[Senate Hearing 109-661]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-661

  HEALTHCARE IN THE DISTRICT OF COLUMBIA: ACCESS TO PRIMARY CARE AND 
                      AFFORDABLE HEALTH INSURANCE

=======================================================================

                                HEARING

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                            SPECIAL HEARING

                     APRIL 6, 2006--WASHINGTON, DC

                               __________

         Printed for the use of the Committee on Appropriations


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html

                                 _____

                 U.S. GOVERNMENT PRINTING OFFICE

27-193 PDF              WASHINGTON : 2006
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government 
Printing  Office Internet: bookstore.gpo.gov  Phone: toll free 
(866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail:
Stop SSOP, Washington, DC 20402-0001

















                      COMMITTEE ON APPROPRIATIONS

                  THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska                  ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri        TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky            BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana                HARRY REID, Nevada
RICHARD C. SHELBY, Alabama           HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire            PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah              BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
                    J. Keith Kennedy, Staff Director
              Terrence E. Sauvain, Minority Staff Director
                                 ------                                

                Subcommittee on the District of Columbia

                    SAM BROWNBACK, Kansas, Chairman
MIKE DeWINE, Ohio                    MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado               RICHARD J. DURBIN, Illinois
THAD COCHRAN, Mississippi (ex        ROBERT C. BYRD, West Virginia (ex 
    officio)                             officio)

                           Professional Staff

                             Mary Dietrich
                        Kate Eltrich (Minority)

                         Administrative Support

                            LaShawnda Smith







                            C O N T E N T S

                              ----------                              
                                                                   Page

Opening Statement of Senator Sam Brownback.......................     1
Statement of Brenda Donald Walker, Deputy Mayor, Children, Youth, 
  Families, and Elders, District of Columbia.....................     2
Dr. Gregg Pane, Director, Department of Health, District of 
  Columbia.......................................................     2
Prepared Statement of Brenda Donald Walker.......................     4
Statement of Randall Bovbjerg, Principal Research Associate, The 
  Urban Institute................................................     7
Barbara Ormond, The Urban Institute..............................     7
Prepared Statement of Randall R. Bovbjerg........................     9
Statement of Sharon Baskerville, Executive Director, D.C. Primary 
  Care Association...............................................    13
    Prepared Statement...........................................    15
Statement of Maria Gomez, President and Chief Executive Officer, 
  Mary's Center for Maternal and Child Care......................    20
    Prepared Statement...........................................    22
Statement of Christine Reesor, Medical Clinic Coordinator, D.C. 
  Spanish Catholic Medical Clinic of Catholic Community Services.    30
    Prepared Statement...........................................    31
Statement of Lawrence Mirel, Former Commissioner of Insurance, 
  Securities and Banking for the District Of Columbia............    33
    Prepared Statement...........................................    34
Statement of Edmund Haislmaier, Research Fellow, Center for 
  Health Policy Studies, The Heritage Foundation.................    55
    Prepared Statement...........................................    58
Prepared Statement of Senator Mary L. Landrieu...................    66
Prepared Statement of The HSA Coalition..........................    67


















 
  HEALTHCARE IN THE DISTRICT OF COLUMBIA: ACCESS TO PRIMARY CARE AND 
                      AFFORDABLE HEALTH INSURANCE

                              ----------                              


                        THURSDAY, APRIL 6, 2006

                               U.S. Senate,
          Subcommittee on the District of Columbia,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 1:32 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Sam Brownback (chairman) 
presiding.
    Present: Senator Brownback.


               opening statement of senator sam brownback


    Senator Brownback. The hearing will come to order. Thank 
you all for joining us this afternoon.
    Today we've convened a hearing of expert witnesses to 
better understand the health status and insurance status of 
District of Columbia residents, the access to preventative and 
primary care in the District of Columbia and ways to increase 
the availability and affordability of health insurance for 
those who live and work in this city.
    About 17 percent of District adults have no health 
insurance at all, some 50,000 people at any one time, and 
75,000 at some time during the year. One in ten African-
Americans are uninsured, and one in three Latinos are 
uninsured. This compares to about 1 in 20 Caucasians uninsured. 
We have a chart up, showing that, on the side. I'm concerned, 
however, that this rate of uninsurance may actually be higher 
than what even the charts say.
    I believe that it is an important goal to help people gain 
access to affordable health insurance, because, as Mr. 
Bovbjerg, of The Urban Institute, will soon testify, people 
with health coverage have better access to medical care, and 
are measurably healthier, than those who are not insured. I 
believe that access to preventative and primary care is crucial 
for helping individuals live longer, healthier lives, and more 
productive lives.
    Aside from poor overall health outcomes, individuals who 
are not insured usually do not seek routine and preventative 
care, and often use hospital emergency rooms to access 
treatment for nonemergency ailments. The cost of so-called 
``free'' emergency room treatment is not free at all, because 
it is passed on to insured patients, via higher premiums, and 
to other payers.
    We look forward to hearing from our witnesses today about 
the healthcare needs of those they serve, available services 
for the patients they care for, and their perception of the 
barriers to expanding health insurance coverage. We also look 
forward to hearing ways that we can reach and enroll uninsured 
persons who live and work in the District.
    Senator Landrieu may join us a little later, but if she 
can't make it her statement will be inserted in the record. 
They're having a caucus right now on a topic, immigration, 
which has certainly grabbed all of us lately, so I don't know 
if she'll be here or not, but if she is, I'll recognize her for 
any statement that she might have.
    We've combined our panels, and I'm appreciative of all of 
you being here. We'll run the clock at 5 minutes and each of 
you can put your written statements in the record, if you'd be 
willing to do that, and then testify on the topics that you're 
interested in and what you think we need to be considering. And 
I then want to ask some questions of you.
    We'll have testifying Ms. Brenda Donald Walker, Deputy 
Mayor of the District of Columbia for Children, Youth, 
Families, and Elders; Mr. Randall Bovbjerg, principal research 
associate of The Urban Institute; Ms. Sharon Baskerville, 
executive director of the D.C. Primary Care Association; Ms. 
Maria Gomez, president and CEO, Mary's Center for Maternal and 
Child Care; Ms. Christine Reesor, medical clinic coordinator, 
D.C. Spanish Catholic Center; Mr. Lawrence Mirel, former 
commissioner of insurance securities and banking for the 
District of Columbia; and Mr. Edmund Haislmaier, research 
fellow, Center for the Health Policy Studies at The Heritage 
Foundation.
    I appreciate all of you joining us today. Your full written 
statement will be put into the record.
    And let's start with Ms. Walker, and your testimony. Thanks 
for joining us.
STATEMENT OF BRENDA DONALD WALKER, DEPUTY MAYOR, 
            CHILDREN, YOUTH, FAMILIES, AND ELDERS, 
            DISTRICT OF COLUMBIA
ACCOMPANIED BY DR. GREGG PANE, DIRECTOR, DEPARTMENT OF HEALTH, DISTRICT 
            OF COLUMBIA

    Ms. Walker. Thank you so much.
    Good afternoon, Senator Brownback and members of the staff 
and the subcommittee.
    I am Brenda Donald Walker, District of Columbia Deputy 
Mayor for Children, Youth, Families, and Elders. I am 
accompanied here today with--by Dr. Gregg Pane, who is director 
of the District's Department of Health. We are very pleased to 
be here to discuss the status of healthcare in the District.
    Over the past 7 years of the Williams administration, there 
has been significant progress on several fronts, but there is 
still much work to be done.
    The most significant accomplishment of this administration 
is in the area of health coverage. Five years ago, the Mayor 
created the D.C. Healthcare Alliance, a program that offers 
comprehensive health coverage to all District residents under 
200 percent of poverty who don't qualify for Medicaid. The 
Alliance provides care to roughly 30,000 District residents, 
and it has led to decreases in emergency room visits and an 
increased use of primary care. The District is now the only 
jurisdiction in the United States that offers health coverage 
to all residents under 200 percent of poverty. The Mayor has 
proposed to expand coverage even further in fiscal year 2007 by 
expanding Medicaid for children up to 300 percent and adding an 
adult dental benefit.
    Despite high rates of insurance, though, not every District 
resident has ready access to medical services. To address this, 
the Mayor has strongly supported the medical homes initiative, 
which you will hear more about, to improve the quality and 
availability of primary care in underserved neighborhoods. In 
addition, he has proposed to build a new private hospital, in 
partnership with Howard University, to provide access to 
medical care and emergency care for residents on the eastern 
side of our city.
    Yet, the District continues to face some very dire health 
statistics. Our rates of chronic and communicable illness are 
much higher than the national average, especially in some parts 
of the city. In particular, we are concerned about diabetes, 
hypertension, asthma, infant mortality, HIV/AIDS, and substance 
abuse.
    In the past year, we have developed several new initiatives 
to address the root causes of illness. We have just launched an 
innovative model of healthcare in our jail facilities to 
improve inmate care and provide continuity of care when inmates 
are released back into the community. We are also focusing on 
HIV/AIDS, and the Mayor has announced a high-level task force 
to develop a full plan. In the meantime, we are partnering with 
George Washington University to improve surveillance and also 
to encourage widespread HIV testing.
    We know, of course, that there is much more to be done, and 
we welcome opportunities to work with the Federal Government, 
especially on projects that could serve as demonstrations for 
the rest of the country. One such initiative is a comprehensive 
prevention and disease management program that has three 
different components--a major media campaign to communicate 
health behaviors and to--to communicate health behaviors 
necessary to stay healthy, a health outreach program that we 
think will address some of the people who are eligible for 
coverage, but who are not yet insured, and also to provide 
peer-to-peer health education and a chronic disease 
collaborative to improve care management among District health 
providers.
    Another area for potential partnership is the creation of a 
National Capital Area Regional Health Information Exchange, to 
develop a model of data sharing among healthcare providers 
across the region.
    Another potential Federal/local initiative would be a 
partnership to further expand health coverage in the District. 
While we lead the Nation in offering health coverage to low-
income individuals, there is still a gap for people who earn 
too much to qualify for public programs, but can't afford 
private insurance.
    Thank you for this opportunity to testify. Dr. Pane or I 
will be happy to answer questions that you have. Thank you.
    Senator Brownback. Thank you very much.
    [The statement follows:]
               Prepared Statement of Brenda Donald Walker
    Good afternoon Senator Brownback and distinguished Members of the 
committee. I am Brenda Donald Walker, District of Columbia Deputy Mayor 
for Children, Youth, Families and Elders. I am here today with Dr. 
Gregg Pane, director of the District's Department of Health. I am very 
pleased to be here to discuss the status of healthcare in the District 
and opportunities for the District and the Federal government to work 
together to improve health outcomes in our Nation's capital. Over the 
past 7 years of the Williams Administration, we have made significant 
progress on several fronts, but there is still much work to be done.
    The most significant accomplishment of this administration is in 
the area of health coverage. Five years ago, the Mayor made the 
difficult decision, supported by Congress and the former Financial 
Control Board, to close the financially and medically troubled District 
of Columbia General Hospital. This closure was met with significant 
opposition from the District of Columbia hospital industry, employees 
of the hospital, and healthcare advocates, who made doomsday 
predictions about the impact of the closure. However, by closing the 
hospital, the Mayor freed up significant local funds which were used to 
start the DC Healthcare Alliance (the Alliance), a program that offers 
comprehensive health coverage to all District residents under 200 
percent of the Federal Poverty Level (FPL) who don't qualify for 
Medicaid. The Alliance, now 5 years old, is routinely lauded as one of 
Mayor Williams' most important accomplishments. Through the Alliance, 
we now offer primary and preventive care, as well as choice of 
healthcare provider, to roughly 30,000 District residents who used to 
receive most of their care in the District of Columbia General 
emergency room. Since the early days of the Alliance, ER visits among 
the Alliance population have decreased, inpatient admissions have 
declined and primary care visits have increased. We have also begun to 
see a decline in ``avoidable hospitalizations'', which are preventable 
through adequate primary and preventive care. This trend is 
particularly evident for District children. This means that we are 
keeping District residents healthier and spending taxpayer dollars more 
wisely. Over the next several months, we will be significantly 
improving the ability of the Alliance to monitor health outcomes by 
transitioning it to a managed care model, similar to our District of 
Columbia Healthy Families Medicaid program.
    In addition to the creation of the Alliance program, Mayor Williams 
implemented SCHIP (State Children's Health Insurance Program) in 1997, 
expanding Medicaid coverage to children and parents from 100 percent to 
200 percent of poverty. With the expansion of Medicaid and the creation 
of the Alliance, the District of Columbia is now the only jurisdiction 
in the United States that offers health coverage to all residents under 
200 percent of poverty. This expansive health coverage policy is 
reflected in District statistics on the uninsured. In 2003, the Kaiser 
Family Foundation found that the District's rate of uninsurance was 
just 9 percent compared to a national rate of 21 percent. In a more 
recent study, the Urban Institute found that just 5 percent of the 
District population is both uninsured and over 200 percent of poverty, 
without access to a public insurance program. The Mayor has proposed to 
expand coverage even further in his recent fiscal year 2007 budget 
submission. The budget offers Medicaid coverage for children up to 300 
percent of poverty, and it closes a major gap in the Medicaid benefit 
package by adding an adult dental benefit.
    Despite these high rates of insurance in the District, not every 
District resident has ready access to physician and hospital services. 
A 2004 report by the Rand Corporation and Brookings Institution, 
sponsored by the District of Columbia Primary Care Association, showed 
that in some neighborhoods, particularly on the east side of the city, 
as many as 25 percent of the population has no regular source of 
primary care. In addition, there is little access to specialty, 
diagnostic, inpatient and emergency care on the east side of the 
District. Many patients travel long distances to reach doctors, health 
centers and hospitals, which are primarily located in the Northwest 
quadrant of the District of Columbia, even though the highest 
concentrations of chronically ill residents and emergency transports 
come from the east side of the city.
    To address this issue of lack of access to care, the Mayor has 
supported two major initiatives. The Medical Homes initiative, in 
partnership with the District of Columbia Primary Care Association and 
the Brookings Institution, is designed to increase the availability of 
primary care health centers in underserved neighborhoods and to improve 
the quality of care in health centers across the District. The National 
Capital Medical Center proposal, in partnership with Howard University, 
to build a new private hospital is designed to ensure access to 
specialty, diagnostic, inpatient, emergency, and trauma care to 
residents on the eastern side of the city. Through these two 
initiatives, the city will provide capital funding to spur the 
development of new private nonprofit healthcare facilities in 
underserved neighborhoods. As a result, residents with either public or 
commercial health insurance will have somewhere to use their insurance 
cards.
    Health coverage programs for low-income individuals are largely in 
place in the District, and initiatives to expand the private healthcare 
delivery system are moving forward. However, the District continues to 
face some very dire health statistics. Our rate of chronic illness is 
much higher than the national average, especially in some parts of the 
city. For example, 20 percent of Ward 8 residents and 13.5 percent of 
Ward 7 residents reported being diagnosed with diabetes in 2004. 
Nationally the figure is 7.0 percent.\1\ The District has one of the 
Nation's highest asthma rates. In 2002, 13 percent of Ward 1 residents 
and 12.3 percent of Ward 7 residents reported having been diagnosed 
with asthma, while the national was just 8.2 percent.\2\ In 2003, the 
District experienced an alarming rate of death from hypertension of 
64.2 per 100,000, which is significantly higher than the national 
average of 7.5.\3\
---------------------------------------------------------------------------
    \1\ Behavioral Risk Factor Surveillance System, 2004; analysis by 
the National Center for Chronic Disease Prevention and Health 
Promotion, Division of Nutrition and Physical Activity, Centers for 
Disease Control and Prevention, available at http://apps.nccd.cdc.gov/
brfss/list.asp?cat=DB&yr=2004&qkey=1363&state=All.
    \2\ Centers for Disease Control and Prevention (CDC). Behavioral 
Risk Factor Surveillance System Survey Data. Atlanta, Georgia: U.S. 
Department of Health and Human Services, Centers for Disease Control 
and Prevention, 2004. Available at http://apps.nccd.cdc.gov/brfss/
list.asp?cat=AS&yr=2004&qkey=4416&state=All.
    \3\ DC Department of Health Vital Statistics, 2003.
---------------------------------------------------------------------------
    In addition, infant death rates, primarily attributable to poor 
prenatal care and risky behavior during pregnancy, are very high in 
certain parts of the city. For example, in Wards 8, 7, and 5, the 
infant death rates are 18.4, 12.9, and 12.6 per 100,000 respectively, 
compared to a national rate of 6.9.\3\ Our rates of communicable 
disease, most notably HIV/Aids, are deplorable. In 2004, the rate of 
HIV/Aids infection in the District was 179.2 per 100,000 residents 
compared with 15.0 nationally.\4\ And our rate of substance abuse is 
9.6 percent, 52 percent higher than the nationwide rate of 6.3 percent. 
Approximately 60,000 residents--nearly 1 in 10--are addicted to illegal 
drugs or alcohol.
---------------------------------------------------------------------------
    \4\ Table 14, HIV/AIDS Surveillance Report: Cases of HIV Infection 
and AIDS in the United States, 2004, Volume 16, National Center for 
HIV, STD and TB Prevention, Centers for Disease Control and Prevention, 
Department of Health and Human Services, 2005. Available at http://
www.cdc.gov/hiv/stats/2004SurveillanceReport.pdf.
---------------------------------------------------------------------------
    I will note a few silver linings in our health outcomes data. Some 
of our health statistics are better or equal to national averages. For 
example, the District's rate of school age immunization is now 96 
percent, one of the highest in the Nation.\5\ The District death rate 
from strokes is significantly lower than national average, with a rate 
of 37.4 per 100,000 compared with 54.3 nationally in 2003.\6\ The 
prevalence of smoking in the District has gone down to 20.8 percent and 
is now equal to the United States average.\7\ I will also point out 
that the District frequently compares very unfavorably to States and to 
the national average, where a more apples-to-apples comparison to other 
urban areas would show more comparable data.
---------------------------------------------------------------------------
    \5\ Immunization rates data, District of Columbia Public Schools.
    \6\ DC Department of Health Vital Statistics, 2003.
    \7\ America's Health Ranking, United Health Foundation, 2005.
---------------------------------------------------------------------------
    Despite these silver linings, the District's health status in 
general is in need of substantial improvement. We believe that over 
time, health coverage and access to medical facilities will improve 
these outcomes. But in order to significantly move our health 
indicators, we must attempt to address the root causes of illness, many 
of which are linked to individual behaviors and lifestyles, and we must 
target hard-to-reach populations. We have recently started a number of 
initiatives designed to address health outcomes.
    We have taken very seriously a report on the HIV/AIDS epidemic in 
the District of Columbia, authored last year by the District of 
Columbia Appleseed Foundation. We are beginning to implement many of 
the recommendations from that report. First, just this week, we are 
announcing a high-level HIV/AIDS Task Force to develop a full plan to 
address the epidemic. Second, we are also pleased to announce an 
academic public health partnership with George Washington University 
School of Public Health--a partnership that will help us improve the 
surveillance activities and monitoring of our local epidemic. Third, 
consistent with President Bush's State of the Union message about the 
importance of HIV testing and outreach to communities with high rates 
of HIV infection and the CDC's initiative to make HIV testing routine 
in all medical settings, the District of Columbia will soon undertake 
an initiative to encourage widespread testing, so that everyone in the 
District of Columbia knows their HIV status. Finally, also consistent 
with President Bush's concerns about services to incarcerated 
populations, the District of Columbia will expand HIV testing in the 
District of Columbia correctional facilities.
    Another area of focus in the past year has been generally improving 
corrections healthcare. Just yesterday, the Mayor announced an 
innovative new partnership between the District's largest Federally 
Qualified Health Center, Unity Health Care, and the Department of 
Corrections to provide care to inmates in District jail facilities. The 
goal of the partnership is to create continuity of care from community 
health facilities to jail health facilities, since much of the 
population overlaps. Incarceration is an opportunity to identify and 
begin treatment for chronic and communicable diseases. By partnering 
with Unity, the District will ensure that treatment continues after 
inmates are released into the community. The District is fortunate to 
have received significant support through the Robert Wood Johnson 
Foundation to implement this new model in October.
    To address quality of care for chronic illnesses, both of the 
District of Columbia's public health coverage programs, Medicaid and 
the Alliance, have selected quality performance metrics and are now 
implementing a plan to hold contracted managed care organizations 
accountable for improvement on their scores. Ultimately, we plan to 
create pay-for-performance incentives to catalyze improvements in 
disease management, and ultimately, District-wide health outcomes.
    The District's new smoke-free legislation, banning tobacco use in 
most restaurants and bars, begins to take effect this week. In 
addition, in the past year, the Department of Health sponsored town 
hall meetings on healthcare disparities in every Ward of the District. 
These forums allowed us to gather information from District residents 
and begin to promote healthier lifestyles.
    But we know there is more to be done. In our latest strategic 
planning cycle, we identified several major initiatives to address 
health outcomes that would benefit from a Federal partnership, and also 
potentially serve as demonstration projects that, if successful, could 
be replicated in other parts of the country.
    One such initiative currently in development is a comprehensive, 
District-wide prevention and disease management program. This program 
would include three different components targeting both healthcare 
providers and patients. The first aspect of the initiative would be a 
major media campaign targeted at the general District population to 
communicate the key behaviors necessary to stay healthy. Supporting the 
media blitz, the second component would be a community health outreach 
worker program. This program would rely on peer-to-peer education about 
how to get screened for and manage chronic illnesses, as well as how to 
lead a healthy lifestyle. We would target this program to specific 
neighborhoods and populations with negative health indicators. For 
example, we could develop a group of Spanish-speaking outreach workers 
for the Latino immigrant community or a group of young adult outreach 
workers to target teens. Outreach would be conducted in places that 
already cater to key target populations, such as churches and barber 
shops. The outreach worker model has the added benefit of being a 
workforce development program, providing jobs and a career ladder for 
members of lower-income communities. The third component of the disease 
management initiative would be a District-wide chronic disease 
collaborative. Under this model, physicians and community health 
centers across the city would work together to simultaneously implement 
disease management methods to better track care and outcomes of 
populations with chronic illnesses. We believe that this type of multi-
pronged effort to prevent and treat chronic illness is a key step 
toward progress on the District's negative health indicators. It would 
surely benefit from Federal start-up funds.
    As an aside, one challenge in developing such a program is that 
currently, Federal funds supporting disease management are narrowly 
focused on specific diseases, making it difficult to create programs 
that target whole neighborhoods and sub-populations. We have begun a 
very positive relationship with the Centers for Disease Control to try 
to increase our flexibility, but Federal funds ideally would allow more 
broad-based expenditures.
    Another area for a potential partnership is the creation of a 
National Capital Area Regional Health Information Exchange. Healthcare 
data sharing, with appropriate privacy and security protections, 
enables better coordination among emergency rooms, primary care 
physicians, specialists, and hospitals. This improved coordination 
allows primary care physicians to better manage chronic illnesses. It 
also decreases the incidence of medical errors and minimizes 
duplicative health services, ultimately slowing the growth of public 
and private healthcare costs. In addition, the data collected can be 
used to improve disease surveillance and healthcare policy-making. The 
District and surrounding jurisdictions in Maryland and Virginia are now 
in the early stages of developing a Regional Health Information 
Organization for the National Capital Region to develop a technical 
model and governance structure for health information exchange among 
hospitals, physicians, and payors. In the Mayor's Fiscal 2007 budget, 
we funded the implementation of electronic medical records for all 
medical homes community health centers in the District. This is a major 
building block for health information exchange. In addition, we have 
begun an exciting pilot program called QuickConnect, which 
electronically provides key health records from hospital emergency 
rooms to community health centers, enabling them to follow up with 
patients who have visited the ER.
    As a multi-state region, the National Capital Area is an ideal 
location to demonstrate data-sharing, because the ultimate goal is to 
foster a national, interstate model for data sharing. In addition, the 
region continues to be a target for terrorist attacks, and health data 
sharing will be crucial in responding to any major disaster. Finally, 
health coverage in this region is largely funded by the Federal 
Government, through the Federal Employees Health Benefits Plan, 
Medicare, and Medicaid. That means that the expected cost savings of 
health information exchange will accrue to taxpayers. We are currently 
seeking funding to fully launch the National Capital Area Regional 
Health Information Organization. We envision that this organization 
will ultimately adopt a self-sustaining business model.
    Another potential Federal/local initiative would be a partnership 
to further expand health coverage in the District. While we lead the 
Nation in offering health coverage to low-income individuals, there is 
still a gap for low to moderate income individuals, especially between 
200 and 400 percent of poverty. These people earn too much to qualify 
for public programs, but they have difficultly affording private 
insurance. In the last year, through a Department of Health and Human 
Services funded State Planning Grant for Health Coverage, we have 
explored numerous options for expanding coverage to this population. 
One such model would subsidize private commercial insurance through a 
State-run stop-loss pool. Another model would allow moderate income 
individuals to buy into District Medicaid and Alliance managed care 
plans, with sliding-scale premiums according to income level. We have 
also evaluated the Equal Access model, which would open the District of 
Columbia Government employee health purchasing pool to private 
employers. All of these models would require some level of sliding-
scale subsidy in order to attract members.
    Finally, additional Federal funding for our existing District 
health coverage programs, Medicaid and the Alliance, would allow us to 
continue to expand the District's market-based model for coverage to 
the low-income uninsured. With the Alliance, the District moved from a 
government-run, safety-net public health system to a market-based 
system for covering difficult populations, such as the homeless. As 
mentioned earlier, this new model appears to be making significant 
improvements to care. Until now, we have been able to budget enough 
local dollars to cover all eligible Alliance applicants. The District 
currently invests nearly $100 million in local dollars for the 
Alliance. However, we have been quite successful in expanding the 
Alliance program, and membership has increased steadily, up 25 percent 
in the past year alone to over 30,000 members. Soon, it is likely that 
demand for the program will outstrip the dollars budgeted for the 
program. In order to continue enrolling all eligible District 
residents, funding will have to increase in the next several years. The 
Federal Government could offer some flexibility that would allow the 
Alliance to transition to a Medicaid waiver program, thus qualifying 
for Federal funding. Another alternative would be to increase the 
District's FMAP rate for Medicaid, which would free up additional local 
funds for the Alliance program. Despite that fact that one in four 
District residents is covered by Medicaid, the District still only has 
a 70 percent FMAP rate, compared to States such as Mississippi, which 
have rates as high as 77 percent.
    Thank you for this opportunity to testify today. Dr. Pane or I 
would be happy to answer your questions.

    Senator Brownback. Mr. Bovbjerg.
STATEMENT OF RANDALL BOVBJERG, PRINCIPAL RESEARCH 
            ASSOCIATE, THE URBAN INSTITUTE
ACCOMPANIED BY BARBARA ORMOND, THE URBAN INSTITUTE

    Mr. Bovbjerg. Yes. Good afternoon. I am Randall Bovbjerg. 
With me is Barbara Ormond. We're delighted to join you in an 
effort to improve health insurance coverage and make the 
District a better place to live, work, and do business.
    We do work at The Urban Institute, and it is here in the 
District. We've also lived here for decades, although I grew up 
in Iowa, and Barbara grew up in Georgia.
    Our testimony draws on work done for the State planning 
grant of the D.C. Department of Health. We thank Dr. Pane. But 
I am only speaking for me and Barbara today.
    I also would like to pause and thank staff here for 
producing these colorful charts on very short order. You can 
barely see that, but they are quite colorful.
    And I need to acknowledge that I have another colorful 
visual aid, sent to me by the Scots-Canadian branch of the 
family in honor of National Tartan Day, which was proclaimed by 
the Senate in 1998. So, Happy Tartan Day. I find it a useful 
reminder.
    Senator Brownback. Why didn't you have that on?
    Mr. Bovbjerg. Because I am wearing my D.C. flag, which 
shows the District Building and the Capitol Building, both.
    Senator Brownback. So, it would kind of clash, those two?
    Mr. Bovbjerg. It would be difficult. I had a plaid coat, 
and my wife made me give it away. I can use it here to 
highlight--that we already submitted, but we already submitted 
it to the record.
    And that will serve to bring us back to the topic of health 
insurance, which is, indeed, as you said, Mr. Chairman, a very 
important topic, and for precisely the reasons you named. In 
short, people get better access to care. They're healthier, 
they live longer, they're likely more productive. They do 
better, even in communities that have invested heavily in 
safety-net facilities to provide care for the uninsured.
    There is a lot more detail under the tartan, and I refer 
you to that. Let me mention four things very quickly.
    The District has a slightly lower rate than the Nation as a 
whole, as we just heard. Most of the uninsured work, which is 
often unappreciated, they are disproportionately male African-
American, and especially Latino, as the chart just showed. And 
they live all over, which I think isn't appreciated. Indeed, 
something more than a quarter live in the southeast quadrant of 
the District, which is a little bit higher than that share of 
the population. But about twice that many live in the northwest 
quadrant, which is only slightly less than its share of the 
population.
    Now let's look at four charts that aren't in the report. 
We've got number one up there right away. They're from 
different sources, and they look at who has coverage and who 
doesn't. This is just a graphic illustration of what we've just 
heard, that the District has done a lot for poor people. And 
between SCHIP and Medicaid, in the dark color, and this quasi-
insurance program, which is becoming more like insurance over 
time, called the Alliance, the District, in theory, offers 
coverage to everyone, up to 200 percent of poverty. Not 
everyone applies. And if everyone did, the current resources 
would not cover them.
    Exhibit 2 takes a look at the people who are insured. It 
does it by income. And it does it by program eligibility 
category and by work status. About 50,000--you mentioned 
50,000, Senator--are in this category that is targeted by 
either Medicaid or the Alliance. Some of those people, perhaps 
half, might be in the Alliance. We don't really know, because 
this survey doesn't really ask the question to find out. It 
might be half of them have this quasi-insurance coverage 
already. On the other side are the same people, but broken out 
by work status. And here are the people, that were just 
referred to, who have incomes above the public assistance 
level, and yet don't have coverage. And there are somewhat over 
13,000 of those, on a 3-year average early in the 2000s. This 
was a group that the State Planning Grant Advisory Panel 
identified as a likely target of subsidy to try to see if they 
wouldn't purchase insurance on their own.
    Then exhibit 3 compares this group of the uninsured--and 
here they are again; this is the uninsured--with the similar 
people of the same incomes who have insurance, and how they got 
it.
    So, what this shows is that if one targets this income 
group, the 200 to 400 percent income group, indeed, you capture 
the 13,000 people who don't have coverage, but you're also 
aiming more or less at the 83,000 of the same income who 
already have coverage. And that raises the possibility that 
there could be some displacement of those private dollars with 
public dollars unless steps are taken to avoid that.
    Then exhibit 4 shows the wide variation that would occur 
if, indeed, uninsured people were made insured. And this 
assumes that the people would get insurance of the type that 
people of this income level buy for themselves. And the 
variation is enormous. So, you get--would get almost $12,000 in 
spending between the insurance coverage and the out-of-pocket 
amount for the elderly in fair or poor health, and, at the 
other end, you've got under $800 for the kids in excellent 
health. So, the average price, the average spending, the 
premium could be set targeted at $1,700, but that would not be 
enough if disproportionately above-average people were the ones 
who signed up. So, that's a significant problem. The insurers 
call it ``adverse selection,'' and it's something you'll be 
hearing more about.
    Thank you very much.
    Senator Brownback. Thank you.
    [The statement follows:]
               Prepared Statement of Randall R. Bovbjerg
    Expanding health insurance is a major District government priority. 
One manifestation of this priority has been funding analyses under the 
State Planning Grant (SPG) won by DC's Department of Health in 
conjunction with The Urban Institute. We are the co-Principal 
Investigators on this HRSA-funded project. The PI is Brenda Kelly of 
DC-DOH.
    The reason for promoting insurance is that people with health 
coverage have better access to medical care, are demonstrably 
healthier, and likely more productive as well. Provision of coverage 
improves access more than does subsidizing institutions to provide 
safety-net care to the uninsured.\1\ Today's testimony comes from SPG 
work, much of it done for DOH's Health Care Coverage Advisory Panel; a 
current and a past panel member are also testifying today.
---------------------------------------------------------------------------
    \1\ See, e.g., Hadley, Jack and Peter Cunningham. 2004. 
``Availability of Safety-Net Providers and Access to Care of Uninsured 
Persons,'' Health Services Research, 39(5):1527-1546; see also the DOH/
SPG Advisory Panel's ``Statement of Principles on Expanding Health 
Coverage and Safety Net Protection,'' accessible at .
---------------------------------------------------------------------------
    One major source of information on the uninsured in the District is 
our report of October 2005.\2\ The report assesses the rate of 
uninsurance (which differs somewhat by survey), who lacks health 
insurance, which populations are most at risk of uninsurance, and the 
costs of being uninsured. It focused on working-age adults, 19-64, who 
are most at risk of uninsurance. Younger Americans are better covered--
through families' private insurance, Medicaid, and the State Children's 
Health Insurance program (SCHIP), the last known as Healthy Families in 
DC. From age 65 of course, almost everyone is eligible for Medicare.
---------------------------------------------------------------------------
    \2\ See Insurance and Uninsurance in the District of Columbia: 
Starting with the Numbers, prepared by Jennifer King and the State 
Planning Grant Team, accessible at ; the full team is listed at the end of this 
testimony.
---------------------------------------------------------------------------
    The report sought to improve understanding of the city's uninsured 
at a time when District policymakers have been considering various 
options to help. In June 2005, legislation was proposed to require 
universal health care coverage in the District. In October, the city 
made the first $1 million in grants to expand clinic capacity under its 
10-year Medical Homes initiative. And $200 million in city funding for 
a new hospital is also on the table. This hearing is further evidence 
that DOH was prescient in launching the project.
    Some of the report's key statistics include:
  --About 17 percent of District adults have no health insurance--some 
        50,000 people at any one time and 75,000 at some time during 
        the year. (Estimates vary among different surveys, and some of 
        the uninsured have a form of coverage through the Alliance, 
        discussed below.)
  --Men are three times more likely than women to be uninsured.
  --African Americans, 58 percent of District residents, are two-and-a-
        half times more likely to be uninsured than whites; Latinos, 9 
        percent of the population, are eight times more likely.
  --The annual cost of health care for the uninsured is estimated at 
        just over $120 million, about one third each from the uninsured 
        themselves, from non-insurance funding, and from medical 
        providers' uncompensated care (some of which is offset by 
        Disproportionate Share Hospital, or DSH, allowances or other 
        public funds). If health care coverage were universal, the cost 
        would increase by about half, but the out-of-pocket cost to the 
        formerly uninsured would be halved, and uncompensated care 
        would decrease dramatically.
  --Fifty-four percent of uninsured adults are employed, and 22 percent 
        are temporarily unemployed; only 23 percent are non-workers.
  --Twenty-eight percent of uninsured adults have family incomes below 
        the federal poverty level; 6 percent have incomes at least four 
        times the poverty level.
  --Residents of Southeast Washington make up 23 percent of uninsured 
        adults but only 19 percent of the population; 47 percent of the 
        uninsured live in Northwest D.C. versus 54 percent of 
        population.
    Additional insight is available from SPG analyses not presented in 
that report. Four key charts are discussed here.
    The first chart shows how the District's expansions of public 
program makes every resident with family income below 200 percent of 
the federal poverty level (FPL) eligible for some form of medical 
assistance (Exhibit 1). Medicaid covers the traditional categories to 
the FPLs indicated, in recent years augmented by SCHIP, which is 
operated as a Medicaid expansion. Since it closed its public hospital 
in 2001, the District has also run an innovative, insurance-like 
program known as the Alliance. It fills in gaps for people up to 200 
percent of FPL for those with incomes above the applicable Medicaid 
ceiling and those who are categorically ineligible for Medicaid, such 
as childless adults.
    Not everyone eligible actually applies, however, and the Alliance 
has to date had a budget limit that would not permit it to cover 
everyone if they did apply.




    The next chart shows how the District's health insurance glass is 
part full and part empty (exhibit 2). It illustrates coverage gaps for 
all residents below age 65 by family income and by eligibility category 
(left two columns) and by work status (next three columns). 




    About 50,000 people lacked health insurance in the early 2000s, 
according to the federal Current Population Survey (CPS), a standard 
source of data. About 16,000 were children and parents under 200 
percent of FPL, who are targeted by Medicaid (left column). More than 
twice this number were non-parents under 200 percent of FPL--those 
targeted by the Alliance--about 34,000 people (next column). It is not 
reliably known just what share of these are actually in the Alliance, 
which is believed not to be captured as ``insurance'' coverage in the 
CPS, but up to half of the 50,000 may be. The good news here is that 
the number of uninsured is not large. The less-than-good news is that 
these data also show that the biggest gap in the District of Columbia 
insurance coverage is in the safety net of public programs meant to 
cover those with incomes below 200 percent of FPL.
    The same uninsured people are shown in the next columns of exhibit 
2 (past the first double bar). Here, they are re-categorized by their 
work status. Most of the uninsured are in families with a full time or 
part time worker. Those between 200 and 400 percent of FPL were 
considered by the SPG as potential candidates to receive some form of 
new subsidy to encourage purchase of coverage--about 13,000 people. 
(The data lack sufficient sample size to estimate the number of no-
worker families above 200 percent of FPL; the numbers are likely 
small.)
    The third chart compares those without insurance coverage to those 
with coverage, again by income level and work status (exhibit 3). 
Again, it shows some good news. Among all District of Columbia 
residents below age 65, those with insurance outnumber those without 
coverage by over 5 to 1. Among those with incomes of 200 to 400 percent 
of FPL and not already receiving public help--potential candidates for 
subsidy--the ratio is 6 to 1. On the other hand, any new subsidy 
targeted only by income levels (200-400 percent of FPL) will apply to 
some 82,000 people already covering themselves through private 
insurance as well as the uninsured group of only 13,000. 




    Such new aid can be expected to displace some amount of current 
self-help, so that not all of the new public resources go to increase 
access to health care--a phenomenon often called ``crowd out''--unless 
specific steps are taken to reduce such displacement.
    Fourth, the uninsured also differ in age, health status and other 
characteristics related to health spending (exhibit 4). The average 
level of medical spending per person would be some $1,700 a year if the 
entire population of today's uninsured were given coverage similar to 
that now obtained by those of comparable incomes. However, the range in 
spending by type of enrollee would be substantial, as the exhibit 
shows.




    Those under age 19 who describe themselves as in excellent health 
would account for less than half that amount, while those aged 50-64 in 
fair or poor health would be at seven times the average. The policy 
implication is that how much a new insurance subsidy will cost depends 
upon which people sign up for it.
    Thank you for the opportunity to testify today.

    Senator Brownback. Ms. Baskerville.
STATEMENT OF SHARON BASKERVILLE, EXECUTIVE DIRECTOR, 
            D.C. PRIMARY CARE ASSOCIATION
    Ms. Baskerville. Good afternoon, Chairman Brownback, 
distinguished members of the subcommittee.
    My name is Sharon Baskerville, executive director of the 
D.C. Primary Care Association (DCPCA). I just have to plug our 
mission. We are a group of stakeholders committed to creating a 
community-based primary-care-focused healthcare system that 
guarantees D.C. residents the right care in the right place at 
the right time.
    We work with all of these people to try to create 
solutions. And I can say that since DCPCA was founded, in 1996, 
healthcare coverage has been expanded to over 50,000 D.C. 
residents, and we've had our fingers in all of those 
expansions, the result of a combination of progressive policies 
in a city whose pockets of concentrated poverty have increased 
like no other city in the country over the last decade. We have 
more than doubled, in the last decade, our areas of 
concentrated poverty. To battle the growing concentration of 
poverty, the District has been in the forefront of targeting 
new insurance expansions to medically vulnerable communities 
while also maximizing its local investment in healthcare 
dollars.
    Just a sample of these targeted Medicaid coverage 
initiatives--and I think you see, on this map, currently, in 
2002--and I think we have a small improvement--but adults 
without health insurance, by zip code, so you can see that 
there is still a significant number of people who remain 
uncovered.
    We have targeted, however, very low-income, childless 
adults between 50 and 64, after we realized that they were the 
highest spenders and the highest numbers of self--people who 
are in the hospital listed as self-pay, without insurance. So, 
we targeted this population.
    Low-income residents who are HIV-positive, but we covered 
them at the point of diagnosis, rather than waiting until 
they're disabled by AIDS. And so, they have the opportunity to 
have heart therapy and sort of cutting-edge therapy to keep 
them healthier longer.
    And kids and parents up to twice the poverty level, our 
CHIP expansion includes adults, as well as children. We've done 
a great job, and have evidence that we've covered just about 
all the kids in the District of Columbia who are eligible in 
our CHIPs expansion. And, as you hear in the upcoming budget, 
we're looking to expand to children up to 300 percent.
    All of these expansions make sense on a variety of levels, 
in their wise use of District dollars. They dramatically 
improve healthcare for our vulnerable residents.
    But expanding coverage alone will not work to improve 
health. Even if we were able to create universal coverage, not 
everyone would have a place to go to get care. The District 
must continue to improve the entire system of healthcare 
delivery. I think you've heard mentioned what is an initiative 
started by the D.C. Primary Care Association. Over half of the 
District's residents live in neighborhoods where they don't 
have adequate access to a primary care provider. The dark red 
areas on this map are federally designated health professional 
shortage in primary care shortage areas.
    Now, this--the striped--the sort of striped red are 
currently under consideration by HRSA, because they--we have 
been able to prove that they are medically underserved, as 
well.
    So, you see, these zip codes encompass about 300,000 
residents in a city with just over 500,000 residents. So, it's 
a fairly shocking lack of access to primary care in a city with 
such chronic diseases.
    These, of course, are predominantly on the eastern half of 
the city, which, you know, also parallels, if you look at every 
chart, poverty, unemployment, chronic disease, and uninsurance. 
So, clearly the disparities are shocking for a large number of 
people who live in the District of Columbia.
    As a result of the coverage expansions, the District's rate 
of uninsurance is around about 9 percent, pretty low compared 
nationally to the States. But, despite such a low rate, a 
number of people depend--a high number of people depend on a 
primary care safety-net system. We define a ``safety-net 
system'' as providers who see people, regardless of their 
ability to pay. We certainly want them to maximize the ability 
to collect revenue from insurances, but they guarantee people, 
who walk in the door, care, and those are the people that I 
represent.
    We did start Medical Homes DC, which is an initiative to 
strengthen community health centers, to rebuild the primary 
care system for the uninsured in the District, and to continue 
providing high quality care throughout the healthcare system, 
regardless of the ability to pay. To date, DCPCA, with an 
investment from the city, of $15 million, which is soon, I 
believe, to become $21 million in capital money, we've awarded, 
since the fall, $1 million to seven community health centers 
for nine planning and capital projects. In addition to 
providing technical assistance, we've created something called 
the Institute for Primary Care Enhancement to build the 
infrastructure of health centers who have been providing free 
care, so building their billing systems, their financial 
systems, their clinical excellence systems.
    These projects have already yielded a new demo suite in one 
health center, and other capital expansions are underway. But, 
as with all investments, we want to know and measure how we're 
succeeding.
    We are able to show--and I think this is the most important 
part--the impact of the coverage initiatives in creating 
greater access to primary care is already making a quantifiable 
difference. As part of Medical Homes DC, we conducted one of 
the District's first in-depth studies of residents' healthcare 
and access.
    While wide healthcare disparities continue to exist among 
District residents, two key findings are showing that the 
recent efforts by city and healthcare leaders are beginning to 
reverse troubling trends.
    First, transfer ambulatory care-sensitive emergency room 
admissions, those hospital admissions that could have been 
avoided with proper treatment in a primary care setting, are 
decreasing for both children and adults. I've attached some 
slides to my testimony to highlight these findings. Six years 
ago, before most of Medicaid and the Alliance expansions took 
place, children and adults living in high-poverty areas were 
being admitted at twice the pace of their counterparts living 
in what we call low-poverty areas--I call them wealthy areas, 
but, you know--for avoidable causes. Now, when Medicaid 
expansions have covered almost every child in the District, 
avoidable hospital admission rates for children in high poverty 
have dramatically decreased, and rates are nearly the same for 
all children, regardless of income.
    Looking at adults, we can see that the creation of the 
Alliance, avoidable hospitalizations are going down, as well, 
among high-poverty areas. Those are not quite as dramatic as 
children, but we expect to see that continue.
    And I'll talk later, when--I know my time is up, but the 
disparity in rates of key chronic illnesses, such as asthma in 
children, is beginning to be eliminated, with greater coverage 
and access. And we can discuss that more with questions.
    But we've brought you lots of maps. We have a lot of work 
to do. But we are leveling the playing field, and the D.C. 
Primary Care Association remains an innovator in these and 
other healthcare reforms. So, we hope to talk about a few of 
them later on.
    Senator Brownback. Very good. Thank you very much. I'm glad 
to hear some of those numbers are improving. I was wondering if 
that was the case.
    [The statement follows:]
              Prepared Statement of Sharon A. Baskerville
    Good afternoon Chairman Brownback and distinguished Members of the 
committee. My name is Sharon Baskerville, Executive Director of the 
District of Columbia Primary Care Association. DCPCA represents safety 
net providers and other key stakeholders who are committed to our 
mission of creating a community based, primary care focused health care 
system that guarantees the District of Columbia residents the right 
care, in the right place, at the right time.
    DCPCA works very closely with the District government, council and 
safety net providers to expand health care coverage to as many 
residents as possible, and ensure greater access to primary care 
providers.
Covering New Populations in the District of Columbia
    Since DCPCA was founded in 1996, health care coverage has been 
expanded to over 50,000 District of Columbia residents--the result of a 
combination of progressive policies and a city whose pockets of 
concentrated poverty have increased like no other over the last decade. 
To battle the growing concentration of poverty, the District has been 
in the forefront of targeting new insurance expansions to medically 
vulnerable communities, while also maximizing its local investment in 
health care dollars. Just a sample of these targeted coverage 
initiatives include: very low income childless adults between ages 50 
and 64; low income residents at the point of HIV diagnosis, rather than 
waiting until they become disable by AIDS; and kids and parents up to 
twice the poverty level.
    The District continues to work toward increasing coverage with the 
latest initiative from Mayor Williams to expand Medicaid for children 
up to three times the poverty limit--making the District of Columbia 
one of the most progressive Medicaid programs in the country.
    All of these expansions make sense on a variety of levels--they are 
a wise use of District dollars and they dramatically improve health 
care for our vulnerable residents.
Health Care Access Not a Coverage Issue Alone: Medical Homes DC
    But expanding coverage alone will not work. Even if we were able to 
create universal coverage, not everyone would have a place to go to get 
care. The District must continue to improve the entire system of health 
care delivery.
    Over half of the District's residents live in neighborhoods where 
they don't have adequate access to a primary care provider. I've 
attached a map of the District that highlights where these areas are 
located--predominantly on the eastern half of the city, paralleling 
higher rates of poverty, unemployment, chronic disease, and 
uninsurance. As a result of the coverage expansions, the District's 
rate of uninsurance is around 9 percent--pretty low compared nationally 
and to the States. But, despite such a low rate, a high number of 
people depend on the primary care safety net system--nearly 160,000 
individuals, or more than one fourth of our total population.
    A key component of making this safety net system work is an 
innovative initiative led by the District of Columbia Primary Care 
Association called Medical Homes DC. Medical Homes DC is a 10-year 
strategic project to strengthen community health centers to improve and 
continue providing high quality care throughout the health care system 
and regardless of an individual's ability to pay.
    To date, DCPCA has awarded $1 million to 8 community health centers 
for planning and capital projects, in addition to providing priceless 
technical and development assistance. These projects have already 
yielded a new dental suite in one health center, and other capital 
expansions are under way. But as with all investments, we want to know 
and measure how we're succeeding.
Coverage Expansions and Better Access Are Improving Health
    In fact, we are able to show that the impact of coverage 
initiatives and creating greater access to primary care is already 
making a quantifiable difference. As a part of Medical Homes DC, we 
conducted one of the District's first in depth studies of residents' 
health care and access. While wide health care disparities continue to 
exist among District residents, two key findings are showing that the 
recent efforts by city and health care leaders are beginning to reverse 
troubling trends.
    First, trends for ambulatory care sensitive ER admissions--those 
hospital admissions that could have been avoided with proper treatment 
in a primary care setting--are decreasing, for both children and 
adults. I've attached some slides to my testimony to highlight these 
findings. Six years ago, before most of the Medicaid and Alliance 
expansions took place, children and adults living in high poverty were 
being admitted twice as often as their counterparts living in low 
poverty for avoidable causes. Now, when Medicaid expansions have 
covered almost every child in the District, avoidable hospital 
admission rates for children in high poverty have dramatically 
decreased and rates are nearly the same for all children, regardless of 
income. Looking at adults, we can see since the creation of the 
Alliance, avoidable hospitalizations are going down as well among those 
in high poverty, though not quite as dramatically as for children. Then 
again, while almost every child is now insured, we can't say the same 
for adults. Coverage clearly matters.
    Second, the disparity in rates of key chronic diseases--such as 
asthma in children--is beginning to be eliminated with greater coverage 
and access to quality care. Five years ago, there was a stark 
difference in rates of asthma depending on whether a child lived in 
high or low poverty--almost a five-fold increase for children living in 
high poverty. Now, asthma rates have been decreased and are nearly 
identical to children living in low poverty.
    There obviously remains a lot of work, but it is clear that the 
targeted efforts taking place in the District are making improvements 
for the medically vulnerable.
    The District of Columbia Primary Care Association remains an 
innovator in these and other health care reform efforts across the 
District. We've recently launched an Adolescent Health Initiative to 
get teens and young adults more closely involved in determining their 
own health care. We've convened a Mental Health Task Group to work on 
improving and more closely integrating primary care with mental health 
care services. We're one of the leaders of the Regional Health 
Information and Technology efforts to develop health information and 
electronic medical record sharing across providers. And we've recently 
committed to working with the administration and hospital providers to 
develop an Emergency Room Diversion pilot program to help more people 
seek care more appropriately in a primary care setting.
    As you can see, we remain committed to reforming not just health 
insurance coverage, but truly the system that the District of Columbia 
residents depend on for their health care needs. Thank you for the 
opportunity to testify and I'm happy to answer any questions you may 
have.




    Senator Brownback. Ms. Gomez, welcome.
STATEMENT OF MARIA GOMEZ, PRESIDENT AND CHIEF EXECUTIVE 
            OFFICER, MARY'S CENTER FOR MATERNAL AND 
            CHILD CARE
    Ms. Gomez. Thank you, Mr. Chairman and staff. I appreciate 
the opportunity to appear before the subcommittee today to 
share with you my perspective on the hurdles facing the Latino 
community in accessing primary healthcare and health insurance.
    My name is Maria Gomez, CEO of Mary's Center for Maternal 
and Child Care.
    The center was initiated in 1988 as a nonprofit prenatal 
care center for immigrant women displaced by the civil wars in 
Central America in the 1980s. Today, we are a federally 
qualified health center serving over 14,000 families. Our 
target population continues to be low income and recent 
immigrant living throughout the region of this area.
    Mary's Center operates two primary care centers, a school-
based health center and a mobile unit, each located in the 
heart of the District of Columbia's immigrant communities. In 
addition to our comprehensive family healthcare, services also 
include mental health, a mobile health outreach unit, dental 
care, a teen program focused on pregnancy prevention and youth 
development, home visitation, with an emphasis on preventing 
child abuse and neglect, family literacy, and an intensive case 
management to facilitate integration and civic participation of 
families in their respective communities.
    At Mary's Center, we have learned that the lack of access 
to care is one of the greatest challenges facing Latinos in the 
region, as we have said here today. The lack of access is due 
to the high cost of health insurance and the inability of 
potential patients to leave work to see a provider and 
inaccessibility of being able to get on Medicaid. Workers who 
leave work for regular healthcare are, one, not paid, and, two, 
fearful that their job will quickly be filled by someone who is 
not attending to their healthcare needs.
    Our community does not qualify for Medicaid, mostly, 
because most are born outside of the United States, many with 
very complex immigration status. Even though we are largely 
minimum-wage earners, we are ineligible for other entitlement 
programs, since, by working at least two jobs, our combined 
salaries may be--slightly exceed the Federal income 
requirements of 150 or 200 percent in the regional area of the 
Federal poverty level.
    A community-based research study done last year about--from 
about 800 families, by the Council of Latino Agencies in the 
District, showed that we are a population with a high rate of 
obesity, which translates to a greater potential risk for 
chronic disease, including type 2 diabetes, cardiovascular 
disease, kidney, prostate, stomach, and colon cancer, along 
with an increased risk, of course, of premature death. We are a 
population with 20 percent of the women reported being 
diagnosed with gestational diabetes. This is nine times the 
rate of U.S. Latinas, and 17 and 60 times the rate of white 
women in the United States and in the District of Columbia, 
respectively.
    We are a population with a rising rate of teen pregnancy 
and a low rate of abortions. Thirteen percent--as a matter of 
fact, 13 percent of the Hispanic births are to teens.
    We are a population----
    Senator Brownback. What's that percentage again?
    Ms. Gomez. Thirteen percent. Thirteen.
    We are a population with negligible access to dental care 
for the uninsured or Medicaid recipient, and the few clients 
that do offer dental care--clinics that do offer dental care do 
not have the capacity to perform root canals and more 
specialized care.
    We are also a population with more than double the national 
rate of breast cancer among women.
    But there is good news. We are a population with higher 
than national rates of screening for HIV/AIDS, breast and 
cervical cancer, flu shots among seniors and knowledge about 
HIV transmission. This, of course, indicates to us that there 
have been some striking successes in the delivery of healthcare 
to this community, largely via Latino-serving community health 
centers which serve the uninsured.
    Some further demographics and health-related data has been 
included in your--for the record.
    The lessons we have learned in the past 18 years for 
improving and increasing the number of Latinos who have access 
to healthcare systems are the following:
    Using bilingual outreach workers to enroll Latinos in 
health insurance programs. It is a community that accesses the 
services if they are given to them. They access it early and 
appropriately.
    Increase the pool of young Latinos going into healthcare 
careers, who are the ones who are going to be the most likely 
ones to return to the community. I am an example of that.
    In the meantime, fund interpretive services to guarantee 
clear communication between providers and patients, which 
clearly, clearly correlates to the quality of care.
    Conduct education campaigns to reach Latinos in health 
clinics, schools, churches, and workplaces, using individuals 
from the community as the experts.
    Fund efforts to collect data on Latinos--Latino health. 
Community-based research by Latinos must be done in our own 
community.
    Expand the pool of private providers and hospitals that 
accept patients with Medicaid and the D.C. Health Care Alliance 
insurance by providing reimbursement rates that at least cover 
the expense of the visit.
    Fund, replicate, and expand Latino-serving community health 
centers that can have the capacity to stay open extended hours 
and weekends.
    Promote immigration policies that are civil and humane in 
order to guarantee that immigrants are not forced to be in the 
shadow, neglecting their health, giving rise to unnecessary 
public health illnesses, and increasing the rate of emergency-
room visits and costly curative care.
    The data clearly shows that when preventive and primary 
care is offered kindly, near their home, and in a culturally 
and linguistically appropriate manner, Latinos respond and take 
responsibility to stay healthy, working and engaged in their 
community.
    Thank you for the opportunity to be here with you today.
    Senator Brownback. Thank you.
    [The statement follows:]
                   Prepared Statement of Maria Gomez
    Thank you, Mr. Chairman. I appreciate the opportunity to appear 
before the subcommittee today to share with you my perspective on the 
hurdles facing the Latino community in accessing primary health care 
and health insurance.
    I founded Mary's Center in 1988 as a non-sectarian, non-profit 
prenatal care center for immigrant women displaced by civil wars and 
earthquakes in Central America. Now a Federally Qualified Health 
Center, Mary's Center today serves over 14,000 families with primary 
health care and a wide range of wraparound services. Our target 
population is low-income families, most of whom are recent immigrants 
from all over Latin America.
    Mary's Center operates two primary care centers, a school-based 
health center, and a mobile unit, each located in the heart of the 
District of Columbia's immigrant communities. Our services include 
comprehensive family and pediatric health care, prenatal care, mental 
health services, a mobile health and outreach unit, dental care, a teen 
program focused on pregnancy prevention and youth development, a 
nutrition education and supplemental food program, comprehensive 
services for young children with special needs, family case management, 
home visitation with an emphasis on preventing child abuse and neglect, 
family literacy, and vocational training.
    At Mary's Center we have learned that the lack of access to care is 
one of the greatest challenges facing Latinos in Washington, DC. The 
lack of access is due to the high cost of health insurance and the 
inability of potential patients to leave work to see a provider. 
Workers who leave work for regular health care are (1) not paid, and 
(2) fearful that their job will quickly be filled by a another worker 
who does not take time off to meet their health care needs.
    This is a population that does not qualify for Medicaid because 
they are born outside of the United States. And even though they are 
largely minimum wage earners, they are ineligible for other forms of 
federal assistance, since by working two to three jobs their combined 
salaries may slightly exceed the federal income requirements of 150-200 
percent of the Federal Poverty Level. For these working poor, WIC--
which has a higher income threshold--is the only staple and constant 
food source at their table.
    This is a population with a high rate of obesity--which translates 
to greater potential risks for chronic disease, including 
cardiovascular disease, type 2 diabetes and breast, kidney, prostate, 
stomach and colon cancers, along with increased risk of premature 
death.
    This is a population where 20 percent of women reported having been 
diagnosed with gestational diabetes. This is nine times the rate of 
U.S. Latinas and 17 and 60 times the rate of white women in the United 
States and the District of Columbia respectively.
    This is a population with a high rate of teen pregnancy and a low 
rate of abortion.
    This is a population with no access to dental care for the 
uninsured, and the few clinics that do offer dental care do not have 
the provider capacity to perform root canals and more specialized care.
    This is a population with more than double the national rate of 
breast cancer among women.
    But this is also a population with higher than national rates of 
screening for HIV/AIDS, breast and cervical cancer, flu shots among 
seniors and knowledge about HIV transmission. This indicates that there 
have been some striking successes in the delivery of health care to 
this community--largely via Hispanic serving community health centers 
which serve the uninsured.
    What are my suggestions for improving the increasing the numbers of 
Latinos who have access to the health system? Use bilingual outreach to 
enroll Latinos in health insurance programs; conduct education 
campaigns to reach Latinos in health clinics, schools, churches and 
workplaces; fund efforts to collect data on Latino health; expand the 
pool of private providers and hospitals that accept patients who have 
DC Health Care Alliance insurance; and fund, replicate and expand 
Hispanic serving community health centers. Thank you. 




    Senator Brownback. Ms. Reesor.
STATEMENT OF CHRISTINE REESOR, MEDICAL CLINIC 
            COORDINATOR, D.C. SPANISH CATHOLIC MEDICAL 
            CLINIC OF CATHOLIC COMMUNITY SERVICES
    Ms. Reesor. Good afternoon, Mr. Chairman and members of the 
subcommittee.
    My name is Christine Reesor. I am a nurse practitioner. I 
am the medical clinic coordinator for the D.C. Spanish Catholic 
Medical Clinic of Catholic Community Services.
    We serve more than 120,000 people annually in the 
Archdiocese of Washington, including 30,000 immigrants in the 
Washington area. Our D.C. medical clinic provides adult primary 
care and outpatient surgical services for people who otherwise 
would go without medical care. During fiscal year 2005, the 
clinic logged 3,324 patient visits. Our annual budget is just 
over $500,000. The clinic employs a staff of 10, and relies 
heavily on volunteer physicians and nurses who give generously 
of their time and talent. Our medical team provides primary 
care and specialty services. The clinic also conducts a host of 
wellness and disease prevention and outreach programs in the 
community.
    Allow me to begin by saying thank you for this opportunity 
to testify. I would like to make two main points today.
    First, the rising costs of malpractice insurance represents 
a major challenge for nonprofit medical clinics like the 
Spanish Catholic Center, which serves the working poor, people 
who are indigent, and the uninsured.
    Second, more attention and resources must be focused on 
overcoming cultural, economic, and language barriers that keep 
immigrants from seeking medical care.
    On the latter, allow me to share a real-life example of 
what I'm talking about.
    On two occasions in the recent past, clients have come to 
the clinics with tubes sticking out of their backs after having 
sought care in a local emergency room. In both cases, the tubes 
were placed because of obstructions in the urinary system, and 
the patients were told to seek specialty follow-up care in 2 to 
3 days. Both did not, because of cost and language barriers. 
The patients came to the Spanish Catholic Center after 1 month, 
with serious infections that could have become life 
threatening.
    Why did these patients come to our medical clinic? The 
major reason is that we are particularly user friendly and 
culturally relevant to the growing Latino population of 
Washington, DC. The people who come to our clinic find staff 
and volunteers who speak their languages, understand their 
cultural context, and, in many cases, know what it is like to 
be a newcomer, themselves.
    In summary, the Spanish Catholic Center Medical Clinic is 
an inviting place where immigrants who could otherwise not seek 
the medical care can receive affordable care in a compassionate 
and culturally sensitive environment. With all humility, this 
is a model of service that we should all work together to 
expand.
    Now, let me turn to medical practice insurance. As I 
mentioned earlier, the cost of malpractice insurance is a major 
challenge for the Spanish Catholic Center's Clinic. It is our 
largest expenditure, outside of salaries.
    Again, a real-life scenario. One of our physicians, Dr. 
Dierdre Burn, is a former family practitioner in the U.S. Army 
who received additional training as a general surgeon. She's 
also a Catholic nun with an extensive network of physicians and 
medical resources that she leverages for our patients. For 
example, she has developed a relationship with Sibley Hospital, 
whereby she can perform surgeries for our seriously ill 
patients free of charge. Our ability to keep this amazing 
surgeon translates into an annual malpractice insurance bill of 
$60,000, which is 12 percent of our annual budget.
    Given our clientele, costs like these cannot be passed 
along to Federal--to people who are already struggling to 
access primary care. Mr. Chairman, clinics like ours look to 
the Federal and local government for leadership on this issue 
to help provide relief from this significant cost.
    I would like to close by commending the subcommittee for 
assembling this diverse panel. I can attest to the importance 
of healthcare alliances. Our medical clinic is part of the D.C. 
Healthcare Alliance, which enhances our ability to serve the 
poor, working uninsured, and those ineligible for Medicare and 
Medicaid. Well organized and financed healthcare alliances 
work, and they should be replicated.
    Thank you, Mr. Chairman.
    Senator Brownback. Thank you, Ms. Reesor, very interesting.
    [The statement follows:]
                 Prepared Statement of Christine Reesor
    Good afternoon Mr. Chairman and Members of the subcommittee. My 
name is Christine Reesor and I am a nurse practitioner and the medical 
clinic coordinator for the DC Spanish Catholic Center Medical Clinic of 
Catholic Community Services. We serve more than 120,000 people annually 
in the Archdiocese of Washington, including 30,000 immigrants in the 
Washington area. Our D.C. medical clinic provides adult primary care 
and outpatient surgical services for people who otherwise would go 
without medical care. During fiscal year 2005, the clinic logged 3,324 
patient visits, with an annual budget of about half a million. The 
clinic employs a staff of 10, and relies heavily on volunteer 
physicians and nurses who give generously of their time and talent. Our 
medical team provides primary care and specialty services such as 
dermatology, surgery, nephrology, geriatrics and ear, nose and throat 
care. The clinic also conducts a host of wellness and disease-
prevention outreach programs in the community.
    Allow me to begin by saying thank you for this opportunity to 
testify, and I look forward to your questions on health care issues in 
the District of Columbia.
    I would like to make two main points today:
    First, the rising cost of malpractice insurance represents a major 
challenge for non-profit medical clinics like the Spanish Catholic 
Center, which serves the working poor, people who are indigent, and the 
uninsured.
    Second, more attention and resources must be focused on overcoming 
cultural, economic and language barriers that keep immigrants from 
seeking medical care.
    On the latter, allow me share a real-life example of what I am 
talking about. ``On two occasions in the recent past, clients have 
presented to the clinic with tubes sticking out of their backs, after 
having to seek urgent care in an emergency room. In both cases, the 
tubes were placed because of obstructions in the urinary systems and 
the patients were told to seek specialty follow-up care in 2 to 3 days. 
Instead of securing the specialty care--for fear of cost, and 
difficulty communicating to obtain the appointment, the patients 
approached the Spanish Catholic Center after 1 month, on both occasions 
with infections and the need for interventional radiology and specialty 
care.''
    Why did these patients come to our medical clinic?
    A major reason is that we are particularly user-friendly and 
culturally-relevant to the growing Latino population of Washington DC. 
Partly, it's because we are part of the Catholic Church, which has such 
a strong place in Hispanic and Latino countries. Partly, it is because 
we are not a government entity, and governments are often not viewed as 
trustworthy sources of aid in the countries that immigrants leave. 
Churches and non-governmental organizations are often seen as more 
reliable and trustworthy sources of assistance. Perhaps most important, 
the people who come to our clinic find staff and volunteers who speak 
their languages, understand the cultural context they are working from, 
and in many cases, know what it is like to be a newcomer themselves. In 
summary, the Spanish Catholic Center medical clinic is an inviting 
place where immigrants, who would otherwise not seek the medical care 
they need, can receive affordable care in a compassionate and 
culturally sensitive environment. With all humility, this is a model of 
service we should all work together to expand.
    Now let me turn to medical malpractice insurance. As I mentioned 
earlier, the cost of malpractice insurance is a major challenge for the 
Spanish Catholic Center's medical clinic. Malpractice insurance is our 
largest expenditure outside of salaries. Again, allow me to give a 
real-life scenario. One of our physicians, Dr. Deirdre Byrne, is a 
former general practitioner in the U.S. Army who received additional 
training as a general surgeon. She is also a Catholic nun with an 
extensive network of physicians and medical resources that she 
leverages for our patients. For example, she has developed a 
relationship with Sibley Hospital whereby they allow her to perform 
surgeries for our seriously ill patients free of charge. Unfortunately, 
our ability to keep this amazing volunteer depends on our ability to 
cover her malpractice insurance--an annual bill of $60,000. And, given 
the financial status of our clients, costs like these cannot be passed 
along to people who are already struggling to access primary care. 
Clinics like ours look to the federal and local government for 
leadership on this issue to help provide relief from this significant 
financial burden.
    I would like to close by commending the subcommittee for assembling 
this diverse panel. I can attest to the importance of healthcare 
alliances that bring together government, insurance providers, 
hospitals, and community-based organizations like our medical clinic. 
Well organized and financed healthcare alliances work, and they should 
be replicated.
    The Spanish Catholic Center participates in the DC HealthCare 
Alliance. It enables our clinic to provide free services, regardless of 
citizenship or national origin, to the uninsured and severely poor who 
are unable to access Medicare or Medicaid. The Alliance guarantees 
access to primary care services, specialty referrals, laboratory 
analysis, and pharmaceuticals--the exact services needed to support 
continuity of care in chronic diseases like Diabetes. In reality, it 
reduces emergency room visits by the uninsured, keeps medical 
conditions from spiraling out of control, and offers a sense of dignity 
to people who can't afford medical care. It also provides our clinic a 
modest reimbursement for the services we perform. This is a program we 
are happy to participate in, and believe the subcommittee and the D.C. 
government should consider strategies that would create new alliances 
and expand those that are already successful--like the DC HealthCare 
Alliance.
    Thank you Mr. Chairman. I look forward to the opportunity to answer 
your questions.

    Senator Brownback. Mr. Mirel.
STATEMENT OF LAWRENCE MIREL, FORMER COMMISSIONER OF 
            INSURANCE, SECURITIES AND BANKING FOR THE 
            DISTRICT OF COLUMBIA
    Mr. Mirel. Thank you, Senator Brownback. Thank you for 
inviting me, and thank you for all of your interest in, and 
support for, the people of the District of Columbia. We really 
do appreciate that.
    I am Larry Mirel. I'm a partner in the Washington law firm 
of Wiley Rein & Fielding. Until October of last year, I served 
for more than 6 years as the commissioner of insurance, 
securities, and banking for the District of Columbia.
    The views I am presenting today are my own, and do not 
necessarily represent those of either the District government 
or of my present employer.
    As commissioner, I became involved in health insurance 
issues and tried to find better ways to make insurance coverage 
available for the citizens of the District of Columbia. As you 
can imagine, that's not an easy task.
    Medical providers are being increasingly squeezed, as you 
heard a minute ago, between the limited amount of payment that 
health insurers will provide and the ever-increasing costs of 
medical malpractice insurance. And many of these clinics are on 
the edge of financial disaster.
    It's hard to think in terms of comprehensive solutions. 
What I tried to do when I was commissioner was to deal with two 
of the more significant parts of the problem, and those are the 
two I want to talk to you about briefly today.
    One is the unfair and unreasonable discrimination, in my 
view, between people who work for large employers, government 
or private, and those who work for small employers or who are 
self-employed or who don't work at all. Insurance obeys the law 
of large groups, and that says that if you're in a group--
health insurance group that's large enough, you can be covered, 
even if you may have health problems. That's because most 
people are healthy, and, therefore, their premiums help to pay 
the costs of those who are not. If you're in a small group, 
however, or if you are self-employed, that logic does not 
apply. And if you have health issues, real or potential, or if 
you are of a certain age, you may find it very much more 
expensive to get insurance, and, in some cases, you may not be 
able to get it at all.
    Of course, small groups and large groups, as--the 
difference is an artificial one. If you lump enough small 
groups together, you get a large group. And one of the 
initiatives I wanted to tell you about was our equal access to 
health insurance law, which essentially would say that everyone 
who lives or works or goes to school in the District of 
Columbia will be considered part of a large group, and they 
will have access to a menu of private insurance plans. It would 
be a little bit, Senator, as if the Federal plan, to which you 
and your staff belongs, was opened up to everyone, and everyone 
had the same kinds of choices. That would be the idea behind 
it. That act was introduced--the bill was introduced in the 
District Council, but no action was taken on that.
    The other--well, let me tell you a little more about that 
one before I get into the other initiative.
    Some of the problems that small employers have in finding 
insurance is due to the difficulty of obtaining insurance for 
small groups of people, the need to try to find new insurance 
every year, to price it out, to make choices about what kinds 
of things to cover, and what things not to cover. Under the 
equal access approach, employers would not have to do that. 
They would simply be able to take their employees to this 
program, where the employees could choose the kinds of plans 
they wanted, and the employer would make a contribution of 
whatever amount the employer wanted to make.
    We think this is an innovative idea. It has been--it is 
part of the recently announced program in Massachusetts that 
Governor Romney talked about. And we think there is potential 
in the District and elsewhere.
    The other initiative I want to mention just briefly has to 
do with dealing with this problem of medical malpractice 
insurance. Many of the clinics are very small, and have very 
small budgets, and their ability to find insurance is extremely 
limited. What we have proposed is the creation of a captive 
insurance plan, a captive insurance company owned by the 
District of Columbia that would combine together all of the 
malpractice risks of the various clinics and of the District 
itself into one company, and that company then could provide 
good risk management and could provide good--and has good 
bargaining power to get better rates from the malpractice 
insurers.
    Thank you very much.
    Senator Brownback. Thank you, Mr. Mirel. I want to talk 
some more about this kind of health-mart concept that you've 
mentioned.
    [The statement follows:]
                Prepared Statement of Lawrence H. Mirel
    Senator Brownback, Members of the subcommittee, I am Lawrence 
Mirel, a partner in the Washington, DC, law firm of Wiley Rein & 
Fielding. Before joining the firm in October of 2005 I served for more 
than 6 years as the Commissioner of Insurance, Securities and Banking 
for the District of Columbia. The views I am presenting today are my 
own, and do not necessarily represent those of the District of Columbia 
Government or of my law firm.
    As Commissioner I became involved in health insurance issues, and I 
spent a considerable amount of time and effort trying to find better 
ways to make sure that the citizens of the District of Columbia had 
access to reasonable and affordable health insurance. That is no easy 
task. Advances in medical science and technology assure that health 
care costs continue to rise, as people receive more expensive care and 
live longer as a result. In addition the District's unlimited tort 
recovery system means that premiums for medical malpractice insurance 
go up every year, adding further costs to the system. Medical 
providers--doctors, hospitals and clinics--are increasingly being 
squeezed between rising costs for medical malpractice insurance and 
flat or even declining reimbursement by health insurance companies that 
are trying to hold down the cost of health insurance. For some, and 
especially those physicians and clinics that serve the poor, the 
squeeze is threatening their survival.
    Comprehensive solutions are hard to come by. I did undertake two 
separate initiatives, however, as Commissioner aimed at ameliorating 
some of the more egregious problems with the current system, and I 
would like to briefly describe each of them today. Both of these 
initiatives are still in the works, so their value has yet to be 
proven. But I hope you will agree that they hold out real promise for 
improving our health delivery system in the District of Columbia.
    The first is aimed at what I consider to be unfair discrimination 
between persons who are employed by large employers--private or 
government--who have reasonable health insurance options, regardless of 
their medical history, and persons who are employed by small employers, 
are self employed, or are not employed at all. People in this latter 
group have a much tougher time finding decent insurance coverage, 
usually pay more for the coverage they do get, and if they have a 
history of medical problems may not be able to get insurance at all.
    There is no good reason for this discriminatory treatment. 
Insurance is subject to the ``law of large numbers,'' which simply 
means that the larger the number of people in a group of insureds, the 
easier it is to cover them all, even those who have or will have 
medical problems. That is because most people are healthy, meaning that 
the premiums they pay for health insurance can cover the costs for the 
much smaller number in the group who become ill. For those in small 
groups, however, or those who are self-employed, there is no large body 
of healthy people to share costs with. They pay according to their 
individual health status.
    This distinction between large and small groups is entirely 
artificial. If we lump enough small groups together we end up with a 
large group. That is the basic idea beyond a bill that was drafted in 
the D.C. Insurance Department known as the ``Equal Access to Health 
Insurance Act.'' Under that bill, which was introduced in the Council 
of the District of Columbia but has not been enacted, all persons who 
live, work, or go to school in the District of Columbia would be 
treated as a single group for purposes of health insurance rating. 
Members of this large group would be able to choose from among a wide 
array of private health plans--HMOs, PPOs, high deductible plans, 
etc.--the particular policy that best suits their needs. But they would 
pay group rates for those policies and would not be individually 
underwritten.
    Looked at another way, the legislation would require that the 
District of Columbia Employees Health Benefits Plan, which provides a 
menu of options at standard rates to all District Government workers, 
be opened up to all persons who live, work or go to school here. No 
longer would someone who works for a restaurant or small retail 
business have fewer choices and pay higher prices for health insurance 
than people who work for the District of Columbia Government. No longer 
would someone who is self employed be individually underwritten, while 
someone with exactly the same medical history but who works for the 
District Government pays standard rates regardless of that medical 
history.
    The Equal Access bill is designed to create a structured market for 
providing personal, portable health insurance in the District. Under 
the Equal Access bill small employers would no longer have to negotiate 
health plans for their employees each year, deciding whether it would 
be better to include dental coverage or maternity benefits, and whether 
they can afford either. Instead small employers could provide defined 
health benefit payments for their employees, and those employees could 
then sign up for one of the policies offered under the District-wide 
program that would be set up under the act. Not only employers but also 
churches, civic organizations and social service agencies could help 
their members and constituents purchase insurance through this program. 
We think just the ease of being able to access the health insurance 
system without having to find, design and negotiate individual plans on 
a yearly basis will increase the number of people who are insured.
    The legislation would create a District of Columbia Health Benefits 
Program, which would be a central clearinghouse through which anyone 
who lives, works, or attends an institution of higher education in the 
District of Columbia, and their dependents, could obtain health 
insurance coverage. Any District employer could designate the program 
as its ``employer-group'' health insurance plan for its workers and 
their dependents--both those who live in the District of Columbia and 
those who live elsewhere. District residents could also enroll in the 
program directly.
    Once enrolled, individuals would be able to select coverage from a 
menu of health insurance plans offered through the program, and could 
elect to change coverage during an annual open season.
    All of the insurance plans offered through the program would be 
private plans offered by health insurers licensed to do business in the 
District. They would be regulated by the D.C. Department of Insurance, 
Securities and Banking and would have to comply with all applicable DC 
health insurance laws, just like any other licensed health insurance 
plans. The program itself would operate much like the Federal Office of 
Personnel Management does in making private health insurance plans 
available to federal employees; that is, it would administer the 
offering of a menu of private insurance options.
    Although the D.C. Health Benefits Program would be similar in some 
ways to health insurance purchasing or pooling arrangements established 
by some States, it also differs in that it is designed to be considered 
``employer-group'' insurance for purposes of federal tax and employee 
benefit law. In extensive discussions with the Federal Departments of 
Labor, Treasury and HHS, we worked out a novel approach as follows:
  --Any employer could contract with the D.C. Health Benefits Program 
        to make the program its ``employer-group'' health insurance 
        ``plan.'' For purposes of Federal law, that employer's ``plan'' 
        would consist of the menu of insurance product choices offered 
        through the program and the premium subsidy provided to its 
        workers by the employer.
  --This means that any contribution made by the employer to the 
        premium for a policy purchased through the program would be 
        tax-free to the worker. It also means that employees and 
        dependants covered through the program would receive all of the 
        protections afforded by federal law to workers covered by 
        ``employer-group'' health insurance. However, because the 
        policies offered through the program are personal, portable, 
        D.C.-regulated insurance products, workers would be able to 
        keep their coverage when they switch employers.
    The program would also operate a payroll withholding system to 
facilitate collection of premium contributions by workers and/or their 
employers. Employers could choose to augment the coverage offered 
through the program with their own, separate, supplemental plans 
providing additional benefits such as vision care, dental care, long-
term care, and health care flexible spending accounts.
    As the legislation is currently drafted, the program would offer a 
choice of 10 to 15 health plans selected so as to offer a choice of 
plan types (e.g., indemnity, HMOs, PPOs, consumer directed, etc.). All 
plans offered through the program would have to provide major medical 
coverage (defined as: hospital benefits, surgical benefits, in-hospital 
medical benefits, ambulatory patient benefits, and prescription drug 
benefits), and meet the District of Columbia mandates, but within these 
broad parameters insurers would be free to design specific benefit 
packages in response to consumer preferences.
    Policies sold through the program would charge standard, age-
adjusted rates, without underwriting, to all enrollees who had at least 
18 months of previous coverage, or who enrolled in the program as part 
of a participating employer-sponsored group. Each participating plan 
would be free to set its own table of standard, age-adjusted rates, 
subject to review by the D.C. Department of Insurance, Securities and 
Banking (DISB) to ensure that the rates reasonably reflected the 
anticipated costs of the offered benefits.
    Persons who joined the program as part of a participating employer-
group would be able to obtain coverage at standard rates and without 
underwriting, regardless of previous coverage. Persons who enroll in 
the program directly as individuals would be able to buy coverage at 
standard rates without underwriting if they have at least 18 months 
prior creditable coverage. Individual enrollees with less than 18 
months prior creditable coverage could be charged premiums of up to 150 
percent of standard rates for up to 2 years and could be subject to 
pre-existing condition exclusions of up to 12 months, reduced by the 
number of months of creditable coverage.
    The program would be a self-governing, separate legal entity, 
sponsored by the D.C. Government and subject to regulatory oversight by 
DISB. The administrative costs of the program would be financed out of 
assessments on participating carriers, apportioned according to the 
share of enrollees electing coverage offered by each carrier through 
the program.
    Any enrollee who ceased to be eligible to participate in the 
program by reason of a qualifying event (e.g., employment termination, 
divorce, loss of dependent status, etc.) would be permitted to continue 
participating in the program for up to 36 months, on the same terms as 
other enrollees, regardless of the loss of eligibility.
    Insurance agents who brought individuals or groups to the program 
would be paid a 5-percent commission by the plans selected by those 
individuals. Associations and private social service organizations that 
enrolled groups or individuals in the program would be similarly 
compensated.
    The legislation specifies that the D.C. Government would put its 
employees into the program. Thus, the program would start with a core 
group of about 30,000 lives (about 19,000 D.C. workers and their 
dependents). The presence of this large, stable, initial core group in 
the program would be a strong inducement to insurers to participate in 
the program and to offer attractive rates and benefit packages. Then, 
as private businesses and individuals join the program, its growing 
size would make it even more attractive to insurers and encourage even 
more vigorous competition for enrollees.
    Finally, the Equal Access legislation would also establish a 
separate Health Insurance Risk Transfer Pool. The pool would be a 
``back-end reinsurance pool'' structured as an industry-run, mandatory 
association. It would allow participating carriers to transfer claims 
for high cost enrollees to the pool, and then evenly spread those 
expenses across all insured individuals. That way, no single carrier 
would bear a disproportionate share of the costs associated with high-
risk individuals. This would also permit high-risk individuals to have 
the same health plan choices as everyone else.
    The pool would be self-governing and financed by assessments on all 
health insurance carriers selling health insurance in the District of 
Columbia market, both in and outside of the DC Health Benefits Program, 
as well as any self-funded employer plans that also elected to 
participate in the pool. I have attached to this testimony a copy of 
the Equal Access legislation as introduced in the D.C. Council.
    The other initiative is designed to help the economic viability of 
the network of clinics that serves the District's population, and 
especially its less affluent members. Because of the District's 
unlimited liability tort system, the cost for medical malpractice 
insurance continues to rise astronomically. Obstetricians, for example, 
now pay more than $150,000 a year for medical malpractice insurance, 
while health insurers hold down the amount paid for deliveries, making 
the practice of obstetrics in the District of Columbia financially 
unviable.
    Particularly at risk in this financial squeeze are the dozen or so 
independent clinics that provide much of the city's primary care for 
its poorer citizens. Especially since the demise of the old D.C. 
General Hospital these clinics have become the major source of primary 
health care for a large portion of the city's most vulnerable citizens. 
If they were to fold, the people they serve would have no choice but to 
take their medical problems directly to hospital emergency rooms--a 
most dangerous and uneconomical way to provide the care they need.
    Medical malpractice insurance premiums have become a huge burden to 
these clinics. I know of one clinic, the Family Health and Birth Center 
in Northeast Washington, which provides essential pre-natal, birthing, 
post-partum and pediatric care to hundreds of District residents, that 
recently saw the cost of its medical malpractice insurance go from 
$90,000 to $175,000 in one year. The total budget of this clinic is 
only a million dollars a year. These clinics must have malpractice 
insurance, if for no other reason than that the District cannot 
contract with them to provide their health services unless they do. And 
much of their business is done under contract with the District 
Government.
    In my former position as D.C. Insurance Commissioner I proposed 
that the District set up its own medical malpractice insurance 
company--a ``captive'' insurer--to cover all medical malpractice risks 
to which the District Government is exposed, either directly because of 
health services it provides to its citizens or indirectly because of 
health services provided by clinics under contract with the government. 
Individual clinics have little or no leverage with malpractice 
insurers. They are generally so small that there are few insurers 
willing to even make them an offer of insurance. They are victims of 
the same inflexible insurance ``law of large numbers.'' But the 
District Government is a large player, and it can negotiate among 
insurers for good rates. By sweeping the private clinics into the 
District's own insurance mechanism the clinics can enjoy the better 
rates that the District can command, and the District can subsidize 
those costs when necessary. Moreover the ``captive'' insurance company 
will be able to provide important risk management services to those 
clinics. At present the District may be liable for malpractice 
committed at those clinics, but because they are independent 
organizations the District Government cannot insist that they properly 
mitigate their risks.
    Currently the District Government is self-insured for tort claims, 
including medical malpractice. Since there is no sovereign immunity for 
the District Government, and no legal limits in District law on tort 
claims, the Government has open-ended exposure for claims of medical 
malpractice committed by District employees or contractors. What it 
pays out in judgments and settlements each year comes from a 
``settlements and judgments fund'' in the District's annual 
Congressional appropriation. There is little ability for the government 
to control or account for the amount of money paid out each year, or to 
engage in the kinds of rigorous risk management that could reduce those 
claims. By setting up a wholly-owned captive insurance company, that 
would be professionally managed, the District will be able to budget 
better and to better manage its liability risks.
    By allowing clinics to buy insurance from the captive insurance 
company, the District will enable these private entities to realize the 
market stability and savings that will come from the pooling of risks 
with the Government. Moreover the District will have the ability to 
subsidize the insurance costs for those clinics that cannot afford to 
pay them without jeopardizing their ability to provide patient care. 
Those subsidies will be a bargain for the District Government because 
they will ensure that the private clinics will be able to continue 
their mission to serve the District's poorest population, without the 
need for more expensive and cumbersome programs that the Government 
would have to establish if they did not exist. Finally, having a 
professionally managed insurance company involved in providing 
liability coverage for these clinics will ensure that the best risk 
management practices are required, thus providing maximum safety to the 
patients of the clinics as well as to the District Government.
    Senator Brownback, these are modest but important initiatives that 
I believe can help the District provide better medical care for its 
citizens on a more rational and cost effective basis. Because they are 
innovative ideas they naturally meet with some resistance from persons 
who do not understand what they are trying to do, or who are genuinely 
concerned that matters not be made worse. But innovation is what is 
needed, and these are ideas that will work.
    Thank you for giving me the opportunity to appear before you today. 
I will be happy to answer any questions. 



    Senator Brownback. Mr. Haislmaier.
STATEMENT OF EDMUND HAISLMAIER, RESEARCH FELLOW, CENTER 
            FOR HEALTH POLICY STUDIES, THE HERITAGE 
            FOUNDATION
    Mr. Haislmaier. Thank you, Senator.
    My name is Ed Haislmaier. I'm a visiting research--well, 
actually, a research fellow, not visiting--at the Center for 
Health Policy Studies at The Heritage Foundation. I would also 
say two other things. I was born in Columbia Hospital for Women 
in the waning days of the Eisenhower administration, so I am a 
District native.
    So I am a District native, though I grew up in--just across 
the line, in suburban Maryland, but then I went to high school 
at St. John's, here in the District, and I have been a resident 
of Capitol Hill for 15 years. So, what I am testifying on is a 
matter of not only professional interest, but of personal 
interest. And I should also add that I've had the pleasure of 
working, for a couple of years, with then-Commissioner Mirel on 
developing some of his ideas and proposals.
    Let me make a couple of brief comments excerpted out of my 
longer testimony.
    Randy Bovbjerg presented data on the uninsured. And there 
is much more data out there, both nationally and locally. But I 
think what we can do is reduce it down, in my mind, really, to 
a couple of points, and that is to say that if--in the case of 
any given uninsured person, they--the reason they are uninsured 
is one or more of the following three reasons. It's an issue of 
affordability or availability or value.
    Now, what do I mean by that? Well, for some people, it's 
clearly affordability. Even if you made the insurance cheaper, 
even if you, you know, made it more available, they still are 
going to have trouble paying for it. And that's often the focus 
of discussions over policy solutions for the uninsured.
    But that's only a subset of the uninsured. For some people, 
it's not so much a question of affordability as it is a 
question of availability. And this is what Mr. Mirel touched 
on, the fact that they work in the kinds of jobs that don't 
provide them coverage. And, frankly, the way our system's 
organized, that's where most people get their coverage. They 
don't fit the pattern that we've operated on in this country 
since the 1930s, really--well, late 1930s, early 1940s--of 
assuming that everybody goes to work out of high school for a 
large employer like General Electric or General Motors, stays 
there 30 years, gets all their benefits, and then retires with 
a company pension and healthcare.
    Now, if you, or anybody you know, doesn't fit that model, 
they're at risk of running into these availability problems. 
And I should say that I remember talking to some of the Senate 
staff, who I know, from previous years, had worked on the HIPAA 
legislation Senators Kassebaum and Kennedy put together, and I 
said, ``You know, what you guys did in HIPAA was, you made a 
great--you did a great job of making sure coverage was portable 
if people went from GM to General Electric, but that doesn't 
work when going from Home Depot to McDonald's to Joe's Pizza, 
that's a one-off.''
    Value is the third point. There are people who we know can 
afford to buy the insurance, and for whom it is available, and 
they simply don't purchase it. In large measure, they don't 
purchase it, because they don't value it. There are a number of 
reasons why they might not value it. There are rules, in some 
cases--I--happy to say not in the District of Columbia--but in 
some States there are rules that make the insurance 
artificially expensive, and, thus, make it less valuable to 
them. In some cases, they just think, ``Hey, you know, I'm 
healthy, I don't need it.''
    Perversely, to the extent that we have a national policy, 
which we do, EMTALA, the Emergency Labor Treatment Act, which 
says that, ``If you show up without insurance, you'll get 
treated,'' we're rewarding that behavior. We're saying, ``Don't 
worry. If something happens, you'll get treated, and somebody 
else will pay for it.'' So, you know, if you're young and 
healthy, why not skip it?
    The fact of the matter is, in any given instance it's 
probably a combination of those three. But I think outlining 
those three gives us some idea of how we could proceed with a 
set of reforms to address the pieces of the problem.
    The other key point that I would make in this context is 
that the longitudinal research on the uninsured--in other 
words, there were studies where they took the uninsured 
population, over 4 years--and it was about 85 million, as 
opposed to the 40 million reported every year--and they looked, 
and they said, ``Well, how do those people's coverage patterns 
work out?'' Well, they found only 12 percent were uninsured for 
the full 4 years, but 33 percent went in and out, in and out, 
in and out of coverage repeatedly. And another 29 percent were 
basically covered, but had some gap in the middle. So, right 
there, you're looking at two-thirds of these people, if we 
could just make the insurance stick to them instead of the job, 
you could--instead of to their employer, you could solve a lot 
of the problem right there. They would keep the insurance.
    Now, how does this come down to what we're talking about 
here in the District? The equal-access legislation that Mr. 
Mirel was talking about is designed to address the continuity 
problem precisely. It is designed to stop pounding the square 
peg of small business into the round hole of employer group 
insurance, and say, ``Let's make something that fits better for 
everybody,'' so that it's employer group insurance for purposes 
of it being tax free, but everybody goes into one big pool that 
looks like FEHBP, and once a year they get to pick the coverage 
they want. The more people you get in there, the more people 
show up with insurance, either in public clinics or private 
physicians and hospitals, and the money to pay for it.
    You then move to the next piece, which is the D.C. 
Alliance. I think the District did the absolute right thing in 
moving from a provider safety net, which was D.C. General, 
saying, basically, ``We'll pay to make sure you don't go 
broke,'' to a people safety net, which is, ``We're going to use 
the money to make sure people get treatment.'' They need to 
take the next step, which is exactly what Governor Romney is 
proposing in his State, in Massachusetts, and what the 
legislature up there just agreed to, and that is to convert 
that into subsidies to buy insurance.
    We have the money. It's there. It's the next step. The 
equal access provides the framework for it.
    Finally, once you have those two pieces in place, I think 
the other pieces, which have already been discussed--reforming 
the malpractice, helping our clinics get the right 
infrastructure so they can get paid by the insurance 
companies--I think could really tie the package together very 
neatly. And I think, as Mr. Bovbjerg pointed out, it is not 
unrealistic to envision that we could, indeed, achieve 
universal access here in the District of Columbia.
    I would simply say that I think this is a vision in which 
the incentives in the system are aligned to put patients first, 
in which the health insurers are given incentives to compete 
for customers, not just to try to, you know, knock down the 
premium by paying providers less, but to meet the needs of 
their patients, not the employer; and the providers, of course, 
are incentivized to offer the best quality care that they can 
to their patients and to create those kind of medical homes and 
long-term relationships that we do know do yield better 
outcomes and lower cost. I think that it also is a vision in 
which patients, providers, and insurers have incentives to 
collaborate together to manage appropriately the patient's 
care. We know that health--that disease management works best 
when the individual is an active co-manager. I think it's a 
vision worthy of our Nation's Capital.
    Thank you, Mr. Chairman.
    [The statement follows:]
               Prepared Statement of Edmund F. Haislmaier
    My name is Edmund F. Haislmaier. I am a Research Fellow in the 
Center for Health Policy Studies at The Heritage Foundation. The views 
I express in this testimony are my own, and should not be construed as 
representing any official position of The Heritage Foundation.
    Thank you Mr. Chairman and Members of the committee for the 
opportunity to testify before you today on he subject of access to 
primary care and health insurance in the District of Columbia.
    I will begin my testimony by offering a perspective on the three 
basic factors that contribute to the lack of health insurance coverage. 
Then, I will outline the elements of what I believe to be a promising 
strategy for expanding health insurance coverage, while simultaneously 
creating the right incentives for the health care delivery system to 
deliver better quality, lower cost care. Finally, I will conclude with 
a number of observations on how such a strategy could be implemented in 
the District and the benefits that could result.
    There exists a substantial body of data and analytical research on 
health insurance coverage, including analyses of the demographics of 
the insured and uninsured populations according to various demographic 
factors such as income, age, race, sex, geography and employment.
    However, the vast majority of that analysis and research can be 
summarized by saying that in the case of any given uninsured person, 
his or her lack of coverage is attributable to one or more of the 
following three basic factors; the affordability, the availability and 
the perceived value, of health insurance.
    Affordability.--Some of the uninsured simply do not have sufficient 
incomes to pay for coverage. Furthermore, even if coverage could be 
made less expensive than it currently is, many of those individuals 
would still be unable to afford health insurance absent additional 
assistance in the form of some kind of public subsidy. The biggest 
public policy issue in this regard is the current binary, or ``all or 
nothing,'' structure of publicly funded health coverage programs. Those 
who qualify get full coverage, while those who do not qualify get 
nothing. In the case of the District, this applies to Medicaid, DC 
Healthy Families (the District's S-CHIP program) and the Alliance. It 
should be noted in passing that the Federal Medicare program works the 
same way.
    For income-related programs, the reality is that some individuals 
with incomes just under a program's eligibility thresholds could 
probably afford to contribute something towards their coverage, while 
many of those just above the eligibility thresholds will certainly need 
some subsidy to afford health insurance. In recognition of this reality 
some States have expand their public programs by permitting income-
related ``buy-in'' arrangements. For example, Maryland permits families 
with incomes between 200 percent and 300 percent of poverty to ``buy-
into'' S-CHIP coverage for their children by paying a partial premium. 
Less common, is the alternative approach of providing qualified 
individuals with income-related contributions to subsidize private 
coverage.
    Availability.--For other uninsured individuals, the issue is as 
much or more one of availability as it is one of affordability. In 
general, these are persons who lack access to employer-provided 
insurance. For many of them the availability problem quickly translates 
into an affordability issue. That is because the current system of 
Federal tax subsidies for employer-sponsored coverage, combined with 
State insurance laws that divide the market into small-group, large-
group, and non-group segments, each with different regulations, make 
employer-group insurance significantly less expensive than the 
alternative of non-group insurance. However, it is important to keep in 
mind that non-group insurance does offer the advantage of coverage 
portability, while employer-group insurance is never truly portable. 
Thus, were governments to equalize the costs of employer-group 
insurance versus non-group insurance through public policy changes, the 
purchase of non-group insurance would likely become the preferred 
solution for many individuals, particularly those who change jobs more 
frequently.
    Value.--Finally the principle issue for some of the uninsured is 
one of perceived value. Those are individuals have access to coverage 
and can afford to pay for it, but still decline to purchase health 
insurance (either group or non-group) because they perceive it to have 
low value for the price charged (premium). This perception of health 
insurance as a ``poor value for money'' can result from several 
factors, including:
  --Community rating practices that make coverage more expensive for 
        younger and better risk individuals
  --Regulations that prevent the offering of less comprehensive, and 
        thus less expensive, plans
  --A system of public subsidies for uncompensated care that perversely 
        encourage the healthy uninsured to go without coverage, knowing 
        that someone else will pay for their treatment should they in 
        fact happen to need care
  --A general market structure that results in the offering of plans 
        that focus on near-term protection at the expense of long-term 
        protection, such as by applying underwriting in the non-group 
        market equally to those with and without continuous, prior 
        coverage.
    Given the interaction of these three basic factors, it is not 
possible to simply subdivide the uninsured into three groups. Rather, 
the reality for any given uninsured individual is that one of these 
three factors is the dominant reason for a lack of coverage while one, 
or both, of the remaining factors also influence the coverage decision.
    However, this analysis is useful in suggesting a three-prong 
approach that policymakers can take to measurably expand health 
insurance coverage. The most promising strategy is to systematically 
address the three basic factors that produce uninsurance with three 
complementary sets of reforms:
    Set One.--Undertake reforms designed to moderate the cost of 
coverage in general and to permit health insurance markets to better 
align premiums with perceived value.
    Set Two.--Institute reforms in the ways that health insurance is 
bought and sold to make coverage more accessible and available, 
particularly for those whose employment patterns do not match the 
premise of long-term employment at a large firm offering employer-group 
coverage that underlies the current market structure.
    Set Three.--Reform public programs to provide subsidies to more 
individuals, but scale them according to income and need. Also, convert 
existing subsidies for uncompensated care currently directed to medical 
providers into coverage subsidies directed to individuals.
    The data indicate that many of the uninsured are part-time or 
contingent workers, including significant numbers employed by Federal, 
State, and local governments and large private employers. Anther 
significant share consists of those working for small businesses, 
particularly ``micro'' businesses with 10 or fewer employees and the 
self-employed. Finally, almost all of the remaining uninsured 
individuals are the dependents of workers in the first two categories.
    National research also shows that the long-term uninsured comprise 
only a small portion of the total uninsured population. A recent study 
that looked at the total population experiencing one or more spells of 
uninsurance over a 4-year period found that only 12 percent were 
consistently uninsured. In contrast, fully one-third cycled repeatedly 
in and out of insurance coverage and another 29 percent experienced 
coverage gaps during the 4-year period. These results lead the authors 
to conclude that continuity of coverage should be an explicit and 
principal policy goal for health reform.\1\
---------------------------------------------------------------------------
    \1\ Short, Pamela Farley and Graefe, Deborah R., ``Battery-Powered 
Health Insurance? Stability In Coverage Of The Uninsured,'' Health 
Affairs, November/December, 2003. See also: Short, Pamela Farley, 
Graefe, Deborah R. and Schoen, Cathy, ``Churn, Churn, Churn: How 
Instability of Health Insurance Shapes America's Uninsured Problem,'' 
The Commonwealth Fund, Issue Brief No. 688, November, 2003 and Klein, 
Kathryn, Glied, Sherry and Ferry, Danielle, ``Entrances and Exits: 
Health Insurance Churning, 1998-2000,'' The Commonwealth Fund, Issue 
Brief No. 855, September, 2005.
---------------------------------------------------------------------------
    The simple reality is that employment-based health insurance only 
works well for those who are long-term employees of large firms, and 
Medicaid is reliable coverage only for the very poor. Neither system, 
alone or in combination, is doing an acceptable job of ensuring health 
care coverage for the people who don't fit either of those categories.
    The DC Equal Access to Health Insuranc legislation is designed to 
make health insurance coverage more readily available to District 
residents, and to explicitly promote greater continuity of coverage. It 
would create a single ``clearinghouse,'' in the form of a new DC Health 
Benefits Program, through which those who live and work in the District 
could obtain the health insurance plan of their choice. In the case of 
individuals whose employers elected to make the DC Health Benefits 
Program their ``group-health insurance plan,'' they would be able to 
buy coverage through the program using tax-free contributions by their 
employer.
    The effect would be that, as those individuals changed employers, 
they could keep their chosen health insurance policy and take it with 
them from job to job--just as they now do with their auto, home or life 
insurance. Thus, as they changed jobs the only thing that would differ 
from one employer to the next is the arrangement for paying for 
coverage with tax-free dollars. Instead of standardizing the insurance 
benefit package, as Maryland and some other States have done in their 
small-group markets, the DC Equal Access bill would standardize and 
centralize the administrative functions involved in offering a menu of 
plan choices, managing an annual open season, handling enrollment, and 
transmitting premium payments to the chosen insurers.
    In short, the DC Health Benefits Program would provide for all 
District residents and participating employers the same kinds of 
administrative services that the Federal Employee Health Benefits 
Program now provides for workers throughout the Federal Government.
    As I noted, studies of the data on health insurance coverage over 
time have led researchers to conclude that, ``To the extent that job 
turnover undermines coverage stability, designing ways for employers to 
contribute to the cost of coverage, without directly administering 
health insurance, could enhance continuity.'' \2\
---------------------------------------------------------------------------
    \2\ Short, Pamela Farley, Graefe, Deborah R. and Schoen, Cathy, 
``Churn, Churn, Churn: How Instability of Health Insurance Shapes 
America's Uninsured Problem,'' The Commonwealth Fund, Issue Brief No. 
688, November, 2003.
---------------------------------------------------------------------------
    The DC Equal Access bill is designed to implement precisely the 
solution called for by these researchers. Furthermore, the researchers 
also point out how such an approach can provide benefits beyond simply 
reducing the number of uninsured. They note that reducing coverage gaps 
will also aid efforts to improve continuity of care, which can in turn 
result in better health outcomes, improvements in health status and 
potentially lower system costs. Specifically, they concluded that,

    Efforts to reduce churning in public and private plans or to assure 
more seamless transitions from one source of coverage to another would 
also enhance the efforts of physicians and other clinicians to provide 
effective care. The possibility of changing networks of care, frequent 
transitions from one insurance program to another, and losing coverage 
entirely are likely to undermine the continuity, timeliness, and 
appropriateness of care.

    Thus, another, and very important, benefit of the proposed DC 
Health Benefits Program is that it would facilitate and reinforce 
delivery system initiatives designed to improve the effectiveness of 
care, specifically the ``medical homes'' initiative of the District's 
primary care clinics.
    The design of the Equal Access legislation and the DC Health 
Benefits Program would offer a number of other advantages as well.
    For example, the DC Health Benefits Program would administer 
``premium aggregating'' mechanisms, including a uniform payroll 
withholding system, to facilitate the collection of premium payments. 
Those mechanisms would be able to combine contributions from multiple 
sources. Thus, a two earner couple would no longer have to choose 
coverage from one spouse's employer and forgo the coverage contribution 
offered by the other spouse's employer. Instead they could combine the 
contributions from the two employers and use the total amount to buy 
the coverage they real want for their family through the exchange. 
Similarly, an individual with two part-time jobs could ask for a pro-
rated contribution from each employer and then combine them to buy 
coverage through the program.
    With these features in place, small employers would no longer face 
the risks and administrative burdens associated with trying to obtain 
group coverage for their handful of employees. Rather, a business could 
designate the program as its ``group'' health insurance plan and give 
its employees whatever tax-free contribution the business can afford to 
help them buy coverage.
    Under the Equal Access legislation, insurance brokers would 
continue to receive commissions for bringing employer groups and 
individuals to the program. They would earn their commissions by 
providing workers with benefits counseling on picking the best plan for 
their personal situations, and by assisting employers in setting up 
arrangements, currently permitted under Federal and State tax law, that 
make the share of the premium paid by their workers also tax-free to 
the workers. While such arrangements are common among large firms, 
today small firms rarely offer them.
    Furthermore, the Equal Access bill is designed to open up 
additional avenues for providing coverage to hard to reach 
subpopulations. One provision would allow private social service 
entities, such as clinics or church groups to subcontract with the 
program to handle enrollment for populations that they serve. Another 
provision stipulates that if membership groups bring their members into 
the program, that those groups would be paid the same commission as 
insurance brokers. In other words, business and professional 
associations as well as civic, religious or social service 
organizations would be rewarded for ensuring that those they serve get 
health insurance coverage. That could greatly augment outreach and 
enrollment efforts.
    The Equal Access bill would also require the District Government to 
take the lead by providing health insurance to its own employees 
through the program. This provision would have several positive 
effects. First, District of Columbia government workers would gain a 
wider choice of coverage options. Second, it would facilitate getting 
coverage to those government employees, particularly contractual and 
contingent workers, who are currently uninsured. Third, the presence of 
such a large number of workers plus their dependents (about 30,000 in 
total) would be a catalyst for ensuring the program's success. Insurers 
would have a huge market incentive to offer attractive benefit packages 
at attractive premiums through the program, while small businesses and 
their employees would be eager to join.
    Finally, the costs of coverage for the District of Columbia 
government workers might actually decline somewhat under such an 
arrangement. This is because the average age of workers with 
employment-based insurance tends to be significantly higher that the 
average age of the uninsured. Thus, expanding coverage to uninsured 
workers who are generally younger and healthier should have a favorable 
impact on premiums for all covered individuals.
    The remaining missing piece of the puzzle is how to address the 
needs of the low-income uninsured for whom affordability of coverage is 
a major barrier. The good news is that the District took the first step 
in the right direction when it transferred the subsidies it was paying 
DC General Hospital for uncompensated care to the new DC Healthcare 
Alliance. The next step would be to convert the DC Healthcare Alliance 
funding into premium support payments to assist the target population 
in obtaining personal, portable health insurance through the DC Health 
Benefits Program.
    That is precisely the strategy embodied in the comprehensive health 
reform package given final approval by the Massachusetts legislature 
just the other day. The Massachusetts legislation includes a health 
insurance exchange that is taken, with some modifications, directly 
from the DC Equal Access bill, which we shared with them. But the 
Massachusetts bill also takes the next step of converting that State's 
present system of provider subsidies, currently paid out of a hospital 
uncompensated care fund, into income-related premium support payments.
    The final, still missing, piece would be to assist the District's 
primary care clinics in creating the necessary infrastructure to accept 
insurance reimbursement.
    When all of these elements are put together, the vision emerges of 
a District of Columbia in which all residents can easily obtain and 
keep personal, portable health insurance, those with low-incomes have 
the cost of their insurance subsidized through the redirection of 
existing public funding, and individuals use their insurance to obtain 
necessary medical care provided or coordinated by the doctor or clinic 
that is their ``medical home.''
    It is a vision in which all of the incentives in the system are 
aligned to put the needs of the patient first, in which health insurers 
compete for customers by offering the best value for money, and in 
which providers compete for patients by offering the best quality of 
care at the best price. It is a vision in which patients, providers and 
insurers all have incentives to collaborate in together managing the 
patient's care to achieve optimum long-term benefits at the lowest 
long-term cost. It is a vision worthy of the Nation's Capitol.
    Mr. Chairman, that concludes my prepared remarks. I will be glad to 
try to answer any questions the Members of the committee may have.

    Senator Brownback. Thank you, Mr. Haislmaier.
    Ms. Walker, what do you think of this proposal that he's 
put out, that you basically have everybody have health 
insurance, and if they can't afford it, you subsidize the 
purchase of it?
    Ms. Walker. Well, certainly we'd--we support the concept, 
and we certainly want to do what we can and look at different 
options for expanding coverage even beyond what we already 
have, which is actually very good.
    But we did look into the equal-access proposed model a 
couple of years ago, and we have had conversations with Larry 
Mirel and others about that. And there are a couple of things 
that, kind of, have given us pause. One is that we think it 
wouldn't necessarily attract those who really need to be in the 
pool, who need to have insurance coverage, because they can't 
afford it, they're unemployed. And this is--the equal-access 
model goes to people who are employed. And so, that would be a 
large group. But even if you look at cost--and we did have 
actuarial studies on this--showed that the people who we 
believe would be inclined to participate would be those with 
higher health risks and would, in fact--could contribute to 
higher costs that would make it a little untenable for us to 
do.
    But we'd be willing to look at it. We certainly would like 
to explore some more and really kind of tease it out and see if 
maybe, with a subsidy, if there's something that would make 
sense. There also are some administrative challenges. And, of 
course, the District government is--as a public employer, we 
have unions to negotiate with and all of those kinds of things, 
so that we'd--we would have to build all of that into a model.
    Senator Brownback. Let me get to a finer point on this, 
because I'm hearing you say, ``It's an interesting idea, but we 
think there's a lot of problems with it.'' How else are you 
going to get that remaining 17 percent covered?
    Ms. Walker. Well, as I said, we have a couple of--this 
year, in the Mayor's budget--or the Mayor's budget proposal for 
fiscal year 2007 is to increase coverage up to 300 percent for 
all children, which----
    Senator Brownback. Would you do that under Medicaid and 
SCHIP?
    Ms. Walker. Yes.
    Senator Brownback. And just go on that model----
    Ms. Walker. We're proposing additional--yes, to do it 
through that.
    Senator Brownback [continuing]. Instead of doing it under 
an insurance purchase model?
    Ms. Walker. Right, for kids who would qualify at that 
level.
    Senator Brownback. Okay. Have you looked at the cost of 
doing it your way, versus the way I hear Mr. Mirel and 
Haislmaier suggest?
    Ms. Walker. We had actuarial studies. And I don't know what 
the exact dollar comparisons were, but we can revisit those. 
And I think our State planning grant group also looked at it 
independently.
    Senator Brownback. Do you know what the differences are in 
cost, Mr. Mirel, for your type idea? Or Haislmaier?
    Mr. Mirel. The District, I believe, applied for a grant 
from Roger--Robert Wood Johnson Foundation, to do an actuarial 
study. And I think that that's in the works. Is it?
    Mr. Haislmaier. Yes, I----
    Senator Brownback. It seems like, to me, that would be a 
very interesting question to ask. Do you get better and cheaper 
insurance compared to Medicaid and SCHIP?
    Mr. Haislmaier. Yeah, Senator, to answer your question 
specifically, the grant that Mr. Mirel's referring to, his 
department, while he was still there, applied to the State 
coverage initiative project, funded by Robert Wood Johnson. The 
city--the department was awarded--these are planning grants. 
This is a project of the Robert Wood Johnson Foundation, where 
the grants only go to State or local governments for trying to, 
you know, get answers to these kinds of questions. The grant 
request was to fund an actuarial analysis. We--you know, in the 
process of developing--and I know Mr. Mirel had lots of 
meetings--I sat in on some of them--with various stakeholders, 
including different parts of the D.C. government----
    Senator Brownback. Has this been costed out anywhere?
    Mr. Haislmaier. A lot of--well, no, the answer is--the 
answer is, we--the answer is, it hasn't, but there's $150,000 
that the city is currently sending out the RFP for--it's all 
been written and sent out--for actuarial analysis to be done to 
do exactly that. So, hopefully, in a few months, that will be 
done. I don't know where it is in the process. I could check on 
that for you. But I know that the RFP was signed off on, the 
city has the grant money, and it's been sent out to about seven 
or eight different leading actuarial firms to ask them to bid 
on it.
    Senator Brownback. It would be great for the District to be 
the first city in the country that has 100 percent coverage. 
Not all that far off, actually, relative to some other areas, 
at 17 percent. Now, that last 17 percent can be a killer. But 
it looks like this is a reasonable, achievable goal.
    I do want to ask Ms. Reesor, in particular about the Latino 
population, in which one in three are uninsured. What's the 
size of the Latino population in the District? Do we know the 
approximate size? Ms. Gomez, do you know?
    Ms. Gomez. I think it's about--I'm sorry--I think it's 
about 850,000 in the region.
    Senator Brownback. But that's--okay, but that's----
    Ms. Gomez. Not the District, but just----
    Senator Brownback. D.C.'s----
    Ms. Gomez [continuing]. D.C.----
    Senator Brownback [continuing]. Population is----
    Ms. Gomez [continuing]. 60 to 80.
    Senator Brownback. 60,000 to 80,000?
    Ms. Gomez. Yes.
    Senator Brownback. And you're saying one in three are not 
covered.
    Ms. Reesor, you were saying that a number of those have 
kind of complicated immigration status, and that drives some of 
this. Is that right?
    Ms. Reesor. It's a good question. There are definitely some 
who have complicated immigration status. The D.C. Healthcare 
Alliance has not made that a consideration in--they are 
eligible for Alliance, in spite of that.
    Senator Brownback. So, then, that's not an issue. Why are 
such a high percentage uninsured in that population pool, if 
this isn't an issue? Are they in that working-poor category?
    Ms. Gomez. Yes. And I think that that's--that's what's in 
my graphs, and I'm--unfortunately, I didn't send them soon 
enough to be blown up. But it--they're--it is, there's--a very 
large population actually is just above that income of 200----
    Senator Brownback. So, if they bounce up to 300 percent, 
will that cover a lot of this group?
    Ms. Gomez. It might. And I think that one of the things 
that I always argue in the city is that it is so extremely 
expensive to live in the city that, even at 300 percent of 
Federal poverty level, it will be hard for people to be able to 
be--you know, to live at that level and qualify for this. And 
so, I think, you know, it's--that is one of the big reasons 
why, you know, folks don't qualify for this benefit. And now, 
in addition to--of course, on the Medicaid side, of course, is 
the fact that many of the adults are undocumented.
    Senator Brownback. Are what?
    Ms. Gomez. Are undocumented.
    Senator Brownback. So that they can't qualify for Medicaid, 
then, at all?
    Ms. Gomez. Not for Medicaid, no.
    Senator Brownback. Okay.
    Mr. Mirel, how should we address this undocumented 
population in the District that's substantial?
    Mr. Mirel. Well, part of the equal-access concept is to get 
away from strictly employment-based insurance. The way the act 
is designed, various groups could put their population into 
this plan, even though they are not getting insurance through 
their employer. For example, the Spanish Catholic Center could 
do so. Mary's place could do so. That is, they could sign up 
these people through this plan, and there could be a subsidy 
program through the District government to allow them to buy 
it, but they would be--they would have available to them 
insurance, variety of private plans, at group rates. And that 
would be a great advantage, we think, because many of them work 
for employers that just don't want to be bothered getting 
insurance, or don't get around to it, or they--or the people 
who are working for them are working only part time, perhaps 
two or three different jobs, and none of--and, therefore, are 
not eligible for employer-based insurance. Under the equal-
access concept, they would be able to get insurance through the 
D.C. program, with the help of the agencies that serve them.
    Senator Brownback. So that it would cover even an 
undocumented population?
    Mr. Mirel. Yes.
    Senator Brownback. Okay. It seems like that's going to be 
an issue here and in a lot of urban areas across the United 
States, to get that population pool somehow in a system that 
can work for them, and work in the country, and be affordable.
    Ms. Gomez. Yes. And I think that that's the big piece, is 
it's--it really has got to be affordable, because, you know, 
you really have to have a very large pool of people to be able 
to have the cost. And, I mean, I'm--and I support--I mean, I 
think that there's--this population, especially the immigrant 
population, could actually benefit from this. But it's the 
affordability, again, because even with the two or three jobs, 
they're just barely making it.
    Mr. Mirel. But we're going to pay for the health costs of 
that population, one way or another. We're either going to pay 
for them by helping subsidize their ability to buy insurance, 
or we're going to pay for them in the emergency room. And it's 
a lot better to pay for them through insurance than it is in 
the emergency room.
    Senator Brownback. Can you document that, Ms. Baskerville, 
that we're seeing Latino population in the emergency room that 
we're paying for?
    Ms. Baskerville. Well, we are certainly seeing both the 
Latino, the other immigrant population, and the African-
American population all disproportionately, in the emergency 
room.
    Let me just say that I don't think cost is the primary 
driver of whether equal access works or not. It's a great idea. 
We have a 5-page analysis here, that we're happy to submit to 
you later on, about what our concerns are.
    The reality is that with the chronic disease burden that we 
have, and the fact that, you know, we have a system that's now 
beginning--a locally funded system with the Alliance, you know, 
that's funded, but we, every year, look at whether they're 
going to cap it or whether there's going to--I mean, it's hard 
to fund out of all local dollars. The funding for this kind of 
project, our fear is, will suck up all those kinds of dollars 
that do fund some very good programs, to a model that we don't 
think speaks to either the poverty level or the burden of 
chronic disease level in the city.
    So, while you may be a consultant in the city who's 
uninsured, and have some options on insurance, if you run a T-
shirt store on H Street, it's not going to help you cover your 
two or three employees, because, more than likely, it's not 
going to happen. And so, Commissioner Mirel and I have spent a 
couple of years debating this back and forth, but----
    Mr. Mirel. On a very friendly basis, I must say.
    Ms. Baskerville. Yes, very friendly basis. But we think 
you'll see some of the subtler issues that we think will make 
this an unsuccessful program in the long run. Great idea. But, 
in practicality, we don't think it'll solve the uninsured--the 
problem of that last 17 percent. And, you know, the number is 
always a moving target. We--you know, the Alliance isn't called 
``insurance,'' so what--you hear it's 17 percent, but if you 
add the Alliance in, it's actually 9 percent. So, you have to 
watch those numbers.
    It doesn't mean I don't want to cover everyone in the 
District of Columbia, but, you know, there are many pieces to 
it, and we're attacking all the pieces, including the 
malpractice, in all kinds of ways. But we don't have a system 
yet. And until we build a system that guarantees whether you're 
covered or not, and that we can capture and maximize 
reimbursement while guaranteeing care, then none of these 
things will do much of anything but draw off resources and 
build more administrative cost.
    Senator Brownback. Okay. Well, thank you. I wanted to get 
this as kind of an overview of where we are in D.C. healthcare. 
I know there are a number of people working on different models 
of it. And, for me, I wanted to get an overview. I don't have 
solutions to put on the table in front of you, but I wanted to 
hear what the situation is. And I think you've all identified 
it. And it's interesting to me some of the different pieces to 
the puzzle that you're looking at. It'll be interesting to see 
what this is costed out of going up to 300 percent of poverty, 
Medicaid and SCHIP, versus going through a health insurance 
model, or maybe you can provide some alternatives. It might be 
interesting to try to get that number of uninsured in some sort 
of pool or covered in the old system.
    And then, we've got a particular problem, too, in the 
immigrant population, in any urban area in the United States. 
It is in Kansas City, in our urban areas back home, and it is 
across the country. And a lot of the not-for-profit groups are 
providing that front line of care, but it's a population that 
can have some pretty significant health problems, as you 
identified in your--pretty significant in quantity and impact. 
So, it can be pretty expensive to do, and we need to do a 
better job of that.

                     ADDITIONAL PREPARED STATEMENTS

    Thanks for being out today. If you have further statements 
that I should hear, please feel free to submit them for the 
record.
    [The statements follow:]

             Prepared Statement of Senator Mary L. Landrieu

    Good afternoon, to our panel, and thank you Chairman 
Brownback for calling this hearing to discuss the challenges to 
adequate healthcare in the District of Columbia. Today we will 
hear from government officials who must tackle the day to day 
health needs of residents of this city and seek to form policy 
which would improve health access for all and hopefully improve 
the overall health of this city. It is a tough job, but I am 
glad to welcome Deputy Mayor of the District of Columbia for 
Children, Youth and Families Brenda Donald Walker who prior to 
this post did a tremendous job improving the Child and Family 
Services Agency.
    In addition today we will hear from local and national best 
practice experts and several care providers whose work in the 
community is the crux of care in this city. I welcome you to 
the committee and thank you for your important work.
    This is a listening hearing. We know there is a critical 
nation-wide challenge of access to healthcare services, 
especially in vulnerable populations such as the elderly and 
poor, and also the mass lack of health insurance coverage which 
makes care affordable. We know the problem exists. Today I hope 
that we can examine the nature of the problem in the District 
and some potential areas for the Congress to provide a catalyst 
for improvement. The most vulnerable populations in the 
District have acutely higher levels than the national average 
of chronic illnesses. For example, 7.6 percent of District 
residents reported being diagnosed with diabetes in 2002 and 
the rate is 6.7 percent nationally. In 2002, over 14 percent of 
residents report having been diagnosed with asthma, with the 
national median being less than 12 percent. And the most 
devastating of all statistics, HIV infection in the District is 
10 times the national average (40.1 cases per 100,000 in the 
District of Columbia compared to 14.8 cases per 100,000 for the 
United States).
    This committee is responsible for the state-level functions 
in the District--primarily the courts and offender supervision. 
However, we have worked with the city to improve another area 
of care--the care of abused and neglected children. And across 
the country States have stepped in to improve the health of 
their residents. Just this week Massachusetts passed a bill to 
require all residents to have health insurance, just like 
drivers are required to carry automobile insurance. And the 
State recognized that affordability is the key barrier to 
insurance so they are investing in options to make health 
insurance more accessible. It seems the District has taken many 
similar steps, such as forming the Alliance, to provide health 
insurance coverage for many more residents. But we know there 
are gaps in those who do not qualify, do not subscribe, or 
cannot afford the only options presented to them. I understand 
some of the witnesses today will address the challenge of 
insuring the uninsured and I hope we can find some avenues for 
relief.
    Today 43 million Americans are without health insurance and 
nationwide 1 out of every 5 of those uninsured are children. In 
the District of Columbia, the rate of uninsured is 12.9 percent 
of the population (73,714 people), compared to the national 
average of 21 percent. I know in my home State of Louisiana, 
even before the hurricanes, more than 813,000 people are 
without health insurance, of which 187,000 of those are 
children and 80 percent come from working families. In the 
District of Columbia it seems there are slightly more uninsured 
working families (83 percent), which 25 percent are families 
who are at the poverty line. I would like the witnesses to 
identify these gaps in health insurance coverage and how to 
target working families.
    Mayor Williams has worked diligently to provide insurance 
to children through the Alliance and the State Children's 
Health Insurance Program through Medicaid. For children, the 
issue of uninsured children may not be as acute as diminished 
access to primary care. I would like our panels today to 
address the effect on children, especially of access to primary 
care health services.
    I understand that regular access to a source of health care 
is particularly limited in Wards 7 and 8 (nearly 25 percent of 
adults have no regular access). Ward 5 is also limited, with 21 
percent of adults with no regular access to health care. Adults 
in Wards 1, 4, and 6 do not fare much better, with 15-20 
percent have no access to regular health care. I would like to 
know what steps the city is taking, and what the outside groups 
recommend, in order to improve access.
    Chairman Brownback, thank you for calling this hearing 
today. We recognize there is a challenge to insuring residents 
who are currently uninsured and many more who have limited 
access to health care. What we need to determine is how to 
overcome these barriers to improve health in the city. I look 
forward to the witnesses' testimony and working together with 
the city and the Chairman this year.
                                ------                                


                Prepared Statement of The HSA Coalition

    Mr. Chairman, and Members of the committee, thank you for 
the opportunity to appear before the United States Senate 
Committee on Appropriations, Subcommittee on the District of 
Columbia on this important issue of providing health care for 
the uninsured, and I ask that my statement appear in the record 
as if read.
    The question of how to best help those who are uninsured 
has been addressed by the Federal and State governments, 
primarily by S-CHIPs and Medicaid. What has not been explored 
is a Health Savings Account vehicle to help the uninsured, and 
this testimony may help begin that discussion.
    After the failure of the Clinton health care plan, and the 
loss of the House of Representatives by the Democrats in the 
election immediately preceding the failure of the Clinton 
health plan, there remains a general consensus in the United 
States that government provided health insurance is certainly 
better than no health insurance, but is less desirable and less 
optimal than private sector health insurance and care.
    Two of the most recent health care reform efforts that have 
become law, HIPAA and the Medicare Prescription Drug plan, 
contained HSA legislation that has been garnering attention 
from employers, banks, insurers, hospitals and doctors. (HIPAA 
contained the Medical Savings Account (MSA) pilot program and 
the Medicare Prescription Drug plan expanded MSAs in to Health 
Savings Accounts.)
    While Health Savings Accounts have been in place for a 
little more than 2 years, the MSA pilot, which began in 1997 
and ended in 2003, yielded some interesting data, specifically 
around their attraction to the uninsured.
    One of the criteria of the MSA pilot legislation was to 
determine if the uninsured would be attracted to purchasing 
MSAs, and it turns out, from data collected by the Clinton and 
Bush administrations, the uninsured were attracted to MSAs.
    While the percentage of uninsured bounced around year by 
year, between a quarter and a third of those who purchased MSAs 
were previously uninsured.
    This trend of converting the uninsured into the insured has 
continued during the first 2 years of HSAs. There are numerous 
studies that show about a third of those purchasing the HSA 
qualified health insurance plan were previously uninsured.
    This data should put aside any concerns that HSAs are for 
the wealthy, since, in the main, the uninsured are not wealthy.
    Essentially, there are a number of reasons MSAs and HSAs 
appeal to the uninsured.
    The number one reason, without question, is that the health 
plans are affordable.
    Affordable is a relative term that means different things 
to different people, but as the cost of traditional health 
insurance has grown rapidly over the last decade, the appeal of 
lower cost health insurance has also grown.
    The average cost of a family health insurance plan in the 
United States in 2005 was roughly $11,100. Of those who have 
employer provided health insurance, the average employer pays 
for 73 percent, with the remaining 27 percent picked up by the 
employee.
    However, for those who do not have employer provided health 
insurance, the $927 a month family plan is simply 
unaffordable--that is--they do not have health insurance 
because it is too expensive. In addition, many employers are 
finding it difficult to continue to offer their employees 
health care, given its rising cost.
    This rising cost also makes it difficult for the government 
to step in and provide traditional health insurance.
    However, the cost of HSA qualified health plan, with a 
deductible in the $3,000 range varies by geography, but can be 
purchased for between $350 and $450 a month, assuming the 
primary insured is in their 40s.
    (As merely a point of comparison, a single female in her 
30s could purchase a $2,000 deductible health plan for about 
$75 a month.)
    Furthermore, recent data from both the individual market 
and the group insurance market has shown--starkly--that HSA 
qualified health plans in the group insurance market have had 
premium increases of about 3 percent a year, and the largest 
and most recent study of health insurance premiums in the 
individual market--where the uninsured are obviously 
concentrated--showed that HSA qualified health insurance 
premiums dropped in cost 15 percent from 2004 to 2005.
    Not only do HSAs attract the uninsured because the health 
plans are affordable, but HSAs continue to be affordable over 
time. This is no small point. For example, a 3.4 percent 
increase on a $400 a month family HSA qualified plan is $13.60 
a month, or $163 a year. However, a 9.6 percent increase on the 
average cost of a family plan in 2005, which costs $927 a 
month, is a monthly increase of $88.99 or an annual increase of 
$1,067.90.
    One insurer, which participated in the MSA pilot, did not 
raise its premiums for the first 5 years they sold MSAs, and in 
the 6th year, when they finally did raise their premiums, it 
was by 7 percent.
    So, we know the uninsured are attracted to HSAs, and we 
know that the uninsured purchase HSAs at a higher percentage 
than any other type of health insurance, and we know HSA 
premiums increase a much slower rate than traditional premiums, 
and we know the HSA premiums are affordable.
    It is on this basis, that a reasonable approach to helping 
the uninsured purchase health insurance may be to consider this 
existing preference for HSAs, expressed in the marketplace, by 
the uninsured.
    There are those who believe that the HSA qualified 
insurance is a less desirable product than traditional health 
insurance. There are also those that believe a car that costs 
twice as much as another car is probably better than the less 
expensive car.
    But if the car that is less expensive is the only one you 
can afford, would you tell the person without a car that they 
have to buy the more expensive car, even if it means they will 
have to go without any car?
    Of course not.
    In general, HSAs are attractive to the uninsured because 
they provide affordable health insurance, and provide a product 
to part of the health insurance market that has been unable to 
purchase traditional insurance.
    How would a HSA plan for the uninsured work? How could it 
work?
    HSA qualified plans where the maximum out-of-pocket amount 
equals the deductible (for example, after a health plan with a 
$3,000 deductible is met, all costs are covered 100 percent) 
should be considered.
    Assuming that this plan would be directed at the low income 
who cannot afford health insurance, a percentage of the federal 
poverty level could be agreed upon, and, if for example, this 
program was directed at uninsured children, an annual amount 
would be provided by the Federal Government to those parents of 
children who were uninsured, and who would qualify for the 
assistance.
    Such an HSA plan would be optional to be chosen by the 
parents, who would not be able to have their child enrolled in 
such a HSA, and in any other program to assist the uninsured 
like Medicaid or S-CHIP.
    Insuring children with an HSA plan would make the premiums 
very affordable, allowing a reasonable amount of assistance to 
go a long way.
    For example, if each child had a health plan with a $2,000 
deductible, with 100 percent coverage thereafter, then the 
Federal Government could pay the insurer on behalf of the 
insured, and deposit the remaining funds in the Health Savings 
Account that is the child's name, but is controlled by the 
parents.
    The total amount of the funds allocated by the Federal 
Government on an annual basis per child, and the cost of the 
premium--which likely would not be significant--would determine 
how much of the deductible could be funded by an annual 
contribution to the account.
    Since the beneficiaries in this case would be low income 
and uninsured, any annual dollar amount settled on, should be 
high enough to fund the account up to 100 percent of the 
deductible.
    This means the funds in the account would equal the 
deductible, in this case, $2,000, which would be used by the 
parents to meet the child's health care expenses, and if the 
child had a serious health problem, the health plan would cover 
all costs above the $2,000 deductible.
    Finally, there are those who assert that HSAs are not good 
for the less healthy, and therefore cause ``adverse 
selection.''
    In fact, adverse selection does not occur with HSAs because 
the less healthy do choose HSAs, and have two very good reasons 
to do so, one financial, and the other non-financial.
    Let's start with the financial reason, again using the 
$11,100 cost for an average family health plan in 2005. Those 
less healthy would choose an HSA with 100 percent coverage 
above the deductible because they assume, correctly, that they 
will be into their insurance coverage at some point in the 
year.
    If the less healthy picked a deductible of $4,000 they 
would take $4,000 from the $11,100 they would have to spend on 
traditional health insurance, and deposit it into their Health 
Savings Account. The remaining $7,100 left would go toward the 
HSA qualified health plan, which would likely cost less than 
the $7,100 left over from funding their account at 100 percent 
of their deductible.
    Let's assume that the less healthy would not save one dime 
in their HSA, they would spend the entire $4,000--because they 
are less healthy.
    In comparison, the less healthy could purchase a 
traditional health insurance plan with a $500 deductible and a 
20/80 co-insurance up to $5,000--meaning the less healthy will 
pay $1,500 plus the $11,100 premium, for a total of $12,600.
    This is why in some cases the less healthy are better off 
financially with an HSA--even if they do not have any funds 
left in the account at the end of the year--than they would be 
with traditional health insurance.
    The non-financial reason that the less healthy choose HSAs 
is that they want control over their own health care and they 
want the flexibility of the choice of doctors, choice of 
treatments to receive, the choice of prescription drugs to 
take.
    These are highly educated health care consumers, because of 
their extensive interaction with the health care system. They 
value the control that an HSA gives them. This is the second 
reason that HSAs are chosen by the less healthy.
    Finally, there have been a number of studies that have 
looked at the effects of a high deductible health plan on the 
less healthy. One of the most credible and extensive was done 
by McKinsey & Company, which found that the less healthy became 
more engaged in their health care treatment, more closely 
followed their treatment regime, and generally took better care 
of them selves.
    I believe the financial incentive posed by the money coming 
out of their pocket provides an additional incentive to take 
better care of them selves--and results in the less healthy 
becoming more engaged in their own care, they have a financial 
incentive to do so.
    Mr. Chairman, it is for these reasons that legislation 
should be introduced to make HSAs an option for those who are 
uninsured, particularly for uninsured children, with their 
deductible funded by the Federal Government through a deposit 
into their HSA.

                         CONCLUSION OF HEARING

    Senator Brownback. And we'll be in touch with some of you 
as proposals move forward, and just see if there are ways that 
we can help out with that.
    Thanks for being here. Hearing's recessed.
    [Whereupon, at 2:31 p.m., Thursday, April 6, the hearing 
was concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]

                                   - 
