs in other areas.
    In sum, parity for substance abuse treatment in employer-
sponsored health plans is not very costly under comprehensively 
managed care, which is the standard arrangement in today's 
marketplace. However, I do want to note for the record that the 
results of our study do not apply to unmanaged indemnity plans, 
and also the employers in our study were relatively large 
employers, so the results may not hold for individuals or for 
smaller groups buying insurance.
    Thank you.
    Mr. Mica. Thank you.
    We will now recognize Mr. Kenny Hall, who is an addiction 
specialist with Kaiser Permanente.
    Mr. Hall. Mr. Chairman, I would like to thank you and your 
committee for allowing me to speak on a matter that is very 
dear to my heart, and that is adequate treatment for 
individuals seeking treatment for chemical dependency.
    Before I go on, I have to apologize to the committee. I 
have a 2 flight that I must take back to California. I am 
really committed to my clients to be there tomorrow, so I 
actually apologize----
    Mr. Mica. Are you leaving from National?
    Mr. Hall. Yes.
    Mr. Mica. No problem. Go right ahead.
    Mr. Hall. What I am going to present this afternoon is a 
study from a pilot project that was conducted by Kaiser 
Permanente in California in 1994 in offering treatment to 
Medicaid clients and the results of that particular pilot 
    For the last 3 years, I have been blessed to be part of an 
organization which I believe has become a pioneer and innovator 
in the arena of chemical dependency treatment and recovery. 
That organization, I am proud to say, is Kaiser Permanente in 
California. I am part of an incredible team of professionals 
with the Kaiser Vallejo Chemical Dependency Recovery Program 
which is on the northern end of San Francisco Bay in Solano 
    Kaiser Permanente is the oldest health maintenance 
organization in the country, a pioneer in the concept of 
prepaid, capitated health care over 50 years ago. Kaiser 
Permanente is also the Nation's largest nonprofit HMO, with 
almost 9 million members, 6 million members within the 
California division.
    Kaiser Permanente is a staff group model HMO with all 
Permanente Medical Group physicians and other health care 
professionals providing services exclusively to Kaiser members 
within Kaiser's own hospitals and outpatient clinics. This 
greatly enhances their ability to operate in an integrated and 
cooperative manner, which significantly improves the overall 
quality of care offered.
    Kaiser Permanente's California Division is also 
distinguished from many other managed care organizations in 
that it provides a very comprehensive chemical dependency 
treatment benefit which is part of the basic health plan 
benefit for all members. Chemical dependency services are 
provided within the integrated organizations, not by a carve-
out company. The benefit includes various levels of care, from 
inpatient detoxification through day treatment, which is 
partial hospitalization, and intensive outpatient programming 
to long-term follow through treatment. It also includes family 
and codependency treatment, as well as adolescent treatment 
program. These services are provided at multiple sites and are 
generally accessible for initial evaluation and treatment 
within 24 hours. Services are well integrated with other 
hospital and outpatient medical services, and efforts are made 
to assist all primary care physicians within Kaiser Permanente 
to identify and refer chemically dependent patients and their 
family members in a timely and effective manner.
    In 1989, the county's public hospital closed and since that 
time the county health department had been involved in 
discussions with the private hospitals in the county over 
reimbursement for publicly funded and indigent health care.
    The largest of those hospitals is a part of Kaiser 
Permanente. Other private hospitals and large physician groups 
as well as a number of previously unaffiliated private 
physicians were also participants in these discussions and 
planning processes. As the California Department of Health 
Services became more encouraging of public-private partnerships 
and managed care arrangements, the Solano Partnership Health 
Plan was created.
    SPHP, which began operations in 1994, was a Partnership of 
all public and private health care providers in the county and 
was constituted as an independent health authority. SPHP 
contracted with the State government to provide a capitated 
health plan for all--approximately 40,000--Medicaid recipients 
within the county. Based on negotiations to determine ``fair 
shares'' of recipients, 10,000 of those clients were assigned 
to Kaiser Permanente and enrolled as members.
    When the agreement was reached to enroll 10 Medicaid 
recipients as Kaiser members, concerns were raised by Kaiser 
physicians about the exclusion of chemical dependency benefits 
in the agreement. Kaiser physicians had come to rely on the 
services of their own chemical dependency program and were 
loathe to give up the prerogative to utilize it with this group 
of patients.
    I want to highlight the result of this study. After 2 
years, we had gained sufficient data in working with this 
particular population, and there was a striking result. The 
results indicated a 50 percent reduction in hospital days 
utilized, from 117 days during the 6 months before treatment to 
58 days during the post-treatment period. What that meant, in 
the beginning, our Medicaid clients utilized the services at a 
much larger proportion than our commercial users did, but after 
a couple of years it leveled out to the same level. There was 
this pent-up urge for treatment, and these clients were able to 
utilize these services that were denied to them for so long. As 
a consequence, the medical savings that Kaiser experienced was 
very, very significant.
    In closing, I would like to say it must be reiterated that 
the strongest arguments for the provision of high quality, 
universally accessible chemical dependency treatment services 
is a personal benefit of the recipients of these services. 
After spending 20 years addicted to heroin and traveling the 
path that addiction leads one down, I can personally attest to 
the influence that chemical dependency can have on one's life. 
It has been 15 years since my last shot of heroin. The 
protracted suffering produced by chemical dependency can be 
eliminated by successful treatment enhancing the health and 
quality of life of patients, families and society.
    Thank you very much, Mr. Chairman.
    Mr. Mica. Thank you.
    [The prepared statement of Mr. Hall follows:]

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    Mr. Mica. We will now recognize Captain Ronald Smith, vice 
chairman of the Department of Psychiatry with the National 
Naval Medical Center.
    Dr. Smith. Thank you.
    My name is Ronald Earl Smith. My remarks do not represent 
necessarily the Navy's position. They are my opinion as a 
physician, and some of this is the Navy's position.
    I am a Navy captain and doctor of medicine. I am currently 
a consultant in psychiatry, addictions, and psychanalysis at 
the National Naval Medical Center, the Pentagon and the U.S. 
Congress. I teach and supervise residents, interns and medical 
students at the Uniformed Services University. I am certified 
by the American Board of Internal Medicine, the American Board 
of Emergency Medicine, the American Board of Psychiatry and the 
American Society of Addiction Medicine. I have a doctorate in 
the philosophy of psychoanalysis.
    It has been my honor, pleasure and pain to work in the 
field of addiction for about 27 years. This work has been in 
academic centers, in emergency rooms, critical care units, 
psychiatry wards and addiction units. I have worked in private 
practice, in the military, the Federal and State systems.
    Over these years, it has been my sad experience to watch 
our culture decrease money for active primary treatment in 
addiction and mental illness. The limited funds remaining after 
budget cuts have been moved to other forms of 
institutionalizations, primarily jails and prisons. Instead of 
hospital beds for treatment, our culture builds prison beds. 
The bulk of the homeless population within 5 miles of this 
Capitol are there because of inadequately treated substance 
abuse and mental illness.
    I have watched mental health units close in my private 
hospital in Newport Beach, CA. It closed 35 beds for mental 
health because the funds were not there. Five years ago in the 
national capital area--and this is in our own military system--
we had three inpatient units, one at Walter Reed, one at 
Bethesda and one at Andrews. We now have two outpatient units, 
and this is a result of money being cut back.
    We know that treatment works. The Navy--I will ask that my 
statement be submitted for the record, but I want to talk just 
candidly about my experience. We know that treatment works. The 
Navy is not exactly in the humanitarian business, and we wanted 
sober pilots in our planes on carrier decks, and we got in the 
treatment business for that reason. The submariners, we wanted 
them to be sober and clear-headed, and 85 percent of those 
pilots who later go on to fly for Northwest and American and 
fly you in and out of this town are sober because of the 
treatment programs in the Navy. The pilots actually do the 
    We treated 220 physicians over the time that I was there in 
Long Beach, and 80 plus percent of those remain sober. And we 
wanted sober doctors in the Navy taking care of the pilots, and 
we insist on that.
    These diseases--sooner or later, the Federal Government 
picks up the tab. Sooner or later, it goes up in Social 
Security, it goes up in Social Security disability, it goes up 
in prison beds. Sooner or later, people within a culture which 
believes that we ought to take care of one another, and we do, 
and ultimately the bill is passed onto the Federal system.
    Now why ask private insurance for help with this? Simply 
because they can do it pretty well. But I think in my 
experience they kind of need a nudge to say go ahead and do it. 
I do believe that the health care--that they do it well, but in 
my private practice in Newport Beach it became harder and 
harder to get care. Plans which promised 50 outpatient beds, 
you had to beg for 4 and 10, particularly in the matters of 
substance abuse. The reality was that the funds were withdrawn.
    All of us are responsible--the Navy for decreased units, 
the Federal Government for decreased funding in Social Security 
for healthcare. It is very hard to get someone treated in an 
inpatient unit through the Social Security system.
    Private industry I don't think is any more responsible than 
all of us in this room. But this is a culture with a paradigm 
shift that is, in the age of deinstitutionalization of the 
mentally ill and substance addicted, to homelessness or to lock 
them up. We are doing the reverse of what was done in the 
enlightenment when we began to take better care of one another, 
and we need to notice that. This committee needs to notice 
that. Private industry needs to notice that.
    Now, the reality is that it is treatable. The reality is 
that an alcoholic affects seven people really. It is the most 
important thing since Social Security. Because you treat 16 
million alcoholics, you treat 100 million Americans. The 
children get off Ritalin for ADD. The work compensation goes 
down. The prison beds empty out. The courtrooms empty out. It 
is just efficient, and it is humane, and it is kind of 
wonderful, and it is a hell of a lot of fun to treat it in the 
early stages.
    But, as a critical care physician, an 18-year-old 
paraplegic because he was drunk on a motorcycle is probably as 
expensive a way to burn dollars as we can do it. AIDS is a 
terribly expensive way to die. There is probably no more 
expensive way to die, and this is preventable stuff.
    All we are asking the private insurance industry to do is 
help us out. The Southern Bell study was not quoted. They 
opened the door for treatment for mental health and substance 
abuse, and that portion goes up a little bit, but guess what 
happens to the total health bill? It goes way down, and it 
takes a while to realize that. Wall Street shows real immediate 
response and when you have to show profit on Wall Street you 
sometimes won't take that long delay. It takes 3 or 4 years to 
go down, but it does.
    Thanks for letting me speak.
    Mr. Mica. Thank you. Without objection, the balance of your 
statement will be made a part of the record.
    [The prepared statement of Dr. Smith follows:]

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    Mr. Mica. I would like to recognize Mr. Peter Ferrara, who 
is the general counsel and chief economist with Americans for 
Tax Reform.
    Mr. Ferrara. Thank you, Mr. Chairman.
    Americans for Tax Reform strongly opposes any government 
mandate requiring health insurers to cover substance abuse 
treatment. There are several reasons for this position.
    First, the American people ought to be free to decide what 
they want in their health policy coverage. If they want 
substance abuse treatment coverage in their health policies, 
they can buy it in the marketplace. Insurers will be more than 
happy to provide the coverage the market demands. But if they 
don't want the coverage or don't want to pay the cost, the 
government should not force them to buy it.
    Let us think about this for a minute. Is this any way to 
decide what is in people's health insurance policies? You have 
these committees in Washington and you have these various 
interests that come before them, and then this small committee 
decides for every American in the country this is what benefits 
you will have in your health policy, and these are the benefits 
you will pay for, and you will learn to like it.
    I would submit that a central planning approach is neither 
efficient nor does it have the proper respect for the freedom 
of choice that the American people should have.
    We have heard a lot of testimony today about how efficient 
and cost effective this kind of coverage is. Well, let me 
submit that those who buy the health insurance in America don't 
agree with that position. They are the ones who should be 
    Now, all this discussion about how efficient and cost 
effective it is should be submitted to the insurance companies 
and should be submitted to the employers and should be 
submitted to the purchasers of health insurance across the 
country, and maybe they will change their minds and they will 
buy it, but that is the way that the system ought to work. We 
should not have a group in Washington dictating to the American 
people what the benefits are in their health insurance 
    Second, if the government mandates the inclusion of this 
coverage in health insurance policies, that will raise the cost 
of health insurance. This additional cost burden on working 
people is objectionable in itself. Indeed, in our view, this 
cost increase is quite analogous to a tax increase to fund 
increased government spending for substance abuse treatment.
    Of course, there is one difference with the tax increase. 
You can avoid the increase by just refusing to buy health 
insurance at all, and that is what many people will do if you 
impose this type of mandate on health insurance policies. More 
working people will decide they don't want to buy it, more 
small businesses will decide that they are going to drop it, 
and the result is an increase in the number of uninsured.
    The decision of how much to tax the American people for 
substance abuse treatment programs should be made in the 
regular budget process. It should not be made by this committee 
through a back door health insurance mandate. If it is so cost 
effective, then you should do it openly and directly. And maybe 
you should have more government programs for substance abuse 
treatment and maybe you should cut some other government 
spending to pay for it, but then we can judge this openly as 
part of the general political process and we can hold people 
accountable for their taxing and spending policies. And if it 
is so cost effective, then it is not going to cost you 
anything, and we have heard all this testimony about how much 
it is going to save you. Well, you investigate that and find 
out if that is true, and that then is part of your budget 
control policy.
    But as a matter of health policy, what you should be doing 
in health policy is quite the opposite of what you are 
considering here today. One of the few helpful things that 
Congress could do with health policy is to enact legislation 
removing all government mandates on what benefits are included 
in health insurance policies. This would reduce the cost of 
health insurance, and it would enable more people to buy the 
essential health coverage that they really need. It would 
reduce the number of uninsured, and so it would go a great ways 
toward helping to address that problem and expand the freedom 
of choice for the American people.
    Thank you very much.
    Mr. Mica. Thank you.
    [The prepared statement of Mr. Ferrara follows:]

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    Mr. Mica. I would like to recognize Charles Kahn, and he is 
president of the Health Insurance Association of America. 
Welcome, and you are recognized.
    Mr. Kahn. Thank you, Mr. Chairman and Mr. Ramstad.
    I am Charles N. Kahn III, president of the Health Insurance 
Association of America [HIAA]. Our members provide health, 
long-term care, disability, dental and supplemental coverage to 
more than 123 million Americans.
    I am pleased to be able to address your committee today on 
this issue of parity for substance abuse in health coverage. 
The costs of addiction and substance abuse are enormous, but 
they are costs of mandated benefits, and I think that the 
argument has been made today, and a very compelling one, that 
services to help those overcome substance abuse work, are 
essential and provide a societal good as well as an economic 
    My issue with this matter is not substance abuse. It is a 
question of health policy and insurance--and Federal policy 
toward insurance. An increasingly persuasive body of evidence 
shows beyond any reasonable doubt that mandated coverage for 
treatment or services not historically covered in other major 
medical plans do increase costs and that these costs are passed 
on to consumers in the form of higher premiums, increased cost 
sharing or both. And these higher costs resulting from benefit 
mandates lead directly to more uninsured Americans.
    I think this is very important to make the point that many 
employers provide coverage for services like those provided 
today. Others don't.
    I think if we go back to Ms. Rook's testimony, I think--I 
don't want to be a victim here, but in some ways her 
characterizations of insurance were unfortunate. The fact is 
that CNN purchases her health insurance, probably pays the 
whole price for it. They made the choice as to what the 
benefits were. The insurer offers a product to--or a set of 
products to CNN, and they decide how much they want to spend 
for their employees.
    Second, under the law, under the ERISA law there are 
requirements for CNN to make the benefits available, a 
description of those benefits available to employees. And for 
those of you who are going through open season in FEHBP right 
now, if you look at the book, it tells you how many days you 
get under substance abuse.
    I have sympathy, and who cannot empathize with her 
situation, but on the other hand the company made a decision 
about the health plans, and the company probably made a very 
sound decision for an important employee with an employee 
assistance program, but that was not necessarily--but I guess I 
am a bit taken aback that necessarily the insurer is held 
responsible for what is an employer decision.
    Let me make a few points about that.
    First, we have a voluntary health insurance program in this 
country. In a voluntary system, costs do matter. Employers are 
not required to offer coverage to their workers, and 
individuals are not required to sign up for coverage. Yet the 
private employer-based system in this country provides coverage 
to nearly 160 million Americans, and another 13 million buy 
their insurance privately.
    We all know that health insurance costs are continuing to 
climb, and that is driving up premiums to both employers and 
consumers, and each year employers must decide whether or not 
it will still be economical to provide any health insurance 
coverage. And I make the point any health insurance coverage, 
whether it is for substance abuse or basic med-surg coverage, 
and that their employees must decide whether they want to 
continue to enroll.
    A recent study showed that, of the uninsured, 20 percent of 
them have access to employer-based coverage and because of cost 
sharing have chosen not to take that coverage.
    A recent study by Doctors Gail Jensen and Michael Morrisey 
showed that the number of State mandates has increased 25 fold 
during the last two decades, making health insurance 
disproportionately more expensive for small businesses and 
causing as many as one in four Americans to lose their 
    According to Jensen and Morrisey, chemical dependency alone 
increased insurance premiums by 9 percent on average. I am not 
arguing against coverage for chemical dependency. If that is 
what the employer or the premium payer wants to purchase, then 
they ought to purchase it. But the mandate for this cannot be 
    First, there are many mandates. The Federal Government has 
begun to adopt more mandates and, as time proceeds, I can 
envision the cumulative effect being very great on the total 
cost of health insurance.
    The second point I would like to make is that the RAND 
study, which I am sure represents the value of these types of 
services as well as the services provided by Kaiser Permanente, 
are in a managed care environment. And going back to my 
cumulative--my concern about the cumulative effect of mandates, 
we also have with--and I will call it the assault from our 
standpoint by Congress on this--the Nation's health insurance 
system with the patient protection legislation. The State 
legislatures are doing the same, and what the trial attorneys 
are about to do in class action suits against the insurance 
industry and the managed care industry, they are basically 
dismantling managed care.
    And so the techniques and opportunities managed care offers 
I would argue are not necessarily going to be around, and the 
costs of mandates are clearly higher for small business and 
others who tend to buy plans with more choice, PPO plans and 
other kinds of plans where you don't have the tight control of 
managed care.
    Mr. Chairman, my time has expired, and I will conclude with 
just a thought that, in isolation, who can argue against 
coverage for substance abuse? I am not making that argument. I 
am making the argument that public policy that leads to 
mandating coverage is in a sense nothing more than a tax, as 
Peter described. And at the end of the day it is not going to 
help us get more Americans covered, which we see generally as a 
public good and something that we all ought to be seeking. We 
need to provide other kinds of ways of providing these 
services, and hopefully those can be found through other public 
    Mr. Mica. Thank you for your testimony.
    [The prepared statement of Mr. Kahn follows:]

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    Mr. Mica. Mr. Hall, you are going to have to leave, so we 
have 2 or 3 minutes here before we excuse you. I will ask a 
couple of questions, and then we will let you scoot and catch 
that plane.
    You had indicated that when your coverage, I guess Kaiser 
Permanente, had gotten into offering some of this treatment, 
that there was sort of a pent-up demand and that quite a few 
folks took advantage of that. Were there substantial increases 
in that first year or two from this increased usage? Was that 
reflected in cost, premium costs?
    Mr. Hall. I am trying to understand your question. When you 
say substantial usage----
    Mr. Mica. You testified--you said when you first got into 
this coverage, I thought you said that there was some pent-up 
demand or there were some more people taking advantage.
    Mr. Hall. A particular population utilizing it at a higher 
    Mr. Mica. Right. Was there--were there substantial costs 
involved in that?
    Mr. Hall. No. Because part of our program has a cap on what 
everyone pays when they come into our treatment facility which 
is like a $5 cap.
    Mr. Mica. You testified that there was this pent-up demand, 
and people were taking advantage of it. And then it leveled 
    Mr. Hall. Yes.
    Mr. Mica. With that demand with the treatment, how were the 
costs covered? Who absorbed that?
    Mr. Hall. Kaiser Permanente did. We weren't reimbursed by 
the State.
    Mr. Mica. But you did say that, after a period of time, 
there was a reduction, I think you said 50 percent of hospital 
days. Can you clarify that?
    Mr. Hall. Medical utilization during the 6 months prior to 
treatment was compared to utilization during the period 6 
months post-treatment. And the results indicated a 50 percent 
reduction in hospital beds--in other words, hospitalization.
    Mr. Mica. Well, those are my major questions to you.
    Mr. Ramstad, did you have any questions for Mr. Hall at 
this time?
    Mr. Ramstad. No, I just want to thank you, Kenny, for 
coming all of the way from California for this hearing today 
and all of your important work in this area. You have been a 
key leader nationally in this area, and I appreciate all of 
your efforts.
    Mr. Hall. Thank you. Congressman Ramstad, I thank you for 
your courage also in this area.
    Mr. Mica. We may have additional questions for all 
panelists. I am going to excuse you. Did you have a final 
comment that you wanted to make?
    Mr. Hall. If I can get permission from the committee, I 
promised a young lady who was part of that initial pilot 
program that I would read a letter that she would like me to 
read for the record.
    Mr. Mica. Read it or submit it for the record.
    Mr. Hall. I would like to read it.

    Hello, my name is Diana. I participated in the Valleho 
Chemical Recovery Program in November, 1996. As of November 10, 
1999, I will have 3 years drug free. I could never express my 
gratitude on a piece of paper. There are so many wonderful 
aspects of this program. The qualified and dedicated staff are 
the best. This program is the best thing that ever happened to 
me. And through this program comes the most important aspect, 
my children have their mother back. I owe this to Kaiser's 
chemical dependency recovery program and its irreplaceable 
staff. Forever gratitude, Diana D.

    Mr. Mica. Thank you. We will excuse you at this time. Thank 
you again for your participation.
    Some of our other witnesses, I have heard so much about 
Hazelden treatment and you also said that you represent, sir, 
several other very prominent treatment facilities, Betty Ford 
and others, Mr. Conley?
    Mr. Conley. Yes.
    Mr. Mica. And I guess you have a pretty good success rate. 
What is your success rate?
    Mr. Conley. Collectively, as a group, we look at a success 
rate varying from 51 to 75 percent abstinence from alcohol and 
drugs after 1 year.
    Mr. Mica. You also have a pretty hefty price tag. These 
clinics that were cited or treatment centers are some of the 
highest in the Nation; is that correct?
    Mr. Conley. Well, I don't know if I can comment on the 
others. I can comment on Hazelden. The going retail rate if you 
are in for 28 days of treatment, $15,000. The net effect of the 
cost is somewhat lower because we do get patient aid out for 
those that don't have the insurance and so forth to handle it.
    Mr. Mica. What is your average treatment cost for your 
patients? Could you give us a range?
    Mr. Conley. The average for the full 28 days would be right 
around the $15,000 range. But after we factor in on the average 
the patient aid we give out, I would guess--and I won't swear 
to it--I guess it would be around $11,500, $12,000, or 
something like that.
    Mr. Mica. Of the patients that you see, what percentage 
would you say have insurance coverage that covers all or part 
of that?
    Mr. Conley. I think it would depend on what part of 
Hazelden they went to, if they went to the primary care for 
adults or adolescents. I believe we are reimbursed 30 to 50 
percent of the patients go through and get some reimbursement. 
I can get you those numbers. I don't have it.
    Mr. Mica. I think we would like to have those for the 
record, and maybe alcohol and also drug dependency if they are 
broken out in that fashion.
    [The information referred to follows:]

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    Mr. Mica. You heard some testimony from our last two 
witnesses that felt that this coverage should be left as an 
option and it does result in an indirect tax increase or fee 
increase for everyone when it is imposed or mandated. How would 
you respond to that criticism if we were to adopt a Federal 
parity requirement?
    Mr. Conley. Well, I used to be in that end of the business, 
and my company was a member of HIAA at one time, so I have a 
certain amount of sympathy for that position. But I guess the 
question I really have to say is we haven't had these mandates, 
and as I look at society now, I see a $146 million price tag to 
the work site. I see prisons full. I just see this as something 
that has to be done. I respectfully disagree, I guess, with 
their position.
    Mr. Mica. We heard the gentleman from Americans for Tax 
Reform oppose this as an additional mandate which would, in 
fact, increase costs, which would also diminish the number of 
people who have health care coverage. As the cost goes up, we 
have X number of people, 43, 44 million now, uninsured now with 
no coverage. We would have actually fewer people covered 
because of the increased costs mandated.
    Mr. Conley. Uh-huh.
    Mr. Mica. What do you think about that?
    Mr. Conley. I would make two comments to that.
    No. 1, the incremental cost of this benefit, if the RAND 
study is right, isn't going to be so high that it is going to 
drive people out. That is my first reaction.
    My second reaction, and I would invite HIAA members to 
think about this, is the cost shift to employers in other 
areas. For instance, if people were treated effectively, the 
productivity, the absenteeism, the workers comp claims, the 
liability, the risk exposure, would be less. So what you are 
doing, in effect, is you are robbing Peter or cutting back on 
the treatment end, but that cost is being shifted to employers. 
And I think it would be a fascinating study to see what 
happened after a year or two if the macro health costs would go 
up and drive people out of the market. I don't think that is 
the case.
    Mr. Mica. Your people under treatment are all there 
    Mr. Conley. Pretty much, although some are through 
interventions from employers or families. So when I say 
voluntarily, they may not be jumping for joy that they are 
going to Hazelden.
    Mr. Mica. One of the problems, Captain Smith, we adopted a 
policy of deinstitutionalization of mentally ill or people who 
have substance abuse problems. Many were forced into treatment 
and actually almost incarcerated into some of these programs 
some years ago against their will. And today we--that is not 
allowed. It is not permitted.
    And we do have--you can--just as you said, you can walk 
blocks from here and you will see otherwise healthy human 
beings who have been victimized by chemical dependency and 
substance abuse, and we have no way to get them off the 
streets, no way to get them into these programs, and they will 
not voluntarily go. That is the bulk of our homeless population 
right now. What do we do?
    Dr. Smith. That is a superb question. Whenever human rights 
and individual choices interface with government control and 
the very Constitution, those are significant questions. Do we 
round up everybody and make them take lithium? No. But treated 
in the early stages--and this is my astonishment. My colleagues 
never complain about paying the bill for a paraplegic from a 
motorcycle accident or about AIDS bills. They don't complain 
about liver transplants.
    When you are treating that stage, the ball game is gone. 
But you can treat it early and so efficiently, and I think 
$15,000--do you have any idea how long it takes to spend 
$15,000 in an intensive care unit? I was an internist. I was 
there. Half of the people in ICU are there because of drugs or 
alcohol at the wrong time. And we can run through $15,000 in 
about 12 hours.
    And you can treat--this is the reason that the Navy got 
into the business. You have $2.5 million in a pilot, and our 
pilots like to drink, and you train him that much, you get a 
return on investment that is significant. It is the same for 
IBM or the insurance companies. They train these executives. 
These are good people.
    All we are saying is, let's shift the money to an earlier 
stage. Let's let industry help us with this. If these guys 
would open up their doors to chemical dependency and mental 
health, the total budget would go down. It has been done too 
many times by Kaiser, Northrup, Southern Bell, but they are not 
saying come in and we will treat you. And if they were we would 
not be having these hearings.
    What is the responsibility of the Federal Government to say 
hey, help, it is not working? And if you want to know it is not 
working, look at the largest mental health hospital in this 
country today is the L.A. County jail.
    The prison beds I don't need to tell you that the decline 
in substance abuse beds, adolescent beds comes like this, the 
jail cells go up like that. They cross right there. Where do we 
want to turn it around? I think this is a wonderful way because 
I think these guys can do it well, but I do think that you have 
to say help us in the early stages. Once it gets to 
homelessness and the liver is gone, it is a done deal.
    Mr. Mica. I heard some conflicting testimony today on the 
costs. One of our witnesses and a Member of Congress and some 
others testified to a less than 1 percent cost increase were 
projected. I believe the last witness, Mr. Kahn, talked about a 
9 percent increase. Could you explain what that was for?
    Mr. Kahn. The researchers that I was quoting looked at 
State legislation that had been put in place and made 
comparisons between States that did and didn't have such 
legislation, and that is the difference that they came up with. 
That was directly attributable to that benefit requirement.
    Mr. Mica. It was.
    Mr. Ramstad. Would the gentleman yield?
    Mr. Mica. Go ahead.
    Mr. Ramstad. Those studies reflected mental health parity 
cost, not substance abuse treatment parity.
    Mr. Kahn. That----
    Mr. Mica. This gentleman in the back in the audience is not 
sworn. If you want to comment, we will be glad to have you be 
sworn and comment.
    If you want to provide the testimony, Mr. Kahn, you are 
    Mr. Kahn. The study is included, and I can make it for the 
record. It refers to the amount and explains the methodology 
    Mr. Mica. Specifically substance abuse and parity 
    Mr. Kahn. Yes, and that is explained in here.
    Mr. Mica. Can you identify the title?
    Mr. Kahn. It is the Mandated Benefit Laws and Employer-
Sponsored Health Insurance.
    Mr. Mica. Without objection, that report will be made a 
part of the record.
    [Note.--The report entitled, ``Mandated Benefit Laws and 
Employer-Sponsored Health Insurances,'' may be found in 
subcommittee files.]
    Mr. Ramstad. Who commissioned that study?
    Mr. Kahn. We commissioned the study, but it was done by a 
professor at Wayne State and the University of Alabama at 
    Mr. Ramstad. It flies in the face of the RAND Corp. study, 
the California study, the Rutgers study, the Columbia 
University study, the Minnesota study, States that I am 
familiar with, so I would truly like to sit down and talk to 
you about that because I have some serious questions about that 
    Mr. Kahn. I would not necessarily argue that this study is 
in contradiction to the other studies. This study is looking 
broadly at all types of coverage in given States. If you look 
at very specific types of coverage, you can find that there are 
savings or the cost is marginal. Our problem is that when you 
do a one-size-fits-all mandate, are you mandating that on fee-
for-service coverage, on PPO coverage as well as on managed 
care coverage? That might be sort of tightly controlled and 
that makes a difference.
    The amount of flexibility that an insurer has in 
determining what--under what circumstances benefits will be 
provided is critical to the cost, and I think even in the 
testimony on the RAND study there was precertification and 
other hurdles that had to be overcome for someone to get the 
    Mr. Ramstad. If I may just ask, I didn't support Dingell-
Norwood, and this is not Dingell-Norwood, and I am usually with 
the groups represented by the last two witnesses, and I have a 
lot of respect for them. But per your definition, every bill is 
a mandate. Every bill in Congress from the beginning required 
someone to do something or not to do something.
    I want to point out that this bill does not mandate an 
employer-plan-covered substance abuse treatment. As Susan put 
it so well, if you say you cover it, cover it.
    And to answer your question, and Susan is not here so I 
would take the liberty of answering the question, Chip, that 
you raised. CNN was totally unaware of the cap until Susan was 
in that detox center. They were told and they thought they 
bought the Cadillac package, the whole package. And treatment, 
if it were as available as most plans say, we wouldn't be here 
    Let me ask you a question. Why do most plans offer chemical 
dependency treatment but not make it accessible? Why not tell 
people what the definition of medically necessary care is?
    Mr. Kahn. It is hard for me to imagine, although I am sure 
if you say it is the case it's the case, but a major 
corporation in this country that I am sure has a staff of more 
than 10 or 15 people in their human resources department that 
are overseeing health benefits, and I assume that they are 
self-insured, so probably the carrier was in a sense 
administering the benefit, and for them to say that they didn't 
understand their benefits, I don't think that is the insurer's 
problem, I think that is CNN's problem. And I would argue that 
they were probably in violation of the ERISA laws if they were 
not making clear what those restrictions were to their 
employees from the git-go when those employees made an annual 
choice as to their plan.
    Second, I can't sit here and argue against the success of 
this kind of treatment. I wouldn't sit here and argue against 
the success of drug treatment for cholesterol and the effect 
that has on heart disease.
    I take Pravachol and watch my diet so I know in terms of my 
heart disease that there are treatments that deal with that. I 
am not going to argue about that. But I would be concerned----
    It is fine to say, let's mandate this. We could have a 
hearing at which I could make the same argument that drug 
coverage ought to be mandated because every person with heart 
disease ought to have through their insurance coverage access 
to Pravachol or other kinds of cholesterol drugs which are 
high-cost drugs. I could make the same argument, and we can 
come here and show all of the cost-saving value of people 
taking cholesterol drugs rather than at the end stage needing 
whatever they get--bypass or whatever.
    I am not arguing the utility of it, but the fact is that if 
you go down this road of requiring it here, before you know it 
you are going to have to require drug benefits and you are 
going to have to require other things. Because all of the 
compelling arguments that are being made here can be made about 
many of the things that are offered in our wonderful health 
care system.
    Mr. Ramstad. I know Captain Smith is anxious to respond.
    Dr. Smith. The response I had--and I love so much of what 
Mr. Kahn said, but what the bill is asking, as I understand it, 
is if you have a myocardial infarction, you are going to have 
to pay 10 percent of what the care is. If you get in a crisis 
with drugs, they will ask you to pay at least 50 percent of the 
cost. The bill is asking for parity. I have a much better 
success rate with substance abuse than your cardiologist does 
with cardiovascular disease because I have been in both 
    What the bill is asking, look, just treat this one the 
same. The reason that people don't demand high levels for 
substance abuse treatment is the denial. If someone has 
alcoholism, he doesn't have the disease so he doesn't care what 
the number is. It is one of those few instances because of 
denial inherent in the disease--that is what treatment does. It 
breaks through the denial.
    You are asking a sick brain to decide how much we need to 
treat it. How much money is needed to treat it? And nobody is 
going to sit there--and particularly an alcoholic. His spouse 
may read it carefully, but the alcoholic is not going to care 
how much money there is in the policy for alcohol treatment 
because he doesn't have it because of the denial.
    And those are the points that I would make.
    Mr. Mica. Mr. Ferrara wanted to comment.
    Mr. Ferrara. Mr. Chairman, you have heard testimony today 
about it is going to cost less than 1 percent, cost 9 percent 
increase in costs. And you know what? You don't know. I know 
you don't know. You know you don't know. You are not going to 
know because that is the wrong question to ask. That is a 
central planning question we are never going to know.
    That is why the decision needs to be left up to the 
marketplace where, A, you have people putting out their own 
money directly and have to be convinced directly of the 
benefits that they are going to get back and they will very 
carefully evaluate and make their own choice; and, B, different 
people can make different choices so some people might try it. 
Wow, it reduced our costs or General Motor's costs and Kaiser 
Permanente's costs. And then other people do it, and that is 
the right way to do this. You don't try to have a committee in 
Washington make the decision for everybody.
    I am not making an argument for or against a particular 
kind of treatment or for or against a kind of bill. I am making 
an argument on process. This decision needs to be left up to 
the people buying the health insurance. If there are some 
effects on the government and the government budget, maybe this 
is a decision that you need to make explicitly in the budget 
process. But don't engage in these activities where you shift 
the cost off budget onto other people and then you hide it from 
    And in the situation where quite--I don't mean this 
negatively--you don't know what you are doing because in this 
kind of model you don't know, sitting here in Washington. This 
needs to be made on a decentralized basis by people across the 
country who are putting their own money on the table and will 
do so when they are clear they are going to get the benefit 
    Mr. Mica. Dr. Schoenbaum.
    Mr. Schoenbaum. Yes, I would like to respectfully disagree 
with what Mr. Ferrara just opened with, that we don't know and 
can never know what the costs are of legislation such as this. 
Respectfully, we do know, at least on average and under some 
assumptions that we can articulate and that seem fairly 
reasonable, approximately what the costs are that we can expect 
from legislation like this.
    In the RAND study we looked at data from behavioral--from 
the third largest behavioral carve-out insurance carrier in the 
country, I assume a member of HIAA. Of people with private 
insurance in this country, 75 percent received their coverage 
for substance abuse and mental health services through a carve-
out company.
    RAND has negotiated an agreement with United Behavioral 
Health, the third largest behavioral carve-out company in the 
country, for unrestricted access to their claims and 
utilization data. Those are the data that we based our study 
on. We identified the plans in that study that provide 
unrestricted, although managed, substance abuse treatment 
benefits. That I would argue is the standard of care, the 
standard of practice that is currently prevailing in this 
country--managed carve-out health insurance.
    Under those circumstances, across the range of employers 
that we looked at, which were in a number of different 
industries, had employees in 38 different States, we were quite 
clear about the cost of providing unlimited substance abuse 
treatment benefits. Three-tenths of 1 percent of members in an 
employed population use any substance abuse treatment benefits 
in a year. Of those, the number who use--the fraction who used 
a fairly high amount in a given year is yet smaller.
    So it stands to reason that, under practice patterns like 
that, we are not talking about enormous amounts of money for 
providing the benefit. The issue is that managing services, 
utilization review, the practices, the technologies that the 
carve-out companies have developed for targeting services to 
the people who need them are a more effective way of allocating 
care than benefit limits which have the unfortunate feature 
that they affect the people who need the largest amount of 
    Mr. Mica. Let's see. Has everyone had a shot at this?
    Mr. Ferrara. Do I get to respond briefly?
    Mr. Mica. Captain Smith, did you want to respond? And then 
we will go back to Mr. Ferrara.
    Dr. Smith. I would just say to Mr. Ferrara, these are the 
best people in the world, but it has been left to the 
marketplace to solve this problem. That is why the beds are 
gone. That is why your beds are now in prison. That is why you 
have homelessness all over this country. The marketplace has 
had its shot at it, and by my value system it has failed 
    Now are they going to spontaneously open the doors? No, I 
don't think that they are. I think Congress has to say, hey, 
help us, open up the doors. They have no problems asking us to 
build more prison beds. They have no problem when someone is 
fired and becomes homeless. That is a high consumer of health 
care cost to the private insurer, and ultimately it is the 
Federal system that picks up the tab. You are saying, help us 
when this disease is treatable cheaply.
    Thank you.
    Mr. Ferrara. Captain Smith says this is a great deal, and 
it works out wonderfully, and I tried to explain it, and they 
are not buying it, so please Mr. Smart Federal Government, you 
force them to do it, tell all of these people they are wrong. 
If Mr. Schoenbaum is right and Captain Smith is right, go make 
the case to the employers and to the insurance companies and 
tell them about all the great money that they are going to 
save, and if they think you are right, they will risk their 
money on it. The point is, who is going to make this decision, 
not who is right or wrong, and the decision needs to be made by 
the people buying the health insurance.
    Mr. Mica. Their point is that they are not saving the money 
by instituting this. Or if it is not required by the Federal 
Government for coverage, what happens is that the rest of us 
are picking it up as taxpayers in some more costly fashion.
    Mr. Ferrara. If that is the case, you need to examine your 
substance abuse health treatment programs and deal with it in 
the context of the Federal budget. If there are government 
savings and government effects or broad or societal effects, 
then deal with it explicitly in the budget process where you 
consider it overall against all of the considerations of how 
much taxes you are going to raise and other demands in the 
budget, and then you make your priorities. That is where it 
needs to be decided. Don't hide it by saying we are going to 
make someone else pay for it. They ought to be able to decide 
what is in their health insurance policy and what is not.
    If you are convinced after doing a thorough investigation, 
gee, this is extremely cost effective and the employers don't 
take into account all of the costs that accrue to them and 
insurance companies don't take into account all the costs that 
are going to accrue to them, that is when you have a government 
program to do it.
    Mr. Mica. Mr. Ramstad, do you have additional questions?
    Mr. Ramstad. I don't, Mr. Chairman.
    Mr. Mica. Well, we haven't solved the problem of parity for 
those afflicted with substance abuse or what are our national 
legislative direction will be on this issue today, but we have 
aired some opinions and heard some good testimony I think from 
a number of folks and hopefully moved the debate a little bit 
forward and possibly a legislative resolution.
    We will keep the record open for 10 additional days for 
additional statements. We may have some additional questions 
for some of those who have testified before us today.
    If there is no further business to come before the 
subcommittee--Mr. Ramstad----
    Mr. Ramstad. Just one last word, Mr. Chairman. I want to 
thank all six witnesses on this panel, including the two who 
vehemently disagree with my legislation, because this is the 
way that the process should work. Thank you for coming forward 
and being part of this discourse.
    Mr. Mica. In conclusion, I did want to thank each of the 
witnesses who are on this panel and the other witnesses and 
Members of Congress who testified today. I appreciate again 
your helping us make the process work.
    As I said, there being no further business to come before 
the subcommittee this afternoon, this meeting is adjourned.
    [Whereupon, at 1:20 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record