[House Hearing, 106 Congress] [From the U.S. Government Publishing Office] SUBSTANCE ABUSE TREATMENT PARITY: A VIABLE SOLUTION TO THE NATION'S EPIDEMIC OF ADDICTION? ======================================================================= HEARING before the SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY, AND HUMAN RESOURCES of the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS FIRST SESSION __________ OCTOBER 21, 1999 __________ Serial No. 106-138 __________ Printed for the use of the Committee on Government Reform Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform __________ U.S. GOVERNMENT PRINTING OFFICE 66-251 WASHINGTON : 2000 ______ COMMITTEE ON GOVERNMENT REFORM DAN BURTON, Indiana, Chairman BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California CONSTANCE A. MORELLA, Maryland TOM LANTOS, California CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania JOHN L. MICA, Florida PATSY T. MINK, Hawaii THOMAS M. DAVIS, Virginia CAROLYN B. MALONEY, New York DAVID M. McINTOSH, Indiana ELEANOR HOLMES NORTON, Washington, MARK E. SOUDER, Indiana DC JOE SCARBOROUGH, Florida CHAKA FATTAH, Pennsylvania STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland MARSHALL ``MARK'' SANFORD, South DENNIS J. KUCINICH, Ohio Carolina ROD R. BLAGOJEVICH, Illinois BOB BARR, Georgia DANNY K. DAVIS, Illinois DAN MILLER, Florida JOHN F. TIERNEY, Massachusetts ASA HUTCHINSON, Arkansas JIM TURNER, Texas LEE TERRY, Nebraska THOMAS H. ALLEN, Maine JUDY BIGGERT, Illinois HAROLD E. FORD, Jr., Tennessee GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois DOUG OSE, California ------ PAUL RYAN, Wisconsin BERNARD SANDERS, Vermont HELEN CHENOWETH-HAGE, Idaho (Independent) DAVID VITTER, Louisiana Kevin Binger, Staff Director Daniel R. Moll, Deputy Staff Director David A. Kass, Deputy Counsel and Parliamentarian Carla J. Martin, Chief Clerk Phil Schiliro, Minority Staff Director ------ Subcommittee on Criminal Justice, Drug Policy, and Human Resources JOHN L. MICA, Florida, Chairman BOB BARR, Georgia PATSY T. MINK, Hawaii BENJAMIN A. GILMAN, New York EDOLPHUS TOWNS, New York CHRISTOPHER SHAYS, Connecticut ELIJAH E. CUMMINGS, Maryland ILEANA ROS-LEHTINEN, Florida DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana ROD R. BLAGOJEVICH, Illinois STEVEN C. LaTOURETTE, Ohio JOHN F. TIERNEY, Massachusetts ASA HUTCHINSON, Arkansas JIM TURNER, Texas DOUG OSE, California JANICE D. SCHAKOWSKY, Illinois DAVID VITTER, Louisiana Ex Officio DAN BURTON, Indiana HENRY A. WAXMAN, California Sharon Pinkerton, Staff Director and Chief Counsel Steve Dillingham, Professional Staff Member Mason Alinger, Professional Staff Member Lisa Wandler, Clerk Cherri Branson, Minority Counsel C O N T E N T S ---------- Page Hearing held on October 21, 1999................................. 1 Statement of: Conley, Michael, chairman of the Board of Trustees, the Hazelden Foundation; Michael Schoenbaum, economist, RAND Corp.; Kenny Hall, addiction specialist, Kaiser Permanente; Capt. Ronald Smith, M.D., Ph.D., vice-chairman, Department of Psychiatry, National Naval Medical Center; Peter Ferrara, general counsel and chief economist, Americans for Tax Reform; and Charles N. Kahn III, president, Health Insurance Association of America........................... 51 Ramstad, Hon. Jim, a Representative in Congress from the State of Minnesota......................................... 27 Rook, Susan, media consultant................................ 41 Wellstone, Hon. Paul, a U.S. Senator in Congress from the State of Minnesota......................................... 5 Letters, statements, et cetera, submitted for the record by: Conley, Michael, chairman of the Board of Trustees, the Hazelden Foundation, prepared statement of................. 53 Ferrara, Peter, general counsel and chief economist, Americans for Tax Reform, prepared statement of............ 83 Hall, Kenny, addiction specialist, Kaiser Permanente, prepared statement of...................................... 71 Kahn, Charles N., III, president, Health Insurance Association of America, prepared statement of.............. 87 Mica, Hon. John L., a Representative in Congress from the State of Florida, letter dated Novemebr 12, 1999........... 97 Mink, Hon. Patsy T., a Representative in Congress from the State of Hawaii, letter dated October 20, 1999............. 9 Ramstad, Hon. Jim, a Representative in Congress from the State of Minnesota, prepared statement of.................. 31 Rook, Susan, media consultant, prepared statement of......... 43 Smith, Capt. Ronald, M.D., Ph.D., vice-chairman, Department of Psychiatry, National Naval Medical Center, prepared statement of............................................... 79 Sturm, Roland, Ph.D., RAND Corp., prepared statement of...... 61 SUBSTANCE ABUSE TREATMENT PARITY: A VIABLE SOLUTION TO THE NATION'S EPIDEMIC OF ADDICTION? ---------- THURSDAY, OCTOBER 21, 1999 House of Representatives, Subcommittee on Criminal Justice, Drug Policy, and Human Resources, Committee on Government Reform, Washington, DC. The subcommittee met, pursuant to notice, at 10 a.m., in room 2154, Rayburn House Office Building, Hon. John L. Mica (chairman of the subcommittee) presiding. Present: Representatives Mica, Barr, Souder, Hutchinson, Ose, Mink, Kucinich, Tierney, and Schakowsky. Staff present: Sharon Pinkerton, staff director and chief counsel; Steve Dillingham and Mason Alinger, professional staff members; Lisa Wandler, clerk; Cherri Branson, minority counsel; and Jean Gosa, minority staff assistant. Mr. Mica. I would like to call this hearing to order this morning. We do have a full schedule, and so we will go ahead and proceed. The subject of today's hearing is Substance Abuse Treatment Parity: A Viable Solution to Our Nation's Epidemic of Addiction, is the question that is asked and before our subcommittee. I am pleased that we have three panels of witnesses who are providing testimony. I will start today's hearing with an opening statement and then yield to our ranking member and other Members who will be joining us, but we do want to go ahead and proceed since we do have a lengthy schedule. The Subcommittee on Criminal Justice, Drug Policy, and Human Resources convenes today to discuss our country's war on drugs from a perspective that is different from that of previous hearings. Recently, we have held a number of hearings on topics that impact the supply of drugs in our Nation. Our hearings have ranked from international narcoterrorism developments in Colombia to interdiction operations and resource needs across our southwest border. Last week, we held an important and insightful hearing on what is being done through our now federally funded media campaign to reduce the demand for drugs. Today, we will examine another important component of national efforts to reduce the demand for drugs. We will focus on drug treatment and funding options that might be affordable and make a difference in the drug war. Treatment generally receives less coverage in the press and is often misunderstood. We will examine carefully how treatment might be used to reduce drug-related deaths and destruction. Today, we will hear more about the positive consequences of successfully treating drug abuse. We are especially grateful to our witness who has come forward to tell us about her personal experiences. Her testimony will illustrate how some people with alcohol and illicit drug addictions have broken those terrible chains and regained control of their lives. We all agree that the number of such positive outcomes from addiction should be increased to the greatest extent possible. Accordingly, drug treatment benefits and funding options deserve our close attention. Since 1996, Congress increased Federal spending from $13 billion to almost $17.8 billion for drug control programs and activities. Most of this increased funding has been targeted toward reducing demand. Of the $4 billion increase, 26 percent was set aside for improving treatment options. However, despite the commitment of more dollars and an emphasis on treatment and reducing the demand for drugs, alarming trends demonstrate the need for further action. We know, for example, that from 1993 to 1997 the number of Americans reporting heroin use rose from 68,000 to 725,000-- more than quadrupling. With an estimated 26 million Americans addicted to drugs and alcohol, the human toll is ever present. In mid-August, drugs claimed the life of a young 13-year-old in central Florida. The soon-to-be eighth grader, Jonathan Hilaire, died of a cocaine overdose while visiting Disney World in Orlando. How can this happen? What can be done to save these young lives? I think we can all agree that more action is needed. Mrs. Mink, I don't know if you saw, we have the most recent statistics on drug-induced deaths; and it has now climbed to over 15,000, I think it is 15,200, which is a 7.8 percent increase over last year. In fact, combating substance abuse requires the best efforts of our Federal, State and local governments; our families and communities; our social and religious institutions; and our employers and private sector businesses. In recent years, some observers have adopted the view that drug addiction should be considered as a brain disease, because of accompanying biological changes that occur in the brain. Others argue that addiction is primarily a behavioral disorder, often as the result of personal or character weaknesses over which individuals can and should exercise personal control. These differing views also must factor in the realization that we expect the criminal justice system to respond to drug- related crimes--and to encourage law-abiding behaviors. This responsibility often includes the treatment of offenders for drug addictions. Numerous studies indicate that the longer a person stays in an attempt program, the better the outcome will be. Treatment options enforceable under the law provide added leverage to ensure an abuser's participation. Today, we will discuss options for including substance abuse treatment in employee health plans. Too often, we stereotype drug addicts as being people unable to hold down regular jobs. A Bureau of Labor Statistics report released earlier this year reports that more than 70 percent of those using illicit drugs and 75 percent of alcoholics do, in fact, hold down regular jobs. This represents a significant portion of the country's substance abusers. Many of these employees have, or may acquire, access to some form of employer-provided health care coverage. Today, it has been estimated that only about 2 percent of substance abusers are fortunate enough to be covered by health plans that provide for adequate treatment. I recognize that a handful of States already have passed legislation that includes substance abuse parity provisions. I also fully realize that unwise Federal mandates can disrupt markets, cause inefficiencies, and have other unintended negative consequences. For these reasons, any new Federal mandates should be considered only under exceptional circumstances of demonstrated need. In light of the impact of drugs on our lives and livelihood, we must consider all appropriate and promising measures. If affordable and effective, employee access to substance abuse treatment through employee health plans might be a viable weapon in reducing the demand for drugs in this country. The National Institute for Drug Abuse [NIDA] estimates that drug treatment reduces use by 40 to 60 percent and significantly decreases criminal activity after treatment. In addition to preventing human misery, promoting substance abuse treatment potentially could have significant economic benefits. The costs of both drug and alcohol addiction to society-- including costs for health care, substance abuse prevention, treatment for addiction, combating substance-related crimes and lost resources resulting from reduced worker productivity and deaths--are enormous. Estimates range from $67 billion annually up to $246 billion--almost a quarter trillion dollars. The Substance Abuse and Mental Health Administration [SAMHSA], claims that dollars spent on substance abuse treatment can have tremendous savings--saving society as much as $4 to $7 for each dollar that is wisely invested in effective drug treatment. If accurate, spending a comparatively small percentage of our business dollars for prevention and treatment--an amount less than what would be needed to recoup the costs of lost productivity due to addictions--might be a wise and cost-effective investment. Legislative proposals for providing substance abuse treatment in employee health plans have taken varying approaches. The different proposals introduced in this Congress focus on providing insurance benefits for substance abuse treatment that are equal to benefits for other medical and surgical care. While these bills promote access to substance abuse treatment through employee health plans, consensus has not been reached regarding the scope of coverage and the cost that employees and employers must bear. The panels of witnesses before us this morning will discuss treatment successes, studies, legislative proposals and possible treatment payment options. In some instances, comparisons will be made to the Mental Health Parity Act of 1996 and how that law has impacted employers, insurers, treatment providers, participants and others. The act imposed a national minimum benefit standard for mental health benefits on employer-sponsored health insurance for the first time. Key questions we must consider are whether the approach taken with mental health treatment benefits is working and whether this approach is fully applicable to alcohol and substance abuse treatment benefits. Our first two panelists are very respected Members of Congress. We are very pleased to have one individual leader on this subject from the U.S. Senate and another fellow colleague of ours who has been a champion in the House of Representatives. Each has worked long and hard to promote substance abuse treatment parity at a national level. We look forward to hearing their thoughts and proposals on the subject, and I will introduce them in just a minute as our first panel. The panelist on our second panel has graciously agreed to come and share her personal story of addiction. Her remarks will serve to enlighten us about the difficulties faced by those who struggle to overcome substance abuse, and we will hear her personal success in meeting that challenge. Our third panel is made up of experts from the field who will discuss the costs and benefits of treatment and their ideas and concerns regarding substance abuse treatment parity in health care plans. These officials, experts, and persons with firsthand knowledge of addiction and treatment will give us a better understanding of this critical issue and how we might promote effective substance abuse treatment in our efforts to combat addiction and illegal narcotics. We look forward to hearing this testimony. I am pleased at this time to yield to our ranking member on the panel, the distinguished gentlelady from Hawaii, Mrs. Mink. Mrs. Mink. Thank you, Mr. Chairman. I especially want to commend you for holding these hearings on substance abuse treatment. I want to thank Senator Wellstone and Representative Ramstad for coming and taking the time to give us their own perspective on this very important issue. Mr. Chairman, we all know that there are a wide variety of approaches toward this drug menace in our country. Law enforcement, interdiction, and prevention programs are all important. However, when the individual becomes addicted to drugs, we must have in place access to treatment. The Office of National Drug Control Policy reports that 50 percent of the adults and 80 percent of the children who need substance abuse treatment do not receive it. That is really the heart of our hearing today. Numerous studies show that treatment is both effective and cost effective in saving lives. Therefore, Congress, I feel, should move quickly to require private coverage. This is certainly one area which, if we ignore, vast numbers of people who are uninsured may not be able to get the treatment that they need. I hope that as a result of the hearings today, Mr. Chairman, that we will not only have a greater understanding of the problem, but come closer to finding a solution so that those individuals who need treatment have access to them out of national policy as well as State and local. Thank you very much, Mr. Chairman. Mr. Mica. Thank you. We will allow other Members to submit their opening statements or statements for the record. We will leave the record open for at least 10 days for submissions. I would like to proceed now with our first panel which consists of two very distinguished Members of Congress, one from the Senate and one from the House, two leaders who have fought to bring the problem of chemical dependency to the forefront of the Congress and the Nation. The first individual I will recognize is a leader from the Senate side. He is the senior Senator from Minnesota. His committees include Health, Education, Labor and Pension Committee. He is also on Foreign Relations, Small Business, Indian Affairs and Veterans Committee. In the 105th Congress, he was the author of the Substance Abuse Treatment Parity Act of 1997. In the 106th Congress, he was the sponsor of the Fairness in Treatment, the Drug and Alcohol Addiction Recover Act of 1999. We certainly applaud your leadership on these issues and welcome you to our panel over on the House side this morning. We would like to recognize you at this time. STATEMENT OF HON. PAUL WELLSTONE, A U.S. SENATOR IN CONGRESS FROM THE STATE OF MINNESOTA Senator Wellstone. Thank you, Chairman Mica and Ranking Member Mink, for the opportunity to speak to this subcommittee on the important issue of parity for alcohol and drug addiction treatment. I want to thank my colleague, Jim Ramstad. It has been productive and really a very rewarding experience to work with him on this legislation, and I think he has really been one of the leaders in the country because he has used his own very empowering and personal experience as a successful and I think as a highly respected representative who speaks out about what he has been through, and I think his voice is terribly important. I also want to thank Michael Conley, the chairman of the Board of Trustees of Hazelden from Minnesota. You mentioned Susan Rook, Mr. Chairman. I would like to thank Susan for her courage as well. And I want to make a quick apology to the panelists. There are a lot of people here, and you speak and you leave, and it almost seems like you don't care. I am not even going to get a chance to hear Jim's testimony. I have two committees and a vote that is coming up in the next 20 minutes, and so I will try to be brief. I have introduced a full parity bill, S. 1447, and basically what we are talking about is full parity or ending discrimination in insurance coverage for drug and alcohol addiction, and I am pleased to say that this bill was introduced with Senator Daschle, who is our minority leader in the Senate, Senators Kennedy, Moynihan, Inouye and also Senator Johnson. The bill provides, and this is I think really the key point, for nondiscriminatory coverage of drug and alcohol addiction treatment service by private health insurers. The bill does not require that drug and alcohol be a part of any health care benefits package. It doesn't require that. So in that sense there is no mandate whatsoever. It prohibits discrimination by health plans who offer such benefits but all too often place restrictions on the treatment that are different from other medical services. It is my full intention to move this bill forward in the Senate, and I am looking forward to working with you all on the House side. I want to applaud the administration's efforts during the last year to recognize the need for this coverage for Federal employees. I think that was a positive step forward. I want to applaud the work of General McCaffrey and to recognize his efforts to end drug addiction; and the point that he makes which is he will not be successful if we just focus on the supply side, although we must, but we must also focus on the demand side and you mentioned that as well, Mr. Chairman. I will gloss over the statistics. I think we all know them. The disease, I use that word deliberately, of alcohol and drug addiction, costs our Nation $246 billion annually, $1,000 for every man, woman and child; and the fact of the matter is that it doesn't tell us anything in personal terms about broken dreams and broken lives and broken families and all of the people who, if they had treatment like Congressman Ramstad, could live such a productive life, could do so much for our country and do so much for our community. I would like to thank Congresswoman Mink for her statistics on those who don't receive the coverage. Therefore, I am not going to go over those figures at all. The question that is posed in the title of the subcommittee hearing is this: Is substance abuse treatment parity a viable solution to the Nation's epidemic of addiction? The answer, Mr. Chairman, is yes. Not only is it viable, but it is necessary. At this point the crisis of drug and alcohol addiction in this country warrants solutions from all sectors of our society, all levels of government, the insurance industry, education and health care as well. Now, most private health insurance plans that cover alcohol and drug treatment, this is the problem, set discriminatory and unrealistic annual lifetime and visit limits on the treatment, and these limits fly directly in the face of the scientific recognition of addiction as a chronic, recurrent condition. As a result of these limits, most people who seek treatment who seriously want to end their addiction can't get the treatment. I think Congresswoman Mink made this point very well. That is really what this is about. Proper medical treatment for the disease of addiction is an essential part of this recovery. When privately insured individuals have no benefits, or when you have a plan which does not provide any coverage for this addiction, quite often the public sector has to pick it up. That is what happens. Or, I am very sorry to say that all too often children and sometimes adults basically wind up in correctional facilities for their treatment program, which is wrong--and that kind of treatment is terribly inadequate. Now there will be others who talk about the cost issue, just to mention that the RAND study is extremely important. As a matter of fact, the costs for full parity for drug and alcohol treatment addiction are very low, but the costs for failure for treatment are terribly high. That is what we want to say. Finally, let me conclude this way. I want to emphasize the research. I want to emphasize the data, and the scientific evidence, the work that is being done at NIH, the National Institute on Drug Abuse and the National Institute on Alcohol Abuse and Alcoholism which basically say that treatment is effective. We know from this research that addiction causes long-lasting changes in the brain, changes that in fact contribute to relapse. We are talking about a chronic and relapsing disease that can be treated if there is that treatment, and what we want to do in this legislation is not a mandate but just end the discrimination. Now, the principle of ending this discrimination in insurance coverage for treatment has received strong support from the White House, from General McCaffrey, former Surgeon General C. Everett Koop, former President and Mrs. Gerald Ford, the U.S. Conference of Mayors, Kaiser Permanente Health Plans and many leading figures in medicine, business, government, journalism and entertainment who have successfully fought this battle of addiction with the help of treatment. We had hearings last year in the Senate which were very helpful, and that is why I appreciate these hearings. We had hearings in the Senate Appropriations Committee and in the Committee on Labor, Education and Pensions which highlighted all of the recent major advances in scientific information about the disease, the biological causes of addiction, and the effectiveness and low cost of treatment, and the many painful personal stories of people, including children, who have been denied treatment. That is part of the record of the Senate. It is time for this disease to be treated with fairness, and it is time to end the discrimination against those with this disease. I commend this subcommittee for holding this hearing today. I commend you for bringing this important issue to light. And, most important of all, Mr. Chairman, by forming an alliance between those who support supply and demand side solutions, we as a country will be able to help millions of Americans affected by this disease. I think that is what this hearing is about. I thank my colleague, and again I apologize to other Congressmen that have come in that I have to leave, but thank you very much. Mr. Mica. Senator, before you scoot, and I know that you have to get away, if we could get just one or two quick questions. There are about eight States I think that have adopted similar measures. I am not really that familiar with what each State has to what you are proposing, including Minnesota. One of the constant things that we hear is that there may be significant additional costs in premiums to the insurance insurers and those paying the premiums. To your knowledge, in the eight States or Minnesota, has there been any significant difference in costs since they passed these parity requirements? Senator Wellstone. I appreciate the question, and Jim may have the exact figures. It is a perfect question to ask and a perfect question for me to answer. Actually, in Minnesota we have done both the mental health and substance abuse in ending discrimination, and all of the reports have been that it is extremely cost effective, hardly any rise in premiums. But there is also, and you may have it, Jim, the estimates of the savings for the State. In other words, these costs are no longer dumped on the public sector, and the productivity of people who have been treated adds to the cost effectiveness. So the reports that we have out there show very strong support both by Democrats and Republicans, and we have not had that problem at all. I think Ronald Sturm is going to be testifying for RAND Corp. about the study of the costs nationally. The interesting thing is that in this particular area every study I have seen, every analysis that I have seen, including independent analyses, points out that not only can the treatment be effective but it is quite cost effective as well. In Minnesota--one problem is that we can't get self-insured plans. That is the whole ERISA question, in which case people look to us in Congress to try to pass some kind of legislation that will deal with this discrimination. Mr. Mica. Mrs. Mink. Mrs. Mink. Mr. Chairman, I don't know if you are putting this letter from General McCaffrey into the record. Mr. Mica. We would be so glad to. Without objection, so ordered. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T6251.001 [GRAPHIC] [TIFF OMITTED] T6251.002 [GRAPHIC] [TIFF OMITTED] T6251.003 [GRAPHIC] [TIFF OMITTED] T6251.004 [GRAPHIC] [TIFF OMITTED] T6251.005 [GRAPHIC] [TIFF OMITTED] T6251.006 [GRAPHIC] [TIFF OMITTED] T6251.007 [GRAPHIC] [TIFF OMITTED] T6251.008 [GRAPHIC] [TIFF OMITTED] T6251.009 [GRAPHIC] [TIFF OMITTED] T6251.010 [GRAPHIC] [TIFF OMITTED] T6251.011 [GRAPHIC] [TIFF OMITTED] T6251.012 [GRAPHIC] [TIFF OMITTED] T6251.013 [GRAPHIC] [TIFF OMITTED] T6251.014 [GRAPHIC] [TIFF OMITTED] T6251.015 [GRAPHIC] [TIFF OMITTED] T6251.016 [GRAPHIC] [TIFF OMITTED] T6251.017 [GRAPHIC] [TIFF OMITTED] T6251.018 Mrs. Mink. And in response to your inquiry, which I think is very critical, in this report it says that the studies show that the average premium increase is only 0.2 percent, so it is very minimal. So I don't think that it is a cost factor. There is some hang-up someplace else. Senator Wellstone. I think, Congresswoman Mink, and I leave on this, and you will find this in the hearing today and many of you already know it, you have this disconnect or lag between the scientific evidence, the data, and the perceptions that people have, both about what we are talking about, also about the nature of this disease and also about the treatment and the cost of it. The consequences are really tragic of our not trying to end this discrimination and getting some coverage for people. Thank you very much. Mr. Mica. Thank you, Senator, and we will let you scoot. I would like to now recognize our champion on this issue, someone who is really the leading force in our conducting this hearing today, who has been just tireless in trying to bring this issue before Congress. As we all know, this is a tough venue, but there are individuals among us who will take an issue and just hammer away and work at it, and Jim Ramstad, who has himself had problems and is a survivor from chemical dependency, I have heard him talk about it, has turned a difficult personal experience into something very positive for himself and also for our country and has been the leader since he came to Congress on this issue. He is also on the Ways and Means Committee and on the Health and Trade Subcommittees and House Law Enforcement Caucus and Medical Technology Caucus, and he is in the author in the 105th Congress of the Substance Abuse Treatment Parity Act of 1997 and sponsor of the Substance Abuse Parity Act of 1999 in the 106th Congress. And, again, just an untiring champion. And we thank you for your persistence and are pleased now to recognize you. STATEMENT OF HON. JIM RAMSTAD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA Mr. Ramstad. Thank you very much, Mr. Chairman, Ranking Member Mink, and members of the distinguished panel. I appreciate your leadership and in particular, Mr. Chairman, your kind words. Also, I want to thank Sharon, Mason, and Steve from your staff for helping put this hearing together, as well as Megan from my staff. Mr. Chairman, members, we are talking about the epidemic of addiction in America, dealing with an epidemic, and I use that term advisedly because 26 million Americans are presently addicted to drugs and/or alcohol. Of these addicted, 16 million people are covered by health insurance plans, but only 2 percent of these 16 million, as the chairman pointed out, can access effective treatment. That is because of, as Senator Wellstone explained, discriminatory caps, artificially high deductibles, limited treatment stays and copayments that don't apply to any other diseases. In short, only 2 percent of alcoholics and addicts covered by health plans are accessing treatment because of discrimination, discrimination against people with addiction. Now every day we all hear talk around here of the goal of a ``drug-free America.'' But we will never even come close to a drug-free America until we knock down these barriers of discrimination, these barriers to chemical dependency treatment. We can build all of the fences on our borders, all of the prison cells that money can buy, hire border guards, other drug enforcement officers, but simply dealing with the supply side of the drug problem will never solve it. Mr. Chairman, your words in your opening statement were very refreshing. You recognized the need to deal with the demand side, to deal with treatment as well as the supply side. The American Medical Association first recognized in 1956 that chemical addiction is a disease, and it is a fatal disease if not treated properly. If we are serious about reducing illegal drug use in America, we must address the disease of addiction by putting chemical dependency treatment on par with treatment for other diseases. If you believe what the American Medical Association told the Congress and the country in 1956, then you can't justify the discrimination. And that is why Senator Wellstone and I introduced the Substance Abuse Treatment Parity Act named after Harold Hughes in the Senate and Bill Emerson in the House with whom many of us served. Their recoveries from addiction certainly inspired thousands of chemically dependent people, including myself. We now have 50 co-sponsors in the House for this legislation. And this the bill that we are bringing forward would enable 16 million Americans to receive treatment without significantly increasing health care premiums. It is the right thing for Congress to do, and it is clearly the cost effective thing to do. I am a recovering alcoholic, and I know that the treatment works, and I know firsthand the value of treatment. I have been in recovery for over 18 years, and I am absolutely alarmed by the dwindling access to treatment in America. Over the last 10 years, over 50 percent of the treatment beds are gone. Even more alarming is the fact that 60 percent of the adolescent treatment beds in America have disappeared in the last 10 years. Why do we have youth violence? Why do we have so many problems with juvenile crime? Let's look and treat the underlying cause--addiction. Any police officer will tell you that 80 percent of it is related directly to addiction. Now, over half of the treatment beds are gone for adults, 60 percent for adolescents. Why? Because only 2 percent of the alcoholics and addicts covered by health plans are able to access treatments. It is time, Mr. Chairman and members of this panel, to reverse this alarming trend. It is time to end the discrimination against people with alcoholism and drug dependency. It is time to provide access to treatment by prohibiting the discriminatory caps, the high deductibles, the copayments that don't apply to any other disease. We have all of the empirical data, including actuarial studies, to prove that parity for chemical dependency treatment will save billions of dollars nationally while not raising premiums, as you explained, more than two-tenths of 1 percent in the worst-case scenario. Dr. Roland Sturm is here, the senior economist with the RAND Corp., to testify on the cost savings from parity for treatment. Because that is the first question I asked when I was approached by people with addiction and others from my district to champion this legislation. The first thing I asked, what is it going to cost in terms of increased premiums? In addition to savings billions of dollars, every dollar spent for treatment saves $7 in health care costs, criminal justice costs, lost productivity, injury, sub par work performance, and so forth. A number of studies have shown that health care costs alone are 100 percent higher for untreated alcoholics and addicts compared to people like me who have had the benefit of treatment. Think of that. Health care costs for these 26 million untreated alcoholics and addicts today in America are 100 percent higher than they are for people like me and Ms. Rook, who will testify shortly, who have had the value of treatment. Mr. Chairman, I would like to address one last point which has been raised in opposition to this critical legislation, and that is the argument that it imposes a mandate. H.R. 1977, the Substance Abuse Treatment Parity Act, does not require insurance companies or health plans to cover anyone for treatment of chemical dependency. It simply bans discrimination by saying that addiction must be treated like any other disease. Plus there is an exemption option. If the sky fell in and for some reason health care costs increased 1 percent or greater, then the parity requirement is off. No parity. And of course businesses with 50 employees or fewer are exempted under this legislation. Let me just say in closing, Mr. Chairman and Members, that I truly do appreciate this hearing today. The fact that you accommodated my requests for many of the witnesses here today, you are going to hear from some incredible people, and I hope many of you can hear their testimony. They are vital stakeholders in the battle against drugs and alcohol addiction, recovering physicians and people, employers and insurance company representatives. They know, like the American Medical Association told us in 1956, that we are dealing with a disease. If you believe that, if you accept that, then there is no way that we can justify the continued discrimination against people with addiction. We cannot justify discrimination against this disease. We also know and I know firsthand that this disease, if not treated, is fatal. It is a fatal disease we are dealing with. And I am very grateful as a recovering alcoholic, because I know, Mr. Chairman, without any doubt at all if it weren't for treatment, I would be dead. I would not be here because of the quantities of alcohol that I was consuming over a 12-year period of time. I didn't want to be an alcoholic. I had two uncles who died of this addiction. One was a doctor who did very well on my mother's side of the family. The other was a very successful businessperson, my uncle George in Alaska, who died after making millions of dollars in the construction business, who died on Skid Row in Anchorage drinking wine out of a brown paper bag. I didn't want to be an alcoholic. Nobody chooses to be an alcoholic. There are various components to this disease, and I trust that this panel understands the disease nature of addiction. I truly hope that each one of you will work hard with me, with Mark Souder, with others who are championing this legislation because, believe me, it is not my battle alone. We have 50 cosponsors bridging the ideology gap in the House, from some of the most conservative friends and Members on the far right to some of our most liberal friends on the far left, and a lot of us who are more centrist. This is not a political issue. It should not be partisan. It is a human issue, a life-or-death issue. And, Mr. Chairman, again, let me express my gratitude to all of you for holding this hearing today and working together in a bipartisan, common-sense, pragmatic way to move this legislation forward. Thank you. Mr. Mica. Jim, I thank you for your very compelling testimony and, again, your leadership on this issue. You do so I think from the heart and from personal experience in trying to bring some hope and resolution to the great personal problem that you have had and so many others have experienced. [The prepared statement of Hon. Jim Ramstad follows:] [GRAPHIC] [TIFF OMITTED] T6251.019 [GRAPHIC] [TIFF OMITTED] T6251.020 Mr. Mica. I would like to see if you have any questions, any questions from our side? Go ahead, Mr. Hutchinson. Mr. Hutchinson. Thank you, Mr. Chairman. I want to express my appreciation to Representative Ramstad for his compelling testimony and personal experiences he shared. I doubt that there are many Members of Congress who do not have some family member somewhere who has been impacted by this. In my life, I have had a nephew, and I have very close family members that have had substance abuse problems, and it can be fatal. For my nephew, it was not a matter of access to a treatment facility, it was a matter of it not being successful, and he ultimately committed suicide. I am certainly struck by your testimony. There has been a decline in adolescent treatment beds, and I would like for you to elaborate why you see that is the case. Is it simply a lack of resources and people cannot afford these beds? And then what obstacles are you running into getting this legislation through? Mr. Ramstad. Thank you for the comments and for sharing your own family experience. Each week on the average I get two to three calls from people, mostly in Minnesota, but sometimes elsewhere, recently in Oklahoma, Florida, from people with sons or daughters, families who are suffering the ravages of addiction. Virtually all of these people, most of them, although the one in Oklahoma didn't, most are covered by insurance plans. One or two of the parents are gainfully employed and covered for substance abuse treatment. But because of the limitations placed on the plans, they are not able to access treatment. I wish I had all day, and I would like to share with you a couple of those statements. A family in Eden Prairie, a family in a town in Oklahoma and a family in Florida who have been absolutely devastated, and at least two of those families had insurance, but the main problem is only 2 percent of the 16 million people covered under health plans are able to access treatment because of the limited treatment stays, on the average from 2 to 7 days. Dr. Smith, a Navy Captain, is going to testify later today. He is the expert. He knows more about addiction than anyone in this country. He will tell you that no one can get meaningful treatment in 2 to 7 days. The artificially high copayments and the caps that don't apply to any other disease are what we are trying to overcome and eliminate. Mr. Hutchinson. This is a disease, but it is related to behavior as well. Is there a comparison where other diseases that are impacted by behavior is covered, but for this there are all of these caps? Mr. Ramstad. I am not sure that I understand your question. Another disease that is caused by---- Mr. Hutchinson. For example, I can see people objecting saying--and I think it is perhaps through a lack of understanding--that substance abuse relates to behavior. You start with a weakness, it leads to a disease, and so why should everyone who is on a health plan subsidize someone else's poor behavior habits. I am thinking this through in my own mind. You have heart disease, also, but that is related to behavior because you have not--perhaps not eaten correctly. Mr. Ramstad. A good example is lung cancer caused by smoking. We were told by the AMA about the direct link, the cause-effect link, causal relationship between smoking and lung cancer, but we don't discriminate against lung cancer patients like we do alcohols or addicts. I think the American Medical Association, based on the chromosome research--and there are experts following me in the testimony today who can testify as to the disease concept, but I think they would question--I don't think that I am a weak person. I never thought of myself as a weak person. But when I had a beer or a glass of wine I responded differently from my nonaddicted mother and sister, from other friends who are not alcoholics or addicts. It is partly physical and partly psychological and partly emotional. Mr. Hutchinson. I yield back the balance of my time. Mr. Mica. We only have 4\1/2\ minutes before this vote. Mrs. Mink. Yes, I just want to say that I am certainly impressed by your testimony, and if I am not already a cosponsor, I will become one. Mr. Ramstad. You are and thank you. Thank you for your cosponsorship. I should have pointed that out. Mr. Mica. Mr. Tierney. Mr. Tierney. The cutoff point at 50 employees or less, how many people does that leave out and was that strictly a decision over what you could gather support with? Mr. Ramstad. That was the pragmatic part of the bill, and we made some other changes too. Many changes we have made are positive. One provision addressing faith-based treatment centers is appropriate. I am close to a faith-based treatment center sponsored by an Assembly of God Church in south Minneapolis, and I go there frequently and share my story and listen to the kids' stories, and their results are about the same as Hazelden or Fairview Recovery Services or Turning Point or any of the other programs that I am familiar with. Mr. Tierney. Would that add a significant cost or is there just the perspective of people that would add a cost that makes you back off that on the bill? Covering employees of 50 or less, would that add to the cost of this whole operation, or is it just that people perceive that so you want to stay away from it politically? Mr. Ramstad. In working with the various groups in putting this bill together and getting last year 98 cosponsors and this year 50 already, we had to give and take a little bit. I would just as soon not see that exemption, but to get the bill moving and to bring in conservatives and others, we compromised. Mr. Mica. We are down to about 3 minutes. If you want to come back, Jim. Mr. Ramstad. I would be happy to come back. Mr. Mica. We will come back. In 15 minutes we will be back here. [Recess.] Mr. Mica. We will call the subcommittee meeting back to order here. I did not have a chance to ask questions and will do so at this time. Mr. Ramstad, one of the concerns is that, again, the potential cost, increasing costs. I asked Senator Wellstone about this, and you did tell me that you have a trigger in your Substance Abuse Parity Act. That 1 percent premium increase would allow companies to, I guess, exempt themselves from this. Could you tell us how that would work, specifically? Mr. Ramstad. How the exemption option would be utilized? Mr. Mica. Right. Mr. Ramstad. It is simply an option on the part of business. Mr. Mica. They have to experience a 1 percent, and then it is triggered? Mr. Ramstad. Exactly. Then the option is up to them. Mr. Mica. All right. What about ERISA plans. Are they covered? Mr. Ramstad. ERISA plans, yes, similarly. Mr. Mica. All right. And, as I mentioned, we have eight States that have now adopted some type of parity provision, somewhat similar in requirements. Why do you believe the Federal Government should get into this particularly mandated requirement, as opposed to allowing each State to pursue its own legislative remedy? Mr. Ramstad. Well, for several reasons. I reviewed my good friend Chip Kahn's testimony last night. Chip is not supporting this legislation on behalf of the Health Insurance Association of North America, but he will after we educate him as to the cost effectiveness. I haven't spent enough time with Chip yet. But as Chip's testimony pointed out, Mr. Chairman, even he recognizes that the State laws are inconsistent and incomplete. In his statement he notes that among the States with substance abuse parity laws, quoting from his testimony, requirements vary as to who is eligible for the expansion of benefits and what benefit levels are required to be covered. Because of those inconsistencies, we are not realizing the full cost savings. To complete the answer to the question that you posed to Senator Wellstone and he deferred to me, and there will be more extensive testimony from the representative of RAND Corp., but let me put it this way so everybody can understand. For less than the price of a cup of coffee per month, we can treat 16 million addicts in America. That is the bottom line. For less than the cost of a cup of coffee per month, increase in premiums, two-tenths of 1 percent, we can treat 16 million Americans addicted to drugs and/or alcohol today. The RAND Corp. study found that removing the annual limit of $10,000 per year on substance abuse treatment is estimated to increase insurance payments by 6 cents per member per year. The RAND Corp. study also found removing a limit of $1,000 increases payments by $3.40 per year, or 29 cents per month. I don't know any coffee you can buy for 29 cents. Mr. Mica. Thank you. Let me see, Mr. Barr was here and was about to ask a question. Then we will go to Ms. Schakowsky. Mr. Barr. Mr. Barr. Thank you, Mr. Chairman. Starbucks' coffee costs considerably more, which is what I drink. Mr. Ramstad. It sure does. Mr. Barr. But I guess you get what you pay for. Jim, you used a lot of statistics this morning, and one that I am not sure that I caught correctly was one you mentioned, in talking about law enforcement, 80 percent is related to addiction. Is that the figure--I have heard the figure from a lot of law enforcement people that 80 percent of the crime they see is drug-related, which is not to me necessarily the same as addiction. A lot of that is drug trafficking, money laundering, sales, so-called recreational use and so forth. Is that what you meant by the 80 percent, or is there something---- Mr. Ramstad. I was alluding to the Columbia University--the recent 10-year comprehensive study of crime in America conducted by the Institute of Criminal Justice at Columbia University in New York City, and their finding, exhaustive research, is that 80 percent of all criminal activity in America is related directly or indirectly to drugs and/or alcohol addiction, to drugs and/or alcohol. Mr. Barr. I think I would be a little bit suspect with that. Mr. Ramstad. I can also show you six other studies that corroborate the Columbia University study. More importantly, or just, I think, Bob, as importantly, come and ride with me in north Minneapolis or south Minneapolis or St. Paul or my district, certain parts, and any police officer will tell you-- and I spent 1,600 hours riding in squads since 1984 and chronicled every hour--every cop tells you the same thing. Mr. Barr. I am not saying 80 percent of the crime is drug related--it's not. I understand that. That was pretty much the figure when I was the prosecutor and so forth. I don't accept the fact that it is addiction-related. I think it is drug- related. It may be how broadly one defines ``addiction.'' I may not agree with how they conducted their studies using the term addiction. But to me somebody that sells a joint of marijuana is violating the law, and that is a crime that is related to drugs. It is not necessarily a crime related to addiction. I don't think that everybody that uses drugs is addicted to them. I think a lot of people choose to use drugs, and the same as a lot of people, I understand that some people--I think a lot of people choose to use alcohol. If one says that people can't choose not to be--don't choose to be an addict or an alcoholic, one also has to accept the fact that a lot of people, even those who grow up in families with a history of alcoholism, choose not to become alcoholics. So it plays both ways. I think we have to be very careful in the use of some of these statistics. I am not saying you are not being careful, but one really has to look at the terms on which these studies are based. I think it might very well be valid to say that 80 percent of crime is drug related. To me, that is not necessarily if we simply took care of those who are suffering true addiction, the crime problem would go away. I don't think that would happen. Mr. Ramstad. Certainly you believe the statistics from the American Medical Association, and they have been corroborated as well by other studies, by 10 or 12 studies that I have seen, that there are approximately 26 million--obviously you can't quantify it to the person, but approximately 26 million people in America today addicted to drugs and/or alcohol. That is a fact. One out of 10 Americans is addicted to drugs and/or alcohol. Nobody disputes that, that I know of. Mr. Barr. There are an awful lot of people, far too many people, that use drugs and alcohol. Mr. Ramstad. I am talking about those addicted. You are right, there are recreational users, I hate that term, but that is what everybody understands, that aren't chemically dependent people. I know a lot of people. Most of my friends will have a beer or glass of wine. They don't have disastrous consequences. They are not chemically dependent. They can stop after one glass of wine or two, or a beer or two. They are not addicts, chemically dependent. I didn't choose to be chemically dependent. I wish I weren't. I would love to have a beer after running my 3 miles. Of course, that would defeat the run, but playing tennis or whatever. I didn't choose to be chemically dependent, any more than I choose to be a male versus a female. It is not something I chose. I think if you look at the research and the report to the Nation, to the Congress, in 1956 by the American Medical Association that explains the disease nature, and then look at the followup research that has been done, the Bill Moyer series last year on public television that went to identifying the genes and the chromosomes that are different from people like me, who are chemically dependent, and people like my sister, the commissioner of corrections in Minnesota, who is not. Mr. Barr. Thank you. Mr. Ramstad. Thank you for your question. Mr. Mica. Thank you. The gentlelady from Illinois. Ms. Schakowsky. Thank you, Mr. Chairman. Mr. Ramstad, I am proud to be a cosponsor of your legislation and couldn't agree more on whether we want to dispute some dollars. It seems to me everyone, all experts in the field, are in agreement that it is the most cost-effective way to deal with this issue, is through treatment and prevention. I wanted to ask you a question about the 1 percent waiver. Is that in our bill because you are confident that most won't achieve that 1 percent? We certainly don't want to set barriers that are going to---- Mr. Ramstad. You know, when I talk to small businessmen and women back home, most of them realize, who have programs that cover chemically dependent employees, they realize the value in this. They would be willing to pay increased premiums to have their people treated. They realize that absenteeism drops markedly when people are treated; productivity increases dramatically when people are treated who are chemically dependent. The empirical reason for that--I explained the political reason to get the bill moving. The empirical reason for that is some small employers are having trouble getting insurance, as we all know, and we don't want to put another burden. We want to give the employers the option if costs for, let's say, I said before, if the roof fell in and costs did increase more than 1 percent because of parity, we want to give them that option to be exempted. Ms. Schakowsky. When we say premiums have increased because of parity, in your discussions with the insurance industry has there ever been clear documentation or justification or explanation of why insurance premiums go up? It is kind of a mystery I think in many cases. Mr. Ramstad. That is why Mr. Kahn is here today, to answer that question. I hope you ask it, because that is a fair question and one that needs to be answered. I think there is a certain shroud of mystery surrounding the increases. Some of the costs are certainly justified and easily quantifiable and understandable, and others I don't think are. But the most compelling evidence and the most I think compelling justification for this legislation from a cost standpoint came from the Family Research Council. Listen to this. The Family Research Council--a very credible organization and credible study--found that, ``Alcohol and drug addiction in economic terms cost the American people $246 billion last year. American taxpayers paid over $150 billion for drug-related criminal and health care costs alone.'' $150 billion for criminal justice and health care costs alone. That is more than we spent on education, transportation, agriculture, energy space and foreign aid combined. Think of that. And that is what the insurance companies need to realize, need to understand. That is what most small business people understand, the cost if they don't do it is much greater than any 29 cent increase per premium if they provide help. Ms. Schakowsky. Add in some of that foreign aid, because we are right now discussing a very substantial amount, several billion dollars to Colombia possibly to fight the drug war, and yet it seems to me that this is a more cost-effective way to address the problem. I am not necessarily posing it as an either or. Mr. Ramstad. I don't think there is any question, we need both. We need to emphasize the supply side and the demand side. If you look over the last 12 years in America, two-thirds on the average of the resources have gone to the supply side, one- third to the other side. As General McCaffrey explained not long ago, this single-step parity for substance abuse treatment would do more than any other measure to cut down on the drug problem in America. We have got to treat the people already addicted. We are emphasizing the supply side and new Border Patrol agents and keeping the drugs out. What about the 26 million Americans right now living and working, as the chairman pointed out, who are already hooked, who are already addicted? We have got to deal with them, because those numbers are increasing. If we don't deal with the problem of addiction, if we don't treat these people already addicted, we are never going to see an improvement in this situation. Ms. Schakowsky. Let me ask you a more specific question. Many private insurers that currently cover substance abuse treatment only cover expenses associated with detoxification but don't cover expenses associated with ongoing support services. How would your bill respond to the need for ongoing support services? Mr. Ramstad. Well, again, a person who is a diabetic or who has heart disease or lung disease, much of that is up to the providers, the diagnosis, the evaluation. For some people, long-term treatment is necessary and is desirable. For others-- I spent 28 days in St. Mary's, it was then called St. Mary's Rehabilitation Center in Minneapolis, undergoing treatment for alcoholism. Then I went to recovery groups. I have been going to recovery groups every week for 18 years. Others go to 6- month programs and halfway houses. That is pretty much a decision that needs to be made by the professionals, the chemical dependency, chemical treatment professionals. Ms. Schakowsky. Thank you. Mr. Ramstad. Thank you for your cosponsorship and help on this bill. Mr. Mica. I would like to recognize the gentleman from Indiana, Mr. Souder. Mr. Souder. It is good to see you here this morning. I don't have a lot of questions, but I am pleased we have been able to work together on this bill. I commend you for your persistence and your leadership. Clearly, in keeping the bill moving forward, had you not been willing to speak in conference, work with the leadership, continue to push for hearings in many places and try to hear the different concerns that people had, this legislation would not be getting a hearing today. We would not be continuing to gain cosponsors in the House. I want to congratulate you for that, first off. I also think you have accommodated a number of concerns that are most frequently raised, which I am sure we will hear today and which have come through in the testimony, about the costs and about accountability. We all know that unless people are accountable with this, they can easily burn up a lot of dollars through drug and alcohol treatment when it is not a personal decision to go. I think everybody is concerned about that. You may want to make a few additional comments on that. I am sorry I missed the first part. I also think that, as we work through drug-free schools, which is a prevention program over in the Education Committee, as we work with the question of Colombia, because if we don't address the amount of supply of illegal narcotics then the price will go down, which means people use it more. We have all those different things. But we also can't neglect the treatment side. Because, ultimately, if our prevention works and if our interdiction works, you still have a large pool of not only those addicted to cocaine and heroin but to alcohol who are not being reached, and ultimately a lot of the problems, whether it is work productivity or crime in our society, are related to those two things. I mostly wanted to commend you at this point and thank you for your work. If you wanted to comment on any of those points further---- Mr. Ramstad. Thank you, Mr. Chairman. Thank you, Mark. You know, you have truly been a leader here, and your efforts in putting this bill together have been very, very appreciated. We wouldn't have had 98 cosponsors last year if it weren't for your leadership. We wouldn't have 50 cosponsors this year if it weren't for your leadership. I appreciate working together with you. I want to work with all of you. We think we have enough caveats, regulations here, so there aren't going to be abuses. We don't want abuse. We don't want money wasted. This is about saving money and saving lives. Certainly some of the things you brought into the bill have been very important in that regard. John Kasich, a cosponsor of this bill with me, who has been very helpful from the dollar and cents standpoint, John Kasich understands this problem, and certainly you understand it and other members of this committee. That is very refreshing. Many of you have heard me say this many times in conference, I wish we could turn Congress into one big AA meeting where people say what they mean and mean what they say. I think this panel does that. That is why I am confident that, working together, we can get this done. Mr. Mica. Thank you. Mr. Kucinich. Mr. Kucinich. Thank you, Mr. Mica. To Mr. Ramstad, I want to add my voice to those of you on the committee who are thanking you for the work you have done. People ask me, Mr. Chairman, about serving in the House of Representatives and about the people I serve with, and what I have found in the 3 years now that I have been here is that we are very fortunate to be serving with each other. We have people here of depth and of character, people who are willing to share their deepest experiences, not with just us but with the Nation. And, through you, people all over this country are going to be given an opportunity to transcend themselves, to become bigger and better than they are and through their experience to help a Nation lift itself up. So, I think all of us owe you a debt of gratitude for your courage, for your willingness to make your story parts of America's story and to help the Nation recover. So I thank you. I look forward to working with you on this. Mr. Ramstad. Thank you, Dennis. Mr. Mica. Mr. Ose. Mr. Ose. No questions. Mr. Mica. We certainly thank our colleague again for his leadership, for his testimony today, and for his hard work in bringing this very troubling issue before the Congress and the American people. We thank you. We will excuse you at this time. Thank you, Mr. Ramstad. Mr. Ramstad. Thank you again. Mr. Mica. We will move forward with the hearing. Our second panel today is one individual who is going to offer her personal testimony, and I will call forward as the witness Susan Rook. Susan Rook is a media consultant. Susan has covered most of the breaking news stories of the last decade. She joined CNN in January 1987 and became a nationally prominent news anchor while co-anchoring crime news with Bernard Shaw. She was chosen to pioneer the network's daily interactive town meeting, a show that we know as Talk Back Life. On Talk Back Life, Susan became the first journalist to juggle both a live studio audience, newsmaker guests and a nationwide high-tech audience into a quick-based interview and discussion program. She lives now in Washington, DC, and she has been willing to come forward today and share with us some of her personal experience with addiction and treatment. I must say, first of all, that we welcome you. This is an investigations and oversight subcommittee of Congress. We had congressional Members. We don't swear them in. We will swear you in and ask you at this time if you would stand, please, raise your right hand. [Witness sworn.] Mr. Mica. The witness answered in the affirmative. We are pleased to have you join us. We look forward to your testimony, and you are recognized. STATEMENT OF SUSAN ROOK, MEDIA CONSULTANT Ms. Rook. Thank you, Mr. Chairman. Thank you, all of you, for the privilege and the opportunity to speak to you today. You mentioned my work on CNN. As a journalist, I have always looked for stories that needed to be told. For two decades I have reported on the so-called war on drugs. Well, today I am here to give you a live report from the lines. I am an alcoholic and an addict. I am in recovery. I am alive today because I was able to get access to the medical treatment that was required to treat my disease. An overdose landed me in the emergency room. Without access to drugs and alcohol, I started the withdrawal process. I turned to this nurse that was there and I said, ``Why can't I hold a glass of water without spilling it? Why do I feel so sick?'' and I really was very physically sick. I asked her what was going on. She looked at me with a mixture of disgust and pity on her face, and she said ``Because you are a drunk and a junkie. You are detoxing. What do you think is happening to you?'' Until that moment, I did not know. I thought I knew what drunks and junkies looked like, and I certainly didn't fit that picture. I am here today because I may not fit your picture of what a drunk and a junkie looks like. I want you to see the face of addiction, and I want you to see the face of recovery. Until the comment from that nurse, I didn't know that I had crossed the line from being a social drinker to being an addict. Current scientific evidence shows that there is a line that people with chemical dependency cross. Certainly that initial use is voluntary, but that use triggers a biological reaction that changes my biology, making it unable for me to stop. The right to have the choice of whether to have a drink or not drink, or have just one drink, disappears. The obsession and compulsion are the most powerful things I have ever seen or experienced. I could not moderate my use of drugs and alcohol, and I could not stop. Treatment interrupted that compulsion, and it gave me the opportunity for sobriety. Top management came to the hospital, and they gave me a choice. I could either stay in the hospital for the 72 hours required for what was listed as a suicide attempt and go back to work, or I could immediately go into alcohol and drug treatment. I chose treatment. Shaken by the look of pity by that nurse and armed with the knowledge that I have a disease for which there is no cure but there is the possibility of recovery, I went off to treatment. About a week into treatment insurance ran out. I was scared. Physically, I was still very sick. Trying to negotiate the maze of the insurance company, that familiar hopelessness reappeared. CNN management and an effective and committed employee assistance program coordinator stepped in and told me if I was willing to complete the entire 28-day treatment program, CNN would pay for anything that insurance did not cover. I stayed in treatment and have been abstinent from drugs and alcohol ever since. Two things made the difference for me. I was lucky enough to work for a company that treated my disease as a disease and gave me access to the same kind of medical care that they would give anyone who has another brain disease, like Parkinson's. CNN did that. The insurance company did not. According to the Hay Group study, substance abuse benefits have decreased 75 percent in the last 10 years. I called where I went to treatment, Ridgeview, outside of Atlanta. I called Ridgeview yesterday and I said, say, do you guys still offer that 28-day treatment program? They said, no, managed care won't allow it. We don't even have it. If I got into treatment today, I couldn't go and get the comprehensive medical care, even fully paying for it myself or my company paying for it, because it is not there. As you go into your business today, I ask you to look around you. Studies show that 7 out of 10 people are affected by this disease, 1 in 10 people have it. I want you to wonder how many people are living a double life, as I did when I was giving you the news and when you watched me and when I was doing all the things that you mentioned in the bio. I was drinking and using illegal drugs, and chances are you certainly didn't know it, and nobody else did. As you go in your cars to go home and go about your business, I want you to look around you and wonder, who is in that car next to me? This is the face of addiction. I applaud your efforts to reduce the supply of drugs coming into this country. I think that is a very important component of this, and I urge you to put greater emphasis on demand reduction techniques like treatment and prevention. Mr. Chairman, you have the power to lead this country in moving the conversation of alcoholism and drug addiction from a moral arena to a medical arena where it belongs, and I ask you to use that power to do that. Please make treatment a visible component of our Nation's drug policy. This is the face of addiction. Can you afford to ignore it? This is the face of recovery. Thank you for seeing it. Mr. Mica. Thank you for your testimony and your coming forward and giving us your difficult experience. [The prepared statement of Ms. Rook follows:] [GRAPHIC] [TIFF OMITTED] T6251.021 [GRAPHIC] [TIFF OMITTED] T6251.022 Mr. Mica. I want all the Members--also, I have heard her saying that I have the power to change this. As chairman, I want you to vote in lockstep with me. Mrs. Mink. Yes, sir. Yes, sir. Mr. Mica. I wish it was that easy. Sometimes I feel like I am drowning in a sea trying to get--and failing--in trying to get the attention of the Congress and the American people, and it is a tremendous drain on our society. The cost is just unbelievable, not only in dollars and cents, but in human tragedies, as you have cited. One of the difficulties we have is trying to sort out how we can do things that will be most effective, and the question before us today is do we mandate insurance coverage for substance abuse and chemical dependency. When I say mandate, bring the Federal Government into the arena. And then there is the question of the effectiveness of what is done. You almost sort of presented a dream case today because most of the cases--you are very fortunate. It sounds like you went into a treatment plan, you had 7 days' coverage and then, through the largesse of your employer, they went on and covered you, and you have since maintained recovery. But the unfortunate story we hear is so many of the treatment programs are not working. You feel, though, that the 7 days--you went on to 28 days--were adequate at least for you. If you had stopped at 7, what do you think the outcome would have been? Ms. Rook. I don't think I would be sober today if I had simply detoxed. The obsession and compulsion are incredibly powerful. When I was talking to the insurance company, and I really thought that I was going to have to leave, I was scared. I was scared. But that 28--what that 28 days bought me was a little bit of time and distance, a little bit of foundation, of security and safety. That was completely invaluable. I mean, I can't even measure that. Mr. Mica. Mrs. Mink. Mrs. Mink. Yes, thank you very much for your very compelling testimony. In reference to the 28 day treatment, if we at least did that in terms of our insurance coverage, do you feel that that would be an adequate first step, if we weren't able to move to a more comprehensive type of coverage? Ms. Rook. First, let me address the issue of mandating health care. The parity legislation is actually about being straight with people who are getting health care. A $10,000 cap does nothing. What I would really love to see is insurance companies look at people and say, you know what, we are actually pretending to give you insurance coverage, but here is the deal: We are not. So if you are going to use this coverage, you need to be aware of it. I would like honesty in the advertising. I wonder how many companies are paying for something that they are actually not getting? I was lucky enough to work for a company that stepped in and said we will do the difference. But I wonder how many companies and business people out there think, I am looking out for my employees, and then bump up against that cap? I am not a proponent of Federal mandates. I don't want the Federal Government to step in and say everyone who is an addict or alcoholic, you need to trot into treatment for 28 days. I don't want the Federal Government messing in lives like that. I didn't want--I would not want it messing in mine. So I am not advocating that. I am advocating, one, truth in advertising; two, an opportunity and a commitment on the Federal level to have treatment as an available option for the people who want it; and, third, it is cost effective. When you put somebody in jail--so a 28-day program at Hazelden, for example, is about $15,000. When I went through, it was about $20,000. So for a month it is $39,000 to keep someone in prison. Now, when they get out of prison, do you want them making their decisions drunk or sober? The decision to go in and check with the parole officer, the decision of whether or not to really go look for a job or, hmm, let's just boost that car and toss the kid out who is in the back seat. How do you want people to make their decisions? That is actually what my request is. Not a blanket Federal mandate of going in and actually doing things, but a commitment on the Federal level that when treatment is available and people can get into it, it works. Mrs. Mink. Thank you very much. Mr. Mica. Mr. Barr, our vice chairman. Mr. Barr. Thank you, Mr. Chairman. I appreciate the hearing; and I appreciate, Ms. Rook, your being here and our colleagues before you and the witnesses that will come after. The only thing I would caution would be I guess it all depends on what mandate means. I mean, the legislation--and I am not saying I am for or against the legislation, because I need to look at it a great deal more carefully. But to say that it doesn't include mandates is simply, I think, inaccurate, unless one uses a very unusual definition of mandates, because it does mandate that group health plans shall do certain things and cannot do other things. So there are mandates in it. I think we need to look at it, to weigh the mandates. Obviously, there are a lot of laws that provide for a lot of mandates, but it does contain some mandates. What we have to weigh up here is the policy, the cost, and the policy decisions. Do we want to remove any flexibility that insurance companies might have for making sometimes legitimate perhaps economic decisions? They may have a legitimate reason to treat certain types of coverage somewhat different than others, based on history. I do think that saying we should remove this, the moral component, completely may not be the best way to cast this argument, because we do want to send a message to people that alcohol is bad and the use of drugs is bad, and not to say, well, it is OK and we can't have any stigma at all attached to it. So I think, from my standpoint, I just stay away from saying we ought to remove any moral component. I think it is important to have a moral-ethical component. That should be reflected in the policies that Congress sends. That is just my reaction. I do appreciate your being here and appreciate your work in the media very much. Thank you. Ms. Rook. Thank you, sir. You mentioned legitimate economic decisions. I am very compassionate to the insurance companies looking and saying we don't want to increase costs. I am compassionate to the employers who look and worry and say I don't want to increase costs. But here is the deal: If people aren't sober, the insurance cost that isn't going up over here comes over here. So you are going to have to go back to your voters and explain why you are going to have to build more prisons, and they are going to have to pay for it. Mr. Barr. Well, I certainly try to and think I succeed fairly well at listening to my constituents, and they are a compassionate constituency. They believe in fairness. They also believe in tough law enforcement. They don't like drugs. They don't like alcoholism either. They want to strike a balance, and that is what I try and do, also. Because there are some very good reasons for what you are saying. But to me it isn't simply that, well, we have alcoholics and drug addicts out there. Therefore, we must mandate that they be taken care of. I think it is a little more complex than that. We need to weigh in a lot of different factors. The economics of it, you are right, may in the great cosmic scheme of things, everything we do irons out in the end. We save some money here, we cause further problems over here. But we still have to make those decisions. I will look very carefully, Mr. Chairman, at this legislation. I think it is important. I appreciate it coming up, and I appreciate your being here. Ms. Rook. Thank you, sir. Mr. Mica. The gentleman from Arkansas, Mr. Hutchinson. Mr. Hutchinson. Thank you, Mr. Chairman. I do not have any questions. I just want to express my appreciation for your testimony today and for sharing your story with us. Let me thank the chairman also, just for having this hearing, because I had not focused on the legislation, and this allows us to do so. I look forward to doing that and hopefully moving this forward. Thank you for your testimony today. Ms. Rook. You are welcome. Mr. Mica. Mr. Ose, the gentleman from California. Mr. Ose. Ms. Rook, thank you for coming. I appreciate it. I want to explore a little bit the insurance side of the thing, because we have a lot of debate going on here in the House about access and availability and what have you. Clearly, CNN offers a health insurance program for its employees. Do they give you a choice, or is it just kind of this is the program, period? Ms. Rook. I don't know what they do now. I left CNN 2 years ago. Mr. Ose. When you were there. Ms. Rook. When I was there, we got a choice. Employees could look and say, I want this plan, this plan or this plan. I don't know what they are doing now. I would imagine it is the same. They have got a really good commitment to quality of life for their employees. Mr. Ose. So CNN gave you a choice, and the final decision, the employee would pick which of those programs best suited their needs. Ms. Rook. Yes. Mr. Ose. It wasn't crammed down, if you will---- Ms. Rook. No. Mr. Ose. And then the amount of cost, if you will, the premium reflected the services or the benefits that were in each of the programs I imagine. Ms. Rook. Yes. I had the Cadillac deluxe plan. I don't remember what it was or what the insurance company was, but I checked the one that said, yes, you get everything covered, whatever you want. Mr. Ose. OK. Ms. Rook. And substance abuse coverage was $10,000. Mr. Ose. Was capped at $10,000. Ms. Rook. Yes. Mr. Ose. And if I understand your point today, it is that, No. 1, the cap is too low, and, secondarily, businesses should be offering the substance abuse treatment because from your perspective it is a disease over which you don't have any control. Ms. Rook. Yes. Mr. Ose. I am accurate on that? Ms. Rook. Yes. Not just the cap is too low, but let's be straight about it. People think they are buying insurance, and they are not. It would be like if I have breast cancer and I go in and they say you can get treated for your breast cancer, but only $10,000, which will not cover much. Just be straight about what you are offering the people. That is not insurance. That is a double bind. Mr. Ose. That is the part--I don't mean to be argumentative, but that is the part I don't quite understand. You are able to cite the provisions very clearly today, and from where I sit $10,000 worth of coverage is better than zero coverage, even though it doesn't address the problem in its entirety. But the ultimate decision as to which of those programs--I presume some of the other programs had zero for substance abuse treatment. The ultimate decision for that, which plan you chose, was left by CNN in the lap of the employee, if I understand you correctly. Ms. Rook. Yes, correct. Mr. Ose. Thank you, Mr. Chairman. Mr. Mica. The gentleman from Indiana, Mr. Souder. Mr. Souder. I wanted to followup, too, because our legislation doesn't mandate any particular line of coverage, and while 28 days may have been essential for you, a smaller program may have been enough for other people, and, in fact, some people can go through three or four programs. Part of the goal of this legislation is to make sure there is at least a minimal option. Could you describe--you said you have been drug and alcohol free. Could you explain to us a little bit--because many people stumble. When you are battling it, it is not easy just to go cold turkey, even if it is 28 days, and suddenly not be tempted by the sin and the same problems you had before. Could you explain a little bit about how you felt previous, why you went into this treatment, and what gave you the strength to then be free after 28 days? That is a pretty amazing story. Ms. Rook. I didn't go in willingly. I went in because I overdosed and ended up in the hospital. I didn't think that I had a problem. Everybody that I knew drank and did drugs. My social life, my private life, was very--was completely separate from the life on CNN, completely separate. I did not know that I had an option of not drinking or not doing drugs. I didn't know that that was even possible. Treatment interrupted that and made me see, oh, look, sobriety is even possible. It never occurred to me that other people didn't live like I lived. It just didn't occur to me. What I got in treatment was a group of medical professionals skilled in what they do who were suggesting things for me to do in my recovery in the 28-day program and my recovery when I left treatment, when I actually left the facility. They made the decisions. They made the suggestions. And I guess that is one of the things that I am requesting that you look at, who is actually making the decision. Is it a clerk at an insurance company who is saying what is best or is it a professional? And you are absolutely right. Not everybody needs 28 days. You can do it in less. If something else works, great. Explore all of those options. But a trained professional making that is, to my mind, the way to go, instead of like a clerk. Mr. Souder. Are you part of an accountability group and did your company do anything that further held you accountable that if you did not change--tell me a little bit about that. It is still dramatic. Most people who go through programs struggle and often they make some progress each time they go through, but it is a real battle. Ms. Rook. I think Hazelden has a study that 50 percent of people who go to treatment are abstinent for their first year, and 80 percent are sober their first year, with one slip in between. I will tell you, if you had those kind of results with heart disease, adult onset diabetes and asthma, you would be doing pretty good. Personally, I do a personal program of recovery. I am not going to talk about that in front of the cameras. I will be glad to talk about that with any of you in private. I learned what I need to do to stay sober in treatment, and I do it. I am really clear. I did a lot of drugs. I drank a lot. I am really clear. I pick up, I am dead. Mr. Souder. Thank you. Mr. Ramstad. If the gentleman would yield very briefly. Mr. Mica. You are recognized, Mr. Ramstad. Mr. Ramstad. Susan is right; and Mr. Mike Conley, who is chairman of the Board of Trustees of Hazelden, will be able to elaborate on that, I am sure. Recidivism, as the American Medical Association studies have shown for chemical addiction, it is amazingly the same as for diabetes. The amount of recovery or recidivism, depending on whether you want to look at the glass half full or empty, is about the same as it is for diabetes. Recovery rates after treatment for addiction compare very favorably to most other diseases, are about the same as for diabetes, as was said. Mr. Mica. Thank you, Ms. Rook. Thank you for coming forward and providing us with your personal testimony today. Mrs. Mink and I said that you are very fortunate to be in recovery and through a treatment program that has been so successful for you personally. Unfortunately, we had over 15,200 who died from drug-induced deaths last year, and we have millions who are not covered, who are hopeless and a tremendous burden on their families, destroying their lives and not success stories. We are pleased that you would come forward and tell a little bit about your personal experience and maybe give some hope to those other individuals out there. We do have a vote in progress and just a few minutes left. We are going to excuse you and thank you again for your testimony. The subcommittee will stand in recess until 12:15. We will call our third panel at that time. [Recess.] Mr. Mica. I would like to call the subcommittee back to order. I would like to call at this time our third panel. The witnesses on that panel consist of Mr. Michael Conley, who is chairman of the Board of Trustees of the Hazelden Foundation; Dr. Michael Schoenbaum, who is an economist with the RAND Corp.; Mr. Kenny Hall, who is an addiction specialist with Kaiser Permanente; Captain Ronald Smith, M.D. and Ph.D., who is vice chairman of the Department of Psychiatry at the National Naval Medical Center; Mr. Peter Ferrara, general counsel and chief economist for the Americans for Tax Reform; and Mr. Charles N. Kahn III, who is president of the Health Insurance Association of America. I would like to welcome all of our witnesses. As I mentioned to our previous panel witness, this is an investigations and oversight subcommittee of Congress, and we do swear in our witnesses. If you would all stand, please, to be sworn. [Witnesses sworn.] Mr. Mica. The witnesses answered in the affirmative, and we are pleased to have each of you with us this afternoon looking at this question of substance abuse treatment parity. We will start right off with Mr. Michael Conley, who is chairman of the Board of Trustees of the Hazelden Foundation. Now since we have a large number of panelists, we are going to run the light and try to stick to it. It is 5 minutes for an oral presentation. If you have a lengthy statement or additional report or information you would like to be made part of the record, it will be included in the record by unanimous consent request. So we just ask your compliance with that set of time limits. We will put those complete documents in the record. With that, let's recognize Mr. Michael Conley, chairman of the Board of Trustees of the Hazelden Foundation. STATEMENTS OF MICHAEL CONLEY, CHAIRMAN OF THE BOARD OF TRUSTEES, THE HAZELDEN FOUNDATION; MICHAEL SCHOENBAUM, ECONOMIST, RAND CORP.; KENNY HALL, ADDICTION SPECIALIST, KAISER PERMANENTE; CAPT. RONALD SMITH, M.D., PH.D., VICE-CHAIRMAN, DEPARTMENT OF PSYCHIATRY, NATIONAL NAVAL MEDICAL CENTER; PETER FERRARA, GENERAL COUNSEL AND CHIEF ECONOMIST, AMERICANS FOR TAX REFORM; AND CHARLES N. KAHN III, PRESIDENT, HEALTH INSURANCE ASSOCIATION OF AMERICA Mr. Conley. Thank you, Mr. Chairman and members of the subcommittee. Good afternoon. My name is Mike Conley. I am here today as chairman of the Board of the Hazelden Foundation, as a retired health insurance executive, profoundly concerned with the negative trends that I see in the chemical dependency reimbursement systems, and as a grateful recovering alcoholic. I would like to thank you for the opportunity to testify before your subcommittee and would like to request that my entire written statement be included in the record. Mr. Mica. Without objection, so ordered. Mr. Conley. Thank you. I am testifying on behalf of the Partnership for Recovery, a coalition of nonprofit alcohol and drug treatment providers that include four of the Nation's leading treatment centers, the Betty Ford Center, Caron Foundation, Hazelden Foundation, and Valley Hope Association, collectively representing 250,000 individuals who completed treatment for alcohol or drug addiction. Today I would like to focus my remarks on three key areas: one, that addiction is a treatable disease; two, that good treatment is a cost-saving tool in the workplace; and, three, that H.R. 1977, the Substance Abuse Treatment Parity Act, is an important first step toward fully utilizing treatment benefits to society. My testimony reflects the strong need for a balanced approach between demand and the supply side strategies, including treatment, prevention, interdiction and criminal justice measures. Mr. Chairman, as a former businessman and health insurance executive, I know that good substance abuse treatment is a cost-saving tool in the workplace. A significant number of American workers abuse substances, and some of them--some of this occurs at work. Most current drug users age 18 and older are employed--in fact, 73 percent. The costs of alcohol and illicit drug abuse in the workplace, including lost productivity, medical claims and accidents, is estimated to be as high as $140 billion a year. Moreover, the societal costs are staggering. Fortunately, the tools for addressing the problem are available, as many enlightened employers have discovered. A couple of examples, Chevron Corp. found that for every $1 spent on treatment, nearly $10 is saved. Northrup Corp. saw productively increase 43 percent in the first 100 employees to enter an alcohol treatment program. After 3 years of sobriety, savings per rehabilitated employee approached $20,000. Oldsmobile's Lansing, MI, plant saw the following results 1 year after employees with alcoholism problems received treatment: Lost man-hours declined by 49 percent, health care benefit costs by 29 percent, absences by 56 percent. Despite the significant efforts of this subcommittee as well as others to improve the outlook for drug-free workplaces, small businesses unfortunately fall far behind when it comes to addressing substance abuse. The data is clear. Most small businesses will at some point be faced with an employee who has a substance abuse problem. Given that small businesses represent a large majority of employers, the work site is one of the most effective places to reach Americans. In short, good treatment and recovery policies are sound business investments for large and small employers alike. We believe that H.R. 1977 is the landmark legislation that takes an important first step toward giving people suffering from the disease of alcoholism and drug addiction increased access to treatment. This legislation does not mandate that health insurers offer substance abuse treatment benefits. It does prohibit health plans from placing discriminatory caps, financial requirements or other restrictions on treatment that are different from other medical and surgical services. H.R. 1977 will help eliminate barriers to treatment without significantly increasing health care premiums, and you will hear about it in a minute, but the RAND study did show that this could be made available to employees for $5.11 a year or 43 cents a month. Mr. Chairman, my statement details what the Partnership believes are some of the key ingredients for a public policy that effectively addresses the essence of the addition problem: Acceptance of the disease as a critical public health issue and a public policy with a balanced emphasis on treatment and prevention as well as interdiction and criminal justice. Our Federal drug policy should also recognize that all persons, regardless of their illness, should be treated with human dignity. H.R. 1977 goes right to the heart of the need for fair and equitable treatment for people suffering from this disease, and we believe it is a step in the right direction. And if I can just speak strictly for myself as a recovering alcoholic, it breaks my heart to know that so many people out there who need help are not getting help because of the system. They are not statistics. They are living, breathing people like me, a recovering alcoholic, with a potential of being important contributors to their families, workplaces and communities. You folks have the power to help get this back on track, and I sincerely appreciate your letting me share this with you today. Thank you. Mr. Mica. Thank you for your testimony. [The prepared statement of Mr. Conley follows:] [GRAPHIC] [TIFF OMITTED] T6251.023 [GRAPHIC] [TIFF OMITTED] T6251.024 [GRAPHIC] [TIFF OMITTED] T6251.025 [GRAPHIC] [TIFF OMITTED] T6251.026 [GRAPHIC] [TIFF OMITTED] T6251.027 [GRAPHIC] [TIFF OMITTED] T6251.028 [GRAPHIC] [TIFF OMITTED] T6251.029 Mr. Mica. We will hear all of the witnesses and then go through for questions. I recognize next Dr. Michael Schoenbaum, who is an economist with RAND Corp. Welcome, and you are recognized, sir. Mr. Schoenbaum. Thank you. I am an economist at RAND. I am here today in place of my colleague at RAND, Roland Sturm, who ruptured his Achilles tendon and was unable to come. He has prepared a written statement, and I would ask that be entered into the record. Mr. Mica. Without objection, so ordered. Mr. Schoenbaum. Thank you. [The prepared statement of Mr. Sturm follows:] [GRAPHIC] [TIFF OMITTED] T6251.030 [GRAPHIC] [TIFF OMITTED] T6251.031 [GRAPHIC] [TIFF OMITTED] T6251.032 [GRAPHIC] [TIFF OMITTED] T6251.033 [GRAPHIC] [TIFF OMITTED] T6251.034 [GRAPHIC] [TIFF OMITTED] T6251.035 [GRAPHIC] [TIFF OMITTED] T6251.036 Mr. Schoenbaum. RAND is a nonprofit institution which helps improve policy and decisionmaking through research and analysis. This statement is based on research funded by the Robert Wood Johnson Foundation and the National Institute on Drug Abuse. The opinions and opinions expressed are mine and do not necessarily reflect those of RAND or of the research sponsors. As we have heard today, substance abuse imposes major economic burdens to society, and empirical studies document that some treatment programs can be effective. However, largely because of cost concerns, treatment for substance abuse has been excluded from recent Federal and State legislation mandating parity, equal coverage for mental health and other medical conditions. These concerns stem from assumptions that do not reflect current treatment delivery systems under managed care. We examined--in the research that I am going to present, we examined the use and costs of substance abuse treatment in 25 managed care plans that currently offer unlimited substance abuse benefits with minimal copayments--parity level benefits-- to their enrollees. However, in those plans, care is managed and services must be preauthorized and received through a network provider to be fully covered. I will note that the plans in our study did cover a comprehensive range of substance abuse treatment services. Our research indicated that providing unlimited substance abuse benefits in these plans cost employers slightly more than $5 per plan member per year. The actual number is $5.11 per member per year. A $10,000 annual cap on substance abuse benefits reduces the cost of providing substance abuse treatment coverage by only 6 cents per member per year. A $5,000 annual cap reduces the cost by 78 cents per member per year, compared with the cost of providing unlimited managed substance abuse treatment benefits. To put these numbers in perspective, if we assume that a typical group health insurance premium is approximately $1,500 per member per year, substance abuse benefits under unlimited coverage represent three-tenths of 1 percent of this cost. Furthermore, the potential savings associated with benefit limits is even smaller relative to unlimited but managed benefits. A $5,000 benefit limit, for instance, reduces the overall cost of providing health insurance by less than $1 per member per year. We conclude in this study that limiting benefits saves very little but can affect a substantial number of patients who do need additional care. Patients who lose insurance coverage are likely to end treatment prematurely or switch to public sector coverage which may increase costs in other areas. In sum, parity for substance abuse treatment in employer- sponsored health plans is not very costly under comprehensively managed care, which is the standard arrangement in today's marketplace. However, I do want to note for the record that the results of our study do not apply to unmanaged indemnity plans, and also the employers in our study were relatively large employers, so the results may not hold for individuals or for smaller groups buying insurance. Thank you. Mr. Mica. Thank you. We will now recognize Mr. Kenny Hall, who is an addiction specialist with Kaiser Permanente. Mr. Hall. Mr. Chairman, I would like to thank you and your committee for allowing me to speak on a matter that is very dear to my heart, and that is adequate treatment for individuals seeking treatment for chemical dependency. Before I go on, I have to apologize to the committee. I have a 2 flight that I must take back to California. I am really committed to my clients to be there tomorrow, so I actually apologize---- Mr. Mica. Are you leaving from National? Mr. Hall. Yes. Mr. Mica. No problem. Go right ahead. Mr. Hall. What I am going to present this afternoon is a study from a pilot project that was conducted by Kaiser Permanente in California in 1994 in offering treatment to Medicaid clients and the results of that particular pilot project. For the last 3 years, I have been blessed to be part of an organization which I believe has become a pioneer and innovator in the arena of chemical dependency treatment and recovery. That organization, I am proud to say, is Kaiser Permanente in California. I am part of an incredible team of professionals with the Kaiser Vallejo Chemical Dependency Recovery Program which is on the northern end of San Francisco Bay in Solano County. Kaiser Permanente is the oldest health maintenance organization in the country, a pioneer in the concept of prepaid, capitated health care over 50 years ago. Kaiser Permanente is also the Nation's largest nonprofit HMO, with almost 9 million members, 6 million members within the California division. Kaiser Permanente is a staff group model HMO with all Permanente Medical Group physicians and other health care professionals providing services exclusively to Kaiser members within Kaiser's own hospitals and outpatient clinics. This greatly enhances their ability to operate in an integrated and cooperative manner, which significantly improves the overall quality of care offered. Kaiser Permanente's California Division is also distinguished from many other managed care organizations in that it provides a very comprehensive chemical dependency treatment benefit which is part of the basic health plan benefit for all members. Chemical dependency services are provided within the integrated organizations, not by a carve- out company. The benefit includes various levels of care, from inpatient detoxification through day treatment, which is partial hospitalization, and intensive outpatient programming to long-term follow through treatment. It also includes family and codependency treatment, as well as adolescent treatment program. These services are provided at multiple sites and are generally accessible for initial evaluation and treatment within 24 hours. Services are well integrated with other hospital and outpatient medical services, and efforts are made to assist all primary care physicians within Kaiser Permanente to identify and refer chemically dependent patients and their family members in a timely and effective manner. In 1989, the county's public hospital closed and since that time the county health department had been involved in discussions with the private hospitals in the county over reimbursement for publicly funded and indigent health care. The largest of those hospitals is a part of Kaiser Permanente. Other private hospitals and large physician groups as well as a number of previously unaffiliated private physicians were also participants in these discussions and planning processes. As the California Department of Health Services became more encouraging of public-private partnerships and managed care arrangements, the Solano Partnership Health Plan was created. SPHP, which began operations in 1994, was a Partnership of all public and private health care providers in the county and was constituted as an independent health authority. SPHP contracted with the State government to provide a capitated health plan for all--approximately 40,000--Medicaid recipients within the county. Based on negotiations to determine ``fair shares'' of recipients, 10,000 of those clients were assigned to Kaiser Permanente and enrolled as members. When the agreement was reached to enroll 10 Medicaid recipients as Kaiser members, concerns were raised by Kaiser physicians about the exclusion of chemical dependency benefits in the agreement. Kaiser physicians had come to rely on the services of their own chemical dependency program and were loathe to give up the prerogative to utilize it with this group of patients. I want to highlight the result of this study. After 2 years, we had gained sufficient data in working with this particular population, and there was a striking result. The results indicated a 50 percent reduction in hospital days utilized, from 117 days during the 6 months before treatment to 58 days during the post-treatment period. What that meant, in the beginning, our Medicaid clients utilized the services at a much larger proportion than our commercial users did, but after a couple of years it leveled out to the same level. There was this pent-up urge for treatment, and these clients were able to utilize these services that were denied to them for so long. As a consequence, the medical savings that Kaiser experienced was very, very significant. In closing, I would like to say it must be reiterated that the strongest arguments for the provision of high quality, universally accessible chemical dependency treatment services is a personal benefit of the recipients of these services. After spending 20 years addicted to heroin and traveling the path that addiction leads one down, I can personally attest to the influence that chemical dependency can have on one's life. It has been 15 years since my last shot of heroin. The protracted suffering produced by chemical dependency can be eliminated by successful treatment enhancing the health and quality of life of patients, families and society. Thank you very much, Mr. Chairman. Mr. Mica. Thank you. [The prepared statement of Mr. Hall follows:] [GRAPHIC] [TIFF OMITTED] T6251.037 [GRAPHIC] [TIFF OMITTED] T6251.038 [GRAPHIC] [TIFF OMITTED] T6251.039 [GRAPHIC] [TIFF OMITTED] T6251.040 [GRAPHIC] [TIFF OMITTED] T6251.041 [GRAPHIC] [TIFF OMITTED] T6251.042 Mr. Mica. We will now recognize Captain Ronald Smith, vice chairman of the Department of Psychiatry with the National Naval Medical Center. Dr. Smith. Thank you. My name is Ronald Earl Smith. My remarks do not represent necessarily the Navy's position. They are my opinion as a physician, and some of this is the Navy's position. I am a Navy captain and doctor of medicine. I am currently a consultant in psychiatry, addictions, and psychanalysis at the National Naval Medical Center, the Pentagon and the U.S. Congress. I teach and supervise residents, interns and medical students at the Uniformed Services University. I am certified by the American Board of Internal Medicine, the American Board of Emergency Medicine, the American Board of Psychiatry and the American Society of Addiction Medicine. I have a doctorate in the philosophy of psychoanalysis. It has been my honor, pleasure and pain to work in the field of addiction for about 27 years. This work has been in academic centers, in emergency rooms, critical care units, psychiatry wards and addiction units. I have worked in private practice, in the military, the Federal and State systems. Over these years, it has been my sad experience to watch our culture decrease money for active primary treatment in addiction and mental illness. The limited funds remaining after budget cuts have been moved to other forms of institutionalizations, primarily jails and prisons. Instead of hospital beds for treatment, our culture builds prison beds. The bulk of the homeless population within 5 miles of this Capitol are there because of inadequately treated substance abuse and mental illness. I have watched mental health units close in my private hospital in Newport Beach, CA. It closed 35 beds for mental health because the funds were not there. Five years ago in the national capital area--and this is in our own military system-- we had three inpatient units, one at Walter Reed, one at Bethesda and one at Andrews. We now have two outpatient units, and this is a result of money being cut back. We know that treatment works. The Navy--I will ask that my statement be submitted for the record, but I want to talk just candidly about my experience. We know that treatment works. The Navy is not exactly in the humanitarian business, and we wanted sober pilots in our planes on carrier decks, and we got in the treatment business for that reason. The submariners, we wanted them to be sober and clear-headed, and 85 percent of those pilots who later go on to fly for Northwest and American and fly you in and out of this town are sober because of the treatment programs in the Navy. The pilots actually do the best. We treated 220 physicians over the time that I was there in Long Beach, and 80 plus percent of those remain sober. And we wanted sober doctors in the Navy taking care of the pilots, and we insist on that. These diseases--sooner or later, the Federal Government picks up the tab. Sooner or later, it goes up in Social Security, it goes up in Social Security disability, it goes up in prison beds. Sooner or later, people within a culture which believes that we ought to take care of one another, and we do, and ultimately the bill is passed onto the Federal system. Now why ask private insurance for help with this? Simply because they can do it pretty well. But I think in my experience they kind of need a nudge to say go ahead and do it. I do believe that the health care--that they do it well, but in my private practice in Newport Beach it became harder and harder to get care. Plans which promised 50 outpatient beds, you had to beg for 4 and 10, particularly in the matters of substance abuse. The reality was that the funds were withdrawn. All of us are responsible--the Navy for decreased units, the Federal Government for decreased funding in Social Security for healthcare. It is very hard to get someone treated in an inpatient unit through the Social Security system. Private industry I don't think is any more responsible than all of us in this room. But this is a culture with a paradigm shift that is, in the age of deinstitutionalization of the mentally ill and substance addicted, to homelessness or to lock them up. We are doing the reverse of what was done in the enlightenment when we began to take better care of one another, and we need to notice that. This committee needs to notice that. Private industry needs to notice that. Now, the reality is that it is treatable. The reality is that an alcoholic affects seven people really. It is the most important thing since Social Security. Because you treat 16 million alcoholics, you treat 100 million Americans. The children get off Ritalin for ADD. The work compensation goes down. The prison beds empty out. The courtrooms empty out. It is just efficient, and it is humane, and it is kind of wonderful, and it is a hell of a lot of fun to treat it in the early stages. But, as a critical care physician, an 18-year-old paraplegic because he was drunk on a motorcycle is probably as expensive a way to burn dollars as we can do it. AIDS is a terribly expensive way to die. There is probably no more expensive way to die, and this is preventable stuff. All we are asking the private insurance industry to do is help us out. The Southern Bell study was not quoted. They opened the door for treatment for mental health and substance abuse, and that portion goes up a little bit, but guess what happens to the total health bill? It goes way down, and it takes a while to realize that. Wall Street shows real immediate response and when you have to show profit on Wall Street you sometimes won't take that long delay. It takes 3 or 4 years to go down, but it does. Thanks for letting me speak. Mr. Mica. Thank you. Without objection, the balance of your statement will be made a part of the record. [The prepared statement of Dr. Smith follows:] [GRAPHIC] [TIFF OMITTED] T6251.043 [GRAPHIC] [TIFF OMITTED] T6251.044 Mr. Mica. I would like to recognize Mr. Peter Ferrara, who is the general counsel and chief economist with Americans for Tax Reform. Mr. Ferrara. Thank you, Mr. Chairman. Americans for Tax Reform strongly opposes any government mandate requiring health insurers to cover substance abuse treatment. There are several reasons for this position. First, the American people ought to be free to decide what they want in their health policy coverage. If they want substance abuse treatment coverage in their health policies, they can buy it in the marketplace. Insurers will be more than happy to provide the coverage the market demands. But if they don't want the coverage or don't want to pay the cost, the government should not force them to buy it. Let us think about this for a minute. Is this any way to decide what is in people's health insurance policies? You have these committees in Washington and you have these various interests that come before them, and then this small committee decides for every American in the country this is what benefits you will have in your health policy, and these are the benefits you will pay for, and you will learn to like it. I would submit that a central planning approach is neither efficient nor does it have the proper respect for the freedom of choice that the American people should have. We have heard a lot of testimony today about how efficient and cost effective this kind of coverage is. Well, let me submit that those who buy the health insurance in America don't agree with that position. They are the ones who should be deciding. Now, all this discussion about how efficient and cost effective it is should be submitted to the insurance companies and should be submitted to the employers and should be submitted to the purchasers of health insurance across the country, and maybe they will change their minds and they will buy it, but that is the way that the system ought to work. We should not have a group in Washington dictating to the American people what the benefits are in their health insurance policies. Second, if the government mandates the inclusion of this coverage in health insurance policies, that will raise the cost of health insurance. This additional cost burden on working people is objectionable in itself. Indeed, in our view, this cost increase is quite analogous to a tax increase to fund increased government spending for substance abuse treatment. Of course, there is one difference with the tax increase. You can avoid the increase by just refusing to buy health insurance at all, and that is what many people will do if you impose this type of mandate on health insurance policies. More working people will decide they don't want to buy it, more small businesses will decide that they are going to drop it, and the result is an increase in the number of uninsured. The decision of how much to tax the American people for substance abuse treatment programs should be made in the regular budget process. It should not be made by this committee through a back door health insurance mandate. If it is so cost effective, then you should do it openly and directly. And maybe you should have more government programs for substance abuse treatment and maybe you should cut some other government spending to pay for it, but then we can judge this openly as part of the general political process and we can hold people accountable for their taxing and spending policies. And if it is so cost effective, then it is not going to cost you anything, and we have heard all this testimony about how much it is going to save you. Well, you investigate that and find out if that is true, and that then is part of your budget control policy. But as a matter of health policy, what you should be doing in health policy is quite the opposite of what you are considering here today. One of the few helpful things that Congress could do with health policy is to enact legislation removing all government mandates on what benefits are included in health insurance policies. This would reduce the cost of health insurance, and it would enable more people to buy the essential health coverage that they really need. It would reduce the number of uninsured, and so it would go a great ways toward helping to address that problem and expand the freedom of choice for the American people. Thank you very much. Mr. Mica. Thank you. [The prepared statement of Mr. Ferrara follows:] [GRAPHIC] [TIFF OMITTED] T6251.045 [GRAPHIC] [TIFF OMITTED] T6251.046 Mr. Mica. I would like to recognize Charles Kahn, and he is president of the Health Insurance Association of America. Welcome, and you are recognized. Mr. Kahn. Thank you, Mr. Chairman and Mr. Ramstad. I am Charles N. Kahn III, president of the Health Insurance Association of America [HIAA]. Our members provide health, long-term care, disability, dental and supplemental coverage to more than 123 million Americans. I am pleased to be able to address your committee today on this issue of parity for substance abuse in health coverage. The costs of addiction and substance abuse are enormous, but they are costs of mandated benefits, and I think that the argument has been made today, and a very compelling one, that services to help those overcome substance abuse work, are essential and provide a societal good as well as an economic good. My issue with this matter is not substance abuse. It is a question of health policy and insurance--and Federal policy toward insurance. An increasingly persuasive body of evidence shows beyond any reasonable doubt that mandated coverage for treatment or services not historically covered in other major medical plans do increase costs and that these costs are passed on to consumers in the form of higher premiums, increased cost sharing or both. And these higher costs resulting from benefit mandates lead directly to more uninsured Americans. I think this is very important to make the point that many employers provide coverage for services like those provided today. Others don't. I think if we go back to Ms. Rook's testimony, I think--I don't want to be a victim here, but in some ways her characterizations of insurance were unfortunate. The fact is that CNN purchases her health insurance, probably pays the whole price for it. They made the choice as to what the benefits were. The insurer offers a product to--or a set of products to CNN, and they decide how much they want to spend for their employees. Second, under the law, under the ERISA law there are requirements for CNN to make the benefits available, a description of those benefits available to employees. And for those of you who are going through open season in FEHBP right now, if you look at the book, it tells you how many days you get under substance abuse. I have sympathy, and who cannot empathize with her situation, but on the other hand the company made a decision about the health plans, and the company probably made a very sound decision for an important employee with an employee assistance program, but that was not necessarily--but I guess I am a bit taken aback that necessarily the insurer is held responsible for what is an employer decision. Let me make a few points about that. First, we have a voluntary health insurance program in this country. In a voluntary system, costs do matter. Employers are not required to offer coverage to their workers, and individuals are not required to sign up for coverage. Yet the private employer-based system in this country provides coverage to nearly 160 million Americans, and another 13 million buy their insurance privately. We all know that health insurance costs are continuing to climb, and that is driving up premiums to both employers and consumers, and each year employers must decide whether or not it will still be economical to provide any health insurance coverage. And I make the point any health insurance coverage, whether it is for substance abuse or basic med-surg coverage, and that their employees must decide whether they want to continue to enroll. A recent study showed that, of the uninsured, 20 percent of them have access to employer-based coverage and because of cost sharing have chosen not to take that coverage. A recent study by Doctors Gail Jensen and Michael Morrisey showed that the number of State mandates has increased 25 fold during the last two decades, making health insurance disproportionately more expensive for small businesses and causing as many as one in four Americans to lose their insurance. According to Jensen and Morrisey, chemical dependency alone increased insurance premiums by 9 percent on average. I am not arguing against coverage for chemical dependency. If that is what the employer or the premium payer wants to purchase, then they ought to purchase it. But the mandate for this cannot be isolated. First, there are many mandates. The Federal Government has begun to adopt more mandates and, as time proceeds, I can envision the cumulative effect being very great on the total cost of health insurance. The second point I would like to make is that the RAND study, which I am sure represents the value of these types of services as well as the services provided by Kaiser Permanente, are in a managed care environment. And going back to my cumulative--my concern about the cumulative effect of mandates, we also have with--and I will call it the assault from our standpoint by Congress on this--the Nation's health insurance system with the patient protection legislation. The State legislatures are doing the same, and what the trial attorneys are about to do in class action suits against the insurance industry and the managed care industry, they are basically dismantling managed care. And so the techniques and opportunities managed care offers I would argue are not necessarily going to be around, and the costs of mandates are clearly higher for small business and others who tend to buy plans with more choice, PPO plans and other kinds of plans where you don't have the tight control of managed care. Mr. Chairman, my time has expired, and I will conclude with just a thought that, in isolation, who can argue against coverage for substance abuse? I am not making that argument. I am making the argument that public policy that leads to mandating coverage is in a sense nothing more than a tax, as Peter described. And at the end of the day it is not going to help us get more Americans covered, which we see generally as a public good and something that we all ought to be seeking. We need to provide other kinds of ways of providing these services, and hopefully those can be found through other public policy. Mr. Mica. Thank you for your testimony. [The prepared statement of Mr. Kahn follows:] [GRAPHIC] [TIFF OMITTED] T6251.047 [GRAPHIC] [TIFF OMITTED] T6251.048 [GRAPHIC] [TIFF OMITTED] T6251.049 [GRAPHIC] [TIFF OMITTED] T6251.050 [GRAPHIC] [TIFF OMITTED] T6251.051 [GRAPHIC] [TIFF OMITTED] T6251.052 [GRAPHIC] [TIFF OMITTED] T6251.053 [GRAPHIC] [TIFF OMITTED] T6251.054 Mr. Mica. Mr. Hall, you are going to have to leave, so we have 2 or 3 minutes here before we excuse you. I will ask a couple of questions, and then we will let you scoot and catch that plane. You had indicated that when your coverage, I guess Kaiser Permanente, had gotten into offering some of this treatment, that there was sort of a pent-up demand and that quite a few folks took advantage of that. Were there substantial increases in that first year or two from this increased usage? Was that reflected in cost, premium costs? Mr. Hall. I am trying to understand your question. When you say substantial usage---- Mr. Mica. You testified--you said when you first got into this coverage, I thought you said that there was some pent-up demand or there were some more people taking advantage. Mr. Hall. A particular population utilizing it at a higher rate. Mr. Mica. Right. Was there--were there substantial costs involved in that? Mr. Hall. No. Because part of our program has a cap on what everyone pays when they come into our treatment facility which is like a $5 cap. Mr. Mica. You testified that there was this pent-up demand, and people were taking advantage of it. And then it leveled out? Mr. Hall. Yes. Mr. Mica. With that demand with the treatment, how were the costs covered? Who absorbed that? Mr. Hall. Kaiser Permanente did. We weren't reimbursed by the State. Mr. Mica. But you did say that, after a period of time, there was a reduction, I think you said 50 percent of hospital days. Can you clarify that? Mr. Hall. Medical utilization during the 6 months prior to treatment was compared to utilization during the period 6 months post-treatment. And the results indicated a 50 percent reduction in hospital beds--in other words, hospitalization. Mr. Mica. Well, those are my major questions to you. Mr. Ramstad, did you have any questions for Mr. Hall at this time? Mr. Ramstad. No, I just want to thank you, Kenny, for coming all of the way from California for this hearing today and all of your important work in this area. You have been a key leader nationally in this area, and I appreciate all of your efforts. Mr. Hall. Thank you. Congressman Ramstad, I thank you for your courage also in this area. Mr. Mica. We may have additional questions for all panelists. I am going to excuse you. Did you have a final comment that you wanted to make? Mr. Hall. If I can get permission from the committee, I promised a young lady who was part of that initial pilot program that I would read a letter that she would like me to read for the record. Mr. Mica. Read it or submit it for the record. Mr. Hall. I would like to read it. Hello, my name is Diana. I participated in the Valleho Chemical Recovery Program in November, 1996. As of November 10, 1999, I will have 3 years drug free. I could never express my gratitude on a piece of paper. There are so many wonderful aspects of this program. The qualified and dedicated staff are the best. This program is the best thing that ever happened to me. And through this program comes the most important aspect, my children have their mother back. I owe this to Kaiser's chemical dependency recovery program and its irreplaceable staff. Forever gratitude, Diana D. Mr. Mica. Thank you. We will excuse you at this time. Thank you again for your participation. Some of our other witnesses, I have heard so much about Hazelden treatment and you also said that you represent, sir, several other very prominent treatment facilities, Betty Ford and others, Mr. Conley? Mr. Conley. Yes. Mr. Mica. And I guess you have a pretty good success rate. What is your success rate? Mr. Conley. Collectively, as a group, we look at a success rate varying from 51 to 75 percent abstinence from alcohol and drugs after 1 year. Mr. Mica. You also have a pretty hefty price tag. These clinics that were cited or treatment centers are some of the highest in the Nation; is that correct? Mr. Conley. Well, I don't know if I can comment on the others. I can comment on Hazelden. The going retail rate if you are in for 28 days of treatment, $15,000. The net effect of the cost is somewhat lower because we do get patient aid out for those that don't have the insurance and so forth to handle it. Mr. Mica. What is your average treatment cost for your patients? Could you give us a range? Mr. Conley. The average for the full 28 days would be right around the $15,000 range. But after we factor in on the average the patient aid we give out, I would guess--and I won't swear to it--I guess it would be around $11,500, $12,000, or something like that. Mr. Mica. Of the patients that you see, what percentage would you say have insurance coverage that covers all or part of that? Mr. Conley. I think it would depend on what part of Hazelden they went to, if they went to the primary care for adults or adolescents. I believe we are reimbursed 30 to 50 percent of the patients go through and get some reimbursement. I can get you those numbers. I don't have it. Mr. Mica. I think we would like to have those for the record, and maybe alcohol and also drug dependency if they are broken out in that fashion. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T6251.055 [GRAPHIC] [TIFF OMITTED] T6251.056 Mr. Mica. You heard some testimony from our last two witnesses that felt that this coverage should be left as an option and it does result in an indirect tax increase or fee increase for everyone when it is imposed or mandated. How would you respond to that criticism if we were to adopt a Federal parity requirement? Mr. Conley. Well, I used to be in that end of the business, and my company was a member of HIAA at one time, so I have a certain amount of sympathy for that position. But I guess the question I really have to say is we haven't had these mandates, and as I look at society now, I see a $146 million price tag to the work site. I see prisons full. I just see this as something that has to be done. I respectfully disagree, I guess, with their position. Mr. Mica. We heard the gentleman from Americans for Tax Reform oppose this as an additional mandate which would, in fact, increase costs, which would also diminish the number of people who have health care coverage. As the cost goes up, we have X number of people, 43, 44 million now, uninsured now with no coverage. We would have actually fewer people covered because of the increased costs mandated. Mr. Conley. Uh-huh. Mr. Mica. What do you think about that? Mr. Conley. I would make two comments to that. No. 1, the incremental cost of this benefit, if the RAND study is right, isn't going to be so high that it is going to drive people out. That is my first reaction. My second reaction, and I would invite HIAA members to think about this, is the cost shift to employers in other areas. For instance, if people were treated effectively, the productivity, the absenteeism, the workers comp claims, the liability, the risk exposure, would be less. So what you are doing, in effect, is you are robbing Peter or cutting back on the treatment end, but that cost is being shifted to employers. And I think it would be a fascinating study to see what happened after a year or two if the macro health costs would go up and drive people out of the market. I don't think that is the case. Mr. Mica. Your people under treatment are all there voluntarily? Mr. Conley. Pretty much, although some are through interventions from employers or families. So when I say voluntarily, they may not be jumping for joy that they are going to Hazelden. Mr. Mica. One of the problems, Captain Smith, we adopted a policy of deinstitutionalization of mentally ill or people who have substance abuse problems. Many were forced into treatment and actually almost incarcerated into some of these programs some years ago against their will. And today we--that is not allowed. It is not permitted. And we do have--you can--just as you said, you can walk blocks from here and you will see otherwise healthy human beings who have been victimized by chemical dependency and substance abuse, and we have no way to get them off the streets, no way to get them into these programs, and they will not voluntarily go. That is the bulk of our homeless population right now. What do we do? Dr. Smith. That is a superb question. Whenever human rights and individual choices interface with government control and the very Constitution, those are significant questions. Do we round up everybody and make them take lithium? No. But treated in the early stages--and this is my astonishment. My colleagues never complain about paying the bill for a paraplegic from a motorcycle accident or about AIDS bills. They don't complain about liver transplants. When you are treating that stage, the ball game is gone. But you can treat it early and so efficiently, and I think $15,000--do you have any idea how long it takes to spend $15,000 in an intensive care unit? I was an internist. I was there. Half of the people in ICU are there because of drugs or alcohol at the wrong time. And we can run through $15,000 in about 12 hours. And you can treat--this is the reason that the Navy got into the business. You have $2.5 million in a pilot, and our pilots like to drink, and you train him that much, you get a return on investment that is significant. It is the same for IBM or the insurance companies. They train these executives. These are good people. All we are saying is, let's shift the money to an earlier stage. Let's let industry help us with this. If these guys would open up their doors to chemical dependency and mental health, the total budget would go down. It has been done too many times by Kaiser, Northrup, Southern Bell, but they are not saying come in and we will treat you. And if they were we would not be having these hearings. What is the responsibility of the Federal Government to say hey, help, it is not working? And if you want to know it is not working, look at the largest mental health hospital in this country today is the L.A. County jail. The prison beds I don't need to tell you that the decline in substance abuse beds, adolescent beds comes like this, the jail cells go up like that. They cross right there. Where do we want to turn it around? I think this is a wonderful way because I think these guys can do it well, but I do think that you have to say help us in the early stages. Once it gets to homelessness and the liver is gone, it is a done deal. Mr. Mica. I heard some conflicting testimony today on the costs. One of our witnesses and a Member of Congress and some others testified to a less than 1 percent cost increase were projected. I believe the last witness, Mr. Kahn, talked about a 9 percent increase. Could you explain what that was for? Mr. Kahn. The researchers that I was quoting looked at State legislation that had been put in place and made comparisons between States that did and didn't have such legislation, and that is the difference that they came up with. That was directly attributable to that benefit requirement. Mr. Mica. It was. Mr. Ramstad. Would the gentleman yield? Mr. Mica. Go ahead. Mr. Ramstad. Those studies reflected mental health parity cost, not substance abuse treatment parity. Mr. Kahn. That---- Mr. Mica. This gentleman in the back in the audience is not sworn. If you want to comment, we will be glad to have you be sworn and comment. If you want to provide the testimony, Mr. Kahn, you are recognized. Mr. Kahn. The study is included, and I can make it for the record. It refers to the amount and explains the methodology and---- Mr. Mica. Specifically substance abuse and parity legislation. Mr. Kahn. Yes, and that is explained in here. Mr. Mica. Can you identify the title? Mr. Kahn. It is the Mandated Benefit Laws and Employer- Sponsored Health Insurance. Mr. Mica. Without objection, that report will be made a part of the record. [Note.--The report entitled, ``Mandated Benefit Laws and Employer-Sponsored Health Insurances,'' may be found in subcommittee files.] Mr. Ramstad. Who commissioned that study? Mr. Kahn. We commissioned the study, but it was done by a professor at Wayne State and the University of Alabama at Birmingham. Mr. Ramstad. It flies in the face of the RAND Corp. study, the California study, the Rutgers study, the Columbia University study, the Minnesota study, States that I am familiar with, so I would truly like to sit down and talk to you about that because I have some serious questions about that study. Mr. Kahn. I would not necessarily argue that this study is in contradiction to the other studies. This study is looking broadly at all types of coverage in given States. If you look at very specific types of coverage, you can find that there are savings or the cost is marginal. Our problem is that when you do a one-size-fits-all mandate, are you mandating that on fee- for-service coverage, on PPO coverage as well as on managed care coverage? That might be sort of tightly controlled and that makes a difference. The amount of flexibility that an insurer has in determining what--under what circumstances benefits will be provided is critical to the cost, and I think even in the testimony on the RAND study there was precertification and other hurdles that had to be overcome for someone to get the treatment. Mr. Ramstad. If I may just ask, I didn't support Dingell- Norwood, and this is not Dingell-Norwood, and I am usually with the groups represented by the last two witnesses, and I have a lot of respect for them. But per your definition, every bill is a mandate. Every bill in Congress from the beginning required someone to do something or not to do something. I want to point out that this bill does not mandate an employer-plan-covered substance abuse treatment. As Susan put it so well, if you say you cover it, cover it. And to answer your question, and Susan is not here so I would take the liberty of answering the question, Chip, that you raised. CNN was totally unaware of the cap until Susan was in that detox center. They were told and they thought they bought the Cadillac package, the whole package. And treatment, if it were as available as most plans say, we wouldn't be here today. Let me ask you a question. Why do most plans offer chemical dependency treatment but not make it accessible? Why not tell people what the definition of medically necessary care is? Mr. Kahn. It is hard for me to imagine, although I am sure if you say it is the case it's the case, but a major corporation in this country that I am sure has a staff of more than 10 or 15 people in their human resources department that are overseeing health benefits, and I assume that they are self-insured, so probably the carrier was in a sense administering the benefit, and for them to say that they didn't understand their benefits, I don't think that is the insurer's problem, I think that is CNN's problem. And I would argue that they were probably in violation of the ERISA laws if they were not making clear what those restrictions were to their employees from the git-go when those employees made an annual choice as to their plan. Second, I can't sit here and argue against the success of this kind of treatment. I wouldn't sit here and argue against the success of drug treatment for cholesterol and the effect that has on heart disease. I take Pravachol and watch my diet so I know in terms of my heart disease that there are treatments that deal with that. I am not going to argue about that. But I would be concerned---- It is fine to say, let's mandate this. We could have a hearing at which I could make the same argument that drug coverage ought to be mandated because every person with heart disease ought to have through their insurance coverage access to Pravachol or other kinds of cholesterol drugs which are high-cost drugs. I could make the same argument, and we can come here and show all of the cost-saving value of people taking cholesterol drugs rather than at the end stage needing whatever they get--bypass or whatever. I am not arguing the utility of it, but the fact is that if you go down this road of requiring it here, before you know it you are going to have to require drug benefits and you are going to have to require other things. Because all of the compelling arguments that are being made here can be made about many of the things that are offered in our wonderful health care system. Mr. Ramstad. I know Captain Smith is anxious to respond. Dr. Smith. The response I had--and I love so much of what Mr. Kahn said, but what the bill is asking, as I understand it, is if you have a myocardial infarction, you are going to have to pay 10 percent of what the care is. If you get in a crisis with drugs, they will ask you to pay at least 50 percent of the cost. The bill is asking for parity. I have a much better success rate with substance abuse than your cardiologist does with cardiovascular disease because I have been in both businesses. What the bill is asking, look, just treat this one the same. The reason that people don't demand high levels for substance abuse treatment is the denial. If someone has alcoholism, he doesn't have the disease so he doesn't care what the number is. It is one of those few instances because of denial inherent in the disease--that is what treatment does. It breaks through the denial. You are asking a sick brain to decide how much we need to treat it. How much money is needed to treat it? And nobody is going to sit there--and particularly an alcoholic. His spouse may read it carefully, but the alcoholic is not going to care how much money there is in the policy for alcohol treatment because he doesn't have it because of the denial. And those are the points that I would make. Mr. Mica. Mr. Ferrara wanted to comment. Mr. Ferrara. Mr. Chairman, you have heard testimony today about it is going to cost less than 1 percent, cost 9 percent increase in costs. And you know what? You don't know. I know you don't know. You know you don't know. You are not going to know because that is the wrong question to ask. That is a central planning question we are never going to know. That is why the decision needs to be left up to the marketplace where, A, you have people putting out their own money directly and have to be convinced directly of the benefits that they are going to get back and they will very carefully evaluate and make their own choice; and, B, different people can make different choices so some people might try it. Wow, it reduced our costs or General Motor's costs and Kaiser Permanente's costs. And then other people do it, and that is the right way to do this. You don't try to have a committee in Washington make the decision for everybody. I am not making an argument for or against a particular kind of treatment or for or against a kind of bill. I am making an argument on process. This decision needs to be left up to the people buying the health insurance. If there are some effects on the government and the government budget, maybe this is a decision that you need to make explicitly in the budget process. But don't engage in these activities where you shift the cost off budget onto other people and then you hide it from accountability. And in the situation where quite--I don't mean this negatively--you don't know what you are doing because in this kind of model you don't know, sitting here in Washington. This needs to be made on a decentralized basis by people across the country who are putting their own money on the table and will do so when they are clear they are going to get the benefit back. Mr. Mica. Dr. Schoenbaum. Mr. Schoenbaum. Yes, I would like to respectfully disagree with what Mr. Ferrara just opened with, that we don't know and can never know what the costs are of legislation such as this. Respectfully, we do know, at least on average and under some assumptions that we can articulate and that seem fairly reasonable, approximately what the costs are that we can expect from legislation like this. In the RAND study we looked at data from behavioral--from the third largest behavioral carve-out insurance carrier in the country, I assume a member of HIAA. Of people with private insurance in this country, 75 percent received their coverage for substance abuse and mental health services through a carve- out company. RAND has negotiated an agreement with United Behavioral Health, the third largest behavioral carve-out company in the country, for unrestricted access to their claims and utilization data. Those are the data that we based our study on. We identified the plans in that study that provide unrestricted, although managed, substance abuse treatment benefits. That I would argue is the standard of care, the standard of practice that is currently prevailing in this country--managed carve-out health insurance. Under those circumstances, across the range of employers that we looked at, which were in a number of different industries, had employees in 38 different States, we were quite clear about the cost of providing unlimited substance abuse treatment benefits. Three-tenths of 1 percent of members in an employed population use any substance abuse treatment benefits in a year. Of those, the number who use--the fraction who used a fairly high amount in a given year is yet smaller. So it stands to reason that, under practice patterns like that, we are not talking about enormous amounts of money for providing the benefit. The issue is that managing services, utilization review, the practices, the technologies that the carve-out companies have developed for targeting services to the people who need them are a more effective way of allocating care than benefit limits which have the unfortunate feature that they affect the people who need the largest amount of services. Mr. Mica. Let's see. Has everyone had a shot at this? Mr. Ferrara. Do I get to respond briefly? Mr. Mica. Captain Smith, did you want to respond? And then we will go back to Mr. Ferrara. Dr. Smith. I would just say to Mr. Ferrara, these are the best people in the world, but it has been left to the marketplace to solve this problem. That is why the beds are gone. That is why your beds are now in prison. That is why you have homelessness all over this country. The marketplace has had its shot at it, and by my value system it has failed miserably. Now are they going to spontaneously open the doors? No, I don't think that they are. I think Congress has to say, hey, help us, open up the doors. They have no problems asking us to build more prison beds. They have no problem when someone is fired and becomes homeless. That is a high consumer of health care cost to the private insurer, and ultimately it is the Federal system that picks up the tab. You are saying, help us when this disease is treatable cheaply. Thank you. Mr. Ferrara. Captain Smith says this is a great deal, and it works out wonderfully, and I tried to explain it, and they are not buying it, so please Mr. Smart Federal Government, you force them to do it, tell all of these people they are wrong. If Mr. Schoenbaum is right and Captain Smith is right, go make the case to the employers and to the insurance companies and tell them about all the great money that they are going to save, and if they think you are right, they will risk their money on it. The point is, who is going to make this decision, not who is right or wrong, and the decision needs to be made by the people buying the health insurance. Mr. Mica. Their point is that they are not saving the money by instituting this. Or if it is not required by the Federal Government for coverage, what happens is that the rest of us are picking it up as taxpayers in some more costly fashion. Mr. Ferrara. If that is the case, you need to examine your substance abuse health treatment programs and deal with it in the context of the Federal budget. If there are government savings and government effects or broad or societal effects, then deal with it explicitly in the budget process where you consider it overall against all of the considerations of how much taxes you are going to raise and other demands in the budget, and then you make your priorities. That is where it needs to be decided. Don't hide it by saying we are going to make someone else pay for it. They ought to be able to decide what is in their health insurance policy and what is not. If you are convinced after doing a thorough investigation, gee, this is extremely cost effective and the employers don't take into account all of the costs that accrue to them and insurance companies don't take into account all the costs that are going to accrue to them, that is when you have a government program to do it. Mr. Mica. Mr. Ramstad, do you have additional questions? Mr. Ramstad. I don't, Mr. Chairman. Mr. Mica. Well, we haven't solved the problem of parity for those afflicted with substance abuse or what are our national legislative direction will be on this issue today, but we have aired some opinions and heard some good testimony I think from a number of folks and hopefully moved the debate a little bit forward and possibly a legislative resolution. We will keep the record open for 10 additional days for additional statements. We may have some additional questions for some of those who have testified before us today. If there is no further business to come before the subcommittee--Mr. Ramstad---- Mr. Ramstad. Just one last word, Mr. Chairman. I want to thank all six witnesses on this panel, including the two who vehemently disagree with my legislation, because this is the way that the process should work. Thank you for coming forward and being part of this discourse. Mr. Mica. In conclusion, I did want to thank each of the witnesses who are on this panel and the other witnesses and Members of Congress who testified today. I appreciate again your helping us make the process work. As I said, there being no further business to come before the subcommittee this afternoon, this meeting is adjourned. [Whereupon, at 1:20 p.m., the subcommittee was adjourned.] [Additional information submitted for the hearing record follows:] [GRAPHIC] [TIFF OMITTED] T6251.057 [GRAPHIC] [TIFF OMITTED] T6251.058 [GRAPHIC] [TIFF OMITTED] T6251.059 [GRAPHIC] [TIFF OMITTED] T6251.060 [GRAPHIC] [TIFF OMITTED] T6251.061 [GRAPHIC] [TIFF OMITTED] T6251.062 [GRAPHIC] [TIFF OMITTED] T6251.063