Statement of Jacqueline Shannon, President, National Alliance for the Mentally Ill (NAMI), Regarding Mental Illness Parity, Submitted to the Committee on Health, Education, Labor and Pensions, United States Senate
Statement of Jacqueline Shannon, President, National Alliance for the Mentally Ill (NAMI), Regarding Mental Illness Parity, Submitted to the Committee on Health, Education, Labor and Pensions, United States Senate
Chairman Kennedy, Senator Gregg and members of the Committee, I am Jacqueline Shannon of San Angelo, Texas, President of the National Alliance for the Mentally Ill (NAMI). In addition to serving as NAMI's president, I am also the mother of Greg Shannon. Greg was diagnosed with schizophrenia in 1985, during his senior year in college. For the past 15 years, Greg and our entire family have struggled with his illness. We have experienced discrimination in health insurance first-hand. Our health insurance had a lifetime maximum benefit for mental illness of six thousand dollars. Greg exhausted this benefit during his first hospitalization.
For the past decade, insurance parity has remained NAMI’s top legislative priority. As the nation’s largest organization representing individuals with serious brain disorders and their families, with 220,000 members and over 1,200 affiliates, we know why a minimum standard for parity in insurance coverage is desperately needed. Our members – individuals with mental illnesses and their families – know first-hand what it means to face discrimination in health insurance.
NAMI members understand what it is like to exhaust their coverage with a single hospital stay, to be forced to pay higher deductibles and co-payments, to run through unfair limits on inpatient days and outpatient visits. What makes these discriminatory limits so unjust is that they apply only to illnesses of the brain, and not to any other organ or system of the body. As I will discuss in greater detail in my testimony, NAMI believes strongly that insurance parity for the treatment of severe mental illness is at its core an issue of discrimination. We believe that mental illnesses are brain disorders, that treatment for these illnesses is just as (if not more) effective than for other diseases, and that health plans should not be allowed to impose limits and conditions in insurance plans that do not apply to all other diseases. In short, we are not asking for special treatment, merely the coverage that any of us expect when we need treatment.
A mental illness is, more accurately, a brain disorder; and brain disorders--like epilepsy--are biologically-based medical problems. The newest medical technology can take "pictures" that show differences between brains with disorders and normal brains. In any given year, about five million American adults suffer from an acute episode of one of five serious brain disorders: schizophrenia, manic depression, severe depression, obsessive-compulsive disorder, and panic disorder. Even many of America's children--more than three million--suffer from these disorders.
Untreated, disorders of the brain profoundly disrupt a person's ability to think, feel, and relate to others and to his or her environment. Despite age-old myths and misinformation, "mental illnesses" are not caused by bad character, poor child-rearing, or an individual's behavior. The "PET" scans attached to my statement graphically demonstrate how schizophrenia and depression are directly linked to variances in brain structure , chemistry and firing of neurons.
Brain disorders are shrouded in stigma and discrimination. For centuries they have been misunderstood, feared, hidden, and often ignored by science. Only in the last few decades has the first real hope for people with mental illnesses surfaced, and that hope has grown from pioneering research that found both a biological basis for brain disorders and treatments that work. NAMI’s efforts to combat discrimination and stigma received a major boost in December 1999 with the release of the U.S. Surgeon General’s Report on Mental Health. This historic report documents the scientific evidence that treatment is effective and concludes that there is no justification for health plans to cover treatment for serious brain disorders such as schizophrenia and bipolar disorder differently from any other disease.
As Surgeon General David Satcher noted in his 1999 landmark report, science has proven that severe mental illnesses are treatable. The current success rate for treating schizophrenia is 60 percent. The success rate for treating manic depression is 65 percent, and for major depression it is 80 percent. By contrast, treatment efficacy rates for interventions such as angioplasty (41 percent) and atherectomy (52 percent) are lower. Mental illnesses can now be diagnosed and treated as precisely and effectively as other medical disorders. Tragically, the stigma associated with these illnesses too often prevents individuals from accessing treatment that science has proven is effective. More importantly, the fact that health insurance plans have historically imposed limitations and conditions on the coverage for treatment of severe mental illness compounds this stigma.
Discrimination in health insurance takes many forms. The most common techniques that apply only to mental illness treatment are: higher cost sharing requirements for outpatient visits and prescriptions, lower treatment limits on inpatient days and outpatient visits and lower annual and lifetime dollar limits. The use of these discriminatory limits and conditions has been well documented.
Numerous studies compiled prior to the enactment of parity laws (including surveys of plans by the U.S. Bureau of Labor Statistics) found that 85 percent of all plans limit inpatient care and more than 98 percent limit outpatient care. In 1991-92, the BLS Employee Benefit Survey also found that one-half of plans were restricting hospitalization to 30 to 60 days. More than 70 percent of plans were found to have limited either the dollar value of outpatient benefits, or the actual number of visits. These surveys also found that arbitrary limits were often unrelated to actual treatment needs. While the federal Mental Health Parity Act (MHPA) and the 32 state parity laws are changing this reality, clearly a legacy of discrimination still exists in the private health insurance market.
While these studies are persuasive, what is more important from NAMI’s perspective are the personal stories that vividly describe how insurance discrimination has touched people’s lives.
Suzette Scheele of Burnville, MN is a single parent raising three children ages 11, 9 and 6. Her oldest son is diagnosed with bipolar disorder and ADHD. Her insurer requires a copayment of $20 for each visit to a pediatrician, with no annual deductible. By contrast, this same plan imposes pre-authorization for visits to a child psychiatrist, with a 20 visit annual limit, a $1000 deductible and pays only $20 per visit – leaving Suzette responsible for an $80 fee per visit. The burden of caring for her son with bipolar disorder and her other children have forced Suzette to sell her business and prevent her from returning to work full-time. Parity will help Suzette get the treatment her son needs and provide opportunities for her children.
Anne Renee Hansard of Thomasville, Georgia was first diagnosed with bipolar disorder in 1982 at age 19 when she was an honor student at the University of Virginia. A hospitalization in the mid-1980s resulted in her exhausting her policy’s very limited inpatient benefit. At the time of her discharge when her benefits ran out, she was nearly catatonic and unable to care for herself. With no inpatient benefit left to fall back on, Anne was forced to leave the job market altogether and apply for disability benefits in order to get health care coverage – all at taxpayer expense. Now more than a decade later, Anne has still not been able to return to work. Parity would have prevented Anne from ever having to leave the workforce to get coverage for the treatment she needed.
A woman from Michigan has been living with depression since she was an adolescent. Her struggle with depression cost her an opportunity to complete her graduate degree at a university. Since then, a string of low-paying jobs – all of them with health insurance – have left her without the means to access coverage for the treatment she needs. Her most recent job offered her health coverage that paid for only 50 percent of the cost of psychiatric hospitalization and office visits to a psychiatrist. After investigating the specifics of her policy in 1997, she found that her plan’s lifetime dollar limit was in violation of the Mental Health Parity Act of 1996 (they have since agreed to comply, after her complaints). Still, her health plan recently tripled its cost sharing requirement for psychiatric medications to $30 per prescription. She now faces the grim prospect of potentially having to switch to a different medication that has a cheaper generic equivalent in order to afford her medication – this despite the fact that her current treatment is effective. Full parity will help ensure that she has access to the most effective treatment for her illness.
Bonnie Putnam of Florence, South Carolina has been diagnosed with major depression since 1979. Even though she has worked for the same company for more than 25 years, she is on the verge of losing her job because she cannot afford to pay for the treatment she needs on her own. Her employer qualifies for the small business exemption under the MHPA. South Carolina’s parity law is of little benefit to Bonnie because it still allows her health plan to strictly limit coverage for outpatient medication and therapy – limits she long ago exceeded. Passage of South Carolina’s law actually made things worse for Bonnie since her health plan responded by further limiting outpatient coverage. Bonnie Putnam needs parity.
Christine Phillips is an elementary school teacher from Portland, Oregon who was first diagnosed with bipolar disorder in 1992. Even today, she and her psychiatrist struggle to find the proper balance with medications, a process that Christine notes "does not care how many visits my insurance plan allows me." By contrast, she notes that her health plan does not place the same restriction on the benefits allowed for husband’s diabetes. Why should coverage for Christine’s chronic illness be any different from her husband’s? Parity would bring an end to such arbitrary and unfair distinctions.
Susan Delaney of Monrovia, Maryland and her daughter know first-hand how the expected protections of health insurance seem to immediately vanish with the onset of an illness such as bipolar disorder. When Susan’s daughter was diagnosed with bipolar disorder at 18, she quickly ran through her $20,000 lifetime limit. Even when Susan switched to COBRA coverage after leaving her job, her insurer carried over the $20,000 limit and refused to cover any additional treatment. The result is that Susan’s daughter was forced to go into a state psychiatric hospital after her symptoms substantially deteriorated – at substantial cost to taxpayers.
These personal stories are just a small sample of the experiences that NAMI members go through everyday in trying to access coverage for the treatment they need from an unresponsive health insurance system.
The first major step toward ending discrimination in health insurance came in 1996 when President Clinton signed the federal Mental Health Parity Act (P.L. 104-204) into law. With the leadership of Senators Pete Domenici (R-NM) and Paul Wellstone (D-MN), this landmark law establishes a standard of parity for annual and lifetime dollar limits only. The law applies only to employers that offer mental health benefits; i.e., it does not mandate such coverage. More importantly, the MHPA allows for many cost-shifting mechanisms, such as adjusting limits on mental illness inpatient days, prescription drugs, outpatient visits, raising co-insurance and deductibles, and modifying the definition of medical necessity.
As the General Accounting Office (GAO) noted in testimony before this Committee in 2000, lower limits for inpatient and outpatient mental illness treatments have continued, and in some cases, actually expanded to help keep costs down. However, it is important to note that the MHPA does apply to both fully insured state-regulated health plans and self-insured plans that are exempt from state laws under the Employee Retirement Income Security Act (ERISA), which are regulated by the Department of Labor. Existing state parity laws are not preempted by the MHPA (i.e., a state law requiring more comprehensive coverage is not to be weakened by the federal law, nor does it preclude a state from enacting stronger parity legislation, which many have). Other critical limitations in the MHPA include a small business exemption (for firms with 50 or fewer employees) and an increased cost exemption (employers that can demonstrate a one percent or more rise in costs due to parity implementation will be allowed to exempt themselves from the law).
NAMI is encouraged by the GAO findings presented at this hearing that 86 percent of surveyed health plans are complying with the MHPA. While it is alarming that 14 percent of the surveyed plans are not in compliance, we view this as an issue of lack of effort on the part of state insurance commissioners, the Centers for Medicare and Medicaid Services (CMS) and the Pension and Welfare Benefits Administration (PWBA) to educate employers about the new law. Likewise, as the GAO noted, compliance is based largely on a complaint-driven process, thereby placing responsibility on aggrieved plan participants to come forward – something made more difficult through the stigma associated with mental illness. In order to ensure greater compliance with the MHPA, and all future federal parity efforts, NAMI urges Congress to push CMS and PWBA to do more to educate employers and health plans about their responsibilities under the law and to randomly audit representative samples of large, medium and small employers for compliance.
Mr. Chairman, it is interesting to note that while the opponents of the MHPA in 1996 attempted to vastly expand the scope of this increased cost exemption during regulatory implementation of the MHPA, relatively few employers have used it. NAMI believes that this is due in part to accountability measures included in the regulations (by retrospective examination of claims data, disclosure to employees when a firm seeks an exemption, etc.). However, the reality that fewer than ten employers have sought the one percent cost exemption is a development that is more than likely due to the fact that parity is affordable and costs simply have not gone up.
As is often the case, states have taken the lead ahead of Congress in moving to end insurance discrimination. The original idea behind parity was modeled on legislation in the 1960s that prohibited cancer exclusions in insurance coverage. Mental health parity was first successful with state employees in Texas, then in Maine, New Hampshire, Rhode Island, Maryland. By the early 1990s, parity laws had been passed in six states. Although these laws do not apply to ERISA self-insured companies, they give employees some protection and they serve to statistically validate the fact that parity is affordable. After enactment of the federal MHPA in 1996, we saw the passage of nine more state parity laws in 1997 and seven (unfortunately three were vetoed) in 1998. In 1999, 11 more states enacted parity laws, bringing the total number of states which such laws to 28. With the addition of California in 1999, more than half the population are living in states that require non-discriminatory coverage.
In 2000, Alabama, Kentucky, New Mexico, Massachusetts, and South Carolina (state employees only) passed parity laws. In 2001, Kansas became the latest state to enact a parity law, bringing the total to 32 states. Illinois is expected to soon enact its own law. Clearly, the trend to pass state parity legislation is picking up momentum. Even today, NAMI affiliates are continuing to seek out legislative leaders to sponsor parity bills of all types in the states with the ultimate goal of ending all insurance discrimination against those who suffer from mental illnesses. NAMI will continue to provide documentation of the experiences of the states that passed parity laws in the early 1990s and other evidence of the affordability of parity and the effectiveness of treatment. NAMI will seek coverage that is equal to that of other medical conditions covered in each policy written, and we will not turn away from this effort until the discrimination has ceased.
Beginning in January 2001, the Office of Personnel Management (OPM) began requiring all health plans competing in the Federal Employees Health Benefits Program (FEHBP) to offer parity level benefits for mental illness. As you know, FEHBP is the largest health insurance program in the nation, covering 9.5 million federal employees, retirees, and their families.
One of the principal lessons learned from the experience in the states that have enacted parity laws – as well as with preliminary estimates by OPM for FEHBP – is that parity is extremely affordable. This is especially the case for laws that focus the parity requirement on a categorical list of severe diagnoses.
As you have seen at this hearing, the cost of paying for health insurance parity for mental illness unfortunately remains a hotly debated issue. This is disturbing to us at NAMI given the overwhelming evidence through multiple studies that demonstrate the minimal cost impact resulting from parity. As the GAO found in its report on MHPA implementation, only 3 percent of surveyed plan administrators found that cost went up as a result of compliance. For the record, I would like to briefly summarize just a few of these studies – most of them from independent sources with no stake in the policy debate over parity – that have come forward in recent years:
Background Report: Effects of the Mental Health Parity Act 0f 1996 (March 30, 1999) -- Issued by the Substance Abuse and Mental Health Services Administration (SAMHSA), results of this national survey showed that 86 percent of employers who made changes in health plans to comply with the 1996 federal law did not make any compensatory reductions in other benefits because the cost of compliance was minimal or nonexistent.
Parity in Financing Mental Health Services: Managed Care Effects on Cost, Access & Quality (July 15, 1998) -- The second in a series of reports to Congress issued by the National Advisory Mental Health Council found that full parity costs less than one percent of annual healthcare costs. When implemented in conjunction with managed care, parity can reduce costs by 30 to 50 percent.
Rand Corporation Study (November 12, 1997) -- Equalizing annual limits (typically $25,000) - a key provision of the Mental Health Parity Act of 1996 - will increase costs by only about $1 per employee per year under managed care. An even more comprehensive change required by some state laws (i.e., removing limits on inpatient days and outpatient visits) will increase costs by less then $7 per enrollee per year. The main beneficiaries of parity were found to be families with children who, under current conditions, are more likely than adult users to exceed their annual benefit limits and go uninsured for the remainder of the year.
Mercer Study (October 23, 1997) -- 85 percent of American companies are either in compliance or plan to make changes to comply with the Mental Health Parity Act of 1996 by January 1, 1998. Seven out of ten of those same employers agree that mental health parity is a reasonable national policy goal and that parity is important to their employees.
National Advisory Mental Health Council's Interim Report on Parity Costs (April 29, 1997) -- The introduction of parity in combination with managed care results in, at worst, very modest cost increases. In fact, lowered costs and lower premiums were reported within the first year of parity. Maryland reported a 0.2 percent decrease after the implementation of full parity at the state level; Rhode Island reported a less than 1 percent (0.33 percent) increase of total plan costs under state parity; Texas experienced a 47.9 percent decrease in costs for state employees enrolled in its managed care plan under parity.
Lewin Study (April 8, 1997) -- In a survey of New Hampshire insurance providers, no cost increases were reported as a result of a state law requiring health insurance parity for severe mental illnesses.
As I noted above, the combined effect of the MHPA, the 32 state laws and parity for FEHBP, while substantial and historic, still leaves too many individuals with mental illness behind. Parity is becoming a reality in our country, but discrimination persists – particularly for individuals in ERISA self-insured plans and with respect to cost sharing requirements that apply only to mental illness treatment.
NAMI believes strongly that S 543, the Mental Health Equitable Treatment Act of 2001, is needed to address these gaps in the parity quilt and finish the job of ending discrimination for persons living with the most severe and disabling forms of mental illness. NAMI’s consumer and family membership is extremely grateful for the leadership of Senators Domenici and Wellstone in seeking to once and for all end discrimination.
The Mental Health Equitable Treatment Act contains a simple message – that mental illnesses are real diseases and that coverage for their treatment must have the same limitations as those imposed on medical and surgical benefits. Put simply, S 543 means full insurance parity for people with mental illnesses and effectively removes all inequitable limits including on copays and deductibles, and on inpatient days and outpatient visits. S 543 would cover all of the disorders listed in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM IV). This includes schizophrenia, bipolar disorder (manic depression), major depression, obsessive compulsive disorder, panic disorder, post-traumatic stress disorder, autism and other severe and disabling mental disorders such as anorexia nervosa and attention deficit/hyper activity disorder.
Other key features of S 543 include a small business exemption for firms with 25 or fewer employees. This change from the 1996 MHPA (its small employer exemption is 50 or fewer workers) will result in millions of additional workers and their families being covered by parity. S 543 also eliminates the existing expiration provision in the MHPA that sunsets its requirements on October 1, 2001. In addition, S 543 eliminates the "one percent" cost exemption in the MHPA mentioned above.
S 543 is core to NAMI's vision of ensuring that the next generation of individuals with mental illness and their families will not have to live out their lives on disability or in public institutions, unable to get the very care that would give them back productive lives. Insurance discrimination enforces the false message that mental illnesses are "untreatable" and "hopeless." As I have noted above, parity is both affordable and cost-effective. With parity as envisioned in S 543, businesses in fact stand to gain from reduced absenteeism; reduced healthcare costs for physical ailments related to mental illnesses; increased employee morale; and increased productivity overall.
Chairman Kennedy, Senator Gregg and members of the Senate HELP Committee, I would like to thank you for the opportunity to share NAMI’s views on this important issue. We look forward to working with all members of this Committee to ensure that the Senate acts on S 543 this year.
STATEMENT OF JACQUELINE SHANNON
NATIONAL ALLIANCE FOR THE MENTALLY ILL (NAMI)
REGARDING MENTAL ILLNESS PARITY
SUBMITTED TO THE
COMMITTEE ON HEALTH, EDUCATION, LABOR AND PENSIONS
UNITED STATES SENATE
JULY 11, 2001