Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2579, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to expand the definition of "serious mental illness" and to increase the minimum coverage for alcohol and drug dependence benefits.

Testimony in support of this measure was received from the Department of Commerce and Consumer Affairs, Department of Health, National Association of Social Workers, Hawaii Disability Rights Center, Hawaii Psychological Association, National Alliance for the Mentally Ill, NAMI O'ahu, Kaiser Permanente, Equal Insurance Coalition, Hawaii Psychiatric Association, Blueprint for Change, Hawaii Medical Association, Hale O Honolulu, and two individuals. Testimony in opposition was received from the National Federation of Independent Business-Hawaii and Chamber of Commerce of Hawaii. Comments were received from the Hawaii Medical Service Association.

Act 121, Session Laws of Hawaii 1999 (Act 121), established a requirement for parity in the coverage of serious mental illness under health insurance plans and prohibited the imposition of coverage limits for serious mental illness that were not applicable to other medical or surgical conditions. In defining "serious mental illness", Act 121 failed to include certain serious mental illness disorders. This measure corrects that omission by expanding the definition of "serious mental illness" to include obsessive-compulsive disorder, dissociative disorder, delusional disorder, and major depression.

This measure also increases the mandated minimum coverage for alcohol and drug dependence benefits from two treatment episodes per lifetime to two treatment episodes per year.

Your Committee finds that a requirement for mental health parity represents sound public policy. Data collected by the American Psychiatric Association on states with parity requirements showed that, after adoption of parity, inpatient psychiatric admissions declined (Maryland), premiums did not increase (Minnesota, New Hampshire), and mental health expenses were consistently lower than overall health benefit payments (North Carolina).

Hawaii data also supports a finding that mental health parity has not resulted in high levels of usage and costs. A Mental Health Task Force survey of health plans whose membership represents ninety per cent of individuals covered by commercial health plans in Hawaii, reported that slightly more than two per cent of overall health insurance costs were attributable to mental health and substance abuse services.

Your Committee has concerns, however, about the potential cost impacts of increasing the minimum coverage for substance abuse benefits. Your Committee notes that pursuant to S.C.R. No. 116, S.D. 1, the Auditor was directed to conduct a study of the effects of requiring parity for substance abuse treatment, and the results of that study are expected to be released shortly. The findings of this study should be seriously reviewed and considered before the Legislature takes final action on this measure.

Your Committee has amended this measure to correctly reflect the language of the Hawaii Revised Statutes.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2579, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2579, S.D. 2.