[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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