OF SOUND MIND AND BODY
MAY 9, 1996
One of the major differences between the Senate and House versions of health insurance reform is a provision to provide equal coverage for physical and mental illnesses. Margaret Warner leads a debate over whether the provision would lead to better mental health services, or reduce the overall levels of insurance offered by employers.
MARGARET WARNER: Should health insurance offer the same coverage for mental illness as it does for physical ailments? Last month, in a last minute addition to a health insurance reform bill the Senate said yes. On a voice vote, it approved an amendment requiring insurers and health plans to provide mental health coverage that is fully equivalent to the coverage they provide for physical disease. The House-passed version of the insurance reform bill contains no such amendment, however, and now with the bill headed for conference, controversy over the so-called mental health parity amendment has erupted.
We get two perspectives on that controversy. Mike Faenza is president of the National Mental Health Association, an advocacy organization for patients and professionals. Mark Isakowitz is a health care lobbyist for the National Federation of Independent Business. Welcome, gentlemen. Thanks for coming in. Mike Faenza, make the case for us for this amendment.
MICHAEL FAENZA, Consumer Advocate: Okay. As the President of the National Mental Health Association, a day doesn't go by where I hear about the human cost of not covering mental disorders equitably within health insurance. As a matter of fact, just here in the studio several minutes ago when I told one of your staff about why I was here, they began telling me about a neighbor who had made three suicide attempts and that the husband was at the kitchen table sobbing because they had taken out two mortgages on the house to pay for coverage and the family just did not know how they would pay for treatment. What we have with the mental health parity amendment in this current health insurance reform bill as an historic opportunity to ban discrimination against people with mental illnesses in insurance. And the fact is that for many years, it's--millions of children and adults with mental health care needs have suffered and even lost lives because of our failure to be able to do that. Yes.
MARGARET WARNER: You and most of the business community are opposed. Why?
MARK ISAKOWITZ, Small Business Lobbyist: Well, I think the issue is not really about whether or not employers, small or large, want to provide mental health benefits. In fact, 99 percent of employers who provide mental health benefits already provide some mental health coverage. What this is about is the cost of insurance and when the cost of insurance goes up, overall coverage goes down. And what we've seen, what employer experience with mental health has been, if you do this amendment, you're going to make coverage, you're going to make premiums go up 4 to 10 percent at least, probably more for small business. When premiums go up, coverage goes down, so what you're left with is--and I sympathize with the human element that Mike pointed to, but the people that suffer the way he describes, what this will do is they will not only not have mental health benefits but they won't have physical health benefits either, because when cost go up, as this surely would cause, coverage goes down. And that's what we're trying to avoid.
MARGARET WARNER: Before we go further into the argument, give us a quick snapshot, both of you, of just what is the current status of mental health coverage, both in traditional fee-for-service insurance plans and also in managed care, just the current reality.
MR. FAENZA: First, the bottom line is that people with mental illnesses are the last class of American citizens that are blatantly discriminated against in any social institution.
MARGARET WARNER: Well, what is the relationship between--
MR. FAENZA: The majority of Americans do not have equitable coverage for mental health treatment needs in their insurance. There was a 1989 study I'm aware of that outpatient treatment, only 3 percent of Americans had equitable coverage for outpatient visits, as opposed to physical illnesses.
MARGARET WARNER: Okay. Then how--are the limits placed on how much mental health treatment you can get, is that how that's managed?
MR. ISAKOWITZ: Yes. The way it works, as I said, almost all employers already cover some mental health benefits, but they have seen the need to put some caps on it limiting visits or putting some managed care on it, and that's one thing. So almost health plans have it, but to keep cost down, it is limited in some way.
MARGARET WARNER: Okay. Now you wanted to jump in on this argument about how businesses would--
MR. FAENZA: What the current bill would change, it would ban discriminatory limits on visits, it would ban discriminatory, um, co-payments, so Americans that had mental health coverage would be able to afford decent care, and they would be able to get enough services to adequately treat their needs. And the, the issue of cost has been very central to this debate, and, uh, I and many of us, and certainly Sen. Domenici, Sen. Wellstone think this about fairness and, and the rights of Americans, but if we look hard at the cost issue, we see that the Congressional Budget Office has scored Domenici-Wellstone mental health parity--
MARGARET WARNER: This bill.
MR. FAENZA: This bill is costing 1.6 percent increase in employer-paid benefits. So employers would actually need to pay to do the right thing with mental health care an additional $2 per month per employee. On the other hand, the cost of not covering mental health care really is devastating to American businesses. The National Mental Health Association commissioned a study to MIT in 1994 that looked at the cost of clinical depression in the workplace, and it's $23.8 billion, billion with a "b," in lost productivity for clinical depression alone. We can't afford not to do the right thing for mental health care.
MARGARET WARNER: You're shaking your head.
MR. ISAKOWITZ: Well, first of all, in terms of real-life experience in the state of Massachusetts, where they had--have a mental health care mandate which is not nearly as generous as this, Blue Cross-Blue Shield, real life experience, not a study, found that it raised premiums 10 percent.
If you are a small business owner--by the way, I represent business owners with about five employees--most of whom can't afford to provide any coverage and are just struggling to provide something, hospitalization, anything, in the 1980's, they had double digit premium increases every year. In the early '90s, premiums for big business started going down and for a variety of reasons for small business continued to go up. And on top of this, if you do something that in the states in some cases resulted in 10 percent premium increases, it forces them to go to their employees and say, I'm going to have to drop coverage because the federal government says if I provide benefits just a little bit below what they say I should do in mental health, it's illegal for me to provide you anything. And if I--I'm sorry, if I could just make the quick point--if this is discrimination, it's amazing to me that Medicare doesn't provide this the way it's in the Senate bill, Medicaid doesn't. The federal employee health benefits program which covers members of Congress doesn't cover the Clinton health care plan, which was the cadillac of all benefits didn't have this mental health parity in it, and the reason is those are all very generous programs. It's not just the business community but the government programs have also seen if we don't put some lid on this in some way, we're going to have a cost problem that's going to cause a crisis.
MARGARET WARNER: All right. Now what about his point that his, his members really could get in a position where they say, sorry, I can't afford to provide even regular catastrophic care because of--
MR. FAENZA: Well, two points--economic and still human. Uh, for people with mental illnesses are the only folks in this country, we would even tolerate this kind of debate. Will your membership agree to pulling out people have cancer or AIDS, or cardiovascular diseases because the cost of treating those? What insurance is about in this country, it's about sharing risk and taking care of vulnerable people, and to not do that with, with mental health needs is clearly unfair, but the other side of this, the economic side, again, there have been corporations--a "Boston Globe" article the other day cited Conoco and Bell South stating how they had shrunk their health care expenditures, their investment in mental health benefits by providing accessible comprehensive care.
There's something at a number of levels very preventive about getting people mental health coverage early on, preventing hospitalizations, and other kinds of long treatment. One thing that happens when we do not provide adequate mental health care is that we shift the cost for people with mental illness in a variety of ways. People with mental health care needs in this country are not going to go away because the employer decides not to cover them. We have a public mental health system in this country that is very strained that is supported by taxpayers' dollars and that affects citizens and certainly affects employers, and it is so overwhelmed that in every major American city in this country you cannot walk down the street without needing to step over somebody who is homeless and has a mental illness. That is shameful. It's, it's harmful to our quality of life, and it could be prevented if we treated people with mental disorders fairly in health insurance.
MARGARET WARNER: Does he have a point about that, that sometimes the costs are greater if you wait?
MR. ISAKOWITZ: Well, I think that argument works when you're looking at a business that provides no mental health benefits at all. But as I said earlier, that's the case almost nowhere. Employers who provide benefits provide some mental health. There's not the open-ended mental health that we're talking about today. I'd make a couple of points about it. First of all, he mentioned a couple of companies. I know that Xerox Corporation, which are--and American Express--two huge companies that dwarf the people I represent in terms of negotiating power with insurers tried something like mental health parity and had to back away from it because their costs were skyrocketing, and that's, that's what happens, umm, and that's what's happened at Blue Cross-Blue Shield, for instance. It's caused costs to skyrocket.
MARGARET WARNER: Is--let me just say--is that true?
MR. FAENZA: There has been some mixed experience in corporate America, but the majority of companies that have developed parity, like Conoco, Digital, IBM, AlCan Aluminum, really the list goes on and on, have been able to do this successfully. It's also the case that we have a couple of states now that have created a parity legislation for their health care coverage that really models, reflects what is in this current bill. It's Minnesota and Maryland. There has been no hue and cry. There has been no uprisal from small businesses or corporate America because it's not working. That--it's really the--costs to a business on the negative side are really distorted in this dialogue.
MR. ISAKOWITZ: The reason why you haven't seen the hue and cry that was just discussed is because when the states do this, there's a way out of it. Big companies can self-insure, which gets them out of these state mandates, and small companies just drop it. We once asked our members who don't provide health insurance benefits; 16 percent of them said if there were not mandated benefits--in other words, if they could figure out what benefits are best for their employees, 16 percent more of our members would provide if there were no mandated benefits.
Another point I'd make, you keep citing numbers of the Fortune 100 who have managed their health care costs. In the small business community, in the countryside and small towns, they don't even know in many cases what managed care is. In firms with fewer than 10 employees, uh, they don't--only about 10 percent of 'em have managed care plans. They don't offer HMO's and PPO's yet. It hasn't come to the small business community. And when you're in traditional fee-for-service medicine, and you have a benefit like this, it's almost impossible to control your costs, so corporate America, a few companies may figure out a way how to deal with this. I don't think very many, but some might. But to Main Street America, it's going to be devastating.
MARGARET WARNER: All right. Now what do you all think are the prospects for this amendment emerging from conference?
MR. FAENZA: I think the prospects are excellent. There's something extraordinary happening in the political realm with this. You have Sen. Domenici and Sen. Wellstone--
MARGARET WARNER: A Republican and a Democrat.
MR. FAENZA: A couple of our elected leaders who perhaps agree on a small number of things each year. You have Dick Armey in the House who says he's for parity. You have the President, and the people that, you have such a wide array of people that are for this, and the reason that they are is because a person like Sen. Domenici understands mental illness because it's touched his life. He is one of the most pro-business awarded elected leaders in this country, and he is behind this because he knows it's fair and he knows that the American public will benefit from this legislation.
MARGARET WARNER: What do you think the prospects are?
MR. ISAKOWITZ: Well, it's extraordinary to think that if there's a consensus saying that it's fair, also when they found out that if they applied this to Medicare and Medicaid benefits, it would cost $124 billion over six years, so it's supposed to be very fair, but we're not going to make it apply to government programs, which is the poor and the elderly, which is extraordinary, but I think in the end they're going to have to drop it because the whole objective of health care reform this year was to do a limited, consensus bill. This falls far outside of that category.
MARGARET WARNER: And very briefly, any prospects for a compromise? A couple of Senate--I mean of House subcommittee chairman are talking about compromise.
MR. FAENZA: Well, that very well may happen, but on behalf of the National Mental Health Association, I have to say that it's time to end discrimination against people with mental illnesses. This is an historic chance to do that.
MARGARET WARNER: A chance--
MR. FAENZA: There should be no compromise.
MR. ISAKOWITZ: I think--
MARGARET WARNER: Any compromise?
MR. ISAKOWITZ: --some compromises are being discussed. I think most of them are unworkable, and I think in the end, this is pretty much going to have to be dropped for the bill to move forward.
MARGARET WARNER: All right. And we're going to drop this, but thank you both very much.