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rights that would limit the ability of employer-sponsore plans to manage health care, we need to weigh extremely the impact of this type of legislation.

Once again, let me thank Senators Domenici and Wells their leadership on this issue. I look forward to working wit as well as my colleagues on this Committee to pass legisla year that extends and improves upon the important work w five years ago.

The CHAIRMAN. Senator Jeffords, and then Senator Collin Well, we are going to follow one of the old, old, old cha rules. [Laughter.]

If people have tight schedules, I want to respect them. If has a special request, as Senator Roberts did, we will try commodate them. But I would like to sort of go back and seniority.

OPENING STATEMENT OF SENATOR JEFFORDS

Senator JEFFORDS. Thank you, Mr. Chairman.

We share a common interest in assuring that Americans h cess to quality insurance coverage for physical as well as health care. During the 104th Congress, an important fir was taken with the passage of the Mental Health Parity 1996, which I supported.

Today, we are taking testimony on the Mental Health Ed Treatment Act of 2001, legislation I am proud to be a cospo and have enjoyed working with Senators Domenici and We over the years on this problem. The bill puts health insuran erage for mental illness on an equal footing with coverage fo physical illnesses.

The complete integration of mental health into our healt system is long overdue. Recent data from the World Bank a World Health Organization show that four severe mental hea nesses-schizophrenia, bipolar disorder, major depression, a sessive-compulsive disorder-account for four of the top ter disabling illnesses in the United States and in the world.

Research also shows that early recognition of mental illn tentimes reduces the onset of more serious mental illness and expensive interventions down the road, and recent scienti vances in the development of new psychotropic drugs for the tive treatment of mental illness. Based on this kind of inform we can no longer justify the current bias favoring the cover physical over mental health services.

Mr. Chairman, thank you again for holding this hearing, look forward to the committee's consideration and adoption bill.

The CHAIRMAN. Senator Collins?

OPENING STATEMENT OF SENATOR COLLINS

Senator COLLINS. Thank you, Mr. Chairman.

Mr. Chairman, I want to start by joining my colleagues in ing the efforts of Senator Domenici and Senate Wellstone. have been true champions for Americans suffering from ment ness, and I want to commend them and thank them for the

forts and their unceasing commitment to increasing awareness, eliminating the stigma that too often is still associated with mental illness, and for their efforts to provide more equitable treatment under insurance.

This is particularly important for the estimated 5.5 million Americans who suffer from often tragically disabling mental illnesses, such as schizophrenia, major depression, and bipolar disorder. Research suggests that treatment for these patients, who frequently require repeat hospitalizations, may account for 40 to 60 percent of all mental health costs. Persons hospitalized repeatedly for mental health services can quickly exhaust their financial resources, resulting in tremendous hardship for families or insufficient levels of care.

Mr. Chairman, as we consider proposals to require that private health plans provide parity in the coverage of mental health benefits, I also believe that we need to make an effort to make sure that our own Federal house is in order.

I was very surprised to learn at a health care conference earlier this year that we do not provide parity for mental health services under Medicare. I was amazed that the Federal Government, which should be the leader in designing the structure of its own health plans, actually has discriminatory treatment.

While Medicare beneficiaries typically pay 20 percent coinsurance for most outpatient services, they currently are required to pay a 50-percent copayment for mental health services. This is of particular concern, given that a substantial number of our senior citizens experience mental disorders that are not part of the normal aging process.

We know that depression is strikingly prevalent among our older population and is a foremost risk factor for suicide in older adults. This is especially troubling since, as Senator Wellstone mentioned, older citizens have the highest rates of suicide in the United States. I think we often think of the problems with teenagers. But, in fact, it is our elderly population that has the highest rate of suicide in this country.

I therefore have cosponsored the Medicare Mental Illness NonDiscrimination Act to eliminate the discriminatory outpatient copayments for mental health services under Medicare by reducing the copayments from 50 to 20 percent. So in addition to looking at the private side, I hope, as we take up proposals to modernize Medicare, that we, the Federal Government, will set the example in our own Federal health care programs.

Thank you, Mr. Chairman, and again I want to salute our two colleagues for their tremendous leadership in this area. The CHAIRMAN. Senator Reed?

OPENING STATEMENT OF SENATOR REED

Senator REED. Thank you very much, Mr. Chairman. I too want to salute Senator Domenici and Senator Wellstone for their great efforts and the great spirit that they bring to this struggle over many, many years.

I want to also echo Senator Dodd's comments and Senator Wellstone's that this is a particularly pressing and poignant problem when it comes to children. We are seeing more and more where un

treated mental health problems in very young children, even preschool children, are leading to not only family trauma and destroyed lives, but contributing significantly to other costs. When you talk about this issue of cost, many of our education costs are a result of children who have serious, serious mental health problems.

So this legislation is long overdue and I hope we would move quickly and aggressively to pass it, and I look forward to hearing the witnesses.

Thank you, Mr. Chairman.

The CHAIRMAN. Senator Clinton?

OPENING STATEMENT OF SENATOR CLINTON

Senator CLINTON. I thank the chairman for convening this hearing, and I particularly thank our colleagues, Senators Domenici and Wellstone, for their eloquent advocacy of this issue. I think it is imperative that we move forward with this bill.

I came down the hallway and I have never seen such a long line for any event in my 6 months here in the Congress. It stretches all the way down the hall, and there are people of all backgrounds, all ages, some holding babies, some being held up, who would all be in here and giving, in a way, their silent, eloquent testimony to support Senators Domenici and Wellstone.

I am not going to read my prepared statement. Everyone has said what needs to be said about all the various issues. But I pulled a letter from a constituent from Brooklyn who had a double whammy last year when her husband was diagnosed with cancer and her 18-year-old was diagnosed with a mental illness.

Her husband received wonderful care while fighting his cancer. Her daughter's condition, however, was not treated so well. The insurance company limited the hospital stays and denied coverage for her psychiatrist and therapist. The mother writes, "Instead of getting sympathy, my daughter is treated like a leper, but her illness is as real as any other illness."

That was particularly chilling because, as Senator Domenici pointed out, if we were talking about another organ of the body, we wouldn't be facing this. And think about how lepers were treated, a disease that was so misunderstood and treated with such terrible contempt almost that literally people were isolated in faraway places in this country and around the world.

Well, we don't technically do that, but it is not such a far-off metaphor that we do consign people with mental illness to their own colonies, to their own isolation, to islands that are cut off from the rest of society. I think that is something we cannot tolerate in our country, just as we don't any longer tolerate leper colonies.

I think we have pointed out, and I commend our colleague Senator Collins for pointing out the issues with Medicare, and Senators Dodd and Reed about the issues with children. But I want to make a special plug for adolescents, who are often left out completely.

Even though, as we know, diseases like schizophrenia principally come out during a child's late adolescence or their 20s, adolescents get probably the worst medical care in America. They don't get taken to the doctor by their parents. Sometimes, you can't make

your adolescent do anything, let along take them to the doctor, and we have a lot of adolescents who are woefully suffering and undertreated.

I particularly want to mention the 8 million Americans suffering from eating disorders, most of whom are adolescents and young adults. According to the National Institute of Mental Health, 1 in 10 people with anorexia die of starvation, cardiac arrest, or other complications. It is a different kind of suicide.

Despite the fact that eating disorders are among the most lethal of all mental illnesses, I have heard countless stories, as many of you have, about how these young people, principally women, but not completely, are sent home from hospitals because they have reached their maximum number of inpatient hospital days.

The Eating Disorder Coalition for Research, Policy and Action reports that although patients with eating disorders typically require 6 weeks of inpatient therapy, including forced feeding, insurance companies offer an average of 10 days.

The stories and statistics are alarming, but we can help alleviate this suffering. And this bill and the championship that Senators Domenici and Wellstone and Ms. Domenici and others bring to it, are helping to put a face on the suffering that often knows no name. And I just cannot thank both of you enough for making this happen and to build on the good work that was done in 1996. Thank you, Mr. Chairman.

The CHAIRMAN. Very good. We thank our colleagues and we will look forward to moving along with our next panel.

I would like to welcome Edward Flynn, the Associate Director for Retirement and Insurance from the Office of Personnel Management. He directs the Federal retirement systems, the Federal Employees Health Benefits Program, and the Federal Employees Group Life Insurance Program. He will testify today on the implementation of parity for mental health benefits in the Federal employees program.

Mr. Flynn?

STATEMENT OF WILLIAM E. FLYNN, III, ASSOCIATE DIRECTOR FOR RETIREMENT AND INSURANCE, OFFICE OF PERSONNEL MANAGEMENT, WASHINGTON, DC

Mr. FLYNN. Good morning, Mr. Chairman and other members of the committee. It is really a pleasure to be here to have a chance to speak to you this morning on this important topic. And I suppose, Mr. Chairman, I should assure you that I plan not to leave this seat until you have released me to do so.

You have a prepared statement from me. I thought I might just start out and spend a few minutes to mention some of the key points from that statement.

First, the Federal Employees Health Benefits Program is the health insurance program for Federal employees, retirees, and members of their families. It covers all branches of the Government, as well as the Postal Service, and provides comprehensive and affordable health insurance coverage to over 8.5 million people. It is a component of the Government's overall compensation package. It enables the Government to compete with other employers

for its share of the talent needed to carry out the work of Government.

Let me turn just for a moment to a brief history of mental health benefits in this program. During the late 1980s, we witnessed an erosion in the value of the mental health benefits offered in the program. Because of this, we established a floor for those benefits and informed health plans that we would not accept further reductions in their existing mental health benefits.

In 1994, we required health plans to pay at least half the cost for a certain number of hospital days and doctor's office visits each year. However, the benefits were still limited and some members could not get coverage for all their mental health needs. They typically paid more for what they did get, and for some the benefit was unaffordable.

Since 1994, we have worked with health plans each year to improve mental health coverage. In 1995, we abolished lifetime benefit limits. Later, we eliminated annual benefit limits. We encouraged health plans to remove day and visit limitations, and to lower patient out-of-pocket expenses. In 1999, all plans began providing the same coverage for office visits and diagnostic testing when managing drug treatment for mental conditions, as for any other medical condition.

We sponsored conference presentations on mental health by panels of experts, including representatives from the National Institute of Mental Health and others. We have presented findings demonstrating that most mental health illnesses, as you have heard this morning, have well-established biological bases, that diagnoses are reliable, and that treatments are effective. Other sessions demonstrated improved health outcomes, reductions in workplace absences and disabilities, and greater financial security. Moreover, actual experience in other settings was demonstrating parity could be implemented without substantially increasing premiums, as long as care was managed effectively.

Even more telling were studies by the National Advisory Mental Health Council demonstrating cost savings from the introduction of managed care techniques and average premium increases in the range of 1.5 percent and less in many settings.

Based on this, we concluded it would be possible to substantively expand access to mental health care. At the White House Conference on Mental Health in June 1999, the President directed us to achieve benefit parity for mental health and substance abuse by 2001.

To help us, we asked the Washington Business Group on Health to report on the experiences of large employers who have taken similar steps. We continued our liaison with public and private experts, and we collaborated extensively with the health plans that participate in the program. This culminated in our negotiation objectives for 2001, outlining the essential components of parity.

Covered services would include all medically necessary treatment for all categories of mental health and substance abuse conditions listed in the Diagnostic and Statistical Manual of Mental Disorders. Participants in the health plan could choose between parity for in-network mental health benefits or out-of-network benefits