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Search Terms: mental AND health AND parity, House or Senate or Joint

Document 16 of 103.

May 18, 2000, Thursday

SECTION: PREPARED TESTIMONY

LENGTH: 3350 words

HEADLINE: PREPARED TESTIMONY BY KEN LIBERTOFF, PH.D. DIRECTOR OF THE VERMONT ASSOCIATION FOR MENTAL HEALTH MONTPELIER, VERMONT

BEFORE THE SENATE COMMITTEE ON HEALTH, EDUCATION, LABOR AND PENSIONS

SUBJECT - MENTAL HEALTH PARITY

BODY:
Brief Introduction

Mr. Chairman and Members of the Senate Health, Education, Labor and Pensions Committee: I very much appreciate the invitation to testify before you today on the issue of mental health parity. I will try, in my brief remarks, to share with you our experience in Vermont where in 1997, we passed the nation's most comprehensive parity bill for mental health and substance abuse. It is also my hope and expectation to identify some of the lessons we have learned from our experience with the hope and expectation that they have some relevancy to the debate on federal parity legislation.

Section I The Vermont Story On the morning of January 5th, 1998, as I sat in, my downtown Montpelier office, I received a telephone call that was both very poignant and very familiar. It was a call from a mother of a sixteen year old daughter who had been experiencing, over the past three years, a variety of serious behavioral health care problems that ranged from depression, bulimia, an unsuccessful suicide attempt and episodes of alcohol abuse. Both parents of this daughter were working Vermonters with their health insurance covered through the father's employment in a company of some twenty employees. For a decade, they had been able to secure the best policy offered by Vermont Blue Cross/Blue Shield (BC/BS) of Vermont. The best that BC/BS had to offer was good but certainly not good enough. Despite having a million dollars of lifetime insurance and full, comprehensive coverage for all physical health conditions, their coverage was limited to $10,000 lifetime for mental health treatment. Their policy also carried with it annual limits on coverage as well as higher co-payments and deductibles for behavioral health as compared to physical health.

This telephone call was all-too-familiar because over the course of the past fifteen years, I had, as director of the Vermont Association for Mental Health, a private, non-profit citizens' organization, fielded hundreds of calls and many visits from people with serious and oftentimes dramatic concerns about their coverage for mental health and substance abuse treatment. Anguish and tears were not uncommon. Most of these folks not only had the "horror" of coping with a very sick loved one but they also confronted the reality that they and their families might be on the brink of a financial catastrophe.The mom who called me on January 5th, 1998 was very emotional and, in fact, within a few minutes of the conversation, she had to take a moment to collect herself because of the strained circumstances. In September of 1997, her daughter had reached her lifetime cap of $10,000 for mental health treatment, fueled in part by two residential treatment experiences, and during the latter months of 1997, the family had recently paid thousands of dollars out-of-pocket in order to be able to continue treatment. The Morn reported that although her daughter had shown some improvement, the medical treatment people were clear in advising that further intervention was needed. There was no way they could continue to pay for the treatment from their own resources.

This more had heard and read a news account that appeared on January Ist of 1998, that indicated that Vermont's new, comprehensive parity law for mental health and substance abuse was now in effect. As she understood it, this bill was intended to end all arbitrary discriminatory practices in the construction of health insurance as it involves behavioral health care treatment. Her question was simple, "Does this mean that my daughter now has the potential of having her insurance cover treatment for the conditions that she has whether it is depression or substance abuse"?

The poignancy of the moment did not escape me. Many of us had worked in Vermont for more than a decade to be able to give an answer without a great deal of pause or reflection. My answer was a very simple "yes"; there are, as of the Ist of January 1998, no more arbitrary lifetime or annual limits, no high deductibles or co-payments, and no restrictions on either in-patient or out-patient care. In addition, I could assure her of the following:

1. All conditions for mental health and substance abuse would be included.

2. Her daughter's new lifetime limit would be the same of that for physical health care.

3. Vermont's legislation enables the Morn, daughter and family to focus on the task of getting better rather than confronting the realities of discriminatory insurance practices that reduce access to appropriate care and raise the prospect of financial chaos.The poignancy of the moment did not escape me. While the mother thanked me profusely and emotionally, well beyond that which was necessary or appropriate, I discovered that she was not the only one who had to wipe a tear from their eye.

Fighting successfully for parity, comprehensive parity, was well worth the battle.

Section II: Describing the Vermont Comprehensive Parity Bill

Vermont's Mental Health and Substance Abuse Parity Law (Act 25) Brief Overview

Vermont's parity law is simple in form and design. It ends, by mandate, all discriminatory practices in the construction of health care benefits for mental health and substance abuse treatment.

Under the provision's of Vermont's parity law, all health insurance policies in Vermont treat the body and the mind in a similar fashion, making little, if any, distinction between benefits for physical health and mental health. This is a bill built on a foundation of inclusion. There are no loopholes or exclusions beyond those allowed under the Employee Retirement Income Security Act (ERISA).

Further highlights and components of the bill are listed below:

A. A health insurance plan must provide coverage for treatment of a mental health condition and shall not establish any rate, term or condition that places a greater financial burden on an insured for access to treatment for a mental health condition than for access to treatment for a physical health condition. This legislation marks true fiscal parity for mental health and substance abuse treatment.

B. "Rate, term or condition" means any lifetime or annual payment limits, deductibles, co-payments, coinsurance and any other cost- sharing requirements, out-of-pocket limits, visit limits and any other financial component of health insurance coverage that affects the insured.

C. The Vermont parity bill defines "mental health condition" as meaning any condition or disorder involving mental illness or alcohol or substance abuse that falls under any of the diagnostic categories.

D. The Vermont law permits but does not require the use of managed care for mental health.

In order to balance the concerns of both proponents and opponents of the legislation, the Vermont bill allows for managed behavioral health care even if there is not a corresponding management component for the physical health care provided in any particular health insurance plan.

E. Vermont's parity bill went into effect on January I, 1998 or as consumers reached their anniversary date for health policy renewal. Previous collective bargaining agreements were also recognized and honored.

F. The Vermont Department of Banking, Insurance, Securities and Health Care Administration (BlSHCA) is the state agency charged with the responsibility of monitoring the implementation of the bill. The law specifically states that a managed care organization must be in compliance with rules adopted by the commissioner of Banking, Insurance, Securities and Health Care Administration and assures that the system for delivery of treatment for mental health conditions does not diminish or negate the purpose of this law.

Section III: The Framework of the Vermont Parity Bill and Implications for Social Policy.

#1. PARITY AS A CIVIL RIGHTS ISSUE

The Parity campaign in Vermont was not simply about improving insurance coverage or improving behavioral healthcare treatment. In Vermont, the 1997 Parity initiative was a fight for civil rights.

When Vermont's Governor Howard Dean signed the parity bill into law on June l0th of 1997, the state made a profound commitment to end discriminatory practices by the insurance industry against all consumers and subscribers in Vermont's private healthcare market.In confronting this discrimination, the Vermont bill attempts to redefine the meaning of behavioral healthcare to include not only mental health but substance abuse treatment as well. Indeed if there is reference to the "Vermont model of Paris", acceptance of this definition is of critical importance.

Vermont's parity bill was designed to address the unfair and unacceptable discriminatory practice that has been prevalent in the insurance industry for decades as it relates to the treatment of mental health and substance abuse disorders. It was our contention in 1997, and it is even more of a contention in the year 2000, that anything less than comprehensive parity might best be characterized not only as "partial parity" (often referred to as biologically based brain disorders or severe mental illnesses) but as the continuation of "partial discrimination".

At a time when many states and the federal government are exploring this issue, it is our recommendation that every and any proposal be weighed for its worthiness in reducing and eliminating a fundamental civic rights barrier that confronts millions of Americans today. The time has come to treat the disease of mental health and substance abuse in an equal and/or similar fashion to that of physical health problems. To do less, in our opinion, is to fall short of the mark.

#2. THE FINANCIAL COST OF PARITY

The Parity campaign in Vermont may have been framed as a civil rights or social justice issue but for most participants, the key question was the probable cost of our legislation. Without reliable cost projections, it is unlikely we could have moved the debate forward.

"How much will it cost?" In 1996 we had little specific data about Vermont. Neither did other players in the debate including leading insurance companies and representatives of the state's business groups. One thing that we did learn was that there was a need to focus on facts and statistics rather than vague and sometimes inaccurate projections based as much on political positioning as on actuarial analysis. Despite claims from opponents (of Vermont's comprehensive bill) that the premium increase might be as high as 7% - 12 %, we were able to secure a thorough actuarial analysis performed by Coopers & Lybrand in early 1997 that focused solely on Vermont. The actuarial report suggested a probable 3.4% increase for comprehensive parity as outlined in the Vermont legislation. This projection turned out to be accurate although initial first-year reporting suggests an even lower cost impact than anticipated.The Vermont Health Care Administration queried major health insurance companies about the percent increase in 1999 rate attributable to Act 25 (Comprehensive Parity). In general, plans that manage their mental health and substance abuse benefits allocated between 0 - 2% of their premium to parity, while plans that do not manage those benefits allocated a slightly higher percentage (3 6%).

Specific premium increases allocated to Act 25: Blue Cross and Blue Shield of Vermont: 1% Kaiser Permanente/CHP: 2% MVP Health Plan: 1.14-1.26% Allianz/North American Preferred: 1-2% Fortis: 5-6%

This information is taken from the Department of Banking, Insurance, Securities and Health Care Administration's Response to Questions Raised by Senate Health & Welfare Committee dated February 12, 1999.

Having spent two years examining the cost of parity in Vermont and the costs in other states, it is our belief that in fact, a mandated, comprehensive approach represents a sound actuarial decision_for the investment of "precious healthcare dollars". In 1996, the Congressional Budget Office estimated that a more partial parity approach (such as a parity bill that has limited diagnosis based mental illness) costs 90% of comprehensive parity. Partial parity legislation defies much of the logic and operating principles associated with insurance. If one is primarily covering "high-end" diseases for mental health treatment (or for a medical disease like cancer), one not only discriminates in favor of high profile and highly intense interventions but this approach carries with it significant cost and expense considerations.

As articulated earlier, the decision to include substance abuse treatment in Vermont's parity bill reflected greatly on our desire to craft a new definition for behavioral healthcare in our state, meaning both mental health and substance abuse. But the actuarial findings were not only instructive but encouraging. In terms of dollars and cents, insurance coverage for the disease of alcohol and substance is rather "inexpensive". Based on the actuarial projections of the Coopers & Lybrand study (January 1997), we had a high degree of confidence that any fiscal argument against the inclusion of substance abuse were unfounded.

#3. UNINTENDED CONSEQUENCES

The Parity campaign in Vermont did consider, in 1996, many different models ranging from comprehensive parity with and without substance abuse, as well as a variety of diagnostic based parity approaches with both short and longer lists of covered conditions in severe mental illness (SMI) parity. The more we analyzed the situation, the more worried we became about taking a course that would result in unintended consequences. We came to believe that the way to avoid these unintended consequences was to support a comprehensive parity bill.

A. Possible reduction in over-all benefits as a result of expansion in certain sectors.

The goal of parity legislation is to expand access to behavioral healthcare treatment. Yet the fear of unintended consequences of the partial parity approach made us uncomfortable. We believed that one probable outcome of the partial parity (SMI) approach would be the prospect of seeing the market adjust by actually reducing or even eliminating coverage for all those conditions not designated for broader parity. It appears that this unintended consequence may be identified in the U S General Accounting Office findings about the impact of the federal Mental Health Parity Act of 1996 which suggests there was a reduction in some benefits to accommodate the required enhancements. This "offset" factor should be a serious concern for those who want to increase access to mental health in an incremental fashion.

B. Neglecting Children's Mental Health in Parity.

One major priority in our campaign of 1997 in Vermont was our desire to make sure that children and adolescents would have access to parity for both mental health and substance abuse treatment. From our vantage point, one unintended consequence of the partial parity approach, one which has been adopted by a majority of the states in the past five years, is that it generally omits many conditions that impact young children or teenagers. Schizophrenia and bipolar disorders are two prime examples of "biologically-based" conditions that are not commonly diagnosed in those under the age of 18 years.

The omission of comprehensive coverage for children and adolescents was simply not acceptable in the Vermont parity plan. Federal parity legislation should, in our opinion, set the same standard.C. Distorting Diagnostic Procedures To Access Treatment

Another major concern we encountered as Vermont considered the best approach for us was the likelihood that partial parity legislation might encourage, in fact lead to, a systematic change in the way conditions and diseases are diagnosed in behavioral health care treatment plans. Moving quickly from theory to practice, when some health conditions "enjoy" parity status, and therefore accessability to treatment is enhanced, there is a strong tendency to see a distortion in the diagnostic process. Certainly it is not an unknown reality in health care but the design of partial parity is an invitation for what I will call "improper diagnostic creep". This is one reason we worked so hard to include alcohol and substance abuse coverage which is oftentimes a co-occurring disorder. It is time to enhance good clinical practice in behavioral healthcare rather than perpetuate or encourage a system that distorts diagnoses (upgrading diagnostic evaluations) as a strategy to access more expansive treatment.

D. Unregulated Managed Care Can Undermine Parity Legislation

In Vermont, it was our assumption that the passage of our comprehensive parity bill would result in an expansion of managed care in the field of behavioral healthcare treatment. In reality, this would have happened even if we had not passed such an expansive bill because managed care has become a standard in the delivery of behavioral healthcare throughout much of the nation.

Managed care is a technique for rationing access to health services. It is, in our opinion, a very young industry. In reaction the early Vermont experience with managed care companies, we passed, in 1994, a model regulatory bill aimed at providing controls and oversight over the industry. There has been concern that left unchecked, managed care companies might hold such power as to negate the very core goals of our parity legislation. In fact, Vermont has experienced problems over the way in which managed care companies have performed since January of 1998. Our concerns recently led us to propose and pass additional regulatory controls over managed care companies which we believe will address some important questions, questions about the amount of dollars that are being invested in behavioral healthcare treatment both before and during the "parity years" as well as the introduction of a rating system that might better capture the strengths and weaknesses of insurance and managed care companies in their behavioral healthcare work in Vermont.

Section IV: Significant Recent Developments

Over the course of the last six years, there has been major progress made in expanding insurance coverage for the diseases of mental health and substance abuse. During this period, much of the initiative for parity legislation has moved from the halls of Congress to statehouses across America including Montpelier, Vermont, Sante Fe, New Mexico and Annapolis, Maryland. Fives states now have passed comprehensive parity bills that include both mental health and substance abuse. While a majority of states have, during the last six years, passed limited "partial parity" bills, they differ greatly in scope, design and vigor. And there are nearly twenty states with no parity legislation of any type at all. Incremental though this may be, it is a start. However this is a "patch-work" quilt of activity. It is time for a clear and expansive statement from Congress on the parity issue.

The recent publication of the Surgeon General's Report is the first document of its type to focus on mental health in America. This report clearly recommends that mental health should have parity with physical health coverage.

On June 7th 1999, the President unveiled the Federal Employees Health Benefits Plan (FEHBP), granting all federal employees and their dependents comprehensive parity (for mental health and substance abuse) by the year 2002. This decision is of major significance not only because it will cover more than nine million people but it sets a new federal standard for comprehensive parity. If this can be achieved for federal employees, other Americans deserve nothing less.

Section V: Brief Conclusion

We are living in an age of incremental health care reform. Now is the time and the United States Senate is the place to address a fundamental civil rights issue - - that of parity for the diseases of mental health and substance abuse. There are many models and many ideas on the subject. We think that the Vermont Parity legislation of 1997 offers a fine standard for national consideration.

END

LOAD-DATE: May 19, 2000

Document 16 of 103.


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