    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

       THE PAUL WELLSTONE MENTAL HEALTH AND ADDICTION EQUITY ACT OF 2007

    =======================================================================

                                    HEARING

                                   BEFORE THE

                             SUBCOMMITTEE ON HEALTH

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 1424

                                   __________

                                 JUNE 15, 2007

                                   __________

                               Serial No. 110-57

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

        JOHN D. DINGELL, Michigan,       JOE BARTON, Texas
                 Chairman                    Ranking Member
    HENRY A. WAXMAN, California          RALPH M. HALL, Texas
    EDWARD J. MARKEY, Massachusetts      J. DENNIS HASTERT, Illinois
    RICK BOUCHER, Virginia               FRED UPTON, Michigan
    EDOLPHUS TOWNS, New York             CLIFF STEARNS, Florida
    FRANK PALLONE, Jr., New Jersey       NATHAN DEAL, Georgia
    BART GORDON, Tennessee               ED WHITFIELD, Kentucky
    BOBBY L. RUSH, Illinois              BARBARA CUBIN, Wyoming
    ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
    BART STUPAK, Michigan                HEATHER WILSON, New Mexico
    ELIOT L. ENGEL, New York             JOHN B. SHADEGG, Arizona
    ALBERT R. WYNN, Maryland             CHARLES W. ``CHIP'' PICKERING,
    GENE GREEN, Texas                        Mississippi
    DIANA DeGETTE, Colorado              VITO FOSSELLA, New York
        Vice Chairman                    STEVE BUYER, Indiana
    LOIS CAPPS, California               GEORGE RADANOVICH, California
    MIKE DOYLE, Pennsylvania             JOSEPH R. PITTS, Pennsylvania
    JANE HARMAN, California              MARY BONO, California
    TOM ALLEN, Maine                     GREG WALDEN, Oregon
    JAN SCHAKOWSKY, Illinois             LEE TERRY, Nebraska
    HILDA L. SOLIS, California           MIKE FERGUSON, New Jersey
    CHARLES A. GONZALEZ, Texas           MIKE ROGERS, Michigan
    JAY INSLEE, Washington               SUE WILKINS MYRICK, North Carolina
    TAMMY BALDWIN, Wisconsin             JOHN SULLIVAN, Oklahoma
    MIKE ROSS, Arkansas                  TIM MURPHY, Pennsylvania
    DARLENE HOOLEY, Oregon               MICHAEL C. BURGESS, Texas
    ANTHONY D. WEINER, New York          MARSHA BLACKBURN, Tennessee
    JIM MATHESON, Utah
    G.K. BUTTERFIELD, North Carolina
    CHARLIE MELANCON, Louisiana
    JOHN BARROW, Georgia
    BARON P. HILL, Indiana

    _________________________________________________________________

                               Professional Staff

     Dennis B. Fitzgibbons, Chief of
                   Staff
    Gregg A. Rothschild, Chief Counsel
       Sharon E. Davis, Chief Clerk
       Bud Albright, Minority Staff
                 Director

                                      (ii)
                             Subcommittee on Health

                    FRANK PALLONE, Jr., New Jersey, Chairman
    HENRY A. WAXMAN, California          NATHAN DEAL, Georgia,
    EDOLPHUS TOWNS, New York                 Ranking Member
    BART GORDON, Tennessee               RALPH M. HALL, Texas
    ANNA G. ESHOO, California            BARBARA CUBIN, Wyoming
    GENE GREEN, Texas                    HEATHER WILSON, New Mexico
        Vice Chairman                    JOHN B. SHADEGG, Arizona
    DIANA DeGETTE, Colorado              STEVE BUYER, Indiana
    LOIS CAPPS, California               JOSEPH R. PITTS, Pennsylvania
    TOM ALLEN, Maine                     MIKE FERGUSON, New Jersey
    TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
    ELIOT L. ENGEL, New York             SUE WILKINS MYRICK, North Carolina
    JAN SCHAKOWSKY, Illinois             JOHN SULLIVAN, Oklahoma
    HILDA L. SOLIS, California           TIM MURPHY, Pennsylvania
    MIKE ROSS, Arkansas                  MICHAEL C. BURGESS, Texas
    DARLENE HOOLEY, Oregon               MARSHA BLACKBURN, Tennessee
    ANTHONY D. WEINER, New York          JOE BARTON, Texas (ex officio)
    JIM MATHESON, Utah
    JOHN D. DINGELL, Michigan (ex
        officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     1
    Hon. Nathan Deal, a Representative in Congress from the State of
      Georgia, opening statement.....................................     2
    Hon. Lois Capps, a Representative in Congress from the State of
      California, opening statement..................................     3
    Hon. Heather Wilson, a Representative in Congress from the State
      of New Mexico, opening statement...............................     5
    Hon. Tammy Baldwin, a Representative in Congress from the State
      of Wisconsin, opening statement................................     6
    Hon. Mike Ferguson, a Representative in Congress from the State
      of New Jersey, opening statement...............................     7
    Hon. Jan Schakowsky, a Representative in Congress from the State
      of Illinois, opening statement.................................     8
    Hon. Sue Wilkins Myrick, a Representative in Congress from the
      State of North Carolina, opening statement.....................     9
    Hon. Hilda L. Solis, a Representative in Congress from the State
      of California, opening statement...............................    10
    Hon. John Sullivan, a Representative in Congress from the State
      of Oklahoma, opening statement.................................    10
    Hon. Gene Green, a Representative in Congress from the State of
      Texas, opening statement.......................................    11
    Hon. Jim Matheson, a Representative in Congress from the State of
      Utah, opening statement........................................    12
    Hon. Marsha Blackburn, a Representative in Congress from the
      State of Tennessee, opening statement..........................    13
    Hon. Tom Allen, a Representative in Congress from the State of
      Maine, opening statement.......................................    14
    Hon. Tim Murphy, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................    14
    Hon. John D. Dingell, a Representative in Congress from the State
      of Michigan, prepared statement................................    15
    Hon. Anna G. Eshoo, a Representative in Congress from the State
      of California, prepared statement..............................    16

                                   Witnesses

    Hon. Patrick J. Kennedy, a Representative in Congress from the
      State of Rhode Island..........................................    17
        Prepared statement...........................................    19
    Hon. Jim Ramstad, a Representative in Congress from the State of
      Minnesota......................................................    21
        Prepared statement...........................................    23
    James E. Purcell, president and chief executive officer, Blue
      Cross & Blue Shield of Rhode Island............................    24
        Prepared statement...........................................    27
        Answers to submitted questions...............................    85
    Edwina Rogers, vice president, health policy, the ERISA Industry
      Committee......................................................    32
        Prepared statement...........................................    33
        Answers to submitted questions...............................    94
    Marley Prunty-Lara, board member, Mental Health America..........    36
        Prepared statement...........................................    38
    James A. Klein, president, American Benefits Council.............    40
        Prepared statement...........................................    42
        Answers to submitted questions...............................    77
    Howard H. Goldman, M.D., professor of psychiatry, University of
      Maryland School of Medicine....................................    46
        Prepared statement...........................................    48
        Answers to submitted questions...............................    67

    H.R. 1424, THE PAUL WELLSTONE MENTAL HEALTH AND ADDICTION EQUITY ACT OF
                                      2007

                                  ----------

                             FRIDAY, JUNE 15, 2007

                      House of Representatives,
                                Subcommittee on Health,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 12:13 p.m., in
    room 2123, Rayburn House Office Building, Hon. Frank Pallone,
    Jr., (chairman) presiding.
        Present: Representatives Green, Capps, Allen, Schakowsky,
    Solis, Matheson, Deal, Wilson, Ferguson, Myrick, Sullivan,
    Murphy, Burgess, and Blackburn.
        Staff present: Carrie Annand, Yvette Fontenot, Christie
    Houlihan, Purvee Kempf, Jodi Seth, Bridgett Taylor, Lauren
    Bloomberg, Nandan Kenkeremath, and Chad Grant.

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

        Mr. Pallone. I call the hearing of the subcommittee to
    order.
        Good morning. Today, we are holding a hearing on H.R. 1424,
    the Paul Wellstone Mental Health and Addiction Equity Act of
    2007. My colleagues and the chief sponsors of H.R. 1424,
    Congressman Patrick Kennedy of Rhode Island and Jim Ramstad of
    Minnesota, are here with us this morning. Thank you for being
    here.
        To their great credit, they have been the most vocal
    proponents in Congress for requiring parity in insurance
    coverage of mental health conditions; and together they have
    crisscrossed the country to bring national attention to their
    cause and develop support for the legislation. To date, they
    have garnered 268 cosponsors and have demonstrated that this is
    not a partisan issue; and I want to thank them again for all
    they have done.
        To establish the pressing need for this legislation, we
    will be hearing from witnesses about the current problems
    individuals confront when they seek insurance coverage for
    mental health and addiction treatment services. It will be made
    clear that, in spite of widespread recognition that mental
    illness and substance abuse are treatable illnesses, there
    exists glaring inequities between health insurance coverage for
    mental health and that for other medical conditions.
        Health insurance plans often impose stricter treatment
    limits and higher out-of-pocket expenses on mental health care
    than on care for other illnesses. This discrimination prevents
    many from getting the treatment they need to function normally.
    As a Nation, we can no longer afford to ignore this disparity
    in coverage, because the cost to families and to society in
    general is simply too high.
        On February 26 I hosted a forum in Trenton, NJ, on mental
    health parity with Congressman Kennedy, mental health
    professionals, advocates and individuals who experienced
    discrimination when they sought mental health services for
    themselves or their families. Their stories demonstrated to me
    the pain and anguish that accompanies mental illness when it
    goes untreated. Their personal accounts reveal that denying
    treatment for a mental illness can be just as life threatening
    as denying surgery to a cancer or heart patient.
        The inequities extend across all age groups. For instance,
    it is estimated that over two-thirds of children with mental
    health conditions do not get the treatments they need.
        In my own State of New Jersey, we have what is considered a
    limited mental health insurance parity statute. It requires
    that all biologically based mental illnesses be covered on a
    par with all other illnesses. It does not provide parity for
    what have been called nonbiological-based such as post-
    traumatic stress disorder, substance abuse, and eating
    disorders. Fortunately, thanks to the efforts of advocates and
    enlightened legislators, a measure for full parity has cleared
    many hurdles and is making its way towards passage in the New
    Jersey State Legislature.
        But many other States are moving on their own towards more
    comprehensive coverage and now 26 mandate mental health
    coverage with full parity. I believe that any legislation we
    pass on the Federal level should recognize the value of these
    stronger State laws and serve as a Federal floor of covered
    benefits, beneath which no State law should sink.
        The Kennedy-Ramstad bill recognizes this by not preempting
    existing State laws with greater protections. This sets that
    legislation apart from the Senate bill sponsored by Senators
    Kennedy and Enzi, legislation that is certainly a major step
    forward but not quite as comprehensive. Of course, I haven't
    figured out yet, there are two Kennedys here on two sides of
    the aisle, but we won't get into that too much.
        The Kennedy-Ramstad bill also sets a high standard by
    requiring coverage of disorders offered to Members of Congress
    and their staffs through the Federal Employees Health Benefits
    Program. Our witnesses today will report on the costs
    associated with providing this more comprehensive mental health
    parity.
        Employers have experienced cost increases of less than 1
    percent as a result of implementing full parity laws. In fact,
    it appears that the cost of doing nothing is far greater for
    individuals, families, our health care system, and economy; and
    this will also be discussed in more detail by our witnesses.
        In conclusion, it seems that almost every day a major news
    story breaks that has as its root an untreated mental health
    problem. A college student shoots his classmates, a mother
    drowns her own children, kidnapping, suicides, drug and alcohol
    addiction. The next day's story is about the State's
    deteriorated mental condition--I should say about the subject's
    deteriorated mental condition, which many people knew about,
    and the failure or inability of that person to get mental
    health counseling and treatment.
        By putting mental health on a par with other conditions, we
    will be improving the availability and affordability of health
    care for those with mental health and substance abuse
    conditions. This will not only reduce these horrific public
    incidents but also the everyday pain and anguish of many of our
    constituents and their families who suffer in silence.
        I want to thank our witnesses and our Members for coming
    today and look forward to their comments. But I really couldn't
    conclude without thanking both of you. I saw when I--I know Jim
    wasn't able to come that day in Trenton. He tried, but he
    wasn't able to. But Patrick was there, and it was--the fact
    that Patrick was willing to tell his own story so effectively,
    the fact that so many other people were there to back him up.
    If I could just use that Trenton example of how Patrick and Jim
    have been going around the country, raising attention, both
    media and otherwise, to this. It is really because of your
    efforts and your willingness to do that and spend so much time,
    that we are at the point I think where we are going to be able
    to pass this and send it to the President. You really should be
    very proud, both of you, of what you have done; and I mean that
    sincerely. Thank you.
        I will yield now to the ranking member, Mr. Deal.

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

        Mr. Deal. Thank you, Mr. Chairman.
        I want to thank our colleagues for taking time out of their
    schedules to be with us. I realize this is a piece of
    legislation both of you have worked on for a very long time,
    and we appreciate your presence.
        During last year we had hearings in the subcommittee on
    mental illness, and we discussed not only the prevalence of the
    problem and the treatment for mental illness but also the
    difficulty some patients had in accessing care. We heard
    compelling testimony about the debilitating effects of some of
    these illnesses, in addition to the advances in research. It
    became clear to me that improvements should be made to increase
    the access to mental health services, and I am glad we are
    taking the opportunity to today to explore that issue.
        While I do believe people suffering from mental health
    disorders do need access to the appropriate type and level of
    treatment, legislation should be balanced in how it addresses
    this serious problem. I have always been concerned about the
    impact of insurance coverage requirements on the cost of health
    insurance. While no one mandate may increase the cost of
    insurance in a sizable way, they can have a cumulative effect
    of making coverage prohibitively expensive. I am sure this will
    be a point of discussion in the testimony of our witnesses, and
    I certainly look forward to hearing your thoughts on this
    issue.
        I would also be concerned with any legislation which had
    the unintended consequence of employers not providing any
    coverage for all for other serious mental illnesses. Another
    troubling consequence could be, because employer-sponsored
    insurance is voluntary, increasing mandates could lead
    employers to stop offering benefits altogether. I realize these
    are reservations often raised in regards to legislation like
    the bill before us, and I hope that the witnesses can shed some
    light on these issues.
        Improving access to mental health treatment is certainly a
    worthy goal. However, as we seek this target, there are a
    number of questions which must be addressed, such as what
    diseases and disorders ought to be covered in legislation and
    the broader impact of these changes on the insurance market.
    For this reason, I think this will be a good hearing, and we
    will give the opportunity to the committee to explore these
    issues in more detail.
        My son happens to be a superior court judge in our State
    and handles the drug court for the two counties that our
    circuit is composed of. He was in town yesterday, along with
    mental health court advocates and family courts and drug courts
    from our State; and one of the things that they obviously all
    face is not only funding problems to keep those alternatives,
    which are very, very successful--in fact, the recidivism rate
    coming through the drug court has been 5 percent or less for a
    number of years now.
        We are attempting and have begun the process of a mental
    health court, but it has huge problems of being able to obtain
    necessary funding. So it is a very broad picture, and I thank
    both of you for your time and efforts to be here today.
        Thank you, Mr. Chairman.
        Mr. Pallone. Thank you.
        I recognize the gentlewoman from California, Mrs. Capps.

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

        Mrs. Capps. Thank you, Chairman Pallone.
        The ranking member just made a comment about mental health
    court that prompted my interest, so I am going to be contacting
    him.
        Thank you, Chairman, for holding this important hearing. I
    am very proud to be a cosponsor of the Paul Wellstone Mental
    Health and Addiction Equity Act of 2007, and I will be even
    prouder when it is passed by Congress and signed into law. That
    is when we will truly honor the memory of its namesake.
        It is so fitting today that our first two witnesses are the
    bill's co-authors. Last month, it was also encouraging to take
    part in Mental Health Parity Day and meet with the men and
    women across the country who dedicate themselves to improving
    the lives of others. Really at the heart of this bill and this
    discussion today is the fact that there exists an unreasonable
    difference in the way we treat mental health conditions as
    opposed to all other health conditions. To a health
    professional--and there are a few of us in this subcommittee
    and many across the country that know that there should be no
    distinction in the importance of treating any state of ill
    health, whether it be heart disease, kidney disease, brain
    disease or a mental health disease. All parts of the body,
    including the mind and the brain, are vital to our ability to
    function; and it is so sad that there has existed this
    distinction for mental health because of stigma and
    misunderstanding.
        H.R. 1424 will begin to finally break down barriers for
    accessing life-saving mental health treatment. And I say life-
    saving deliberately, because as we are going to hear from these
    witnesses today, mental health conditions can indeed be just as
    life-threatening as other health conditions. We must put an end
    to the discrimination being practiced by insurers when they
    offer coverage for some health conditions and not others. And I
    know that some people today might refer to the Senate
    compromise on mental health parity. But frankly, I don't feel
    it goes far enough.
        I strongly support the passage of language in H.R. 1424,
    which our dedicated colleagues and champions for mental health,
    Patrick Kennedy and Jim Ramstad, have worked so hard for so
    long to perfect.
        Many employees aren't as fortunate as Members of Congress
    and our staff, who have access to Federal health benefits. Many
    employees have no choice at all which insurance plan they may
    access. They are lucky to have one, and so they take it without
    questioning. When someone gets a job and is offered health
    insurance, they pretty much have to take what the company has
    chosen for them. And it is not fair, I believe, to say, well,
    we are going to cover some parts of your health care, but we
    will pick and choose which parts of your body to cover. I
    believe that is bad for business. I know it is bad health care.
        So again, I look forward to discussing the bill before us,
    and I am excited for the prospects of finally passing this
    legislation during this session of Congress. I yield back.
        Mr. Pallone. Thank you. The gentlewoman from New Mexico,
    Mrs. Wilson.

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

        Mrs. Wilson. Thank you, Mr. Chairman. And I also wanted to
    thank my colleagues, Mr. Kennedy and Mr. Ramstad, for your
    leadership on this issue, and for being willing to take up the
    charge over such a long period of time and make it personal to
    people, as I think that getting beyond the stigma of mental
    illness is part of what we need to do to make sure that we
    achieve parity, so that diseases of the brain are treated in
    the same way and thought of in the same way as diseases of the
    heart or the lungs or the kidneys or anything else.
        I come to this debate, and I have been a supporter in the
    past, a cosponsor in the past of the mental health parity
    legislation here in the House really based on my experience as
    the former cabinet secretary for child welfare in the State of
    New Mexico, where on any night we had about 1,600 kids in
    foster care. And generally, they were physically healthy and
    emotionally a wreck. And we aren't talking about kids who are a
    little bit depressed on the bus on the way to school. We are
    talking about severe mental illness among children. And getting
    those children adopted is hard enough, but making sure that
    they still have access to the necessary medical and insurance
    coverage is certainly a challenge. And mental health parity
    would go a long way to helping families be able to get the care
    that they need for their children.
        There is a different version of this bill, and Mrs. Capps
    just mentioned it, that was introduced in the Senate. It was
    introduced and has been supported for a long time by my
    colleague, the senior Senator from New Mexico, Pete Domenici.
    And that bill does represent I think--it is an agreement--
    represents an agreement that was developed over a period of
    about 2 years between--again in negotiations with various
    stakeholders in the mental health community and so on. I
    actually have a slight preference for the Senate bill, but I
    would like to see this bill get to conference so that we can
    get something done and move forward.
        Again, I thank my colleagues from Rhode Island and
    Minnesota for your leadership on this issue, and I thank the
    chairman for holding this hearing today. Thank you.
        Mr. Pallone. Thank you. Ms. Baldwin of Wisconsin.

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

        Ms. Baldwin. Thank you, Mr. Chairman. And I am very, very
    encouraged by the fact that we are holding this hearing today.
    I am proud to be an original cosponsor of H.R. 1424, the House
    Mental Health Parity bill, and I am delighted that this
    committee is holding this hearing and the bill's two main
    sponsors are here with us today. Congressmen Kennedy and
    Ramstad, you have shown such tremendous leadership on this
    issue, and I thank you both for that.
        All Americans deserve access to affordable, comprehensive
    health care to meet both their physical and mental needs, and I
    believe that Americans should be provided with comprehensive
    coverage for mental health services. Mental illness and
    substance abuse are tangible, treatable health problems, just
    like hypertension, cancer, heart disease. Yet millions of
    hardworking men and women still find that their health plans
    place strict limits on coverage for mental health benefits.
        I am very much looking forward to our discussion with our
    witnesses today, and I hope that we can take this opportunity
    to dispel some misconceptions about mental health parity. Often
    we hear those opposed to parity say that requiring mental
    health parity will increase utilization of mental health
    benefits and mental health costs. But we know from experience
    in States which already have mental health parity laws that
    this is not the case. And I look forward to hearing our
    witnesses talk more about that.
        Lastly, I wanted to share an excerpt from a letter that I
    recently received from a constituent. Her name is Lisa, and she
    is from Madison, Wisconsin. Lisa is a registered nurse and a
    survivor of mental illness. Specifically, she has an eating
    disorder. And she writes, and I quote, ``I strongly believe I
    would not have suffered from a severe eating disorder for 7
    years, putting myself, my friends, and my family through hell
    had I had parity of insurance coverage.'' There are many causes
    and contributing factors to each sufferer's eating disorder,
    and it does not develop overnight. I was one of the lucky ones
    to have even some health insurance for treatment of my serious
    eating disorder. However, it was grossly inadequate, geared
    more towards stabilizing the resultant physical consequences,
    and not the underlying cause. Only those who themselves can
    afford or whose families can afford this great expense have a
    good chance of recovery.
        Unfortunately, Lisa's story is not unique. As we will hear
    today, millions of Americans face horribly restrictive barriers
    when they seek care for mental illness. This is not right, and
    this is why we need to ensure that every American has access to
    adequate mental health care by ensuring mental health parity.
        And again, thank you to the witnesses today. I look forward
    to the testimony. Thank you, Mr. Chairman.
        Mr. Pallone. Thank you. Mr. Ferguson.

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

        Mr. Ferguson. Thank you, Mr. Chairman. Thanks for convening
    this hearing and for your leadership on this issue. This
    legislation will undoubtedly deliver much needed treatment and
    care to thousands and thousands of people for which it is long
    overdue. I particularly want to thank Mr. Ramstad and Mr.
    Kennedy, our colleagues and friends, for joining us. There are
    few people in this body who don't have enormous respect and
    have noticed the incredible leadership and sacrifices that you
    have both made on behalf of this cause. I have had an
    opportunity to work with you on many different issues, but on
    this issue you two have no equal, except maybe each other, in
    your leadership and the work and devotion that you have made
    toward this issue. And you have our admiration for that.
        Addiction and mental illness are afflictions that have long
    been stigmatized and brushed aside by our society and our
    institutions. And I would submit that every family, every
    family has been touched by mental illness in some way, large or
    small, in some way or another. And for too long people have
    been told that they must fend for themselves while battling
    these diseases. Those battling their debilitating effects have
    not been able to receive the stability of care that is
    available when adequate insurance coverage is in place. And the
    Paul Wellstone Mental Health and Addiction Equity Act is an
    idea whose time had come a long time ago. And it is time to
    deliver what people battling addiction and mental illness have
    long needed and wanted, and that is help.
        I have been a cosponsor of mental health parity efforts in
    the past. I am happy to be here today to add my support as a
    cosponsor during this Congress. And I look forward to the
    testimony of our witnesses and both of our panels today, and
    certainly look forward to working with my colleagues on this
    committee on both sides of the aisle to pass this important
    legislation.
        I yield back. Thank you, Mr. Chairman.
        Mr. Pallone. Thank you. The gentlewoman from Illinois.

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

        Ms. Schakowsky. Thank you, Mr.Chairman. I too want to thank
    our wonderful panel of witnesses for sharing their experience
    and expertise with us, particularly those witnesses who are
    willing to share their personal experience, including of course
    Representatives Kennedy and Ramstad, whose leadership has been
    informed by personal experience. And you do honor to our friend
    Paul Wellstone. He and his wife Sheila were great personal
    friends of mine, and I know he will be very proud when this
    bill is signed--or would have been very proud when this bill is
    signed into law.
        The courage that you two demonstrate telling your personal
    stories of struggle and hope will serve as models for others
    who have been touched by mental illness. And what family has
    not been? Each of you serve as proof that with adequate support
    and appropriate treatment people with mental illness can live
    to their full potential and make unique contributions to
    society.
        Your stories also point to the tremendous value of mental
    health treatment. We have come a long way in our understanding
    and treatment of mental illness, but the barriers to obtaining
    coverage remain. Approximately 15 percent of Americans are
    affected by a clinically significant mental disorder in any
    given year, with 2 to 3 percent experiencing a severe mental
    illness. Many of them are struggling to access effective
    treatment that could greatly reduce their suffering and
    increase their participation in occupational, educational,
    social and civic realms.
        Science has dispelled several myths that have been used to
    justify unequal coverage of mental disorders and mental health
    treatments. The arguments that mental illnesses are not real
    illnesses and mental health treatments are not real treatments
    have been dispelled by research into mental disorders and their
    treatment. Growing evidence also suggests that the myth that if
    mental health care were available as a standard benefit then
    everyone would use it and it would bankrupt the system, and
    that has been dispelled by economic analyses and actual
    experience.
        Today we know that mental disorders are real and complex,
    with biological, psychological, and social contributors.
    Rigorous scientific evaluations have found a range of mental
    health treatments to be effective, including numerous
    medications and psychotherapies sometimes showing greater
    effectiveness than many medical treatments. For example, there
    is a 90 percent cure rate for panic disorder, which is a very
    debilitating condition. A variety of mental disorders actually
    have a number of effective treatment options available, making
    cost-effective choices possible.
        Several studies and the experience of numerous States have
    demonstrated that the provision of mental health parity results
    in only modest cost increases. Illnesses such as schizophrenia,
    bipolar disease, major depression, anorexia nervosa, alcohol
    dependence, and many other disorders are potentially life-
    threatening conditions that can cause serious impairment and
    tremendous suffering for affected individuals and their
    families and friends. These illnesses are not moral or personal
    failures, and affected individuals should not be punished for
    suffering from them.
        The time has long passed that we do this. I am so proud to
    be a supporter of H.R. 1424, and look forward to its passage
    and this discussion of it today. Thank you.
        Mr. Pallone. Thank you. Mrs. Myrick of North Carolina.

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

        Mrs. Myrick. Thank you, Mr. Chairman, for holding the
    hearing today. And I also thank our colleagues for all their
    hard work and their willingness to speak out. This issue of
    mental health insurance parity is not a new one, and I think
    this hearing is a good opportunity for members to have
    questions answered about how it will impact of course the
    insurance market, but also the lives of the patients who have
    the brain disease.
        For some time I have emphasized the need for Americans to
    realize that severe mental illnesses are really brain diseases,
    diseases that impact your brain rather than your heart or your
    kidneys. They are diagnosable, treatable, and biological in
    nature.
        There are several fronts in the battle to recognize and
    treat these diseases. There is the awareness fight, which has
    been very difficult, to help people realize that diseases like
    bipolar, schizophrenia, depression aren't moral failings; they
    are diseases that can be treated once they are diagnosed. There
    is a scientific fight in which experts attempt to map the
    different changes in the brain and the genome and that impact
    the onset and the severity of the illnesses, and there is the
    treatment fight. These diseases are expensive and frustrating
    and often difficult to diagnose and treat. Doctors don't always
    have the latest scientific treatment standards at hand to treat
    each patient with the right dose or the right medicine or the
    cocktail or the right therapy. And from personal experience, we
    have had that experience in our family of trying to find the
    right way to do it. Patients with a mental illness aren't
    always willing to seek help from professionals. And then of
    course there is always the question of insurance and how much
    does it cost.
        Untreated mental illness costs our country billions of
    dollars each year. It costs patients the ability to work,
    function in society. It costs our families a lot of heartache,
    and bleeds so much from our public system in the forms of
    homelessness, incarceration, illegal drug use. The list goes
    on.
        It should also be noted that those who have health
    insurance, but lack sufficient mental health coverage,
    sometimes bankrupt themselves and their families, and they
    eventually end up on Medicaid. And we know that that costs us a
    lot over the long run.
        In many ways, having a severe mental illness is no less
    serious than having cancer, and oftentimes it poses a more
    serious threat to the patient's life and ability to function.
    But let's not underestimate the gravity of the decision to
    create a Federal mental health parity structure. The health
    insurance market is notoriously complicated, and those who have
    a brain disease and don't have insurance don't benefit from
    mental health parity mandates. That is a whole 'nother issue.
    And if there is any incentive for insurance providers to drop
    coverage based upon the perceived expense or imposition of
    parity laws, those who have some mental health coverage may
    eventually find themselves without it. And that is why I am
    glad we are having the hearing today to discuss all these
    options.
        It is also important to note States have control over their
    benefits as well and a lot of employee plans under their
    jurisdiction, and we need to look into that as well. I know the
    agreement that is reached on the Senate side. I think it is
    very important they have that kind of agreement, especially
    with the problems that we have today. And so I want to hear
    from people relative to the House bill and what that brings as
    well. And again I thank the gentlemen from Rhode Island and
    Minnesota for all your years of dedication.
        Thank you, Mr. Chairman.
        Mr. Pallone. Thank you. Ms. Solis.

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

        Ms. Solis. Thank you, Mr. Chairman. And I really appreciate
    the fact that you are having this hearing, and want to welcome
    Congressman Kennedy and Congressman Ramstad also. I know you
    guys, both of you, have worked so tirelessly on this issue, at
    least in the last 7 years that I have been here in the House,
    and I want to thank you for continuing the fight that Senator
    Wellstone began. And I did have the pleasure of working with
    him shortly. But as a State legislator, because even in the
    State of California back in 1999, we passed a mental health
    parity bill for this same reason that you are here today. And I
    would just say that it works, it works well, it is something
    that is proven. And for a district like mine, where we have so
    many young people that we are finding in the juvenile justice
    system and then eventually leading into the county jail system,
    and I know Congressman Kennedy knows fully well what that
    means. And in many terms our sheriff there, Lee Baca, has said
    that he is really not a caretaker for criminals, but more of a
    caretaker of the mentally ill. And it is unfortunate, but that
    is a fact and it is a reality, and we as a country need to do
    something about it.
        And I am particularly concerned because of communities of
    color. Because the ratio of suicide for Latinos, Latinas, and
    Asian American women is very high, and we are not doing enough
    to detect that early on and providing tools for their families,
    and also for school districts, where I think intervention
    really needs to take place as well.
        So I am very happy to be a cosponsor of the bill, and look
    forward to hearing from both of you, and can't wait to see a
    signature from the President on the bill. Thank you, and I will
    yield back the balance of my time.
        Mr. Pallone. Thank you. Mr. Sullivan of Oklahoma.

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

        Mr. Sullivan. Thank you, Mr. Chairman. And I would like to
    thank Congressman Kennedy and Congressman Ramstad for
    testifying today on H.R. 1424, the Mental Health Addiction
    Equity Act of 2007, and I am pleased to be an original
    cosponsor of this very important legislation. At the end of
    March, Congressman Kennedy and I held a field hearing in Tulsa,
    Ok, to examine the effects of mental health disorders on
    Tulsans and the need for mental health and addiction parity.
    Hearing from families, scientific experts, businesses in Tulsa,
    all of whom have been affected by mental health disorders,
    drove home the point that mental illness touches many lives and
    the need for mental health parity could not be more important.
        My home State of Oklahoma currently ranks No. 1 in the
    Nation in the number of people struggling with mental illness
    and addiction disorders, almost one-fourth of the population of
    the State. While many States, including Oklahoma, already have
    mental health parity laws in place, it is vital that Congress
    enact Federal legislation which levels the playing field for
    the 54 million Americans suffering from mental illnesses. The
    simple fact is mental illnesses are biologically-based brain
    disorders, and need to be treated by insurance companies like
    any other physical illness.
        According to the Government Accountability Office, nearly
    90 percent of health plans impose financial limitations and
    treatment restrictions on mental health and addiction care.
    This legislation, which would help an estimated 113 million
    Americans receive fair mental health and addiction treatment,
    requires group health plans that offer mental health and
    addiction benefits to do so on the same terms as they do for
    other diseases. This means closing the loopholes in the past
    laws that have allowed insurance companies to continue to
    charge higher copayments and deductibles to individuals seeking
    mental health treatment, and eliminating annual caps on
    inpatient/outpatient care.
        One of the most important aspects of this bill is that it
    ensures that the health plans must cover the same range of
    mental illnesses and addictions that Members of Congress and
    other Federal employees and their dependents receive under the
    Federal Employee Health Benefit Plan.
        And a lot of people talk about this as costing a lot of
    money, which is not true. The economic cost of untreated mental
    illness in America is more than $100 billion each year, and the
    cost of addiction is $400 billion each year. Mental health
    parity will bring these costs down and offer new hope to
    millions of Americans suffering from mental illness.
        I look forward to hearing your testimony, and also I want
    to say that you two are doing something that really is going to
    help people's lives. We vote on a lot of stuff around here, and
    this is truly going to have an impact on millions of people's
    lives. You guys are heroes. You are doing a great job. Thank
    you.
        I yield back.
        Mr. Pallone. Thank you. I recognize our vice chairman, Mr.
    Green.

       OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Green. Thank you, Mr. Chairman. I would like to ask
    unanimous consent to place a full statement into the record,
    and I will just paraphrase it to save time.
        One, like my colleagues, I want to thank our colleagues
    from Rhode Island and Minnesota for being so diligent in
    working on this bill for so many years. I am proud to be a
    cosponsor of it. And I will just briefly talk about the need
    for it.
        Sixty percent of employers in my district that provide
    insurance come under Federal law and not State law. We have 26
    States who have full mental health coverage, but a number of
    other ones only have partial, which includes the State of
    Texas. And I was proud as a State senator to even get that much
    in the late 1980s.
        I am glad the bill uses a DSM-IV, so that doctors and not
    insurance companies will make the decision on illnesses. In our
    experience in the Houston area, with the Katrina evacuees
    traumatized, it is so needed to make sure we have mental health
    services available, whether you are in New Orleans or Houston
    or anywhere else in the country, particularly in a disaster.
        And I will say a caveat, in an earlier career, before I ran
    for Congress, I did mental health work as an attorney. And it
    is half mental health work and half counseling to find
    reasonable placement and family for my clients. And seeing the
    clients who were in the public system, as opposed to the few
    who had private insurance, it was so amazing.
        And so that is why this bill is so important, and I yield
    back my time.
        Mr. Pallone. Thank you. Mr. Burgess.
        Mr. Burgess. Thank you, Mr. Chairman. I want to welcome our
    colleagues, thank them for being here. In the interests of
    time, I am going to submit my statement for the record, reserve
    time for questions.
        Mr. Pallone. Thank you. The gentleman from Utah.

      OPENING STATEMENT OF HON. JIM MATHESON, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF UTAH

        Mr. Matheson. Well, thanks, Mr. Chairman, and I am so glad
    you are holding this hearing today. And I really want to first
    just extend my appreciation to our colleagues, Mr. Ramstad and
    Mr. Kennedy. I appreciate your leadership on this issue and
    your commitment, and I hope we can make progress. I know you
    do, too. I look forward to hearing from both panels, actually,
    and I hope we can get some insight that will help this
    committee move forward. I also hope that we hear
    recommendations on how best to achieve a balance between the
    important goal of mental health parity, and also assuring that
    we continue to improve access for all Americans to affordable
    and comprehensive health care.
        As you know, Mr. Chairman, I am an original cosponsor of
    this bill, and have been a cosponsor in previous Congresses as
    well. I look forward to seeing if this committee can pass
    legislation in this area. I believe the provision of mental
    health care is an important responsibility of health care
    plans. And mental health care should not be treated in a
    significantly different manner than other illness, and those
    who suffer from mental illness should be able to obtain
    necessary services and medications.
        It was in 1999 the Surgeon General reported mental health
    illnesses are largely biologically based disorders, similar to
    other medical conditions. And the Surgeon General has reported
    that mental health treatments are highly effective. It is
    simply common sense to cover these treatments so that those who
    suffer from these illnesses can return to being fully
    productive members of our society.
        It is my hope this committee will work on this tough
    legislation. I think it is a crucial step forward in the fight
    to assure every American's access to high quality health care.
    And I appreciate the time, Mr. Chairman, and I will yield back.
        Mr. Pallone. Thank you. The gentlewoman from Tennessee.

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

        Mrs. Blackburn. Thank you, Mr. Chairman. Thanks for holding
    the hearing, and welcome to all of our witnesses that are here
    with us today. And I do want to thank our colleagues for their
    willingness to work on the legislation and to come before us
    today.
        When I was in the State senate and dealing with issues that
    came before us in judiciary committee, I started to look at
    some of the root causes for teen violence, for gangs, for
    abusiveness, for the drug court problems that we had. And
    repeatedly as I delved into that root cause it came back to
    some form of mental illness and mental health. And as I studied
    a little bit more on the issue and I moved on to Congress I
    certainly became aware of the cost to our health care system.
    When you look at it in aggregate of what it costs the American
    health care system with emergency room visits, and days lost
    from work, and additional costs to the criminal justice system,
    we are talking hundreds of billions of dollars.
        This is not an isolated problem. It is not a segmented
    problem. Many times it is the basis for other forms of health
    and wellness. And currently 46 States have some type of mental
    health coverage that is enacted into law. And they vary
    considerably, including equal coverage or a minimum mandated
    mental health benefit, depending upon the State. And 26 States
    have laws that require some type of mental health parity or
    something that is broader than the Mental Health Parity Act
    passed in 1996. And some laws apply primarily to serious mental
    illness and may not assure coverage for current circumstance.
    Many private market health plans also include some type of
    mental health benefit on a voluntary commercial basis, not
    necessarily required by State or Federal laws.
        Now while this seems like a patchwork, indeed what it does
    show is an awareness over the past couple of decades that there
    is a connection between the physical and the mental health. As
    we move forward on this discussion, I hope that we are going to
    keep an eye toward what happens in the free market and look for
    a decision of how to cover mental health benefits as we can
    leave options to the insurer and the insured. So I am looking
    forward to discussing how a Federal mandate requiring that
    mental health coverage be given parity does not usurp personal
    freedom and unnecessarily trump State laws that are currently
    in existence.
        Thank you again to our witnesses and to our Chairman, and I
    yield back.
        Mr. Pallone. Thank you. Mr. Allen of Maine.

       OPENING STATEMENT OF HON. TOM ALLEN, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF MAINE

        Mr. Allen. Mr. Chairman, thank you for calling this
    important hearing on mental health parity. And to our
    colleagues, Patrick Kennedy and Jim Ramstad, thank you for your
    courage and your determination to drive this issue. You are
    doing it extraordinarily well.
        Through this piece of legislation, we have an opportunity
    to improve the lives of millions of Americans suffering from
    mental illness and addictions, and I believe we must work
    together to strengthen current law to improve access to mental
    health treatment and services.
        The effects and implications of mental illness are broad.
    Poor mental health manifests itself as more than an emotional
    condition. It can also cause or exacerbate physical conditions,
    such as substance abuse, obesity, and heart disease. If our
    goal is to reduce health care spending and improve health care
    outcomes, covering treatment for mental illness differently
    than physical illness is illogical and ineffective.
        Mental illness and addictions left untreated increase
    indirect societal costs. Lack of access to mental health
    treatment due to lack of insurance coverage costs our economy
    more than $100 billion a year through absenteeism, turnover and
    retraining expenses, lower productivity, and increased medical
    costs.
        Treatment of mental illness has come a long way. Mental
    health providers deliver better care for patients through use
    of evidence-based practices and, as we have heard and will hear
    today, improved coverage for mental health does not greatly
    increase total health care spending.
        Many States, including my home State of Maine, have acted
    independently to provide individuals with more comprehensive
    mental health benefits. The Paul Wellstone Mental Health and
    Addiction Equity Act appropriately allows States to continue to
    provide exemplary care to their citizens. States that go above
    and beyond Federal requirements should not be held back.
        I look forward to working with my colleagues to create a
    strong mental health parity bill that truly ensures equal
    coverage for physical and mental illness. I thank our witnesses
    and, Mr. Chairman, yield back the balance of our time.
        Mr. Pallone. Thank you. Mr. Murphy,

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

        Mr. Murphy. Thank you, Mr. Chairman, for holding this
    important meeting. And I appreciate Mr. Kennedy and Mr. Ramstad
    for being here, too, for through this issue we have developed
    real friendships and respect for the work you have done. I
    speak here also as the co-chair of the Mental Health Caucus and
    as the only child and family psychologist serving in Congress,
    and as a person who has held in my arms those patients who have
    tried to commit suicide while waiting for an ambulance or have
    gone to their funerals. But I have also gone to their
    graduations and received notes from them when they have had
    their children as their life has turned around. And it is
    important to know that these are very real instances, despite
    what those who may oppose this bill continue to send out false
    information that it is not treatable, it is a matter of fantasy
    and pretend, or that its costs outweigh the benefits.
        I tell you from a person who has studied this throughout my
    life, and as a practicing psychologist for over 25 years, and
    has written books and published articles on the subject, mental
    illness is real. It is debilitating. It costs money. And it can
    cause health care costs to double when it is untreated.
        Mental illness can be treated successfully, oftentimes
    better than many other medical problems. And to do so is cost-
    effective. When a factory looks at buying a machine for its
    assembly line, it doesn't just look at the direct costs of what
    that machine is, but it also looks at what it would cost to buy
    a cheaper machine when it is less effective, less efficient,
    less safe. We also need to put this same sort of reasoning when
    it comes to buying health care plans. We can all buy something
    cheaper up front, but it will cost more in the long run for
    employee training, absenteeism, presenteeism, workers comp
    costs, injuries, and deaths.
        We also need to know that mental illness is not something
    that one treats just by encouraging one to pull themselves up
    by their bootstraps on one extreme, nor is it something where a
    person is doomed to victimhood all their life with some sad
    lifelong sentence. Indeed, it is something that we can treat,
    but we cannot treat it if we remain mired in the Salem witch
    trials mentality of centuries gone by where we think if we
    ignore something or torture something that somehow it will get
    better.
        This is an opportunity to change the direction of health
    care to save money and to save lives. It is both cost-effective
    and compassionate. I can think of no better marriage of ideas
    from all levels than looking at an issue of mental health
    parity. Many Fortune 500 companies have examined it, have
    concluded that it saves money for them, and we need to deal
    with this in a rational way, finally, to help those who
    otherwise we place behind the shadows of victimhood. And it is
    time that we stop ignoring them. To all of those people we need
    to reach out our hearts, we need to understand this carefully,
    and we need to pass this bill.
        Thank you, Mr. Chairman.
        Mr. Pallone. Thank you. I believe that concludes the
    members' opening statements.
        Any other statements for the record will be accepted at
    this time.
        [The prepared statements of Mr. Dingell and Ms. Eshoo
    follow:]

        Prepared Statement of Hon. John D. Dingell, a Representative in
                      Congress from the State of Michigan

         I welcome all of our witnesses here today to help shed
    light on the issue of Mental Health Parity and specifically
    H.R. 2414 introduced by Representatives Patrick Kennedy and Jim
    Ramstad. The devotion and passion that they have shown on this
    issue is truly impressive.
         More than 54 million Americans, about 20 percent of
    Americans, have a mental disorder in any given year. And 22
    million Americans struggled with drug and alcohol dependence in
    2005. Fewer than 8 million, however, sought treatment for their
    mental disorders and less than 10 percent of Americans sought
    treatment for their substance abuse problems.
         Part of the reason for this is the lack of health
    insurance or an absence of coverage for mental health or
    substance abuse disorders. People cannot afford to pay the
    costs associated with seeking medical care without insurance so
    they forgo necessary treatment. Not only does this lack of
    treatment have detrimental effect on the individual but it also
    has ripple effects on their families, our community and
    economy.
         Inadequately-treated mental illness and substance abuse
    not only harm a person's mental and emotional health, but it
    can also lead to other serious chronic and acute medical
    conditions. For example, studies indicate depression greatly
    increases the risk of developing heart disease and makes a
    person four times more likely to have a heart attack. And
    untreated alcoholism can lead to chronic diabetes. At the
    economic level, employees who are depressed are twice as likely
    to miss work for health reasons as employees who are not
    depressed, and be less productive when on the job. In addition,
    there is a 23 percent unemployment rate among American adults
    with depression, compared to 6 percent of the general
    population.
         Despite the effects of mental illness and substance abuse,
    these disorders can be addressed with treatment. Eighty percent
    of those who seek treatment for clinical depression are
    successful. Behavioral healthcare treatments and psycho-
    pharmacological treatments for panic and bipolar disorders
    range in the 80 percent success rate, while treatments for
    schizophrenia, depression, and obsessive-compulsive disorders
    range in the 60 percent success rate.
         When one considers all of this information, we understand
    how important it is that people have access to the same health
    care coverage to treat their mental health problems as they do
    to treat their physical health problems.
         I applaud this legislation for taking the simple step of
    requiring health plans to impose no more restrictive treatment
    limitations and financial requirements in its mental health and
    substance abuse benefits than are applied in its medical and
    surgical benefits. In addition, this legislation ensures the
    right of States to further protect their citizens. It's a
    question of fairness.
                                  ----------

    Prepared Statement of Hon. Anna G. Eshoo, a Representative in Congress
                          from the State of California

        Mr. Chairman, thank you for holding this important hearing
    on H.R. 1424, the Paul Wellstone Mental Health and Addiction
    Equity Act. The fact that this bill has 268 bipartisan
    cosponsors in the House is a testament to the wide support and
    need for mental health parity legislation.
        Representatives Patrick Kennedy and Jim Ramstad are our
    Nation's champions of this legislation and I thank them for
    their extraordinary leadership. I was proud to host them in my
    congressional district this year for a field hearing on the
    need for mental health and addiction parity. This issue is
    critically important to my constituents and I'm proud to be an
    original cosponsor of H.R. 1424.
        Mental health and addiction disorders touch nearly every
    family in America. They account for over one-fifth of all lost
    days of work or school productivity, and they affect children,
    teenagers, adults and seniors. Approximately 54 million
    Americans suffer from mental illnesses, and 26 million from
    addictions. A high percentage of Americans are battling co-
    occurring mental illnesses and addictions.
        Mental illnesses and addictions have historically not been
    well understood. Because their visible symptoms are changes in
    personality and behavior, mental health disorders have often
    been perceived as personal or moral failings. New technologies
    developed in the last few decades such as MRI's and PET scans
    have allowed scientists to peer inside the brain and clearly
    establish the physiological and biological basis of these
    diseases. The mapping of the human genome has also illustrated
    that strong genetic markers for mental disorders and addictions
    exist. In spite of these facts, public health policy has not
    kept up with science.
        Most Americans face barriers to mental health care and
    addiction treatment not encountered in accessing other forms of
    health care. According to a 2000 report published by the
    Government Accountability Office, most employer-sponsored
    health plans include more expensive financial requirements
    (such as copayments and deductibles), treatment limitations
    (such as limits on the number of covered outpatient visits or
    days in the hospital), or excluded diagnoses related to mental
    health or addiction disorders.
        H.R. 1424 will improve the health of Americans by granting
    greater access to mental health and addiction treatment and
    prohibit health insurers from placing discriminatory
    restrictions on treatment. Specifically, the bill prohibits
    treatment limits or the imposition of financial requirements on
    mental health and substance-related disorder benefits in group
    health plans which are not similarly imposed on substantially
    all medical and surgical benefits in any category of items or
    services under such plans.
        The legislation also requires the Comptroller General to
    study the effect of the bill on various aspects of the health
    care system, including the cost of and access to health
    insurance coverage, the quality of health care, Medicare,
    Medicaid, and State and local mental health and substance abuse
    treatment spending, as well as spending on public services.
        I look forward to the testimony of our witnesses.
                                  ----------

        Mr. Pallone. So we will now turn to our panel, with our two
    Congressmen and sponsors of this legislation, and we will begin
    with Mr. Kennedy.

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

        Mr. Kennedy. Thank you, Mr. Chairman. First, thank you, Mr.
    Chairman, and Ranking Member Deal, and all the committee
    members for your very, very generous comments regarding myself
    and Mr. Ramstad. They were very generous, and believe me, are
    reciprocated many times over for many of you who we worked with
    on the hearings that we did around the country. We couldn't
    have done those hearings without your support and the work that
    you did in organizing them for us as we traveled the country.
    And as evidenced by your opening statements, you basically
    stole our thunder, because you basically told the story of why
    we need this bill better than we could really say it ourselves.
        Each of you laid out in your own statements very
    effectively why we need this legislation, and I think it is
    very poignant that you all addressed this in very different
    ways, from economic arguments, to how it affects the criminal
    justice system, to how it affects our health care system, how
    it affects a whole panoply of areas in our society.
        I thought Mrs. Blackburn's comment that this is not an
    issue that can be isolated and segmented, but it affects all of
    society was right on target. Ranking Member Deal's point, with
    his son running the drug courts, was right on target.
        The fact of the matter is this is a public health issue
    that we have criminalized. And our court system has become
    the--we have basically--as Sheriff Baca said in the words of
    Ms. Solis, I run the largest mental health clinic in the
    country. I run the Los Angeles County jails. That was in the
    words of Sheriff Baca.
        In our health care system, as was mentioned by Mr. Murphy,
    in terms of the costs, we had the head of our emergency rooms
    often talk about up to 80 percent of the costs on any given
    weekend in our Trauma 1 centers, the costs of those patients,
    where those patients were there because of drugs and alcohol.
    But they were never transparently there for drugs and alcohol,
    they were there because of auto accidents that were as a result
    of drugs and alcohol. They were there as a result of gun
    shootings and fights, all of which were the result of drugs and
    alcohol. They were there as a result of other accidents that
    were a result of drugs and alcohol. And all of those accidents,
    and so forth, were written up as contusions, lacerations,
    concussions and intubations, all of which get reimbursed by
    insurance. And of course they are all symptoms of a deeper
    problem which doesn't get covered by insurance. And that brings
    us back to why we need prevention. And that is why we need this
    bill passed. Because if we had the real issue covered, we could
    avoid those other costs that are so acute and end up bringing
    people to the emergency room far too often, adding so much cost
    to our health care system.
        And then of course I think Mr. Murphy said it so well in
    terms of the costs to our business community. He made the
    analogy with the machine in a business. Making that same
    analogy, someone may say, well, it will cost more to implement
    parity. Of course we have here today someone who will testify
    to the fact that it won't. But the fact is even if it does, as
    Mrs. Blackburn said, we haven't taken it into account in terms
    of the overall savings in the aggregate, how it will save us
    money in the aggregate. And he said, well, if you put in a
    machine in a business that turns out more widgets, but it costs
    more to put it in, but in the net of the business you make more
    money, do you ask how much it cost to put the machine in if at
    the end of the day you make more money? No. Because you are
    looking at the bottom line. And so if it costs more to put
    these benefits in but at the end of the day you get a better
    return on your investment because you get better productivity
    from your workers, isn't that worth the investment? And that is
    what we heard in Pittsburgh, from Alberto Colombi from PPG in
    Pittsburgh.
        And then we heard, from those out in San Francisco, we
    heard from Kevin Hines, who has survived a jump from the Golden
    Gate Bridge. Every year we have 34,000 Americans, twice the
    number of Americans that are murdered, twice the number of
    Americans that are murdered attempt--or actually successfully
    take their lives. To think that we see the news every night and
    see the number of people that are murdered, to think that twice
    that number actually successfully take their lives every year.
    And this was one gentleman who actually tried but failed. He is
    getting married this fall, Kevin Hines is. And he is happy now
    because he is getting treatment. And he is a sign of success.
        And you know what, 90 percent of the people who attempt
    suicide are suffering from a mental disorder that is treatable.
    That is treatable. We could avoid those suicides in 90 percent
    of the cases where the mental illness is treatable. And that is
    an avoidable cost that could be addressed if we had mental
    health parity.
        And finally, this is an issue fundamentally of civil
    rights. Nobody chooses to be born with a particular genetic
    makeup or a brain anatomy any more than they choose to be born
    with a particular skin color or gender. And so nobody deserves
    to be denied opportunities based upon such immutable
    characteristics.
        And so when everyone here starts to talk about the cost of
    extending this coverage, let me just tell you about the story
    of Amy Smith. She is a young woman who said that for 40 years
    she was wandering the streets, muttering to herself, in and out
    of jails, because she suffered from schizophrenia and
    addiction. She said finally one day she got access to
    treatment. Now she holds down a job and she pays taxes. But she
    says I lost the opportunity to live my life, to live out my
    dreams as an American because I didn't get access to treatment.
    And that is a cost of our current system that you can't measure
    when you consider the costs of not having parity.
        You can't measure that in financial terms. But that is a
    cost that you have to consider when you are taking it into
    account. You also have to consider the cost in the loss of
    lives. And when you think about cost-effectiveness you have to
    think about telling people like Amy Smith and millions like her
    when you think about keeping health care costs down, are they
    going to have to pay with their lives to keep the health care
    costs down? Because that is what you are essentially going to
    have to say if you say we don't want mental health parity
    because it costs too much. If you do that, you might as well
    say to cancer patients why not roll back coverage for cancer
    patients because that will also bring down costs. And I don't
    think any of you up there would want to roll back coverage for
    cancer. Because essentially you would have to be doing the same
    thing for cancer as you would do for mental health if you were
    to decide that you don't want to cover mental health parity.
    Because effectively you would be asking to be doing the same
    thing.
        Jim and I have both been the beneficiary of mental health
    treatment, and we are both here because of it. And we are
    fortunate to be covered under the Federal Employees Health
    Benefit Plan. And if it is good enough for Members of Congress,
    it ought to be good enough for the rest of the country. And
    that is what this legislation says. And I hope that you have a
    chance to pass it out of this committee in the near future.
        Thank you.
        [The prepared statement of Mr. Kennedy follows:]

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

         Chairman Pallone, Ranking Member Deal, and my
    distinguished colleagues, thank you for inviting me to testify
    today, and, especially, for your commitment to ending insurance
    discrimination.
         And of course, I must single out my great friend and the
    strongest champion for Americans with mental illnesses and
    addictions, Jim Ramstad. For years he has led this fight,
    leaning into the stiff wind of his own leadership without
    regard for the political consequences, speaking up for what he
    knows is right. We all owe him a debt of gratitude, nobody more
    than I. Jim, it has been an honor to stand with you in these
    efforts, and a greater privilege to be your friend.
         This issue is first and foremost one of fundamental
    fairness. Marley Prunty-Lara, who you will hear from, paid her
    health insurance premiums just like everyone else. But when she
    got sick and needed her insurance coverage, she didn't get it.
    That is just not fair. And it nearly cost Marley her life.
         There is no way to justify denying Marley, and millions of
    others, the full benefit of the health insurance they pay for.
         In the attached exhibit, you can see the visual evidence
    that these diseases are physiological brain disorders. Some
    brain diseases, like Parkinson's, affect the motor cortex, the
    basal ganglia, the sensory cortex, and the thalamus. Other
    brain diseases, like depression, affect the limbic cortex,
    hypothalamus, frontal cortex, and hippocampus.
         There is no way to justify providing full coverage to
    treat certain structures of the brain, but to erect barriers to
    the treatment of other structures.
         This discrimination is not only unjustifiable, it is
    enormously costly. Representative Ramstad and I have traveled
    across this country holding informal field hearings on this
    subject--14 in total.
         We've heard from chiefs of police, like Sheriff Baca in
    Los Angeles who says he runs the largest mental health provider
    in the United States: the L.A. County Jail. According to the
    Justice Department, more than half of inmates in jails and
    prisons in this country have symptoms of a mental health
    problem. Two-thirds of arrestees test positive for one of five
    illegal drugs at the time of arrest, according to the National
    Institutes of Health.
         That's a cost of our insurance discrimination.
         We've heard from hospital presidents and emergency room
    doctors, like Dr. Victor Pincus. He said that 80 percent of the
    trauma admissions at Rhode Island Hospital, a level-one trauma
    center, were alcohol and drug related. Eighty percent.
         The physical health care costs go beyond the emergency
    room. Research shows, for example, that a person with
    depression is four times more likely to have a heart attack
    than a person with no history of depression. Health care use
    and health care costs are up to twice as high among diabetes
    and heart disease patients with co-morbid depression, compared
    to those without depression, even when accounting for other
    factors such as age, gender, and other illnesses. Not
    surprisingly then, one study found that limiting employer-
    sponsored specialty behavioral health services increased the
    direct medical costs of beneficiaries who used behavioral
    healthcare services by as much as 37 percent.
         These are costs of our insurance discrimination.
         In our field hearings, we've heard from enlightened
    business leaders and insurance executives who understand that
    skimping on mental health and addiction treatment only winds up
    driving up other costs. That's why Bob Hulsey from the Williams
    Companies in Tulsa, Rep. Sullivan's district, said of parity,
    ``I absolutely believe that it helps the business.''
         Rick Calhoun, an executive in the Denver office of CB
    Richard Ellis, a Fortune 500 company, made a similar point. Mr.
    Calhoun said that the cost of treating mental illness is 50
    percent of the cost of not treating it. As he said, ``This is a
    no-brainer. How could we not cover it?''
         Untreated mental health and addiction cost employers and
    society hundreds of billions of dollars in lost productivity.
    The World Health Organization has found that these diseases are
    far and away the most disabling diseases, accounting for more
    than a fifth of all lost days of productive life. Depressed
    workers miss 5.6 hours per week of productivity due to
    absenteeism and presenteeism, compared to 1.5 hours for non-
    depressed workers. Alcohol-related illness and premature death
    cost over $129.5 billion in lost productivity per year.
         These are the costs of our insurance discrimination.
         All of these costs are preventable, and wasteful. But none
    are as tragic as the individual costs. We heard testimony from
    anguished parents like Kitty Westin and Tom O'Clair, who had to
    bury their children because their mental illnesses and
    addictions went untreated.
         We heard testimony from people like Amy Smith, who said
    when she runs into people she knew 25 years ago, they're
    stunned she's still alive. She was in and out of jail and
    emergency rooms, unable to connect with other people, muttering
    to herself on the street, and unemployed. For 45 years, she
    says, she was a drain on society. Then she finally got the
    treatment she needed and now she's a taxpayer, holding down a
    good job.
         Amy Smith lost decades of her life because she didn't get
    treatment. If you want to know the costs of our insurance
    discrimination, Amy Smith can describe them: ``I would have
    been able to pursue my dreams for my life, which were things
    like driving a car, or holding down a real job, or getting
    married, or volunteering in the community, any of those things.
    I think my life would have been a lot different if I had had
    those services a lot earlier.''
         So many Americans have lost their dreams, lost years, and
    even lost their lives--unnecessarily. In Palo Alto we met Kevin
    Hines. He is a gregarious, outgoing person and is engaged to be
    married this summer. In 2001 he jumped off the Golden Gate
    Bridge, one of very few to survive that fall. Thirty-thousand
    people succeed where Kevin fortunately failed and take their
    own lives each year. How many of them would, like Kevin, be
    starting families, contributing to their communities, holding
    jobs, and realizing their potential if only they had access to
    treatment?
         Mr. Chairman, I'm happy to provide the transcripts from
    the field hearings I have referenced to be included in the
    record of this hearing, as well as our report, ``Ending
    Insurance Discrimination: Fairness and Equality for Americans
    with Mental Health and Addictive Disorders.''
         We will hear arguments that, even if worthwhile,
    equalizing benefits is just too costly. The truth, however, is
    that the cost of doing the right thing and equalizing benefits
    between mental health and addiction care on the one hand and
    other physical illnesses on the other hand is negligible. This
    is not speculation.
         In 2001, we brought equity to mental health and addiction
    care in the Federal Employees Health Benefits Program (FEHBP),
    which covers 9 million lives, including ours as Members of
    Congress. A detailed, peer-reviewed analysis found that
    implementing parity did not raise mental health and addiction
    treatment costs in the FEHBP. Since our bill specifically
    references the FEHBP to define the scope of our bill, this
    analysis provides strong evidence that our legislation will
    similarly have negligible impact on costs. This finding is
    consistent with virtually every study of state parity laws as
    well.
         But frankly, the very fact that we need to debate how much
    it costs to end insurance discrimination is offensive. Nobody
    is asked to justify the cost-effectiveness of care for diabetes
    or heart disease or cancer. Tell Marley Prunty-Lara, Kitty
    Westin, Tom O'Clair, Amy Smith, or Kevin Hines, or the millions
    of others who live with these diseases that to keep health care
    costs down for everyone else, they will not have to pay with
    their lives. Why them?
         People might say that there is a component of personal
    responsibility here, especially with addiction. That's true.
    I'm working hard every day at my recovery, and it's reasonable
    to ask of me. But it's also true that we don't deny insurance
    coverage to people genetically predisposed to high cholesterol
    who eat fatty foods. We don't deny insurance coverage to
    diabetics who fail to control their blood sugar.
         At the end of the day, this is about human dignity and
    whether we deliver on the promise of equal opportunity that is
    at the heart of what it means to be American. Nobody chooses to
    be born with particular genetics and anatomy, any more than
    they choose to be born with a particular skin color or gender.
    And nobody should be denied opportunities on the basis of such
    immutable characteristics. Anybody who pays their health
    insurance premiums is entitled to expect their plan to be there
    when they get sick, whether the disease is in their heart,
    their kidneys, or their brain.
         Unlike any other country in the world, this one was
    founded on principles--the ideas of equality and freedom and
    opportunity. The history of America is the history of a country
    striving to live up to those self-evident truths. In pursuit of
    those values we've fought a civil war, chipped away at glass
    ceilings, expanded the vote, renounced immigration exclusion
    laws, and recognized that disabilities need not be barriers.
    Led by one of our own colleagues, a generation of peaceful
    warriors forced America to look in a mirror and ask itself
    whether its actions matched its promise, and they changed
    history.
         It is time, once again, to ask that question: are our
    actions matching our promises? And once asked, the answer is
    clear. Jim and I know, personally, the power of treatment and
    recovery. We are able to serve in Congress because we have been
    given the opportunity to manage our chronic diseases. Every
    American deserves the same chance to succeed or fail on the
    basis of talent and industriousness. That's the American Dream,
    and it shouldn't be rationed by diagnosis.
         Thank you.
                                  ----------

        Mr. Pallone. Thank you so much. Mr. Ramstad.

      STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN CONGRESS
                      FROM THE STATE OF MINNESOTA

        Mr. Ramstad. Thank you, Chairman Pallone, Ranking Member
    Deal, distinguished committee members and friends all. Thank
    you for holding this important hearing, and thank you for your
    kind and supportive comments.
        On July 31, 1981, I woke up from my last alcoholic blackout
    under arrest for a variety of offenses, woke up in a jail cell
    in Sioux Falls, SD, and I am alive and sober today only because
    of the access that I had to treatment. Too many people don't
    have that access to treatment that Patrick Kennedy and I had.
    It is a national disgrace that 270,000 Americans had the doors
    slammed shut to the treatment centers last year alone. It is a
    national tragedy that last year alone 150,000 of our fellow
    Americans died as a direct result, as a direct result of
    chemical addiction. Nobody knows as an indirect result how many
    heart failures, how many liver failures, how many other causes,
    how many accidents that weren't documented.
        It is also a national tragedy that 34,000 Americans, as
    Patrick mentioned, committed suicide last year as a direct
    result of depression. And it is a national crisis, really a
    crisis that untreated addiction and mental illness, according
    to SAMHSA, cost our economy over $550 billion last year alone.
        When you think of the costs, as I know you all do, that
    can't be measured in dollars and cents, the human suffering,
    the broken families, the shattered dreams, the ruined careers,
    destroyed lives and so on. It is time to end the discrimination
    against people suffering the ravages of mental illness and
    chemical addiction. It is time to end the higher copayments,
    higher deductibles, out-of-pocket costs, and limited treatment
    stays, discriminatory barriers to treatment that don't exist
    for other diseases.
        According to the GAO, 90 percent of health plans currently
    impose financial limitations and treatment restrictions on
    mental health and addiction care that are not imposed on other
    illnesses. Ninety percent of plans impose these discriminatory
    barriers that they don't impose on other illnesses. It is
    really time to treat mental illness and chemical addiction
    under the same rules as other medical illnesses. Because if you
    believe what the American Medical Association espoused back in
    1956, that addiction and mental illnesses are a disease, then
    you can't justify discriminating against those diseases.
        The Paul Wellstone Mental Health and Addiction Equity Act
    will give Americans suffering from addiction and mental illness
    greater access to treatment by prohibiting health insurers from
    putting discriminatory restrictions on treatment. It will end
    the discrimination against people who need treatment for mental
    illness or chemical addiction. And we have all the empirical
    data in the world to show that increasing access to treatment
    is not only the right thing to do, but it is a cost-effective
    thing to do. And I would be happy to share any of the 20-some
    studies that we have that independently corroborate the fact
    that parity, where it has been employed, with respect to the
    Federal Employees Benefit Plan, for example, and you are going
    to hear testimony, I believe, in the second panel, actually
    saves dollars. This doesn't cost dollars, as those critics
    would maintain. We have got the proof, the empirical data,
    including all the actuarial studies, to prove that equity for
    mental health and addiction treatment will save billions of
    dollars nationally, while not raising anyone's premiums not
    more than one-half of 1 percent.
        Let me put it to you this way. For the price of a cheap cup
    of coffee a month, 16 million people in health plans could
    receive treatment for their mental illness or chemical
    addiction. That is right from the Milliman & Roberts study, an
    independent actuarial firm. Furthermore, it is well documented
    that every dollar spent on treatment saves $12 in health care
    and criminal justice costs alone. And that study doesn't even
    take into account savings in social services, lost
    productivity, absenteeism, injuries in the workplace, and so
    forth. And you are going to hear from a CEO today how much
    money was saved and how cost-effective parity was in his
    experience. And we heard that at hearing after hearing across
    the country from employers, enlightened employers who have
    already enacted parity and who have already brought parity into
    their plans and who are saving money.
         Let me conclude by repeating as strongly as I can, it is
    time to end the discrimination against people who need
    treatment for mental illness and addiction. It is time to
    prohibit health insurances from placing discriminatory
    restrictions on treatment. It is time to provide greater access
    to treatment. It is time to get this bill to the President who,
    by the way, endorsed parity in 2002 in Albuquerque, NM, in a
    speech there when he was with Senator Domenici.
        It is time to pass the Paul Wellstone Mental Health and
    Addiction Equity Act. The American people really can't afford
    to wait any longer.
        Thank you again, Mr. Chairman.
        [The prepared statement of Mr. Ramstad follows:]

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

        Chairman Pallone, Ranking Member Deal, thank you for
    holding this important hearing.
        On July 31, 1981, I woke up in a jail cell in Sioux Falls,
    SD, under arrest as the result of my last alcoholic blackout.
        I'm alive and sober today only because of the access I had
    to treatment, as well as the grace of God and support of many
    recovering people the past 25 years. I'm living proof that
    treatment works and recovery is possible.
        But too many people don't have access to treatment. It's a
    national disgrace that 270,000 Americans were denied addiction
    treatment last year. It's a national tragedy that last year
    alone, 150,000 of our fellow Americans died from chemical
    addiction and 30,000 Americans committed suicide from
    depression. And it's a national crisis that untreated addiction
    and mental illness cost our economy over $550 billion last
    year.
        And think of the costs that can't be measured in dollars
    and cents--human suffering, broken families, shattered dreams,
    ruined careers and destroyed lives.
        It's time to end the discrimination against people
    suffering the ravages of mental illness and chemical addiction.
    It's time to end the higher copayments, deductibles, out-of-
    pocket costs, and limited treatment stays--discriminatory
    barriers to treatment that don't exist for other diseases. It's
    time to treat mental illness and chemical addiction under the
    same rules as physical illness.
        The Paul Wellstone Mental Health and Addiction Equity Act
    will give Americans suffering from addiction greater access to
    treatment by prohibiting health insurers from placing
    discriminatory restrictions on treatment.
        It will end the discrimination against people who need
    treatment for mental illness or chemical addiction.
        Expanding access to treatment is not only the right thing
    to do; it's also the cost-effective thing to do. We have all
    the empirical data, including actuarial studies, to prove that
    equity for mental health and addiction treatment will save
    billions of dollars nationally while not raising premiums more
    than one half of one percent. In other words, for the price of
    a cheap cup of coffee per month, 16 million people in health
    plans could receive treatment for their mental illness or
    chemical addiction.
        Furthermore, it's well-documented that every dollar spent
    on treatment saves up to $12 in health care and criminal
    justice costs alone. That does not even take into account
    savings in social services, lost productivity, absenteeism and
    injuries in the workplace.
        Let me conclude by repeating as strongly as I can: It's
    time to end the discrimination against people who need
    treatment for mental illness and addiction. It's time to
    prohibit health insurers from placing discriminatory
    restrictions on treatment. It's time to provide greater access
    to treatment. It's time to pass the Paul Wellstone Mental
    Health and Addiction Equity Act.
        The American people cannot afford to wait any longer for
    Congress to act.
                                  ----------

        Mr. Pallone. I want to thank you again. You explained
    everything so well why we need to pass this bill. It certainly
    is our intention to move on it as quickly as we can. And my
    understanding is, we don't have any questions because I don't
    think there is anything we can ask you. You basically said it
    all.
        Mr. Kennedy. If I could say the sooner that you can move on
    it, I know the Senate is going to be moving on unanimous
    consent. Obviously, we have an opportunity to set the bar if we
    move on it before they do.
        There has--many of you on both sides of the aisle have made
    the point on State's rights which I think is a really strong
    point. States ought to have the opportunity to experiment and
    certainly should not be preempted by the Federal Government,
    and we would have a much stronger position going into it if we
    were to pass our bill first, I think.
        Mr. Pallone. I know it has got to go to several committees,
    but it is already out of two of them, right, is my
    understanding.
        OK. We are going to try our best, and I agree with you on
    the preemption. That was certainly brought home to me when we
    had the hearing in Trenton. That was maybe 50 percent of the
    debate that day, if I remember. So really, thank you again; we
    appreciate it.
        Mr. Burgess. I would ask unanimous consent if Mr. Ramstad
    would make that Millerman & Roberts study available to the
    committee.
        Mr. Ramstad. Thank you. I would be happy to.
        Mr. Pallone. Welcome. Thank you for being here. Starting
    from my left is Mr. James Purcell, who is president and chief
    executive officer of Blue Cross and Blue Shield of Rhode
    Island.
        Ms. Edwina Rogers, who is vice president of health policy
    for the ERISA Industry Committee. Then we have Ms. Marley
    Prunty-Lara; I don't know if I am pronouncing it properly. And
    then we have Mr. James Klein, who is president of the American
    Benefits Council. And, finally, Dr. Howard H. Goldman, who is a
    professor of psychiatry at the University of Maryland School of
    Medicine.
         As you know, we have 5-minute opening statements. We will
    put your statements in the record. If you would like to give us
    some additional material later, you can do that as well, and
    then we will take some questions.
        So we will start with Mr. Purcell.

     STATEMENT OF JAMES E. PURCELL, PRESIDENT AND CHIEF EXECUTIVE
           OFFICER, BLUE CROSS & BLUE SHIELD OF RHODE ISLAND

        Mr. Purcell. Thank you very much. It is a pleasure to be
    here, Chairman Pallone, Ranking Member Deal and members of the
    committee.
        Representing the health insurer at hearings like this, we
    are usually the skunk at the lawn party. Typically, we are
    testifying against mandates for a variety of reasons, most
    often because they increase the cost of health insurance; and
    many times, they are anecdotally driven and they, quite
    frankly, sometimes don't improve the quality of care that is
    rendered.
        Here, I believe this to be an exceptional case, and that is
    why I am here testifying in favor of this legislation.
        My comments here today reflect my experience and the
    experience of my Blue Cross plan in the State of Rhode Island.
    This experience involves both behavioral and physical health.
    The two are inextricably inclined. You can't separate one from
    the other and think that you are providing good health care,
    because you are not.
        My statement, I will say, only reflects the position of
    Blue Cross and Blue Shield of Rhode Island. It does not reflect
    the other positions of other Blue Cross plans nor does it
    affect the position of Blue Cross Association.
        We are an independent local nonprofit plan closely
    regulated by the State of Rhode Island, and our vision is to
    improve the lives of our members by improving their health.
    That is our bottom line. On our members' behalf and in
    recognition of the leadership of our senior Congressman,
    Patrick Kennedy, and your invitation, I am here today about a
    simple message.
        Unlike most mandates, this doesn't cost much, if anything.
    Even if you just look at the cost of the claims expense
    associated with behavioral health care that we cover, it is 3.6
    percent of the total bill, and that doesn't even take into
    account the savings on the physical side associated with early
    intervention for all of the reasons that we have heard from the
    other witnesses.
        I am of the passionate view that without full integration
    of behavioral and physical health, we cannot fully achieve our
    vision of improving our members' lives by improving their
    health; and unfortunately, without a meaningful behavioral
    health parity bill on a Federal level, I think we demonstrate
    to ourselves that it is just not going to happen.
        I submit this testimony mindful of the insurers' special
    role in all of this.
        We have a very difficult balance between maximizing
    coverage for our members, improving reimbursement to providers
    and trying to keep health insurance premiums at a reasonable
    level. Some could argue, it is not at a reasonable level
    anymore, but we do everything that we can to try to minimize
    the increases associated with this. This is a very delicate,
    very difficult balance, and we are in the middle of it. So that
    is our job. That is what we do.
        Like most insurers, we are not generally supportive of
    mandates with regard to coverage. But here I quite frankly
    think, given what we have observed in the State of Rhode Island
    with our mental health parity law and what we have observed in
    our own plan, we can demonstrate to you that this has
    dramatically improved the quality of care that our members get,
    and it has not significantly increased the cost of that care.
        One of the things I would strongly urge the committee is
    with regard to the effective date of the bill. Six months is
    too little time. If we want to do it and do it right, you have
    to give plans time to do the system changes. Some plans are
    going to have to create networks, negotiate contracts.
        It took a long time to implement the FEP program parity. So
    here, please, I would ask you first of all, you might want to
    consider extending the effective date to 11/09. I think that
    would allow plans to do a good job and, still, you would
    implement the parity.
        Second, I would be less than candid if I didn't address two
    issues that I have some concerns about. And I think these are
    details that it looks like you wish to cover. I just want to
    make sure it does. And those are the issues with regard to
    medical management and out-of-network coverage.
        One of the things that we can do to ensure quality-of-care
    access and do something about costs, medical management and
    network, the network gives us the contractual right to do these
    things. And if we have an adequate network so that we have
    adequate access, there should be no reason to have complete
    open access to added network coverage. I can't guarantee to my
    members that they are receiving quality of care if they can go
    anywhere that they want to.
        So somewhere within this we have to ensure that if there is
    adequate access to care within the network, if members choose
    to go out of the network, they pay an additional amount for
    that so that there is an incentive to say that we can guarantee
    their quality.
        Since the initial passage of Rhode Island's partial mental
    parity in 1994, we have continued to ratchet up our coverage.
    We have done many things with regard to coverage as set forth
    in my testimony. I will not go through that here, but in
    essence, through the combination of State statute and how we
    have changed--voluntarily changed our coverage, we have, in
    essence, de facto parity in our State.
        And in 2006, we increased office visits from a maximum of
    30 to a maximum of 50. We voluntarily did that. Why on earth
    would we do that? Because those very few people that need in
    excess of 30 office visits really, really need it. And when do
    they run out of the 30? Right at the----
        Mr. Pallone. I have got to tell you are over by a minute so
    you are going to have to summarize.
        Mr. Purcell. I will summarize it. It doesn't break the
    bank. I think it gives better care. I think the experience in
    Rhode Island demonstrates that, and I would urge its passage.
        The prepared statement of Mr. Purcell follows:]

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        Mr. Pallone. Ms. Rogers.

    STATEMENT OF EDWINA ROGERS, VICE PRESIDENT, HEALTH POLICY, THE
                    ERISA INDUSTRY COMMITTEE (ERIC)

        Ms. Rogers. Good afternoon, Chairman Pallone and Ranking
    Member Deal. Thank you for the opportunity to testify today.
        I am going to speak from the plan sponsor perspective
    representing companies that pay for health coverage for tens of
    millions of Americans. My testimony will focus on concerns
    about the Kennedy-Ramstad Mental Health Parity bill, H.R. 1424.
        ERISA members are in favor of expanding coverage, but this
    bill's approach is fundamentally flawed, we believe. The bill
    fails to incent better coverage options. It creates mandates,
    micromanaging the distribution of benefits, creating costly
    administrative quagmires and failing to keep up with
    integrations and demands widely accepted in the market.
        Today, major employers offer benefits to the employees on a
    voluntary basis to attract and keep employees, improve morale
    and productivity, and because they take pride in providing for
    the employees' life security.
        Congress developed ERISA so that major employers could
    create uniform national plans that fit the needs of their
    employees regardless of where they live, work or receive their
    health care. ERISA was created as a floor upon which States
    could create--was not created as a floor. ERISA was meant to be
    the ceiling.
        As Congress considers a bill that would burden employers by
    forcing them to increase coverage and dissolving their plan
    flexibility, look to ERISA for guidance. Rather than leaving
    plan sponsors at the mercy of various State laws, Congress
    could make a parity law that preempts conflicting State laws,
    giving employers clear guidance on how to become compliant on a
    national level.
        Plan sponsors are concerned about the accreditation of
    mental health providers and facilities, as well as their
    accountability and transparency, and must be able to designate
    which facilities and treatments are bona fide and which should
    not be covered.
        Plan sponsors are moving away from a system of trust, don't
    verify in demanding metrics in transparency for all medical
    providers, data that lets employers and patients know the cost
    of an episode of care and make informed decisions on where to
    get quality treatment. A bill to promote mental health and
    substance abuse treatment would fail in its mission if it did
    not include such provisions for the mental health community.
        Proponents of the mental health mandate claim it would
    lower health care costs, but the bill includes provisions
    anticipating cost increases. New ERISA members stated that
    simply implementing this bill, ignoring the costs associated
    with actually covering the benefits, would cost millions of
    dollars. One member company cited preexisting contracts with
    more than 150 plans, all of which would require amendment or
    renegotiation.
        Other major employers mentioned that a 2 percent increase
    would be more than $10 million for them and that every 1
    percent of health care costs shifted to employees translates to
    about $70 annual costs per employee.
        Historically, it was employers who developed consumeristic
    strategies, demanded transparency, urged adoption of health IT
    and evidence-based medicine, proposed paying for performance,
    initiated patient-centered medical homes and began sponsoring
    disease management and drug therapy programs, and the list goes
    on.
        The current health care systematic actively discourages
    employers from participation with the regulatory structure so
    burdensome that it effectively requires them to operate two
    businesses, One to operate their core business and one to
    administer benefits. As employers are moving to simplify the
    system and leveling the playing field, this bill moves in the
    wrong direction complicating coverage and increasing financial
    burdens.
        The bottom line is that legislation, this legislation will
    likely reduce coverage and not improve quality for major
    employers. Plan sponsors have to reduce coverage or further
    shift costs. In mandating how plan designs and how they offer
    their voluntary benefits, this legislation will hurt plan
    sponsor flexibility and force one-size-fits-all policies.
        The bill will open floodgates of State mandates and
    substance abuse mandates which will be extremely costly and
    burdensome, if not impossible, to comply with. The scope of
    benefits being managed is clearly written in favor of mental
    health groups.
        Those pushing for legislation are not taking into account
    the extremely volatile financial situation of current voluntary
    benefit plans. Further, the bill does not even approach the
    issue of mental health providers and facilities keeping up with
    the necessities and innovations of today's health care
    markets--transparency of quality and pricing data, use of
    health information technology and performance-based
    reimbursement systems.
        If Congress wants to increase mental health and substance
    abuse coverage, it should address the transparency,
    accountability, and affordability and the education issues, not
    create new mandates.
        Thank you, Mr. Chairman.
        [The prepared statement of Ms. Rogers follows:]

                           Testimony of Edwina Rogers

         Good morning, and thank you Chairman Pallone and Ranking
    Member Deal for the opportunity to testify at this hearing.
         I am Edwina Rogers, vice president for health policy at
    The ERISA Industry Committee (ERIC). ERIC is a non-profit trade
    association committed to the advancement of employee health,
    retirement, and compensation plans of America's largest
    employers. We represent exclusively the employee benefits
    interests of major employers. ERIC is engaged in policy
    affecting our members' ability to deliver benefits, their cost
    and their effectiveness, as well as the role of employee
    benefits in America's economy.
         Today I will speak from a plan-sponsor perspective,
    representing companies that pay for health coverage for tens of
    millions of Americans. My testimony will focus on issues of
    concern in the Kennedy-Ramstad Mental Health Parity bill, H.R.
    1424.
         ERIC members are broadly in favor of expanding coverage,
    but the approach contained within H.R. 1424 is fundamentally
    flawed. The bill fails to incentivize better coverage options,
    instead injecting government into the world of voluntary
    benefits, creating mandates, micromanaging the distribution of
    benefits, failing to protect plan sponsors from burdensome and
    costly administrative quagmires, and failing to keep up with
    innovations and demands already widely accepted in the private
    health benefits marketplace.

                    Voluntary Benefits and ERISA Preemption

         Today major employers offer health, pension, and other
    benefits to their employees on a voluntary basis. They pay the
    exorbitant costs associated with these benefits in order to
    attract and keep employees, to improve morale and productivity,
    and because major employers take pride in providing for their
    employees' life security.
         Major employers operate in multiple states--some in all
    50--and their employees have common needs that are often not
    shared with arbitrarily-drawn regions, states, or localities.
    Congress developed the Employee Retirement Income Security Act
    of 1974 (ERISA) so that major employers could create uniform
    national plans that fit the needs of their employees,
    regardless of where the employees lived, worked, or received
    healthcare. ERISA was not created as a ``floor'' upon which
    states could create differing, conflicting laws; this would
    have made voluntarily sponsoring a plan extremely expensive and
    burdensome. ERISA is meant to be the ceiling--the Department of
    Labor regulates the operations of employer-sponsored benefit
    plans in every state, regardless of the laws various states
    create.
         As Congress considers a bill that would burden those
    employers who have chosen voluntarily to offer mental health
    and/or substance abuse benefits by forcing them to increase
    coverage and dissolving their plan flexibility, they should
    look to ERISA for guidance. Rather than leaving plan sponsors
    at the mercy of various state laws, Congress could choose to
    pass a mental health parity law that preempts conflicting state
    laws, giving employers clear guidance on how to be compliant on
    a national level. We should all be moving to support a uniform
    national system. Instead, by allowing states to craft their own
    laws, and not including preemption language, the Kennedy-
    Ramstad bill would further disincentivize plan sponsors from
    offering any mental health coverage at all. Further, there is
    no indication that legislators will not simply continue to
    expand on employer healthcare mandates, for mental and medical
    care, continuing to drive up costs and push employers closer to
    one-size-fits-all plans.

                      Plan Flexibility and Accountability

         Major employers have used logic, experience, and
    experimentation to create plans that offer affordable coverage
    that works for their employees. Many plans have determined that
    certain conditions should be covered, while other conditions
    (particularly some that are listed in that mental illness
    handbook authored by the mental health lobby, the Diagnostic
    and Statistical Manual of Mental Disorders, DSM-IV) are not
    valid. Because plan sponsors were able to make these judgments,
    engage in medical management, and design plans that covered the
    conditions they chose, many plan sponsors currently offer
    extremely generous mental health and substance abuse coverage.
         The soundness of some conditions endorsed by the mental
    health lobby is not the only issue plan sponsors are wary of
    when purchasing mental health care--plan sponsors are also
    concerned about the accreditation of mental health providers
    and facilities, as well as their accountability and
    transparency. Must employers pay preposterously high rates to
    treat imagined detriments like jet lag, shyness, or other
    ailments treated with ``folk'' remedies or possibly unnecessary
    medications from unaccredited professionals? Plan sponsors need
    the flexibility to define which treatments, focusing on
    evidence-based medicine, should be covered. They must be able
    to define a network of providers within (and outside) their
    preferred network. Plan sponsors must be able to designate
    which mental health facilities are bona fide and which should
    not be covered under their plan offerings.
         If mental health and substance abuse treatment are
    mandated to have the same financial and treatment rules as
    medical coverage, they should also have the same accountability
    standards. Plan sponsors are moving away from a system of
    ``trust, don't verify,'' and beginning to demand metrics and
    transparency from all medical providers--data that lets
    employers and patients know the costs of an episode of care,
    and helps them make informed decisions on where to get
    treatment through reporting on quality measures. A bill to
    promote mental health and substance abuse treatment would fail
    in its mission if it did not include accountability and
    transparency provisions for the mental health community, if not
    also including value-based purchasing language and urging these
    providers, facilities, and programs to begin using health
    information technology. It would be a mistake to impose a host
    of new elements into the healthcare coverage equation without
    also requiring those elements to comply with the innovations
    and advances (in both quality and cost efficiency) already made
    standard in the rest of the healthcare community. ERIC members
    overwhelmingly reject the one-way street of information from
    the mental health community--while the bill demands plan design
    details and claims information from ERISA plans, it does not
    require any transparency from the mental health and substance
    abuse community. A balanced bill must include accountability
    provisions that include transparency of price and quality data.

                              Out of Control Costs

         Proponents of the mental health mandate claim that it will
    lower healthcare costs, but the bill includes very clear
    provisions anticipating cost increases. No doubt the bill's
    backers believe that they are making a concession in offering a
    one-year exemption if, six months into a compliant program, a
    plan sponsor finds that costs are rising at more than an
    additional two percent in the initial year or one percent in
    subsequent years due to the mandate. This demonstrates a
    critical lack of understanding of the financial strains US
    employers are currently facing. While trying to stay globally
    competitive, employers have been burdened with double-digit
    healthcare inflation costs, and are under severe pressure to
    curb these costs--or to cut benefits. Employers have gone to
    great lengths to lower costs by one or two percent, and any
    instant infusion of greater costs could be catastrophic for
    workers' coverage. Numerous ERIC members have stated that
    simply implementing this change in their plans
    administratively, ignoring the costs associated with actually
    covering this benefit, would cost millions of dollars,
    requiring extensive revision to pre-existing plans. One member
    company cited pre-existing contracts with more than 150 plans,
    all of which would require amendment or renegotiation. Other
    major employers mentioned that a two percent increase would be
    more than $10 million, and that every one percent of healthcare
    costs shifted to employees translated to about $70 annual cost
    per employee.
         If the Federal Government steps in, fencing off mental
    health benefits and mandating that employers provide them, the
    prices of mental health services are sure to rise. Creating an
    instant, massive increase in demand will certainly dry up the
    supply, making mental health providers and facilities an even
    rarer commodity than they already are. It is highly probable
    that this legislation will lead to an unnecessary rise of
    utilization, which will in turn lead to a lack of mental health
    and substance abuse services, denying care to those who need it
    most. Creating an artificial demand will disrupt the market,
    drive up prices, and lead to shortages.
         Employers, not government, started all the major
    healthcare quality and efficiency improvement innovations in
    the past decade. Employers developed consumerist strategies,
    demanded transparency, urged adoption of health IT and
    evidence-based medicine, proposed paying for performance,
    initiated patient centered medical homes, began sponsoring
    disease management and drug therapy programs, and the list goes
    on. It took the government ten years just to decide that plan
    sponsors who offer more coverage to early retirees than to
    those eligible for Medicare are not engaging in age-
    discrimination. Now the government, at the urging of a lobby
    that has specific financial interests in the outcome, is
    purporting to dictate to the business community how to offer
    health benefits and save money--something is certainly amiss
    here. If in fact proponents of mental health parity can prove
    that it lowers plan costs and improves employee health, they do
    not need to force this ``reform'' by legislative fiat. Rather,
    this would be an issue of education and advocacy, not
    government interference and employer mandates.
         Just this week the employer community proposed a new
    platform for life security that could serve to expand all
    manner of health coverage to many more individuals and small
    businesses, without harming the current employer-sponsored
    system. ERIC's New Benefit Platform for Life Security envisions
    competing expert third-party administrators who manage
    employers' voluntary contributions, as well as individuals'
    contributions, and provide affordable, effective, and
    innovative retirement and healthcare security benefits. These
    administrators will allow major employers, small businesses,
    and individuals all to purchase fully portable coverage at
    equal rates. This private market system, coupled with tax
    parity, an individual mandate, and subsidies for low-income
    individuals, embodies a revolutionary step forward in expanding
    access and coverage to all Americans, while improving our
    global competitiveness.
         The current healthcare system actively discourages
    employers from participation with a regulatory structure so
    burdensome that it effectively requires an employer to operate
    two businesses, in which one operates the employer's core
    business and the other provides and administers benefits. As
    employers are moving to simplify the system and build a level
    playing field, this bill moves in the wrong direction,
    complicating providing coverage and increasing financial
    burdens on plan sponsors and beneficiaries.
         The government specializes in micro-mismanagement and
    reducing coverage; between crowd-out by entitlement programs,
    ill-conceived healthcare mandates, and other botched attempts,
    the government has failed to address with any real success the
    more than 40 million uninsured Americans. This is partially
    because government has failed to address costs before pushing
    for coverage--instead of deregulating and making the individual
    and small business healthcare market more affordable, they have
    continued to pile on cost-drivers. Instead of enacting tort
    reform, allowing small businesses to band together for
    purchasing clout, or allowing insurance to be purchased over
    state lines, government continues to regulate how voluntary
    benefits are provided, further incentivizing plan sponsors to
    cut back coverage. If this bill is enacted, some ERIC members
    have stated they will reduce coverage, increase employee
    contributions, and implement treatment limits on medical care.

                           What Treatment Is Covered?

         In defining the minimum scope of the new mandated
    benefits, this legislation works in a very round-about way. The
    bill reads that if a plan offers any related benefit, it must
    cover all the mental health and substance abuse benefits (with
    significant enrollment) covered by the Federal Employees Health
    Benefit (FEHB). The FEHB implemented mental health parity in
    2001--and according to a 2005 study by HHS, has seen cost
    increases due to it. More than 56 percent of FEHB beneficiaries
    are enrolled in Blue Cross Blue Shield plans. This, in essence,
    means that Blue Cross plans will always be in compliance, while
    other plans will be forced to conform to the models adopted by
    Blue Cross. This has serious implications for plan competition
    and flexibility, and may lead to increased costs (and decreased
    participation and coverage).
         The legislation does not clearly define how much
    enrollment in FEHB is necessary such that a condition or
    substance is mandated to be covered. It also does not designate
    which conditions or substances might require ``emergency care''
    that would surely incur substantially increased costs. These
    facets of the legislation leave the door wide open for price-
    fixing, as any mental health or substance abuse group that can
    convince a particular plan to adopt coverage for a particular
    condition or substance can thus force all other plans to adopt
    it--and can charge vastly different rates to Blue Cross than to
    other plans.
         It is doubtful that this was the intention of the
    legislation--in the rush to legislate, the bill's backers may
    have been attempting to avoid the pitfalls of using the overtly
    lobbyist-driven DSM IV. However, the option selected is only
    slightly better--perhaps an omen to alert Congress that plan
    design is best left to plan sponsors, not outside actors who
    have financial incentives to overcharge ERISA plans.
         The bottom line is that this legislation will very likely
    reduce coverage, not improve quality or increase coverage. Plan
    sponsors, already stretched thin, will have no avenue to deal
    with their increased costs other than to reduce coverage or to
    further shift costs to employees. In mandating how plans design
    and offer their voluntary benefits, this legislation will
    reduce plan sponsors' flexibility and force one-size-fits all
    policies on diverse and varying pools of workers. The bill will
    open floodgates of state mental health and substance abuse
    mandates, which will be extremely costly and burdensome, if not
    impossible, to comply with. The scope of benefits being
    mandated is hazy, but clearly written in favor of mental health
    interest groups, and leaves room for serious vice. Those
    pushing this legislation are not taking into account the
    extremely volatile financial situations of current voluntary
    benefit plans. Further, the bill does not even approach the
    issue of mental health and substance abuse treatment providers
    and facilities keeping up with the necessities and innovations
    of today's healthcare market--transparency of quality and
    pricing data, use of information technology, and performance-
    based reimbursement systems. If Congress wants to increase
    mental health and substance abuse coverage, it should address
    transparency, accountability, and affordability and education
    issues, rather than creating a new mandate.
                                  ----------

        Mr. Pallone. Thank you. Ms. Prunty-Lara.

     STATEMENT OF MARLEY PRUNTY-LARA, BOARD MEMBER, MENTAL HEALTH
                                AMERICA

        Ms. Prunty-Lara. Thank you very much for this invitation.
        I am here before you for one simple reason: because I am
    dedicated to the proposition that mental health matters. It
    matters because many lose their dignity and sometimes their
    lives in the struggle for mental wellness. It matters to me
    because mental illnesses compromised my mental health so
    profoundly that it put my life and dreams in jeopardy.
        My name is Marley Prunty-Lara, and today I am here to
    testify in support of a bill to establish simple fairness in
    insurance coverage for people with mental health conditions.
        I serve on the National Board of Directors for Mental
    Health America, formerly the National Mental Health
    Association. I work to improve mental health care policies, not
    simply because I have a mental illness, but because I know
    treatment works.
        I have passionately lived within the prison of mental
    illness and have experienced the incalculable emancipation that
    accompanies wellness. I am here today because effective
    treatment saved my life. I am also here because the opportunity
    of health should not be something granted only to the lucky and
    privileged few.
        When I was diagnosed with bipolar disorder at the age of
    15, I never imagined the pain I would endure as a result of my
    illness. Before adequate treatment, I intimately knew the
    harrowing, sinister suicidal depression no one likes to talk
    about. I knew the mania that could obscure the world and
    deprive me of sleep for days. It would fill my mind with racing
    thoughts and grandiose ideas, most of them unfeasible and left
    abandoned, incomplete.
        Living with this disease has meant not only enduring the
    disabling lows and exhilarating highs, but also fighting for
    insurance coverage, educational accommodations and appropriate
    health care. I have experienced firsthand the narrow mindedness
    insurance companies and some in the business industry show
    toward mental illness.
        During my teen years, as my mom searched for a psychiatrist
    available to treat me in South Dakota, a rural State with
    limited mental health resources, we were told we would have to
    wait 4 to 5 months before I could get an initial appointment. I
    did not have that long to live.
        We found help 350 miles away in another State. And I was
    hospitalized for 2 months. However, the treatment facility was
    not covered by my mother's insurance, forcing my parents to
    take a second mortgage out on their home in order for me to
    receive the care that I urgently needed.
        Had I suffered a spinal cord injury requiring long-term
    hospitalization, my insurance company would have paid for my
    care, but because my hospitalization involved a disease of the
    mind, my insurance company deemed it unworthy of equitable
    coverage.
        I am one of the lucky ones. My family was able to take out
    a mortgage to afford my inpatient care. However, many in this
    country currently face a question with no easy answer. What
    happens when the insurance benefits run out and you are not
    better yet?
        My family did everything we were supposed to. My mother, a
    CPA, an ardent advocate on behalf of her daughter, had a good
    paying job and health insurance. She was adept at handling our
    insurance claims, and we exhausted our efforts to receive
    treatment within the coverage system.
        I did not chose my disease.
        I ask those who oppose this legislation what are people to
    do when they don't have the options my family had, when parents
    must choose between watching their children deteriorate or
    giving up custody to obtain insurance benefits? At what point
    do we decide collectively to end the suffering of millions?
        For children struggling to cope with a mental illnesses,
    wellness should not depend on luck, on whether a family's
    particular health plan provides ample and equitable mental
    health coverage. In my case, it has proven far cheaper to treat
    my mental illnesses with medication and proper psychiatric care
    than to have me in and out of hospitals and emergency rooms. I
    understand the power of successful treatment because I am
    living it.
        Congress enacted a parity law in 1996, but it requires only
    partial parity. Current law still permits discrimination based
    on mental health conditions, and it is routine in practice.
    Both current law and practice are untenable. Americans agree
    that partial fairness is unacceptable. In a survey conducted by
    International Communications Research, an independent research
    company, and paid for by Mental Health America----
        Mr. Pallone. I hate to interrupt you because I am--you are
    really telling an important story--because you are over a
    minute.
        Ms. Prunty-Lara. Let me just conclude.
        I implore this committee to act soon to adopt H.R. 1424. I
    urge you further to reject amendments that would weaken it. Kay
    Jamison once said this gap between what we know and what we do
    is lethal.
        The time is right and the time is now to enact
    comprehensive Federal parity. I leave with you that charge and
    hope today. Please remember my name, my face, and my story as
    you work and decide to pass this vital legislation.
        America is waiting. Thank you.
        Mr. Pallone. Thank you, and I wanted you all to know that
    we do put your entire statement in the record even if I ask you
    to summarize at the end.
        Thank you.
        [The prepared statement of Ms. Prunty-Lara follows:]

                        Testimony of Marley Prunty-Lara

        Good morning. I am here before you for one simple reason--
    because I am dedicated to the proposition that mental health
    matters. It matters because many lose their dignity, and
    sometimes their lives, in the struggle for mental wellness; it
    matters to me because illness compromised my mental health so
    profoundly that it put my life and dreams in jeopardy.
        My name is Marley Prunty-Lara and today I am here to
    testify in support of a bill to establish simple fairness in
    insurance coverage for people with mental health conditions. I
    serve on the national Board of Directors for Mental Health
    America, formerly the National Mental Health Association. I
    work to improve mental health care policies, not simply because
    I have a mental illness, but because I know that treatment
    works. I have passionately lived within the prison of mental
    illness and have experienced the incalculable emancipation that
    accompanies wellness. I am here today because effective
    treatment saved my life. I am here today because the
    opportunity of health should not be something granted only to
    the lucky and privileged few.
        When I was diagnosed with bipolar disorder at the age of
    15, I never imagined the pain I would endure as a result of my
    illness. Before adequate treatment, I intimately knew the
    harrowing, sinister, suicidal depression no one talks about. I
    knew the mania that would obscure the world and deprive me of
    sleep for days. It would fill my mind with racing thoughts and
    grandiose ideas; most of them unfeasible and left abandoned
    incomplete. Living with this disease has meant not only
    enduring the disabling lows and exhilarating highs but also
    fighting for insurance coverage, educational accommodations,
    and appropriate health care.
        I have experienced first hand the narrow-mindedness
    insurance companies and some in the business community show
    toward mental illness. During my teen years, as my mom searched
    for a psychiatrist available to treat me in South Dakota, a
    rural state with limited mental health resources, we were told
    we would have to wait four to five months before I could get an
    initial appointment. I did not have that long to live. We found
    help, 350 miles away, in another state, and I was hospitalized
    for two months. However, the treatment facility was not covered
    by my mother's insurance; forcing my parents to take a second
    mortgage out on their home in order for me to receive the care
    that I urgently needed. Had I suffered a spinal cord injury
    requiring long-term hospitalization, my insurance company would
    have paid for my care; but because my hospitalization involved
    a disease of the mind, my insurance company deemed it unworthy
    of equitable coverage.
        I am one of the lucky ones; my family was able to take out
    a mortgage to afford my in-patient care. However, many in this
    country currently face a question with no easy answer: What
    happens when the insurance benefits run out and you're not
    better yet? My family did everything we were supposed to; my
    mother, a C.P.A., had a good-paying job and health insurance.
    She was adept at handling our insurance claims and we exhausted
    our efforts to receive treatment within the coverage system. I
    did not choose my disease. I ask those who oppose this
    legislation: what are people to do when they don't have the
    options my family had; when parents must choose between
    watching their children deteriorate and giving up custody to
    obtain insurance benefits? At what point to we decide
    collectively to end the suffering of millions?
        For children struggling to cope with a mental illness,
    wellness should not depend on luck, on whether a family's
    particular health plan provides ample and equitable mental
    health coverage. In my case, it has proven far cheaper to treat
    my mental illness with medication and proper psychiatric care,
    than to have me in and out of hospitals and emergency rooms. I
    understand the power of successful treatment because I am
    living it.
        We live in a time where discrimination ought not be
    tolerated, in any form, against any people. Having a mental
    illness should neither determine one's fate nor limit one's
    potential. As our country faces the challenges of war, of
    returning veterans changed forever by the trauma of combat,
    Congress must reaffirm its commitment to the principles of
    justice and the pursuit of happiness by enacting comprehensive
    mental health parity legislation. It is not enough to simply
    continue to say, ``We must change,'' veterans, active-duty
    military personnel, and their families; employers; teachers;
    doctors; and those that are struggling--are all counting on
    Congress to be the difference, to make prevention, treatment,
    and recovery believable realities.
        The costs of mental health and substance use conditions are
    unavoidable. Our only decision is how we pay for them. Society
    can either invest in treating mental health and substance use
    conditions or pay a greater price through homelessness, lost
    productivity, suicide, and an increased reliance on the
    criminal justice system. Enacting a comprehensive mental health
    parity law sends a strong message to people across this country
    that mental health is fundamental to overall good health. It
    sends a message to those living with a mental illness that
    their disease is just as real as cancer and diabetes. Enacting
    mental health parity sends a message to the business community
    that we value the health of their employees and their bottom
    line. I believe that treatment access follows dollars; by
    eliminating a barrier to treatment, we provide an incentive for
    providers to enter the mental health field.
        Congress enacted a parity law in 1996. However, that law
    required only partial parity. Current law still permits
    discrimination based on mental health conditions, and it is
    routine in practice. Both current law and practice are
    untenable. Federal law must demand fairness in health coverage
    on behalf of people with or at risk of mental health
    conditions. Americans agree that ``partial'' fairness is
    unacceptable. In a survey conducted by International
    Communications Research, an independent research company, and
    paid for by Mental Health America, 89 percent of Americans
    asserted that insurance plans should cover mental health
    treatments at the same level as treatments for general health
    problems. 74 percent believe that insurance plans should cover
    substance abuse treatments at the same levels as treatments for
    general health issues and 89 percent of employees and employers
    want health insurance coverage for mental health treatments to
    be equitable to general health treatments. \1\
    ---------------------------------------------------------------------------
        1 Interviews were conducted via telephone and the Internet from
    October 10 to November 1, 2006 among a nationally representative sample
    of 3,040 respondents age 18 and older.
    ---------------------------------------------------------------------------
        I implore this committee to act soon and adopt H.R. 1424. I
    urge you further to reject amendments that would weaken it. I
    ask you to consider my testimony not solely as one person's
    story, but as a microcosm of millions of Americans. We are
    people whose treatment has been cut short by arbitrary
    treatment limits, not only annual, day, and visit limits, but
    even lifetime caps on outpatient visits. Consider your son or
    daughter, with health insurance, being told that their
    treatment for cancer would not be covered because their
    diagnosis required more chemotherapy treatments than their plan
    allowed. Imagine finding out that your broken leg, which could
    be healed with appropriate care, would have to fester un-cast
    because your insurance provider denied your claim on the basis
    that a broken leg could be managed on its own. Many with mental
    health conditions face these realities every day. The Paul
    Wellstone Mental Health and Addiction Equity Act seeks to
    remedy the incorrigible and nonsensical practices of the
    insurance industry. The industry has failed to act alone. The
    time has come for accountability and justice.
        It is imperative that help be available to those that seek
    it. Sanctioned discrimination toward those with mental illness
    must end. H.R. 1424 provides fundamental protections against
    the range of discrimination experienced by people like me.
    Please do not dilute it. Please adopt it with utmost
    expediency. Insurance must not stand in the way of goals and
    dreams and normalcy; rather it should be the means by which one
    achieves health. Kay Jamison once said, ``The gap between what
    we know and what we do is lethal.'' The time is right and the
    time is now to enact comprehensive Federal parity. I leave with
    you that charge today. Remember my name; remember my face;
    remember my story. America is waiting. Thank you.
                                  ----------

        Mr. Pallone. Mr. Klein.

       STATEMENT OF JAMES A. KLEIN, PRESIDENT, AMERICAN BENEFITS
                                COUNCIL

        Mr. Klein. Thank you very much, Mr. Chairman.
        I am testifying today on behalf of the American Benefits
    Council. Our member companies are primarily very large national
    employers, as well as health plans and other organizations that
    design and administer health coverage of all sizes, 100 million
    Americans overall, in health and retirement plans.
        Today, I would like to pose and then answer four questions.
        The first question is: why are mental health benefits so
    important? The second is: can employers, insurers, mental
    health providers and patient advocates reach consensus on
    mental health parity? Third, does H.R. 1424, the Kennedy-
    Ramstad bill which is the topic of today's hearing, meet the
    criteria needed for consensus? And fourth, if parity is so
    vital, why doesn't the proposed legislation apply to numerous
    federally sponsored health plans?
        The answer to the first question, why are mental health
    benefits so important, is quite obvious. There probably is not
    a single person in this hearing room who has not been affected
    by mental illness either personally, or as we heard from the
    compelling witnesses today, Ms. Prunty-Lara, Congressman
    Kennedy and Congressman Ramstad, or through a family member or
    a friend.
        For me personally, just a few months ago, a young woman who
    was a friend of my teenage daughter took her own life after
    struggling with mental illness. Ms. Prunty-Lara is one of the
    happy cases. My daughter's friend was not. This issue touches
    us all.
        U.S. employers believe in the value of mental health
    coverage and spend vast sums to provide it to their workers and
    family members. Employer opposition over the past decade to
    expanding current parity law does not reflect lack of support
    for mental health benefits for all of the reasons noted earlier
    that providing mental health benefits can save employers money.
        Rather, the concern and opposition is based on concern over
    a highly prescriptive legislation that dictates the details of
    health plans that denies employers the opportunity to manage
    plans in ways that are permitted for medical and surgical
    benefits, and that it allows States to impose varying
    standards.
        Mr. Chairman and members of the subcommittee, that is not
    parity. That is a proposed set of rules that treats mental
    health benefits vastly differently than health coverage for
    other conditions.
        This raises the second question: Can employers and
    insurers, mental health providers and patient advocates reach
    consensus on parity? The answer is an emphatic ``yes,'' and it
    has already been done.
        Over the past several months, Senators Kennedy, Enzi and
    Domenici brought together the major stakeholders on this issue
    on a process that addressed all parties' primary concerns. The
    American Benefits Council was privileged to work on behalf of
    employers during this effort. The resulting bill, which passed
    the Senate Health Committee by a strong, bipartisan 18 to 3
    vote, may not be anyone's ideal, but it resolves the mental
    health debate in a way that patients, providers, employers and
    insurers can all be proud and satisfied.
        The Senate bill retains private employers' flexibility to
    design the plans they pay for, just like the Federal Government
    does for the plan it sponsors. It protects medical management
    and ensures uniformity between Federal and State parity
    requirements. Even more important than what the collaborative
    process means for achieving mental health parity legislation is
    that it can serve as a model to be emulated as Congress seeks
    consensus on much broader health care reform challenges.
        With that in mind, let me pose the third question: Does
    H.R. 1424 meet the criteria for consensus? Regrettably, my
    answer must be ``no.'' My written statement describes more
    fully the deficiencies of the House bill, but the essence of
    our concern is that it approaches for employers--employer and
    health plan priorities in exactly the opposite way that the
    Senate bill resolves this.
        First, H.R. 1424 requires that if a health plan covers any
    mental health or substance-related disorder benefits, that it
    must cover all conditions described in this DSM-IV volume that
    identifies such disorders. My point here is not to make a value
    judgment as to whether some health conditions are more worthy
    of coverage than others. My point is to say that Congress
    should not do so either. Wisely, Federal law does not impose
    such prescriptive rules on coverage for other physical
    conditions, and it is not justified for mental health benefits
    either.
        Second, unlike the Senate bill, the House bill does not
    protect medical management practices to ensure that patients
    are receiving appropriate care. Health care providers, consumer
    groups and purchasers are actively promoting evidence-based
    measures of quality care. The House bill would stymie these
    efforts as it relates to mental health conditions.
        I will quickly sum up.
        Third, the House bill mandates coverage for mental health
    disorders by out-of-network providers if the plan covers out-
    of-network coverage for certain categories of medical and
    surgical services. This goes even disposing beyond the rules
    governing the Federal employers' benefit plans.
        Fourth, the House bill authorizes States to expand
    enforcement and remedy schemes, either creating special rules
    applicable only to mental health benefits, which seems patently
    unfair, or arguably creating a whole new set of State-by-State
    enforcement-of-remedy standards for all types of health
    benefits, which is clearly beyond the scope of the mental
    health parity bill.
        ERISA's uniform framework should not be dismantled and
    certainly not as an afterthought on the mental health parity
    bill.
        And finally, the American Benefits Council asks why, if
    parity is so vital, does the proposed legislation treat people
    different depending on the plan from which they receive
    coverage. More specifically, why impose parity requirements on
    health plans sponsored by private employers and State and local
    governments when full parity is not required in Medicare,
    Medicaid, veterans health care and TRICARE for active and
    retired military personnel.
        I cannot answer that question. Only Congress can explain
    why there is already parity in FEHBP, which covers Federal
    employees, including Members of Congress and their staff, but
    the proposed legislation completely ignores these other vital
    health programs. Surely the elderly, the poor, and those who
    have bravely put their lives at risk for this Nation should not
    be overlooked.
        Basic fairness, not to mention leadership by example,
    dictates that Congress should not impose requirements on
    private employers and State and local governments when it has
    not yet extended the same requirements to all health plans that
    the Federal Government itself designs and pays for.
        Thank you very much for the opportunity to testify.
        [The prepared statement of Mr. Klein follows:]

                          Testimony of James A. Klein

        Mr. Chairman and members of the Health Subcommittee, thank
    you for the opportunity to share our views with you today on
    the Paul Wellstone Mental Health and Addiction Equity Act of
    2007. My name is James Klein and I am president of the American
    Benefits Council.
        The American Benefits Council's members are primarily major
    employers and other organizations that collectively sponsor or
    administer health and retirement benefits covering more than
    100 million Americans. Most of the Council's members are very
    large companies that have employees in most or all 50 states
    and provide extensive health coverage to active employees and
    retirees. Our membership also includes organizations that
    provide benefits services to employers of all sizes, including
    small employers who often face the greatest challenges in
    providing health coverage for their workers.

          Employers Recognize the Importance of Behavioral Health Care

        The American Benefits Council's members highly value and
    have long recognized the importance of effective health
    coverage for the treatment of both physical and behavioral
    disorders. Indeed, because of the importance our members place
    on these services, we have repeatedly urged Congress that the
    current Federal parity requirements not be expanded in a way
    that would add to plan costs or increase the complexity of plan
    administration. Doing so could unintentionally risk a reduction
    in coverage for these or other benefits provided to employees
    and their families.
        We also recognize that much has changed in the behavior
    health care field over the past decade since the enactment of
    the current Federal mental health parity requirements in 1996.
    Better medical evidence on behavioral health conditions has
    become available and better treatment options have advanced
    during this period. In a great many cases, the way in which
    behavioral health conditions are covered by health plans has
    also changed, particularly with the emergence of health plan
    administrators that specialize in the management of behavioral
    health care services in a wide range of outpatient and
    inpatient settings.
        As the field of behavioral health care has changed during
    this time, it has become increasingly clear that the ability of
    employers to provide access to affordable and appropriate
    health care services, including for behavioral health
    conditions, depends on the ability of health plans to do an
    effective job in the medical management of health benefits.
    This involves often challenging tasks to try to ensure that
    plan participants get the right care and effective care under
    the terms of their plans and for the health conditions they
    have. Employers have a strong interest and an enormous stake in
    seeing that these tasks are performed well, not only because
    employers are the primary payers for the health care coverage
    for millions of American workers, but also because of the
    importance they place in maintaining a healthy and productive
    workforce.

         Senate Parity Legislation Developed through Inclusive Process

        Before I address the concerns we have with the House mental
    health parity bill, H.R. 1424, let me see if I can dispel the
    myth that employers are simply irrevocably opposed to any
    legislation in this area or that employers somehow do not
    understand or appreciate how vitally important effective
    behavioral health care is for millions of Americans.
        Over the past several months, the three Senate sponsors of
    mental health parity legislation--Senate HELP Committee
    Chairman Edward Kennedy, HELP Committee ranking member Senator
    Mike Enzi and Senator Pete Domenici, who is a longtime champion
    of mental health parity and an author of the original
    legislation enacted a decade ago--have taken a fresh approach
    to trying to resolve the difficult and important issue of
    changing the current law Federal parity requirements. Under
    their joint leadership, a new bill was developed, S. 558,
    through a balanced, candid and extensive process that has given
    all the major stakeholders on this issue--employers, health
    plans, behavioral health care providers and patient advocates--
    the opportunity to have their priority concerns addressed.
        The American Benefits Council has been privileged to have
    participated in this process with the three Senate sponsors as
    a representative of employer interests. While these discussions
    have been demanding and have required much give and take on all
    sides, we also think that it has unquestionably resulted in a
    bill that is a bipartisan in the best sense of the term. In
    fact, we believe it could serve as a model for how Congress
    might be able to tackle other similarly challenging health
    policy issues, ones which members of this subcommittee must
    frequently work to resolve, too.
        The Senate parity measure is not perfect. No true
    compromise proposal ever is. But the Senate parity measure is
    the only one of its kind which includes among its supporters a
    leading coalition of mental health parity proponents as well as
    a broad range of organizations representing employers and
    insurers. We hope this good faith effort sends an important
    message that employers will support legislation where their
    priority concerns are addressed in a thoughtful manner and with
    a careful attention to details, even when our preferred outcome
    would be no new legislation or an even better bill.
        Unlike previous parity measures considered by the Senate or
    the parity bill which has been introduced here in the House of
    Representatives, the Senate proposal does not mandate that
    plans cover specific mental health benefits. It leaves those
    decisions up to employers and, in the case of fully insured
    health plans, the Senate bill permits States to continue to
    determine whether to require any particular benefits. In
    addition, the Senate bill includes a provision making clear
    that medical management of these important benefits may not be
    prohibited and preserves flexibility for employers and health
    plans in the formation of networks of health care providers who
    deliver these services. These provisions are vitally important
    because they allow employers to appropriately design and manage
    the health coverage they offer to meet their employees' needs.
        Finally, and most importantly, several of the key
    provisions of the Senate parity bill are subject to a rule
    which is intended to ensure uniformity between the Federal
    parity requirements and those established by the States, while
    maintaining the traditional role of the States to regulate the
    business of insurance in all other respects. Major, multi-state
    employers, in particular, rely upon the uniform Federal
    framework established by the Employee Retirement Income
    Security Act (ERISA). It is crucial to these employers, who
    provide health coverage to over 70 million Americans, that this
    framework not be eroded.

           Employer Concerns with the House Mental Health Parity Bill

        Unfortunately, we do not see the same balanced approach in
    the House parity bill to the issues of key concern to employers
    and we would urge that several changes be made to the
    legislation as it is considered further by this subcommittee
    and the other committees of jurisdiction in the House of
    Representatives. The primary issues which we believe need to be
    addressed are the following:

                     Flexibility Needed in Covered Benefits

        Under the House parity bill, if a health plan provides
    ``any'' mental health or substance-related disorder benefits,
    then the plan must cover all of the same mental health and
    substance disorder benefits as are provided to Federal
    employees under the Blue Cross and Blue Shield standard option
    health plan (the most heavily enrolled health plan offering
    under the Federal Employee Health Benefits Program). Plans
    offered to Federal employees are required to cover all
    conditions listed in the so-called DSM-IV manual, the
    diagnostic manual used by mental health care professionals to
    identify and categorize all disorders in this area. So, while
    the benefit mandate is stated somewhat differently than it has
    been in previous mental health parity bills, the basic
    requirement in the House bill is to cover all mental health and
    substance-related disorders if a plan covers any services at
    all in this area. Of course, the vast majority of plans do
    provide such services.
        Employers have several concerns about this sort of
    requirement. First, it is not necessary to achieve the purposes
    of the legislation, which is to provide parity in any financial
    requirements and treatment limits which a plan applies to the
    benefits it covers. Requiring a plan to provide coverage for
    all of the conditions which are identified in the diagnostic
    manual used by health care providers is not ``parity'', it is
    simply a benefits mandate. It also requires much more
    specificity of coverage than is required for any non-behavioral
    health conditions. Such a requirement would send an immediate
    message to employers that they no longer have any discretion
    over decisions about what benefits they cover for their
    employees in this area of their plan, except the decision to
    provide no coverage for these conditions at all, which is an
    unacceptable alternative.
        In addition, state laws currently govern which benefits are
    required to be covered for fully insured health coverage, so
    this is a matter that can be, and often is, decided by the
    states for the health plans which they regulate. In terms of
    self-insured health plans which are regulated under Federal
    law, there are no similar requirements applied to any other
    broad category of health conditions or services which are
    typically covered by employer-sponsored health plans, in
    recognition that this is an important area of discretion for
    employers when they voluntarily choose to provide health
    coverage to their employees.

              Protection Required for Medical Management Practices

        Another major concern with the House bill is that, unlike
    previous mental health parity bills considered by Congress or
    the current Senate measure, there is no specific protection for
    plan medical management practices. It is very important to
    protect the ability of plans to appropriately manage coverage
    for mental health conditions and substance-related disorders as
    part of any Federal parity legislation. Proposed treatments for
    these conditions should, whenever possible, be consistent with
    standards for evidence-based care. Ultimately, to quote the
    conclusion of an April 11, 2007 op-ed column in the New York
    Times by Maia Szalavitz, ``we need parity in evidence-based
    treatment, not just in coverage--for mental health conditions.
        One of the most important developments now occurring in the
    health care field is in the preparation of measures by numerous
    clinical specialty groups to help define appropriate care and
    expected outcomes for patients for a wide range of conditions.
    Purchasers, health care providers, consumer groups and many
    others are actively working in several different forums to
    reach consensus on evidence-based measures of quality health
    care. While much more needs to be done to achieve a fully
    transparent and more accountable health care system, there can
    be little doubt that the movement to achieve consistent
    measures of quality care is a major step in the right direction
    and can help drive overall health system reform.
        We need to be careful to ensure that neither State nor
    Federal laws undercut or diminish efforts by plans to try to
    ensure that the health care services received by plan
    participants are medically necessary and appropriate for their
    conditions. Some health plans contract with managed behavioral
    health care organizations for this purpose while others perform
    medical management services as part of their core plan
    operations. Either way, it is essential to safeguard these
    important activities so that plans are able to both protect
    themselves and their participants from unnecessary costs as
    well as to try to ensure that coverage is provided for quality
    health care services. Indeed, an August 2006 report by the
    Congressional Research Service on the impact of health parity
    laws cited evidence that there was little adverse impact in the
    Federal Employee Health Benefits Program in terms of access,
    quality or cost of care because the parity requirements for
    mental health benefits covered under that program were coupled
    with the management of care by plans offered to Federal
    employees.

                  Discretion Needed for Out-of-Network Coverage

        A third significant concern that employers have with the
    House bill is that it mandates coverage for mental health and
    substance-related disorders by out-of-network providers if a
    plan provides coverage for substantially all medical or
    surgical services on an out-of-network basis in any of three
    different categories (emergency services, inpatient services or
    outpatient services). Again, this requirement limits important
    plan discretion and exceeds what is required under the Federal
    Employee Health Benefits Program where parity is required only
    for services provided on an in-network basis.
        We would recommend that the House bill be modified to
    conform to either the FEHBP requirement or the comparable
    provision in the Senate parity bill which includes a Federal
    standard that calls for parity in plan financial requirements
    and treatment limitations for any out-of-network mental health
    coverage provided by a plan, but the Senate provision does not
    require plans to offer out-of-network coverage. The Senate bill
    also preserves the traditional role of the States to regulate
    fully insured health plans in this area, so it does not
    interfere with State laws which may require insurers to offer
    out-of-network health coverage.

               Changes Needed to Provisions Related to State Laws

        Finally, we have significant concerns with the provisions
    in the House parity bill which would authorize States to
    provide ``greater consumer protections, benefits, methods of
    access to benefits, rights or remedies--than those in the
    legislation. This is extraordinarily broad language and
    arguably gives States the ability to develop parity laws, at
    least for fully insured health plans, that could differ
    significantly from the Federal standards provided and that are
    determined to be even ``greater'' than those in the House bill.
        More troubling, however, is that the House bill provision
    on the relationship to State laws would give States broad
    authority to enact greater ``consumer protections...methods of
    access to benefits, rights and remedies than any applicable
    Federal standards. This provision appears to go far beyond a
    mental health parity requirement in that it opens the door for
    the States to develop separate enforcement and remedy schemes,
    a matter of frequent review by the United States Supreme Court
    which has ruled unanimously that the Federal remedy scheme
    included in ERISA is exclusive for all health benefits covered
    by employer-sponsored benefit plans.
        Moreover, if the bill is intended to only change
    enforcement and remedy schemes for mental health coverage, then
    there is no justification for a separate set of rules for just
    one category of benefits. If, in fact, this provision is
    intended to permit states to create a new enforcement and
    remedy scheme for all benefits, then such a fundamental change
    in the law should not be an adjunct to a bill whose purpose is
    to address mental health parity.
        The uniformity ERISA establishes for employer-sponsored
    coverage, including its enforcement and remedy scheme, is based
    on sound public policy and is something employers consider
    crucial to their voluntary decision to offer health coverage to
    their employees. Federal preemption is not unlimited, but where
    it does apply it fosters uniform administration of covered
    benefits and reduces costly burdens of complying with differing
    State laws which would occur in the absence of ERISA's
    uniformity provisions.
        If Congress believes that changes are needed in this area,
    is should be fully debated on its own merits rather than
    included as one of many provisions of a mental health parity
    bill.

      House and Senate Parity Bills Fail to Apply to Medicare or Medicaid

        One of the most glaring omissions of both the House and
    Senate parity bills is that they fail to apply the same
    requirements to the mental health benefits provided to millions
    of elderly and low-income Americans who are covered under
    Medicare and Medicaid. While we are aware that separate
    legislation sponsored by Rep. Pete Stark, H.R. 1663, would
    partially address this situation by requiring parity for
    benefits covered by Medicare, nearly all of the debate and
    focus concerning mental health parity over the past decade in
    Congress has been around employer-sponsored health coverage.
        We believe it is simply indefensible for Congress to impose
    parity requirements on employer-sponsored health coverage while
    ignoring the same issues in the programs where it has direct
    responsibility. Failing to do so would mean that if either the
    House or Senate bills were to be enacted, mental health parity
    would be the law for employer-sponsored coverage and, through
    previous action by Executive Order, for coverage offered to
    Federal employees (including members of Congress), but not for
    those covered under Medicare or Medicaid.
        This committee has jurisdiction over Medicare outpatient
    services covered under Part B and the Medicaid program. We
    would be in a very different place in this debate if the
    fundamental policy decision had been made long ago that mental
    health parity was not simply something that Congress was
    seeking to apply solely to employer-sponsored health coverage,
    but was being done as part of a more omnibus effort to achieve
    the same standards in all Federal health programs as well. Such
    an approach would send a substantially different message to
    employers that sponsor health benefits for their employees and
    it is an approach that we strongly urge be done before you
    compel private sector employers to make changes to their plans.
        Again, I appreciate the opportunity to testify today and
    share our views with you on these important issues. The
    American Benefits Council has played a constructive and highly
    engaged role in the multi-stakeholder negotiations that helped
    shape the Senate mental health parity bill. We and our allies
    on this issue are prepared to do the same with the House bill
    if a similar approach is taken to making what we believe are
    important and needed changes to ensure a more balanced
    proposal.
        Employers understand the importance of quality mental
    health coverage for their employees and to maintaining a
    productive, healthy workforce. We also fully understand the
    strong sentiment in Congress to change current Federal mental
    health parity requirements. We believe the candid discussions
    among all the major stakeholders which were used to develop the
    Senate bill have demonstrated that employers and insurers are
    prepared to engage seriously in resolving this longstanding
    issue, provided that the process is respectful of the priority
    needs of all the parties involved. As this legislation moves
    forward, we urge that you consider the merits of this approach
    so that a consensus measure can ultimately be considered by the
    House of Representatives.
                                  ----------

        Mr. Pallone. Dr. Goldman.

    STATEMENT OF HOWARD H. GOLDMAN, M.D., PROFESSOR OF PSYCHIATRY,
               UNIVERSITY OF MARYLAND, SCHOOL OF MEDICINE

        Dr. Goldman. Thank you very much for the invitation to
    speak here today.
        I am Howard Goldman. I am a professor of psychiatry at the
    University of Maryland School of Medicine. I served as the
    senior scientific editor of the Surgeon General's report, and I
    was the principal investigator of the evaluation of behavioral
    health parity for Federal employees.
        My testimony today focuses principally on that evaluation.
    The comments are derived from papers that were published in the
    New England Journal of Medicine and the Journal of Pediatrics,
    and they are also based on an editorial written by two health
    economists that accompany our paper in the New England Journal
    of Medicine.
        The parity policy in the Federal Employees Health Benefits
    Program began on January 1, 2001, and it offered comprehensive
    insurance coverage for all mental disorders, including
    substance abuse, all of the conditions in the international
    classification of diseases.
        The terms were the same for behavioral disorders as they
    were for general medical conditions when the treatment was
    provided by in-network providers under the managed care
    arrangements.
        Our study compared seven Federal plans with a matched set
    of plans that did not change benefits or management and did not
    have parity. We compared use and spending by enrollees in these
    plans for the 2 years before parity, 1999 and 2000, with the 2
    years afterwards in 2001 and 2002.
        We observed the proportion of Federal employees, retirees
    and their dependents who use behavioral health services. We
    looked at how much they spent and how much of this spending was
    out of their own pockets.
        The study found, one, that the policy was implemented very
    smoothy and without any of the Federal plans dropping out of
    the Federal Employees Health Benefit Program, which is
    something that has been feared by some in their testimony
    today.
        Two, there was a significant decline in out-of-pocket
    spending in the Federal plans compared to the nonparity plans,
    which indicates that parity coverage resulted in improved
    insurance protection against financial risks. After all, that
    is the principal objective of health insurance, and we have
    heard about this tremendous financial burden that a mental
    disorder can impose.
        Three, the savings to Federal plan members was not
    associated with significant increases in use and spending
    attributable to parity. In fact, for the most part, increases
    that we did observe in use and total spending in the Federal
    plans were no greater than use and spending increases in the
    comparison plans. This was true for adults just as it was for
    children and adolescents.
        In our published paper, we concluded that these findings
    suggest that parity of coverage of mental health and substance
    abuse services, when coupled with management of care, is
    feasible and can accomplish its objective of greater fairness
    and improved insurance protection without adverse consequences
    for health care costs.
        In their editorial, the two health economists note that the
    purpose of the parity policy was to provide better financial
    protection to everyone who has health insurance. The coverage
    is not only for people who have currently a mental disorder,
    but any one of us who might have a mental disorder in the
    course of the year.
        The economists state that the article by Goldman, et al,
    provides the first controlled study of parity in two decades.
    The compelling evidence presented suggests that in today's
    environment, parity and health insurance coverage is both
    economically feasible and socially desirable.
        The policy performed just as insurance should. It reduced
    the cost of out-of-pocket payments with a small increase in
    plan payments. This could result in very small increases in
    insurance premiums without leading to an increase in use of
    services. The CBO estimates a premium impact for group plans of
    0.4 percentage points, and that is the same increase in
    premium, very small, that we observed for Federal employees.
        Furthermore, there is a concern raised about mandated
    benefits. We conclude that by reducing financial risk, parity
    improves the well-being of insured people without distorting
    the market for mental health services. Legislation is the way
    to accomplish that social good because parity coverage offered
    by only one or two plans would result in those plans attracting
    a disproportionate group of people with persistent mental
    illness. This is referred to as adverse selection, and it is
    only through a parity policy such as that which is offered that
    we can avoid the financial risks associated with adverse
    selection.
        For decades, advocates for parity relied only on an
    argument of fairness to gain support for their cause. Now they
    can argue that parity promotes social well-being and economic
    efficiency in the form of better insurance benefits for all of
    us.
        Thank you, Mr. Chairman, Ranking Member and Members of
    Congress.
        [The prepared statement of Dr. Goldman follows:]

                      Testimony of Howard H. Goldman, M.D.

        Thank you for the invitation to address you today. I am
    Howard H. Goldman, MD, PhD, professor of psychiatry at
    University of Maryland School of Medicine in Baltimore. I
    served as the senior scientific editor of the Surgeon General's
    Report on Mental Health and was the principal investigator of
    the evaluation of behavioral health insurance parity for
    Federal employees.
        My testimony today focuses on that evaluation and its
    findings and conclusions. My comments are derived from our
    report posted on a Department of Health and Human Services Web
    site as well as from published papers. I have appended papers
    by our research team published in the New England Journal of
    Medicine (1) and pediatrics (2). I will also refer to an
    editorial published with our paper in the New England Journal
    of Medicine, written by two health economists (3) and also
    appended to the testimony as well.
        The parity policy in the Federal Employees Health Benefits
    [FEHB] program began on January 1, 2001 and offered
    comprehensive insurance coverage for mental disorders,
    including substance use disorders, on terms that were identical
    to the coverage of general medical conditions, when the
    treatment was provided by in-network providers.
        Our study compared 7 FEHB plans with a matched set of plans
    that did not change benefits or management and did not have
    parity. We compared use and spending by enrollees in these
    plans for the 2 years before parity [1999 and 2000] and for the
    2 years after parity began [2001 and 2002]. We observed (i) the
    proportion of Federal employees, retirees and their dependents
    who used behavioral health services, (ii) how much they spent
    for behavioral health services, and (iii) how much of the
    spending was out of their own pockets.
        The study found that:

        1. The policy was implemented smoothly and without plans
    dropping out of the FEHB program.
        2. There was a significant decline in out-of-pocket
    spending in the FEHB plans compared to the non-parity plans.
    This indicates that parity coverage resulted in improved
    insurance protection against financial risks--the principal
    objective of health insurance.
        3. This savings to FEHB plan members was not associated
    with significant increases in use and spending attributable to
    parity. In fact, for the most part increases in use and total
    spending in the FEHB plans were no greater than use and total
    spending increases in the comparison plans. This was true for
    adults as well as for children and adolescents. (2)
        In our published paper we concluded that ``these findings
    suggest that parity of coverage of mental health and substance
    abuse services, when coupled with management of care, is
    feasible and can accomplish its objectives of greater fairness
    and improved insurance protection without adverse consequences
    for health care costs.'' (1; p. 1386)
        In their editorial, ``Better Behavioral Health Care
    Coverage for Everyone,'' in the New England Journal of
    Medicine, two health economists (Glied and Cuellar) note that
    the purpose of the parity policy was to provide better
    financial protection to everyone who has health insurance. The
    coverage is not only for individuals who already have a mental
    disorder but it is for all of us. (3)
        The economists state that ``the article by Goldman et al.--
    provides the first controlled study of parity--in two decades.
    The compelling evidence presented suggests that in today's
    environment, parity in health insurance coverage is both
    economically feasible and socially desirable.'' (3; p. 1415)
        The parity policy performed just as insurance should, it
    reduced costs from out-of-pocket payments with a small increase
    in plan payments. This could result in very small increases in
    insurance premiums, without leading to an increase in the use
    of services. CBO estimates a premium impact for group plans of
    a 0.4 percentage point increase (4), a figure which is
    identical to our estimate based on the FEHB experience.
        Furthermore, in response to concerns raised about a
    mandated benefit, we conclude that by reducing financial risk
    parity improves the well-being of insured people, without
    distorting the market for mental health services.
        Legislation is the way to achieve this social good, because
    parity coverage offered by only one or two plans would result
    in those plans probably attracting a disproportionate share of
    people with persistent mental illness. This is what is referred
    to as ``adverse selection.''
        In fact, parity provides the best protection for insurers
    and self-insured companies from experiencing adverse selection.
    When they offer parity benefits at the same time, they can
    avoid a shift of high-cost individuals into their plans.
        For decades advocates for parity relied only on an argument
    of fairness to gain support for their cause. Now they can argue
    that parity promotes social well-being and economic
    efficiency--in the form of better insurance benefits for all of
    us.
        References
         HH Goldman et al. ``Behavioral Health Insurance Parity for
    Federal Employees,'' New England Journal of Medicine
    354(13):1378-1386, March 30, 2006.
         Stazrin et al. ``Impact of Full Mental Health and
    Substance Abuse Parity for Children in the Federal Employees
    Health Benefits Program,'' pediatrics 119:452-459, 2007.
        Glied and a Cuellar. ``Better Behavioral Health Care
    Coverage for Everyone,'' New England Journal of Medicine
    354(13):1415-1416, March 30, 2006.
         Congressional Budget Office cost estimate, S. 558, Mental
    Health Parity Act of 2007, March 20, 2007. CBO.gov/ftpdocs/
    78xx/doc7894/s558.pdf.
        Some additional comments and potentialquestions/answers:
        Quality. We also looked at indirect measures of quality of
    behavioral health care in the FEHB plans during this same
    period. Parity was accomplished without increases in
    hospitalization of patients and without a decline in the
    measures of quality of care that we studied, such as likelihood
    of receiving follow-up care for depression or being referred
    for substance abuse treatment.
        What is included in the term ``behavioral health
    services''?This term refers to all use of health care services
    for any of the disorders (including substance use disorders) in
    the diagnostic and statistical manual or the mental disorders
    chapter in the International Classification of Disease (ICD).
    It includes specialty mental health services such as
    psychotherapy as well as visits to a general medical provider,
    when a mental disorder diagnosis is recorded. It also includes
    the use of all medications for which behavioral health
    conditions are an indication. When medications might be used
    for a mental disorder or a general medical condition, use and
    spending were included only if accompanied by a mental disorder
    diagnosis in the record. This is the broadest definition of use
    and spending, designed to capture the impact of parity.
        There was no use or spending for (oft-parodied) trivial
    behavioral conditions under managed care plans.
        It is probably worth noting that the ICD contains a wide
    range of general medical conditions, such as scrapes and
    bruises, rashes, sprains, and the common cold, just as it
    includes sleep disorders, mild phobias and mild learning
    problems. Managed care arrangements and ``medical necessity''
    criteria control un-necessary use and spending for trivial
    cases of general medical conditions and mental disorders alike.
        Can you say anything about the impact of parity on spending
    for general medical care?
        Unfortunately our study did not include such analyses.
        Adverse selection. Adverse selection occurs when plans
    offer different benefits and individuals select plans with
    coverage they expect to use. These plans are said to experience
    ``adverse selection'' resulting in higher costs on average than
    other plans that do not offer special benefits. Without a
    parity mandate plans that wish to offer better benefits attract
    to them a group of users with high costs, resulting in adverse
    economic consequences for the plan and its other members. If
    all plans offer the same benefits (such as under a mandate)
    they can avoid adverse selection. Left to the incentives of
    market pressures, plans either offer the same extremely limited
    set of benefits or a few plans offer better benefits and risk
    selection, while the other plans have a selective advantage and
    lower costs. For everyone to enjoy the benefits of parity and
    the cost-neutral experience of parity in the FEHB program,
    there must be a mandate for parity coverage, and the benefits
    should be standardized. This is why the two health economists
    who commented in the New England Journal of Medicine (Glied and
    Cuellar) concluded that a legislative mandate was required to
    achieve the economic efficiency demonstrated by the FEHB
    experience with behavioral health insurance parity. In this
    instance a mandate promotes market efficiency--or at least
    avoids the market failure associated with adverse selection.
    Ironically, a mandate may help insure employers and plans
    against financial risks when they try to offer better benefits
    to their employees.

       Summary of the key points from the subcommittee hearing testimony
    Focusing on Behavioral Health Insurance Parity in the Federal Employees
                            Health Benefits Program

        The parity policy in the Federal employees health benefits
    (FEHB) program began on January 1, 2001 and offered
    comprehensive insurance coverage for mental disorders,
    including substance use disorders, on terms that were identical
    to the coverage of general medical conditions, when the
    treatment was provided by in-network providers.
        The most important positive finding in the evaluation was a
    significant decline in out-of-pocket spending in the FEHB plans
    compared to the non-parity plans. This indicates that parity
    coverage resulted in improved insurance protection against
    financial risks
        Furthermore, this savings to FEHB plan members was not
    associated with significant increases in use and spending
    attributable to parity. In fact, for the most part increases in
    use and total spending in the FEHB plans were no greater than
    use and total spending increases in the comparison plans.
        Goldman et al. concluded: ``These findings suggest that
    parity of coverage of mental health and substance abuse
    services, when coupled with management of care, is feasible and
    can accomplish its objectives of greater fairness and improved
    insurance protection without adverse consequences for health
    care costs.'' (1; p. 1386) these findings were true for
    children as well as adults. (2)
        Glied and Cuellar, two health economists state: ``the
    article by Goldman et al.--provides the first controlled study
    of parity--in two decades. The compelling evidence presented
    suggests that in today's environment, parity in health
    insurance coverage is both economically feasible and socially
    desirable.'' (3; p. 1415)
        The parity policy performed just as insurance should, it
    reduced costs from out-of-pocket payments with a small increase
    in plan payments. This could result in very small increases in
    insurance premiums, without leading to an increase in the use
    of services. CBO estimates a premium impact for group plans of
    a 0.4 percentage point increase (4), a figure which is
    identical to our estimate based on the FEHB experience.
        Legislation is the way to achieve the benefits of parity,
    because it helps to avoid ``adverse selection.''
        References: (1). HH Goldman et al. ``Behavioral Health
    Insurance Parity for Federal Employees,'' New England Journal
    of Medicine 354(13):1378-1386, march 30, 2006. (2). Stazrin et
    al. ``Impact of Full Mental Health and Substance Abuse Parity
    for Children in the FEHB Program,'' Pediatrics 119:452-459,
    2007. (3) Glied and Cuellar. ``Better Behavioral Health Care
    Coverage for Everyone,'' New England Journal of Medicine
    354(13):1415-1416, march 30, 2006. (4) Congressional Budget
    Office cost estimate, S. 558, Mental Health Parity Act of 2007,
    March 20, 2007. CBO.gov/ftpdocs/78xx/doc7894/s558.pdf.
                                  ----------

        Mr. Pallone. Thank you very much.
        We will have questions from the members, and I should point
    out that if you can't answer the question or you want to get
    back to us in writing, that is certainly permissible, but we
    would like you to try to answer today obviously.
        I am going to start with myself for 5 minutes, and I wanted
    to ask of Ms. Prunty-Lara and possibly Mr. Purcell, as well; it
    deals with the preemption.
        Let me start with Ms. Prunty-Lara.
        Over the last few years, several States have enacted very
    strong parity laws, Rhode Island, Mr. Purcell's State, along
    with some others such as Washington, Oregon--I won't go through
    the list--have strong mental health parity laws.
        Do you have concerns about legislation that would preempt
    States' stronger mental health parity laws and what would that
    mean for patients?
        Ms. Prunty-Lara. I believe, for the 130 million people
    covered by health insurance plans, that they have the right and
    the honor and they deserve the dignity of being provided with
    equitable mental health coverage at the same level that a lot
    of people who have fully funded insurance plans at the State
    level are also offered.
        To disregard what States have already achieved and throw
    that by the wayside, I think is irrefutably wrong, frankly. I
    think that we need to institute a baseline of sorts so that we
    have equitable coverage for as many people as possible in terms
    of mental health care.
        For me personally, in the State of Minnesota we have a
    stronger parity law, and so we need to let that stand as it is
    so that we don't adversely affect those people who are
    currently influenced by the parity laws already in existence.
        Mr. Pallone. Let me ask, Mr. Purcell, what are your
    thoughts on passing a Federal law that would preempt Rhode
    Island's more protective mental health parity law?
        Mr. Purcell. I would be against it. I am here only because
    Rhode Island was innovative enough and perhaps courageous
    enough to pass a law, and we were able to operate under it and
    see the results; and hopefully, those results help you have a
    context in terms of understanding what may happen if you pass
    your law. So this is the old federalism argument, and I think
    it makes abundant sense to have the preemption issue handled
    the way the House bill does throughout the Senate bill.
        Mr. Pallone. OK.
        One of the major differences between the House and the
    Senate bills is that while the Senate legislation allows
    insurers to define what they cover in terms of mental health
    treatment, the House bill sets the standard for coverage. In
    the House bill, mental health conditions must be covered to the
    same extent they are covered for the Federal employees and
    Members of Congress.
        Critics of the House bill charge that this would open
    insurers up to paying for every problem under the sun, but the
    simple fact of the matter is that insurers still have many
    tools by which to manage the coverage and care provided to the
    enrollees. With medical benefits, clients don't have to provide
    every covered benefit to anyone who wants it; they only do so
    if it is medically necessary. And that would continue to apply
    here.
        So I wanted to ask again the two of you, Mr. Purcell and
    Ms. Prunty-Lara, do you believe that, the way the Senate bill
    works, I understand, we would--we might not achieve parity
    because we permit insurers to cover only depression, but not
    autism, or cover alcoholism, but not bipolar as part of the
    parity law.
        Is there a reason any of these illnesses is less deserving
    of coverage than, say, heart disease or diabetes? This is what
    we are trying to get to with the House version.
        I will start with you.
        Ms. Prunty-Lara. I think the problem, with not explicitly
    stating that we need to cover what is considered diagnosable,
    is that you end up with a system in which there is
    discrimination by diagnosis. And that is inherently wrong. My
    disease is no less deserving of coverage than that of a heart
    condition or that of a broken leg or that of autism or cerebral
    palsy or MS. And it is just as real and just as painful, even
    if you can't see it.
        So my hope is that you not allow the discrimination to
    continue on the basis of diagnosis and on the basis that post-
    traumatic stress disorder or an eating disorder would not be
    considered medically necessary. Because I assure you, the pain
    is real.
        Mr. Pallone. Mr. Purcell.
        Mr. Purcell. Of course, the devil is in the details with
    regard to the Senate definition. It depends upon when the
    exception is going to be so big it can eat up the rule. I
    assume it would not be that big. Nonetheless, it does seem to
    me that using the FEP definition gives you much more context.
    If you are going to mandate parity, at least you have to
    mandate what coverages have parity.
        And you have the example in FEP where you have seen, based
    on Dr. Goldman's study, it does not appear to have
    significantly increased costs, if at all. So while we can have
    some red herrings about some of the more fringe, V-type DSM
    types of diagnoses, such as jet lag or gray hair, that is
    beside the point.
        We have got to bring it back to the middle and even though
    you can describe a completely unrealistic or facetious
    coverage, the true idea here is to get people coverage. This is
    all about the people, so I think you have got an example that
    works.
        So I would be in favor of the House version on that.
        Mr. Pallone. Thank you.
        Mr. Deal.
        Mr. Deal. Thank you, Mr. Chairman.
        Mr. Klein, you held up the book, and I assume that is the
    diagnostic and statistical manual; is that correct?
        Mr. Klein. That is right.
        Mr. Deal. Who compiled that?
        Mr. Klein. My understanding is, that is a compilation from
    various health care provider groups that identified the panoply
    of mental health and behavioral disorders.
        Mr. Deal. I have been given some information that indicates
    that it does include a wide variety of things, and you can
    always find some things that sound ridiculous on their face.
    One of them that sounded a little ridiculous to me is a
    mathematical disorder. It may or may not be a significant
    mental disorder.
        My concern is the breadth of coverage, if we require
    coverage of all of those potential manifestations.
        Dr. Goldman, did you find anything, as it related to such a
    broad, expansive coverage, perhaps even to contrast it outside
    of the study you did, that you referred to, with States that
    have more narrowly limited their parity to biologically based
    or serious mental illnesses as State statutes would sometimes
    define it.
        Could you tell us whether that is a problem or not?
        Mr. Goldman. In our experience, studying Federal employees
    parity policy, we didn't see utilization of these so-called and
    often parity-trivial disorders. Utilization was not governed by
    diagnostic criteria, but was governed by management decisions
    that were made about the necessity of service.
        It is considered now an old-fashioned way to make the
    determination of who should get what care, to do it on the
    basis of diagnosis or diagnosis alone, that we have the tools
    of management that allow us to make much more precise decisions
    about allocating the sources based on medical necessity.
        Mr. Deal. And that is in the context of a managed care
    environment?
        Mr. Goldman. Yes. The managed care environment was the
    environment in which the parity policy was implemented in the
    Federal employees plan. And that was true of most of the State
    parity policies as well.
        I should note that if you look within the international
    classification of diseases, of which the DSM has simply one
    chapter on mental disorders, you will see in the other chapters
    a wide range of conditions. Everything from scrapes and sprains
    and skin tags and colds to more serious conditions. And in the
    current health care environment, we use management of care in
    order to make appropriate allocation decisions.
        Parity would extend that mechanism for cost containment to
    mental disorders without having to refer to specific
    conditions.
        Mr. Deal. I think the concern is that we also allow health
    insurance policies to further refine and define the benefits
    and the conditions for which those benefits attach.
        Mr. Klein, in that regard, and also in regard to any,
    perhaps, State studies or variations among the States, do you
    have any comment you would like to make on that?
        Mr. Klein. No. I read Dr. Goldman's excellent study and
    encourage it to everyone.
        It is so crucial to keep in mind that perhaps the major
    reason--I will let him speak to it--that the cost increases
    didn't occur under the Federal Employees Health Plan was
    because there was this medical management that I was referring
    to earlier; and Mr. Purcell also spoke about how important that
    is. Because the issue really isn't, as I said before, making a
    value judgment of which of these conditions is worthy or not of
    being covered.
        The fact of the matter is, not all treatment regimens are
    equally successful. And there are countless studies in the
    journals that show people with the same diagnosis in two
    different parts of the country may get radically different
    kinds of treatment; and in order to ensure high-quality
    outcomes for patients, it is absolutely essential to have these
    medical management tools. And that is something that is
    protected under the House--the Senate bill, but not under the
    House bill.
        Mr. Deal. Would you care to comment on that?
        Ms. Rogers. I agree with what Mr. Klein just said about
    best practices are extremely important, and the major employers
    are really forcing their providers to use best practices. And
    they focus on the cost drivers and are able to manage them, and
    that is actually the future, it is the direction we should be
    doing in.
        We should also be going in the direction of making health
    benefits more portable, and I think this is a step in the other
    direction where you still have all of these different State
    mandates. And in order to get to a system where health plans
    are portable, because the workers are much more mobile these
    days than they used to be, since we are in a global economy,
    you need to move closer in the direction of one system--and
    this moves, in the other direction. And we also need to move in
    the direction of simplicity, and this does not move in that
    direction.
        Mr. Deal. Thank you all for being here.
        My time is out. I am over my time. But thank you all for
    being here.
        Mr. Pallone. Thank you.
        Mrs. Capps.
        Mrs. Capps. Thank you.
        I want to thank you, Ms. Prunty-Lara, for very powerful
    testimony. It is the most eloquent statement I have ever heard
    by a consumer of mental health care and someone who has lived
    and does live with bipolar disorder. My brother does as well.
    And the pain and suffering that you described is also shared,
    as you said, by all the family members.
        I am glad you are on the board of the Mental--I still call
    it the Mental Health Association--the national board; and there
    is a very active local chapter in Santa Barbara, and I am going
    to tell them what a good spokesperson you are for various
    issues as well.
        You talked about the lack of equity for physical versus
    mental health as being a form of discrimination. And I want you
    to describe that connection.
        It is like a revictimization, in a way, that the family
    really does get in on, a pain and suffering caused by the
    denial of treatment, sometimes over and over again. And I think
    for our part here, that this stigma of bias becomes systemic
    when it is promoted; and the status quo, we here in the
    Government are kind of perpetuating as well. That is why I
    think it is so timely that we have this legislation before us.
        Talk a little bit more, if you would.
        But I also want to turn to Mr. Purcell, you were cut off,
    and I think you had some more things to say, and I will give
    you a minute or so to complete that.
        Ms. Prunty-Lara. First of all, I want to comment that there
    is nothing in the Kennedy-Ramstad version of this bill that
    precludes medical management. So I want to make that perfectly
    clear. That is in this legislation. There is nothing to
    preclude it.
        I also want to submit some comments from James T. Hackett,
    who testified before this committee in 2002. And he talked
    about the Federal law that currently allows health insurance
    discrimination against people with mental illness,
    discrimination in duration of needed treatment, discrimination
    in cost-sharing burdens and discrimination by diagnosis, as I
    said.
         There is also a discrimination in ideals, a discrimination
    that says that your illness isn't good enough, that we somehow
    stigmatize the treatment of mental health conditions and we say
    that it is not equitable, that it is not real enough as a
    broken leg. And as some Members of Congress have commented,
    there is a disparity, there is a difference in how we are going
    to treat them. And I am sorry, there is not. It hurts the same,
    it feels the same, it deserves the same principal of equality
    and justice and accountability to your employees and their
    beneficiaries.
        Mrs. Capps. Thank you very much.
        Mr. Purcell, I really--I am going to remember it the way
    you distinguished between mental and physical health. You call
    it behavioral and physical health. That is very clear, health
    covering both of them, or disease, a lack of health, as
    evidenced in different ways.
        I also was struck by your description, and I want you to
    expand on this in whatever time I have, but the relationship
    between mental health problems and their spillover, the
    correlation between mental and physical health, because I think
    that is one way that we can help to document the cost of not
    treating mental health.
        Mr. Purcell. I have an example in my written testimony
    about how gray the line is between an obese diabetic who has
    depression and an eating disorder. Where does the physical
    health component end and the behavioral component begins? And
    of course nobody knows.
        What we are trying in Rhode Island, we have a pilot program
    to achieve integration of behavioral and physical health by
    collocating and integrating behavioral and physical health. The
    whole idea here is to get people in early for office visits.
    Office visits don't cost anything in the greater scheme of
    things. When we increase from 30 visits to 50 visits a year, it
    costs almost nothing. But as I was going to say, the few people
    that run out of 30 really need the care. And when do they run
    out? Right around the holidays. And where do they go? They go
    to the emergency room. Is that cost-effective? Never.
        We have more trouble getting people to go to office visits
    than having them abuse it. And the key here is if you can get
    them to office visits, you keep them from becoming chronically
    ill for the most part. And it is tremendously cost-effective
    both on the behavioral and physical side.
        I hope that answers your question.
        Mrs. Capps. If I had more time, I would get into how do you
    get them in earlier, because that means someone has to refer;
    or there used to be an acknowledgment--I used to work in the
    school district, and I know that is a good place for young
    people to get started.
        Mr. Purcell. Collocation for primary care doctors. That is
    the way to do it.
        Mrs. Capps. Collocation for primary care?
        Mr. Purcell. That is right.
        Mrs. Capps. Excellent. Thank you.
        Mr. Pallone. Mrs. Myrick.
        Mrs. Myrick. Thank you, Mr. Chairman, and thank all of you
    for being here.
         Ms. Rogers, I wanted to ask you a question. You said that
    one of your objections to the House bill is that the nature of
    psychiatric medical care requires flexibility in benefit
    design. Do you see what you call trust, don't verify, that
    culture of psychiatric care, changing as it becomes more
    obvious that these are biological-treated illnesses? And then
    how do you see the status changing in the future--and aren't
    there professional societies like APA that have treatment and
    quality standards that could, A, benefit design plans for
    companies so that they end up paying for quality care?
        Ms. Rogers. Thank you for the question. In our opinion, it
    appears that on the physical side that they are much further
    down the road with regard to having best practices that have
    been pushed out to the primary care physicians and also the
    specialists. And they are starting to get used to the idea of
    reporting on quality measures. I know that Medicare is pushing
    it with the hospitals and also with the physicians.
        Mrs. Myrick. Right.
        Ms. Rogers. And also with transparency of their costs,
    efficiency measures. And we just think that that is key for the
    future, coupled with health information technology. And we see
    the mental health community much further behind on that side.
    So it just seems like they need a push or a nudge, and that
    they need to be included in the fold with regard to those
    advancements.
        Mrs. Myrick. Don't you think that would actually come if
    working together with the companies and the different groups to
    incorporate that type of thing? Because they haven't had the
    same length of experience in doing this that you have with the
    other physical illnesses. Am I making sense?
        Ms. Rogers. Yes, you are making sense. Well, remember, the
    majority of our members have stigma-free mental health. They
    don't have ``parity'' according to this bill, but they have
    very generous benefits. But they do feel like that there are
    quite a few providers, more so on the mental health side than
    they see on the physical side, that are less willing to provide
    the information that they would like to see.
        Mrs. Myrick. So it is less willing.
        Ms. Rogers. Yes.
        Mrs. Myrick. That is why there needs to be more
    cooperation.
        Ms. Rogers. And we just look at this as an education issue.
    We don't see this as a big legislative, regulatory issue.
        Mrs. Myrick. I see.
        Ms. Rogers. But more of an education issue that the private
    sector has been pushing for for quite a while. And especially
    our members on both sides, on the mental health side and also
    on the physical health side. It just seems like on the mental
    health side they are further behind, and they are not as well
    organized and represented.
        Mrs. Myrick. OK. Thank you.
        Marley?
        Ms. Prunty-Lara. If I may just respond, as an organization,
    Mental Health America is working to further evidence-based
    practices, but it is very hard to do when you don't have
    parity, because you don't have the same number of providers,
    and you don't have the same access to treatment to formulate
    those evidence-based practices.
        I would also like to respond about Government interference
    into parity regulation. It is not a question of education,
    because the private sector has failed. They have not
    implemented parity. And it has been 11 years since Paul
    Wellstone stood on the floor of the Senate with Pete Domenici
    and called for the enactment of the 1996 partial parity law.
    These discriminatory practices are, for the best interests of
    the American people, to be eliminated. Federal law subsidizes
    employers through the Federal Tax Code for providing health
    insurance to employees, allowing the cost of insurance as an
    ordinary business expense. It is wholly appropriate for
    Congress to condition entitlement to such benefits on employers
    providing health benefits in a nondiscriminatory manner. This
    Congress has the right to demand that mental health be covered
    equally.
        Mrs. Myrick. Yes. Go ahead. Pardon me, I am almost out of
    time, but quickly go ahead.
        Mr. Klein. No, I was just going to say that I don't believe
    that--I think we are beyond the issue of parity. I mean, the
    Senate bill has already embraced it. The point is you don't
    need such tightly prescriptive type of parity that is called
    for in the House bill in order to encourage the type of quality
    improvement outcomes that we are looking for.
        Mrs. Myrick. Very good. I appreciate that. Thank you all.
        Mr. Pallone. Thank you.
        Ms. Baldwin.
        Ms. Baldwin. Thank you, Mr. Chairman.
        There has already been some discussion, considerable
    discussion, about differences between the House bill and the
    Senate bill and use of the DSM-IV definitions in the House
    bill. But I want to probe for some additional clarity on that.
    So at the risk of being redundant, I do want to pursue that
    subject a little bit more.
        Dr. Goldman, I want to discuss how mental illness should be
    defined in a model mental health parity law. And as I hinted, I
    have serious concerns about the Senate bill, which allows
    insurers basically to pick and choose which illnesses they want
    to cover, and I don't think that is right. In the House bill,
    mental illness is defined based on DSM-IV. And it is my
    understanding that this is the diagnostic manual used by mental
    health and addiction professionals, and that it is widely
    accepted. Is this correct?
        Mr. Goldman. That is correct.
        Ms. Baldwin. Do you think that there is any medical basis
    for allowing insurers to decide what is a mental health illness
    and what is not?
        Mr. Goldman. I think, as I said before, we have other
    mechanisms to make sure that we allocate resources efficiently
    and effectively according to need, and that we don't use
    diagnosis as a way of excluding care on the general medical
    side. And the spirit of parity is to do the same for the
    behavioral disorders. So it is really a matter of not needing
    to focus on diagnosis for purposes of exclusion, but allowing
    management to deal with the cost concerns.
        Ms. Baldwin. So I am concerned that allowing insurers the
    type of discretion that I described earlier would lead to
    discrimination based on diagnosis. For example, an insurer
    might decide that one mental illness or another is simply too
    costly, too therapy-intensive or too complex, and they won't
    cover it. We know that insurers use nonmedical criteria to make
    their coverage determinations now, and so what is to stop them
    from doing the same thing if we were to pass a very weak mental
    health parity law? Do you think that this would pose a
    potential threat to patient health?
        Mr. Goldman. If I base my remarks entirely on the
    experience that we had with the Federal Employees Health
    Benefit Program, we showed that all of the upside benefits that
    you want in terms of the social good, avoiding discrimination,
    and doing so by improving insurance protection can be done
    without reference to restrictions on the basis of disorders, I
    would have to substantially agree with your point.
        Ms. Baldwin. Thanks.
        Mr. Purcell, I thank you for testifying today and sharing
    the experiences of Blue Cross/Blue Shield of Rhode Island in
    providing mental health parity. It is also useful to have the
    data about how things work, and we appreciate you sharing that
    with us.
        Under Rhode Island's mental health parity law, are insurers
    required to provide parity for conditions which are not
    medically necessary?
        Mr. Purcell. No.
        Ms. Baldwin. I have certainly heard arguments from those
    opposed to this bill that insurers would be forced to provide
    parity for a whole host of conditions which are not necessarily
    medically necessary. And it is my understanding that H.R. 1424
    also includes language that says that there will be parity only
    for medically necessary treatment. Is that your understanding
    of the bill as well?
        Mr. Purcell. That is what I have been told, and that is the
    tie-in with medical management.
        Ms. Baldwin. Yes.
        Mr. Purcell. Just because there is coverage for a condition
    does not necessarily mean it is medically necessary, because
    there has to be a linkage here. And you can come up--again,
    labels don't help here. If somebody comes in because they are
    excessively shy, that may not necessarily in and of itself be a
    behavioral disorder, but there may be an underlying function,
    there may be an underlying depression that causes that. And an
    office visit that is covered will allow a practitioner, using
    medical necessity means, to determine if that is so or not. And
    if there is, it deserves treatment, because down the road that
    patient is going to be healthier, their life is going to be
    better. And that is what this is all about.
        So I think as long as we are able to use traditional
    medical management tools for utilization review for medical
    necessity, we can take care of that problem using a little
    common sense. I don't have a problem with it.
        Ms. Baldwin. Thank you.
        Mr. Chairman, I yield back my remaining 16 seconds.
        Mr. Pallone. Mr. Sullivan.
        Mr. Sullivan. Thank you, Mr. Chairman. And I guess my
    questions will be towards Ms. Rogers and Mr. Klein. And we had
    a hearing in Tulsa, we had a company--Williams Company has
    4,000 employees, and they said that they felt that having
    parity in their plans reduced costs, and it was good for their
    business.
         I have three questions for you. Do you--for both of you.
    Do you know any companies that have dropped mental health
    benefits in response to State requirements that they equalize
    benefits? If so, what percentage of covered lives in that State
    lost their benefits as a result?
        Mr. Klein. Congressman, I am not aware of specific
    companies. I am sure logic would seem to indicate that there
    would be some, but I don't know of any. And certainly among my
    member companies, which are primarily large ones, that hasn't
    happened. But, of course, it is possible any time costs go up
    in one area, other changes may be made to the health plan.
        I also think, and I am so glad that you posed the question
    the way you did, about that there is actually cost savings
    relative to parity, because I think that it is inconsistent for
    people to argue, as several have done today, that insurers and
    employers will save money by providing mental health benefits,
    which is correct, if done properly, but then argue that
    employers and insurers are excluding certain coverages in order
    to save money. I mean, employers and insurers have every
    financial incentive to make sure that people are getting the
    appropriate coverages. So those two comments that have been
    made seem to me at complete odds with one another.
        Ms. Rogers. Thank you for the question.
        I have talked to members of our trade association that did
    drop coverage, and the way they explained it to me was that
    they are mainly self-insured plans, but even though they are
    large self-insured, they have large pockets of employees in
    various States, and so they might have some insured plans,
    especially HMOs. And I have been told by numerous companies
    that when they are subject to State mandates that they feel
    that are too burdensome, like, for example, they also mentioned
    the issue of raising the mandatory age where you have to keep a
    dependent child on in some States, like New Jersey to 26, and I
    think maybe Colorado might be close to 30, that they did get
    out of their more managed care plans in those States that
    subject them to the State mandates, and they just fell back on
    their ERISA preemption.
        Mr. Sullivan. Thank you.
        I have another question for both of you. Members of
    Congress and Federal employees have full equity for mental
    health and addiction treatment in our health insurance plans.
    As we heard from Dr. Goldman, a thorough study found that
    equalizing benefits did not increase costs. Why then would you
    suggest that covering the same diseases would be a big cost
    increase for your members?
        Mr. Klein. Well, I will take that one. First of all, the
    Federal Employees Health Benefit Plan only provides parity for
    in-network services, and it doesn't require it for out-of-
    network services.
        The second part of that, again, gets back to this issue of
    medical management. And I think we can actually resolve
    something here today, because there is a little disagreement
    between Ms. Prunty-Lara and me on this question of whether or
    not the House bill interferes with that medical management. The
    Senate bill explicitly prohibits interference with medical
    management. The House bill is simply silent on the issue. So if
    the intention--and I am getting the sense that the intention
    is, amongst the supporters of the House bill, that it should
    not interfere with medical management, which everyone has
    indicated is so crucial--then I think a wonderful amendment,
    when this bill comes to be marked up here, would be to make
    that very clear, as the Senate bill does. That would go a long
    way toward encouraging, giving greater confidence that this
    very important practice that ensures quality outcomes will be
    protected.
        Mr. Sullivan. And then a final question, I guess, Ms.
    Rogers, I guess. Why do you think that passing this bill will
    somehow result in major cost increases, even though parity did
    not increase costs to the Federal employee program, or in
    several States, including mine, Oklahoma, Vermont, Maine, New
    Hampshire, Maryland, Texas, Minnesota, Connecticut or Rhode
    Island or any other State studied?
        Ms. Rogers. I think that because we surveyed our member
    companies, and their responses were--some of them were quite
    specific. Some of them said that their estimates are close to
    $2 million just to implement all the changes that they need to
    do to comply with the House bill. And then others said even
    though they have very generous mental health benefits, they are
    not identical to what would be mandated, and they feel like
    that they can't----
        Mr. Sullivan. Have you ever surveyed them about lost
    productivity in the workforce or anything like that? We lost
    $100 billion last year in America. That is pretty significant.
        Ms. Rogers. Yes. No, that is usually an issue in our
    surveys, but, remember, I keep saying that our members have
    very generous mental health benefits. They all do. And they
    call them stigma-free mental health benefits. But they are not
    financial parity on the medical side. There is not the same
    system. And they do have the ability to medically manage them,
    and they want to be able to keep that ability.
        Mr. Sullivan. I guess we all have to have someone to fight.
        Mr. Purcell, I really appreciated your comments. And you
    are very thoughtful. And you, as a CEO of Blue Cross and Blue
    Shield, I learned something from what you said, and I
    appreciate it. Thank you.
        Mr. Purcell. Hopefully it is not inconsistent with a CEO to
    be thoughtful.
        Mr. Sullivan. No, I think it is well thought out. Thank
    you. I yield back.
        Mr. Purcell. Thank you.
        Mr. Matheson.
        Mr. Matheson. Thank you, Mr. Chairman, and thanks to the
    panel.
        It has been an interesting discussion. To follow up on the
    line of questioning Mr. Sullivan led with, Dr. Goldman, you
    talk about your study with how the cost was affected in the
    Federal Employee Health Benefit Plan when mental health parity
    was implemented. We have also heard about the HHS study that
    found increased costs. Can you talk about the differences in
    the findings and give us some insight into that?
        Mr. Goldman. I am not sure I know about the HHS study that
    is different from our study. Ours was the HHS-sponsored study,
    and what they did find was that there was a small premium
    increase of less than one-half of 1 percentage point of total
    premium impact, and that resulted not from an increase of
    utilization, but a shift of costs onto the plan and away from
    the out-of-pocket costs of people who used services. So it was
    just due to an improved insurance coverage, the financial
    protection associated with the parity benefit. That is a very
    small increase in premium.
        And I believe that that is what you will find on the HHS
    Web site, and it is very similar to the CBO estimate for the
    Senate bill, and it is similar to our estimate for the Federal
    Employees Health Benefit Program.
        Mr. Matheson. Can you also provide insight into that
    discussion on the past set of questions on how I think Mr.
    Klein indicated the Federal Employee Benefit Plan, that the
    savings were not necessarily as realistic for the rest of the
    marketplace because of the way the plan is structured?
        Mr. Goldman. If I understand, and of course Mr. Klein can
    answer for himself, but I think the point was that for Federal
    employees parity applied to in-network benefits only where care
    was managed. Now, we saw people move from out-of-network
    providers to in-network providers in order to follow their
    financial incentive. People do behave rationally with respect
    to their insurance coverage. And so where they had the option,
    they moved. Many of them chose to move to get the parity
    coverage by going in network and having managed care, but they
    did have the choice. You all still have the choice, as Federal
    employees under this plan, to go out of network. Usually out-
    of-network benefits are unmanaged, but the coverage is usually
    inferior; that is, the cost-sharing arrangements are much
    higher.
        Mr. Matheson. Right.
        Mr. Goldman. And the issue is whether if you mandate parity
    on out of network, whether the cost controls will be
    sufficient, and that is one of the hardest things. Our study
    can only speak to a situation in which in-network benefits are
    on a par.
        Mr. Matheson. OK. That is helpful.
        Mr. Goldman. Is that also with you?
        Mr. Klein. Yes.
        Mr. Matheson. Mr. Purcell, I was going to ask you, I am
    from a State where we have partial parity at this point, and
    since you have been involved in the transition that took place
    in your State, do you have advice you could give to insurers in
    other States who have not yet made that transition about how to
    most effectively have a smooth transition toward full parity?
        Mr. Purcell. Well, I think most often the characterization
    is that insurers are standing in the way of this. Quite
    frankly, the more business we get, the better it is for us. So
    in some respects, this is good business. But what you have to
    do is you have to get out to the business community and bring
    the word, with some backup, because they expect some proof,
    that this is not going to dramatically increase your costs.
        And why is it good business for you? And it is good
    business for you, exactly what Mr. Sullivan said. You can
    really track the increase in productivity, the lowering of
    absenteeism, and the biggest monster in the corner, which is
    presenteeism in which you have people who are depressed or
    suffering from other behavioral disorders coming to work, and
    maybe they are being there a quarter of the time. And there are
    ways you can measure this. And if you can bring that measure to
    the employer, the business community, and say this will
    actually help, I think that is your key, because once you have
    got them convinced, they won't have to pay any more premium,
    but they also won't viscerally react, oh, no, another mandate,
    this is enough, I have had enough. Because Ranking Member Deal
    had a great point. How many ornaments do you hang on the tree
    before you weigh the tree down? And that is always the issue
    with mandates. Each mandate is just a little bit, but you die
    by a thousand cuts. Here this one, I think, is substantively
    different. So that is why I think if you do that, I think you
    stand your best chance of getting it done.
        Mr. Matheson. Thanks.
        Mr. Chairman, I yield back.
        Mr. Pallone. Thank you.
        Mr. Burgess.
        Mr. Burgess. Thank you, Mr. Chairman.
        Mr. Purcell, let me ask you a little bit about the medical
    management issue, and I guess you also referred to utilization
    review. Now, you made the comment that that was not in the
    House bill that is before us, but that language is in the
    Senate bill.
        Mr. Purcell. What I understand----
        Mr. Burgess. You had three things that would improve the
    bill before us. One was date of implementation, second was
    medical management, and the third was the out of network.
        Mr. Purcell. My understanding is that the House bill is
    silent on the issue. Whether it does provide the medically
    necessary, and therefore by implication that allows medical
    management, I suppose I could make that argument as a good
    lawyer. I would much prefer that it affirmatively say that you
    can employ appropriate medical management techniques in order
    to assure medical necessity.
        Mr. Burgess. Do you think this is important for the overall
    performance of the program?
        Mr. Purcell. I very much do.
        Mr. Burgess. Dr. Goldman, let me ask you, in your paper
    from the New England Journal, in the abstract under the
    conclusion line, it says, when coupled with management of care,
    implementation of parity in insurance benefits for behavioral
    health care can improve insurance protection without increasing
    costs. Is that phrase, ``when coupled with the management of
    care,'' is that the same thing that Mr. Purcell is referring to
    as far as the medical management that he would like to see
    incorporated in the legislation?
        Mr. Goldman. It is.
        Mr. Burgess. And so would you agree with that statement,
    that perhaps the bill could be improved by incorporating either
    language like the Senate or an amendment that would incorporate
    the concept of medical management utilization review?
        Mr. Goldman. You are the experts on draft language, but our
    study indicates that you want to have the care managed if you
    want to have the same experience.
        Mr. Burgess. You want to have the care management as part
    of the total program?
        Mr. Goldman. If you wish to have the same financial impact.
        Mr. Burgess. And I would assume that--and, Dr. Goldman, I
    guess in full disclosure, I am a simple country doctor, so I
    have done this only for the past couple of years.
        Mr. Goldman. I am a complicated urban man.
        Mr. Burgess. Let me ask you this, because this is something
    that has bothered me for some time. When managed care really
    burst upon the scene in the mid-1990's, my perception as a
    practicing OB-GYN in suburban Dallas, TX, was it didn't do a
    thing for the practice of psychiatry, at least in my world. And
    Ranking Member Deal also kind of implied that the health
    insurance policies sometimes kind of defined the conditions of
    the world in which we live. Do you see a potential for some
    problems here?
        Mr. Goldman. For many professionals managed care is a mixed
    blessing. There are down sides in terms of having your work
    observed by other people. Some people don't like to have their
    professional judgments second-guessed by other professionals.
    But when it comes to this issue of whether the allocation
    decisions should be made on the basis of arbitrary diagnostic
    criteria versus individualized management, I think we have
    learned that we can improve people's insurance protection if we
    rely on managed care rather than on arbitrary diagnostic
    criteria and our nominal benefits. So there are problems.
        Mr. Burgess. Right.
        Mr. Goldman. But they are the same problems that occur in
    general medicine. I don't know very many providers of general
    medical care that don't have their problems as well with
    managed care.
        Mr. Burgess. And we could talk about that at length, but we
    don't have time.
        Mr. Goldman. Yes, we could. We want it to be just as
    unpleasant perhaps --for some on both sides of this issue.
        Mr. Burgess. Perhaps.
        Let me ask you this, and I appreciate your position as
    well, but, as you kind of look at the evolution of insurance
    and insurance benefits, at least over the time I was in
    clinical practice, I mean, we had the time when all of
    obstetric benefits weren't covered, and then slowly those were
    incorporated in. There have been other things that have been
    slowly incorporated into the insurance world. Would you see
    this as just part of the--perhaps the normal evolution of
    insurance benefits that we just might otherwise expect to see
    happen?
        Ms. Rogers. Yes, I do agree with that. As people learn
    more, and there is more information out about mental health
    issues, I think that you will see more and more issues being
    covered.
        Now, I never said that we were against mental health
    parity. Our issues lie with having one Federal system for major
    multinational employers who are trying to compete globally.
    That is our main concern. And so that gives us a lot of
    heartache, this particular bill does, because of that.
        Mr. Burgess. Let me just interrupt you. Does the Senate
    bill give you less heartache?
        Ms. Rogers. Far less; yes, it does.
        Mr. Burgess. Let me move to one last thing, because I just
    have to get this out. Mr. Klein, you said it is just an issue
    of fundamental fairness that Medicare and Medicaid, I presume
    SCHIP, veterans benefits, should provide the same parity that
    we are talking about imposing upon the private sector. Did I
    grasp that concept correctly?
        Mr. Klein. That is correct.
        Mr. Burgess. And, Dr. Goldman, your contention would be
    should we take that step, we would, in fact, save money for
    Medicare, Medicaid, SCHIP, veterans health care. Is that
    correct?
        Mr. Goldman. I think what I would say is we could improve
    insurance coverage and not have a big cost impact.
        Mr. Burgess. Has anyone--we have to live and die by the CBO
    here, and the Congressional Budget Office refuses to allow us
    to dynamically score things. We always used to have to score
    things on what the direct cost is. Have any of you looked at
    that to any degree?
        Mr. Klein. Congressman, I have not looked at it lately, but
    memory seems to serve me that back in 1996, when the initial
    parity law was enacted, that there was, I think, some CBO
    calculation around that issue. I would be happy to check into
    that. And it obviously would need to be updated, but I think
    there might have been some sometime back.
        Mr. Pallone. Mr. Burgess, you are over.
        Mr. Murphy.
        Mr. Murphy. Thank you, Mr. Chairman.
        Ms. Rogers, let us say you are the CEO of a company, or
    maybe even vice president of a division, and one of your
    employees who has been around for a while has just been
    promoted himself to maybe high-level executive of sales. And
    you notice, you hear reports that what is happening is his
    performance is beginning to deteriorate pretty significantly,
    restless, perhaps falling asleep in meetings, absent-minded,
    distractable, moody, irritable, perhaps even leading to loss of
    sales and productivity. Would you want to have him evaluated?
        Ms. Rogers. Well, I don't know if I would require that this
    person be evaluated.
        Mr. Murphy. You spent a lot of money over the years
    training this person.
        Ms. Rogers. I think that I would--most of our members have
    counselors on staff, and it would be more appropriate for that
    type of person to talk to this senior salesperson.
        Mr. Murphy. Like an employee assistance person or
    something?
        Ms. Rogers. Yes.
        Mr. Murphy. Let us say they recommended this person have
    some medical evaluation, and there is a lot of things that
    could relate to that. It could be a tumor, it could be
    narcolepsy, could be a diabetic, could be depressed.
        Ms. Rogers. That is true.
        Mr. Murphy. It could be jet lag. What do you do if there is
    a diagnosis of jet lag? You specifically referred to that in
    your----
        Ms. Rogers. Yes, I do.
        Mr. Murphy. Do you know what the treatment is for jet lag?
        Ms. Rogers. I would assume that it would be make sure that
    you are hydrated, because flying dehydrates----
        Mr. Murphy. You adjust your flight schedule. It is not a
    psychiatric treatment. But the DSM-IV--I am trying to help you
    understand, because it comes up so much among some people
    trying to be a little psychiatric diagnosis. They use that one,
    or shyness, et cetera. Just because it is in the DSM-IV doesn't
    mean it is a psychiatric treatment. You have to label
    everything. If a person shows up and they say, well, the good
    news is we don't have to spend hundreds of thousands on other
    things for you, it is jet lag, instead of talking to a
    psychiatrist, you talk to the person who books their flights.
        Here is another thing, too, I want you to know, because
    this is so important when it comes to providing things for
    mental health services, and that has to do with a lot of times
    people are not providing mental health services, but they will
    have like--they are screened by a general practitioner or
    someone. And a good example of where this can break down is I
    think in the use of Paxil, psychiatric medication for
    depression. Tragically, it is associated with a higher risk of
    suicide and other complications. But I know when I have talked
    to students in medical school and other things, the highest
    risk for suicide comes when the patient starts to get better.
    They lose their social supports, they start to get better, they
    feel energized. And what happens so often is that 75 percent of
    psychiatric drugs are prescribed by nonpsychiatrists. When you
    have heart disease, you double the chance of depression. If you
    don't treat the depression, you double the cost of the
    treatment, the illness. And many times cardiologists say, all
    right, looks like you have a terrible heart disease, I am going
    to describe Prozac for you, too. But that person never goes on
    to get the treatment they need where you can really reduce
    costs.
        And the point being made by Mr. Purcell, et cetera, is when
    this is done--I wouldn't say managed care, I would say care
    management, because I hate that word ``managed care.'' it
    really is helping to manage a person. It is making sure the
    right things get done. And I would hope that as you look at
    some of the studies that you refer to, it is so important to
    look at who is doing the treatment and how it is done. It could
    be a big cost if it is done wrong. But when we look at these
    things, shyness and other things like that caffeine withdrawal,
    those are simply labels to say if you have caffeine withdrawal,
    the treatment is stop drinking so much coffee; jet lag, talk to
    the person who books your flights.
        But when you are dealing with depression and bipolar
    illness and other things, you got to keep this in mind. I think
    that, and I hope the business community pays attention, too,
    and that is that these are real employees they invest thousands
    of dollars in training and all these other things for, and if
    we look at this in the big picture, what is the proper
    treatment and the proper diagnosis, it is as important as
    saying if someone else had some other medical problems, you
    want to get the proper treatment.
        I would go back to this. If that great sales manager did
    have a tumor, and you only sent him to the employee assistance
    program that says, Joe's just kind of moody, he has been a bad
    employee, get rid of him, I don't think we would want that. If
    he did have narcolepsy or diabetes or something, we would want
    that treatment.
        And so I see us looking at mental health parity as
    something where you are really bringing the experts in to make
    decision. You manage that case so they just aren't going off
    somewhere and making sure, for example, they don't get some
    folk treatment. Someday I would like to find out what you mean
    by that, too. But I think the idea is you get the experts
    together to get more effective and cost-effective treatment.
    And that is part of that, so----
        Ms. Rogers. Yes. And I think we agree more so than
    disagree. And personally, I am a big advocate of mental health
    benefits, and I spend a lot of money on them myself. My dad has
    psychosis. I have two children that are premature. And none of
    the experts I have been to even take insurance. So you might
    want to look at that issue.
        Mr. Murphy. Probably not covered.
        Ms. Rogers. Well, I do have mental health benefits through
    Blue Cross, but they don't take my insurance, so I just have to
    pay for it personally. So, that is an issue, too.
        But, remember, I mentioned that our members have very
    generous mental health benefits. In all of our surveys we
    couldn't find complaints from employees that felt like they
    were not covered for everything that they needed to be covered.
    These are America's largest employers, 25,000 employees and up.
        Mr. Murphy. Well, then there is a lot of those employers
    who really say they have a cost savings, and not a loss.
        Thank you, Mr. Chairman.
        Mr. Pallone. Thank you. And let me thank all of you. I know
    this is such an important issue, and we do really want to deal
    with it effectively, and your testimony was very helpful to us
    as we proceed.
        I would also mention that the members have the option of
    submitting additional questions to you within the next 10 days
    or so, and the clerk would notify you of that. So just keep
    that in mind and respond in writing if you get those requests.
         And without further ado, again I want to thank you. And I
    hope that we can move in an expedited fashion on the
    legislation. This hearing is adjourned.
        [Whereupon, at 2:34 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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