NAMI President Jackie Shannon Gives Testimony On Mental Health Parity NAMI Members Encouraged To Make Strong Advocacy Push

STATEMENT OF JACQUELINE SHANNON PRESIDENT NATIONAL ALLIANCE FOR THE MENTALLY ILL (NAMI)

REGARDING MENTAL HEALTH PARITY

FOR THE COMMITTEE ON HEALTH, EDUCATION, LABOR AND PENSIONS UNITED STATES SENATE

MAY 18, 2000

Chairman Jeffords, Senator Kennedy and members of the Committee, I am Jacqueline Shannon of San Angelo, Texas, President of the National Alliance for the Mentally Ill (NAMI). In addition to serving as NAMI's president, I am also the mother of Greg Shannon. Greg was diagnosed with schizophrenia in 1985, during his senior year in college. For the past 15 years, Greg and our entire family have struggled with his illness. We have experienced discrimination in health insurance first-hand. Our health insurance had a lifetime maximum benefit for mental illness of six thousand dollars. Greg exhausted this benefit during his first hospitalization.

For the past decade, insurance parity has remained NAMI's top legislative priority. As the nation's largest organization representing individuals with serious brain disorders and their families, 210,000 members and 1,200 affiliates, we know why a minimum standard for parity in insurance coverage is desperately needed. Our members - individuals with mental illnesses and their families - know first-hand what it means to face discrimination in health insurance.

NAMI members understand what it is like to exhaust their coverage with a single hospital stay, to be forced to pay higher deductibles and co-payments, to run through unfair limits on inpatient days and outpatient visits. What makes these discriminatory limits so unjust is that they apply only to illnesses of the brain and not to any other organ or system of the body. As I will discuss in greater detail in my testimony, NAMI believes strongly that insurance parity for the treatment of severe mental illness is at its core an issue of discrimination. We believe that mental illnesses are brain disorders, and that treatment for these illnesses are just as (if not more) effective than for other diseases. We therefore believe that health plans should not be allowed to impose limits and conditions in insurance plans that do not apply to all other diseases. In short, we are not asking for special treatment, merely the coverage that any of us expect when we need treatment.

1. Mental Illnesses Are Brain Disorders

A mental illness is, more accurately, a brain disorder; and brain disorders--like epilepsy--are biologically based medical problems. The newest medical technology can take "pictures" that show differences between brains with disorders and normal brains. In any given year, about five million American adults suffer from an acute episode of one of five serious brain disorders: schizophrenia, bipolar disorder (manic depression), severe depression, obsessive-compulsive disorder, and severe anxiety disorders. Even many of America's children-more than three million-suffer from these disorders.

Untreated, disorders of the brain profoundly disrupt a person's ability to think, feel, and relate to others and to his or her environment. Despite age-old myths and misinformation, "mental illnesses" are not caused by bad character, poor child rearing, or an individual's behavior.

Brain disorders are shrouded in stigma and discrimination. For centuries they have been misunderstood, feared, hidden, and often ignored by science. Only in the last few decades has the first real hope for people with mental illnesses surfaced, and that hope has grown from pioneering research that found both a biological basis for brain disorders and treatments that work. NAMI's efforts to combat discrimination and stigma received a major boost in December 1999 with the release of the U.S. Surgeon General's Report on Mental Health. This historic report documents the scientific evidence that treatment is effective and concludes that there is no justification for health plans to cover treatment for serious brain disorders such as schizophrenia and bipolar disorder differently from any other disease.

2. Treatment Works

As the Surgeon General documented, science has proven that severe mental illnesses are treatable. The current success rate for treating schizophrenia is 60 percent. The success rate for treating manic depression is 65 percent, and for major depression it is 80 percent. By contrast, treatment efficacy rates for interventions such as angioplasty (41 percent) and atherectomy (52 percent) are lower. Mental illnesses can now be diagnosed and treated as precisely and effectively as other medical disorders. Tragically, the stigma associated with these illnesses too often prevents people from seeking the treatment that science has proven is effective. More importantly, the fact that health insurance plans have historically imposed limitations and conditions on coverage for treatment for severe mental illness compounds this stigma.

3. Discrimination Is Wrong

Discrimination in health insurance takes many forms. The most common techniques to avoid fair coverage of mental illness treatment are: higher cost-sharing requirements for outpatient visits and prescriptions, fewer allowed inpatient days and outpatient visits, and greater annual and lifetime dollar limits. The use of these discriminatory limits and conditions has been well documented.

Numerous studies compiled prior to the enactment of parity laws (including surveys of plans by the U.S. Bureau of Labor Statistics) found that 85 percent of all plans limit inpatient care and more than 98 percent limit outpatient care. In 1991-92, the BLS Employee Benefit Survey also found that one-half of plans were restricting hospitalization to 30 to 60 days. More than 70 percent of plans were found to have limited either the dollar value of outpatient benefits or the actual number of visits. These surveys also found that arbitrary limits were often unrelated to actual treatment needs. While the federal Mental Health Parity Act (MHPA) and the 31 state parity laws are changing this discrimination, clearly a legacy of discrimination still exists in the private health insurance market.

Mr. Chairman, while these studies are persuasive, the experience of Bonnie Putnam of Florence, South Carolina more clearly articulates what NAMI members go through every day to get coverage for the treatment they need. Every year, we at NAMI receive hundreds of these personal stories that demonstrate how health insurance plans discriminate against individuals with severe mental illness and their families.

Bonnie is from Florence, South Carolina, and has been diagnosed with major depression since 1979. Even though she has worked for the same company for more than 25 years, she is on the verge of having to leave her job because she cannot afford to pay for the treatment she needs on her own, the very treatment that keeps her well enough to work. Her employer qualifies for the small-business exemption under the MHPA. South Carolina's parity law is of little benefit to Bonnie because it still allows her health plan to strictly limit coverage for outpatient medication and therapy - limits she long ago exceeded. Passage of South Carolina's law actually made things worse for Bonnie since her health plan responded by further limiting outpatient coverage. Bonnie Putnam needs true parity.

4. The 1996 Mental Health Parity Act Was an Important Step Forward

The first major step toward ending discrimination in health insurance came in 1996 when President Clinton signed the federal Mental Health Parity Act (P.L. 104-204) into law. With the leadership of Senators Pete Domenici (R-NM) and Paul Wellstone (D-MN), this landmark law establishes a standard of parity for annual and lifetime dollar limits only. The law applies only to employers that offer mental health benefits; i.e., it does not mandate such coverage. More important, the MHPA allows many cost-shifting mechanisms, such as adjusting limits on mental illness inpatient days, prescription drugs, outpatient visits, raising co-insurance and deductibles, and modifying the definition of medical necessity.

As the General Accounting Office (GAO) noted in their testimony before this Committee, lower limits for inpatient and outpatient mental illness treatments have continued and, in some cases actually expanded to help keep costs down. However, it is important to note that the MHPA does apply to both fully insured state-regulated health plans and self-insured plans that are exempt from state laws under the Employee Retirement Income Security Act (ERISA), which are regulated by the Department of Labor. Existing state parity laws are not preempted by the MHPA (i.e., a state law requiring more comprehensive coverage is not weakened by the federal law, nor does it preclude a state from enacting stronger parity legislation, which many have). Other critical limitations in the MHPA include a small-business exemption (for firms with 50 or fewer employees) and an increased cost exemption for employers that can demonstrate a one percent or more rise in costs due to parity implementation will be allowed to exempt themselves from the law.

NAMI is encouraged by the GAO findings presented at this hearing that 86 percent of surveyed health plans are complying with the MHPA. While it is alarming that 14 percent of the surveyed plans are not in compliance, we view this as a lack of effort on the part of state insurance commissioners, the Health Care Financing Administration (HCFA), and the Pension and Welfare Benefits Administration (PWBA) to educate employers about the new law. Likewise, as the GAO noted, compliance is based largely on a complaint-driven process, that places responsibility on aggrieved plan participants to come forward - which often fails because of the stigma associated with mental illness. To ensure greater compliance with the MHPA and all future federal parity efforts, NAMI urges Congress to push HCFA and PWBA to do more to educate employers and health plans about their responsibilities under the law and to randomly audit representative samples of large, medium, and small employers for compliance.

Mr. Chairman, it is interesting to note that while the opponents of the MHPA attempted to vastly expand the scope of this increased cost exemption during regulatory implementation of the MHPA, relatively few employers have used it. NAMI believes that this is due in part to accountability measures included in the regulations (by retrospective examination of claims data, disclosure to employees when a firm seeks an exemption, etc.). However, the fact that fewer than ten employers have sought the one- percent cost exemption is more than likely due to the fact that parity is affordable and costs simply have not gone up because of it.

5. 31 States and FEHBP Have Adopted Parity

As is often the case, states have taken the lead ahead of Congress in ending insurance discrimination. The original idea behind parity was modeled on legislation in the 1960s that prohibited cancer exclusions in insurance coverage. Mental health parity was first successful with state employees in Texas, then in Maine, New Hampshire, Rhode Island, and Maryland. By the early 1990s, parity laws had been passed in six states. Although these laws do not apply to ERISA self-insured companies, they give employees some protection and they serve to statistically validate the fact that parity is affordable. After enactment of the federal MHPA in 1996, we saw the passage of nine more state parity laws in 1997 and seven (unfortunately three were vetoed) in 1998. In 1999, 11 more states enacted parity laws, bringing the total number of states with such laws to 28. With the addition of California, now more than half the population lives in States that require non-discriminatory coverage.

Already in 2000, Kentucky, Massachusetts, and New Mexico have passed parity laws, which brings the total to 31 states. Clearly, the trend to pass state parity legislation is picking up momentum. Even today, NAMI affiliates are continuing to seek out legislative leaders to sponsor State parity bills of all types with the ultimate goal of ending all insurance discrimination against those who suffer from mental illnesses. NAMI will continue to provide documentation of the experiences of the states that passed parity laws in the early 1990s and other evidence of the affordability of parity and the effectiveness of treatment. NAMI will seek coverage equal to that of other medical conditions covered in each policy written, and we will not turn away from this effort until the discrimination has ceased.

Even though Congress has not acted to expand the modest protections in the Mental Health Parity Act since its passage nearly four years ago, the Clinton Administration has moved to expand the scope of parity. In June of 1999, as part of the historic White House Conference on Mental Health, the President announced that the Federal Employees Health Benefits Program (FEHBP) would require parity beginning in January 2001. FEHBP is the largest health insurance program in the nation, covering 9.5 million federal employees, retirees, and their families.

6. Parity Is Affordable

One of the principal lessons learned from the experience in the states that have enacted parity laws - as well as from preliminary estimates by the Office of Personnel Management (OPM) for FEHBP - is that parity is unquestionably affordable. This affordability is especially evident under the laws that focus the parity requirement on a categorical list of severe diagnoses.

As has been made clear at this hearing, the cost of paying for health insurance parity for mental illness unfortunately remains a hotly debated issue. This is disturbing to us at NAMI since overwhelming evidence from multiple studies controversy demonstrates the minimal cost impact resulting from parity. As the GAO found in its report on MHPA implementation, only 3 percent of surveyed plan administrators found that their insurance costs went up as a result of compliance. For the record, I would like to briefly summarize just a few of these studies - most of them from independent sources with no stake in the policy debate over parity - that have provided data in recent years:

• Background Report: Effects of the Mental Health Parity Act of 1996 (March 30, 1999) -- Issued by the Substance Abuse and Mental Health Services Administration (SAMHSA), results of this national survey showed that 86 percent of employers who made changes in health plans to comply with the 1996 federal law did not make any compensatory reductions in other benefits because the cost of compliance was minimal or nonexistent.

• Parity in Financing Mental Health Services: Managed Care Effects on Cost, Access & Quality (July 15, 1998) -- The second in a series of reports to Congress issued by the National Advisory Mental Health Council found that full parity costs less than one percent of annual healthcare costs. When implemented in conjunction with managed care, parity can reduce costs by 30 to 50 percent.

• Rand Corporation Study (November 12, 1997) - This study found that equalizing annual limits (typically $25,000)-- a key provision of the Mental Health Parity Act of 1996-will increase costs by only about $1 per employee per year under managed care. An even more comprehensive change required by some state laws (i.e., removing limits on inpatient days and outpatient visits) will increase costs by less then $7 per enrollee per year. The main beneficiaries of parity were found to be families with children who, under current conditions, are more likely than adult users to quickly exceed their annual benefit limits and go uninsured for the remainder of the year.

• Mercer Study (October 23, 1997) -The findings of this study indicated that 85 percent of American companies are either in compliance with the federal law or plan to comply with the Mental Health Parity Act of 1996 by January 1, 1998. Seven out of ten of those same employers agree that mental health parity is a reasonable national policy goal and that parity is important to their employees.

• National Advisory Mental Health Council's Interim Report on Parity Costs (April 29, 1997)- This report found that the introduction of parity in combination with managed care results in, at worst, very modest cost increases. In fact, lowered costs and lower premiums were reported within the first year of parity. Maryland reported a 0.2 percent decrease after the implementation of full parity at the state level. Rhode Island reported a less than 1 percent (0.33 percent) increase of total plan costs under state parity. Texas experienced a 47.9 percent decrease in costs for state employees enrolled in its managed care plan under parity.

• Lewin Study (April 8, 1997) -- In this survey of New Hampshire insurance providers, no-cost increases were reported as a result of a state law requiring health insurance parity for severe mental illnesses.

7. Let's Finish the Job -- S 796

As I noted above, the combined effect of the MHPA, the 31 state laws, and parity for FEHBP participants, while substantial and historic, still leave too many individuals with mental illness behind. Parity has become a reality in our country, but discrimination persists - particularly for individuals in ERISA self-insured plans and in cost-sharing requirements that apply only to mental illness treatment.

NAMI believes strongly that S. 796, the Mental Health Equitable Treatment Act, is needed to address these gaps in parity and finish the job of ending discrimination for persons living with the most severe and disabling forms of mental illness. NAMI's consumer and family membership is extremely grateful for the leadership of Senators Domenici and Wellstone in seeking to once and for all end discrimination.

The Mental Health Equitable Treatment Act requires that limitations on the coverage of benefits for "severe biologically based mental illnesses" may not be imposed unless comparable limitations are imposed on medical and surgical benefits. This provision provides full insurance parity for treatment for people with severe mental illnesses and effectively removes all inequitable limits on co-pays, deductibles, inpatient days, and outpatient visits.

S. 796 targets specific adult and childhood mental illnesses and defines the term "severe biologically based mental illnesses" as illnesses determined by medical science in conjunction with the Diagnostic and Statistical Manual of Mental Disorders (DSM IV) to be severe and biologically-based. These illnesses are listed in the bill as: schizophrenia, bipolar disorder (manic depression), major depression, obsessive compulsive disorder, panic disorder, post-traumatic stress disorder, autism and other severe and disabling mental disorders such as anorexia nervosa and attention deficit/hyperactivity disorder.

S. 796 also prohibits unequal limits on the number of covered inpatient days and outpatient visits for people seeking treatment for all mental illnesses. Under this provision, the number of covered impatient days and outpatient visits for mental illnesses must be equal with covered medical/surgical inpatient days and outpatient visits.

Other key features of S. 796 include a small-business exemption for firms with 25 or fewer employees. This change from the 1996 MHPA (its small-employer exemption is 50 or fewer workers) will result in an additional 15 million workers and their families being covered by parity. S. 796 also eliminates the existing expiration provision in the MHPA that sunsets its requirements on October 1, 2001. In addition, S. 796 eliminates the "one percent" cost exemption in the MHPA mentioned above.

S. 796 is core to NAMI's vision of ensuring that the next generation of individuals with mental illness and their families will not have to live out their lives on disability or in public institutions, unable to get the very care that would give them back productive lives. Insurance discrimination enforces the invalid message that mental illnesses are "untreatable" and "hopeless." As I have noted above, parity is both affordable and cost-effective. With parity as envisioned in S. 796, businesses in fact stand to gain: from reduced absenteeism, reduced healthcare costs for physical ailments related to mental illnesses, increased employee morale, and increased productivity overall.

Mr. Chairman, I would like to make one additional point about S. 796 as it relates to a very important new law that Congress enacted last year - the Ticket to Work and Work Incentives Improvement Act (P.L. 106-170). First, on behalf of NAMI's consumer and family membership I would like to thank you, Chairman Jeffords, and you, Senator Kennedy, for the outstanding bipartisan leadership you showed in moving this legislation through the Senate last year by wide bipartisan margins. We are extremely grateful for your efforts on the critical issue of extending health insurance coverage for adults with severe disabilities who can, and in fact, want to work. In the coming years, thousands of adults with severe metal illnesses will be able to leave the Social Security rolls for the workforce, without fear of losing coverage under Medicare and Medicaid.

How does parity relate to TWWIIA? Just as with the "pre-disability" Medicaid state demonstration in the new law, NAMI believes that parity is integral to establishing state and federal policies that prevent people from ever having to quit their job and go into poverty to get the medical care they need. If working adults with severe mental illnesses have adequate and non-discriminatory health care coverage, they will be able to access the treatment they need earlier in the course of their illness and perhaps need less treatment over their lifetimes. Likewise parity will ensure that they can retain access to coverage for the treatment they need to maintain functioning and stay in a job. For NAMI, parity as envisioned in S. 796 is an extension of TWWIIA and its goal of shifting disability in our nation to foster, rather than inhibit, employment, productivity and independence.

Finally, Chairman Jeffords, I would like to respond on the record to the observations made by Ken Libertoff, Ph.D., of the Vermont Mental Health Coalition earlier in this hearing. In his testimony, Dr. Libertoff characterized S. 796 as inadequate for meeting the needs of children and adolescents with mental illnesses. He also stated that this important legislation is a "step sideways" in ending insurance discrimination. NAMI would like to take issue with his unfair and inaccurate observations about S. 796.

First, it should be noted that S. 796 includes full parity for every major severe mental disorder in children and adolescents, including early onset bipolar disorder, major depression, obsessive compulsive-disorder, panic disorder, autism, and other severe and disabling mental disorders such as anorexia nervosa and attention-deficit/hyperactivity disorder. In addition, the bill includes full parity for adolescents experiencing the onset of schizophrenia - a process that can commonly exhaust coverage for many families with a single hospitalization. More important, this legislation contains protections that will permit adding to the list of diagnoses for which full parity is required as medical science accumulates more evidence about which childhood disorders are biologically based (thereby to be covered under full parity). Thus, the provisions in S. 796 will keep pace with scientific advances in knowledge about child and adolescent disorders and their treatments. NAMI strongly supports S. 796 as a major step forward for children and adolescents with mental illnesses and their families.

Finally, as a response to the allegation that S. 796 is a "step sideways," NAMI notes how clear it is quickly becoming that, in seeking to end discrimination, Congress and the states have an obligation to first address the needs of those most profoundly and directly affected by inadequate coverage. Given the broad scope of mental health disorders as defined by the DSM IV, NAMI emphasizes that it is the severe diagnoses listed in this legislation as those to be included in the full parity requirement that cause people to exhaust the coverage in their health plans. It is these diagnoses that result in families having to borrow, go into debt, take out second mortgages, file for bankruptcy, quit jobs and relinquish custody of their children to qualify for public benefits that-when all else fails-give them access to treatment.

In NAMI's view, it is these families and individuals that have historically shouldered the burden of severe mental illness in our country. In NAMI's view, it is these families and individuals that Congress and the President should place foremost in their priorities while moving forward in the debate over mental illness parity. Clearly, S. 796 is a profound, life-saving, and historic step for these families and individuals touched by mental illness.

Conclusion

Chairman Jeffords and Senator Kennedy, thank you for the opportunity to share NAMI's views on this important issue. We look forward to working with you and all members of this Committee to ensure that the Senate acts on S. 796 this year.

For information on serious mental illnesses and brain disorders, or for a referral to your State and local affiliates, please contact the NAMI HelpLine: 1-800-950-NAMI (6264) / TDD 703-516-7227 Visit the HelpLine page