[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
 H.R. 2833, THE PREEXISTING CONDITION EXCLUSION PATIENT PROTECTION ACT 
                                OF 2007
=======================================================================


                             FIELD HEARING

                               before the

                        SUBCOMMITTEE ON HEALTH,
                     EMPLOYMENT, LABOR AND PENSIONS

                              COMMITTEE ON
                          EDUCATION AND LABOR

                     U.S. House of Representatives

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

              HEARING HELD IN HARTFORD, CT, MARCH 20, 2008

                               __________

                           Serial No. 110-85

                               __________

      Printed for the use of the Committee on Education and Labor


                       Available on the Internet:
      http://www.gpoaccess.gov/congress/house/education/index.html



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                    COMMITTEE ON EDUCATION AND LABOR

                  GEORGE MILLER, California, Chairman

Dale E. Kildee, Michigan, Vice       Howard P. ``Buck'' McKeon, 
    Chairman                             California,
Donald M. Payne, New Jersey            Senior Republican Member
Robert E. Andrews, New Jersey        Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia  Peter Hoekstra, Michigan
Lynn C. Woolsey, California          Michael N. Castle, Delaware
Ruben Hinojosa, Texas                Mark E. Souder, Indiana
Carolyn McCarthy, New York           Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts       Judy Biggert, Illinois
Dennis J. Kucinich, Ohio             Todd Russell Platts, Pennsylvania
David Wu, Oregon                     Ric Keller, Florida
Rush D. Holt, New Jersey             Joe Wilson, South Carolina
Susan A. Davis, California           John Kline, Minnesota
Danny K. Davis, Illinois             Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona            Kenny Marchant, Texas
Timothy H. Bishop, New York          Tom Price, Georgia
Linda T. Sanchez, California         Luis G. Fortuno, Puerto Rico
John P. Sarbanes, Maryland           Charles W. Boustany, Jr., 
Joe Sestak, Pennsylvania                 Louisiana
David Loebsack, Iowa                 Virginia Foxx, North Carolina
Mazie Hirono, Hawaii                 John R. ``Randy'' Kuhl, Jr., New 
Jason Altmire, Pennsylvania              York
John A. Yarmuth, Kentucky            Rob Bishop, Utah
Phil Hare, Illinois                  David Davis, Tennessee
Yvette D. Clarke, New York           Timothy Walberg, Michigan
Joe Courtney, Connecticut            [Vacancy]
Carol Shea-Porter, New Hampshire

                     Mark Zuckerman, Staff Director
                   Vic Klatt, Minority Staff Director

         SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS

                ROBERT E. ANDREWS, New Jersey, Chairman

George Miller, California            John Kline, Minnesota,
Dale E. Kildee, Michigan               Ranking Minority Member
Carolyn McCarthy, New York           Howard P. ``Buck'' McKeon, 
John F. Tierney, Massachusetts           California
David Wu, Oregon                     Kenny Marchant, Texas
Rush D. Holt, New Jersey             Charles W. Boustany, Jr., 
Linda T. Sanchez, California             Louisiana
Joe Sestak, Pennsylvania             David Davis, Tennessee
David Loebsack, Iowa                 Peter Hoekstra, Michigan
Phil Hare, Illinois                  Cathy McMorris Rodgers, Washington
Yvette D. Clarke, New York           Tom Price, Georgia
Joe Courtney, Connecticut            Virginia Foxx, North Carolina
                                     Timothy Walberg, Michigan


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 20, 2008...................................     1

Statement of Members:
    Andrews, Hon. Robert E., Chairman, Subcommittee on Health, 
      Employment, Labor and Pensions.............................     1
    Courtney, Hon. Joe, a Representative in Congress from the 
      State of Connecticut.......................................     3
        Prepared statement of....................................     4
        Additional submissions:
            Letter from the Connecticut AIDS Resource Coalition..    34
            Letter from the Juvenile Diabetes Research Foundation 
              International......................................    35
            Statement of Jennifer C. Jaff, Esq...................    35

Statement of Witnesses:
    Davenport-Ennis, Nancy, founder, president & CEO, Patient 
      Advocate Foundation and National Patient Advocate 
      Foundation.................................................     8
        Prepared statement of....................................     9
    Farrell, John J., founder, J.J. Farrell Associates...........    25
        Prepared statement of....................................    25
    Gould, Rita D., retired professor............................    11
        Prepared statement of....................................    12
    Horoschak, Donna, vice president, product policy, America's 
      Health Insurance Plans.....................................    16
        Prepared statement of....................................    17
    Stirling, James, chief executive officer, Stirling Benefits..    13
        Prepared statement of....................................    15
    Tessier, Robert, executive director, Connecticut Coalition of 
      the Taft-Hartley Health Fund...............................    22
        Prepared statement of....................................    24

                  H.R. 2833, THE PREEXISTING CONDITION


                EXCLUSION PATIENT PROTECTION ACT OF 2007

                              ----------                              


                        Thursday, March 20, 2008

                     U.S. House of Representatives

         Subcommittee on Health, Employment, Labor and Pensions

                    Committee on Education and Labor

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 2:31 p.m., in 
hearing room 1-D, Legislative Office Building, 300 Capitol 
Avenue, Hartford, Connecticut, Hon. Robert Andrews [chairman of 
the subcommittee] presiding.
    Present: Representatives Andrews and Courtney.
    Staff Present: Carlos Fenwick, Policy Advisor for 
Subcommittee on Health, Employment, Labor and Pensions; Sara 
Lonardo, Junior Legislative Associate, Labor; Ken Serafin, 
Minority Professional Staff Member.
    Chairman Andrews. Ladies and gentlemen, the subcommittee 
will come to order.
    Good afternoon. It's my privilege to be here in the 
undisputable capital city of Connecticut and receive such a 
warm welcome thus far.
    I want to thank you, Congressman Joe Courtney, in arranging 
for this hearing and inviting us here today.
    I have had the privilege of serving in Washington for 18 
years now. I was very young when I started. I must tell you I 
am absolutely weary of theoretical discussions about health 
care. I am really tired of it. The next person that comes into 
my office and says we need high quality, affordable and 
accessible health care, I am going to throw them out of my 
office because I have heard those three phrases again and again 
and again. I was tempted to say nothing has changed. That is 
not true; something has changed. When I was privileged to go to 
Washington in 1990 we had about 35 million uninsured Americans. 
Today we have 48 million uninsured Americans. It's changed the 
wrong way. I made a vow to myself I am going to be rejecting 
theory, embracing reality.
    What we are here to talk about today, my friend Joe 
Courtney has a very valid based idea of how to deal with the 
problems of the uninsured. We've done a lot of research on the 
uninsured. They are uninsured for various reasons and for 
various periods of time. Some because they run up against 
lifetime policy limits. There's a lot of belief the remedy to 
that is to abolish lifetime policy limits. Other people are 
uninsured because they live in a family where the wage earner 
is not employed by an employer who can afford health insurance. 
We think we had a very good answer for five million of those 
children in the Children's Renewal Health Insurance Program 
this year, which had broad Democratic and Republican support. 
It failed to pass because it was one vote short of the White 
House. One vote short of the House of Representatives.
    The third idea, which is gaining, is because of Joe 
Courtney's efforts. Americans who lack health insurance because 
they are unfortunate enough to have a preexisting health 
condition. By our research there are about 7.2 million 
Americans as we meet this afternoon who are uninsured because 
they have a preexisting condition.
    Now the law that was passed in 1996 says that those 
individuals can be made to wait for about a year before they 
can be brought into a health plan. I want you to focus on these 
facts. This is a person who has a job, works for an employer 
who offers health insurance to his or her employees, but has to 
wait for a year because he or she has a preexisting condition. 
The idea that Congressman Courtney is championing would take a 
huge bite out of that problem.
    Our quick research indicates that the Courtney idea could 
result in health care for five million people that presently 
don't have insurance. This story has a moral dimension and 
economic dimensions. The moral dimension is obvious in a 
country as large as this one, a person who has breast cancer, 
diabetes, HIV or some other condition and is not able to get 
health care coverage because of some arbitrary waiting period, 
it is outrageous and needs to be fixed.
    Beyond that there is the economic dimension. How much 
longer are we going to be able to sustain a health care system 
where so many people are uninsured but receive health care 
anyway. Uninsured people thank goodness, do get health care in 
emergency rooms or other settings. The way we pay for it is 
irrational. It is a drain on the employees, the employer and 
the economy. We need a system where more people get health care 
coverage not only morally, but the way we pay for it. So 
Congressman Courtney made a very constructive, in my view 
pragmatic suggestion how to address this problem.
    As the person privileged to be the chairman of the 
subcommittee with jurisdiction over this area, I am very 
enthusiastic about this idea. I think under the circumstances 
this kind of idea can reach out across the political hill, both 
Democrats and Republicans, and get the job done. The purpose of 
this hearing is to educate the members of subcommittee and 
members at large as to the progress we were to make if we were 
to take Congressman Courtney's idea, work with both political 
parties, get them in the act as soon as we could. I want to 
thank Joe.
    When I was the junior representative, achievement was 
figuring out how the elevators work. Joe has far exceeded that 
level of achievement. He is a problem solver. I serve with him 
on the Armed Services Committee and he has had an impact. I 
serve with him on the Education and Labor Committee. He is a 
workhorse, not a show horse. He's one of the members that comes 
early, stays for the duration, asks very probing questions and 
substantive questions, participates in the deliberations of the 
committee in a thoughtful and constructive way. When he 
extended the invitation, I accepted. I would thank him for that 
and ask for an opening statement.
    Mr. Courtney. I have no way to go but downhill. I want to 
welcome you to Connecticut, Rob, and for coming to Hartford 
today.
    He's got a busy schedule back home in New Jersey. It is 
exciting for me to be back in my old stomping grounds. I have 
lots of friends in the Legislative Office Building to welcome 
Rob. As someone who does serve on both of my committees with 
Rob, he's without a doubt one of the brightest, most effective 
members of Congress. I had the pleasure to get to know him over 
the last year or so. Just a couple of weeks ago Rob actually 
was on the floor managing passage in the house of the Paul 
Wellstone Mental Health Parity bill which was a watershed for 
this country. It put the U.S. House of Representatives to a 
first time majority vote for a simple, but important concept 
for this country which is mental illnesses. Nervous conditions 
will be treated exactly the same way as any other physical 
ailment that people suffer from. And it was not an easy debate 
that was on the floor. It was a very hotly contested issue. It 
was again a lot of arguments that were thrown against the bill 
from the opposition and Rob did a masterful job in terms of 
guiding this legislation through.
    It was during the course of the debate with Senator Kennedy 
and son Patrick were sitting on the floor a few feet away to 
sort of be there for this moment which many people in this 
country have been waiting for for an extremely long period of 
time. He successfully guided the debate all the way to passage.
    If we look back at the 110th Congress sometime down the 
line, I think what Congressman Andrews did in terms of getting 
passage of the mental health bill would be one of the high 
moments of the new congress.
    I again want to say it is great to be with a lot of good 
friends like my friend Edith Prague who I served together with 
on the Public Health Committee and Human Services Committee for 
many years. She's been a tireless advocate on health care and 
quality, doing good things at the State level and so many 
others in the room.
    As Congressman Andrews said, this bill is focused on what I 
think is the very sort of practical, real issue in terms of our 
health care system, also on the work lives of millions of 
Americans, which is in a country where the largest number of 
people with insurance get it through their employment.
    The question of how to make a system that works for people 
moving from employment-based health coverage to a new 
occupation, which is something that happens all the time in a 
very dynamic economy like the U.S. economy, that we have a 
system that actually works for people, so that when they make 
what is sometimes necessary decisions because of layoff or 
because of change in circumstances or because they want to 
advance themselves and their families, they don't put at risk 
critical health coverage that they or their children or their 
spouses depend on in many cases to receive lifesaving health 
care access and cure.
    In 1996 the Congress passed again another watershed piece 
of legislation, the Health Insurance Portability and Access 
Act. Again there was a struggle to get that legislation 
through. In retrospect HIPAA, as it's called, is an inefficient 
inevitable part of the economic and health care landscape. That 
didn't just happen, it took a lot of hard work and advocacy for 
people to set up the basic structure of portability which 
provides guaranteed coverage for individuals subject to some 
preexisting condition exclusions.
    People are moving from one group health plan to another. We 
now have 12 years of experience under our belts as a country to 
look at how this is operated and to determine whether or not, 
like any law, it needs to be updated or modified based on real 
life empirical conditions that suggests we can do better as a 
country to make the system work better. That really is what the 
focus of this legislation is. As Rob indicated we still have a 
health care system struggling in so many ways. Certainly for 
the employment-based piece of the system this legislation is 
aimed at what I think is a real problem. I think some of the 
testimony and evidence is going to bring out today, again solve 
a lot of issues for people who want to again advance themselves 
and their families, but are many times held back because of 
rules that restrict their access to needed health care.
    The line up of witnesses that we have here today is, I 
think, extremely impressive. I want to thank all of them for 
taking the time out of their schedule to join us here today. We 
have a diversity of views we have patient, advocate, insurer 
prospective payer, etc. All of those points of view need to be 
listened to as we move forward to try to improve our health 
care system.
    Again I am looking forward to a lot of the testimony which 
I had a chance to see some of it in advance, certainly open it 
up for some question and answer.
    Thank you very much, Mr. Chairman, in helping us explore 
this issue.
    [The statement of Mr. Courtney follows:]

 Prepared Statement of Hon. Joe Courtney, a Representative in Congress 
                     From the State of Connecticut

    Thank you all for joining us this afternoon. I must say what a 
pleasure it is to return to Hartford in the LOB. As co-chair of the 
Public Health Committee in the Connecticut General Assembly in the 
early 1990s, we tackled many of these issues and it is my privilege to 
continue to work on them in Washington, D.C.
    Chairman Rob Andrews, and the Committee on Education and Labor, 
thank you for traveling to Connecticut to explore improving access to 
health insurance for the nearly one third of the American population 
with at least one chronic or pre-existing medical condition, or an 
estimated 1,114,538 Connecticut residents.
    I would like to extend my appreciation to our panel of witnesses 
who have come today to share their personal stories, experience and 
expertise on the subject.
    As you may be aware, Connecticut tends to be ahead of the nation 
when it comes to quality health care access. For example, the Congress 
just passed mental health parity this past month, but parity has been 
law in Connecticut since 1999 (PA 99-284; ``An Act Concerning Managed 
Care Accountability''). But when it comes to allowing access to 
coverage for individuals, even with the most minor preexisting 
condition, Connecticut falls behind with the rest of the nation.
    What we will explore today is the length of time that individuals 
are forced to go without coverage, how deep into their medical records 
health insurance companies are allowed to poke around and whether or 
not people who need coverage can access it or are required to pay twice 
as much to join a state high risk pool. We are answering a fundamental 
question--is health insurance about avoiding risk or pooling risk?
    For me, the answer is clear. Health insurance is a means to pool 
risk so that all individuals can access health coverage that goes 
beyond emergency room visits.
    That is why I introduced the ``Pre-existing Condition Exclusion 
Patient Protection Act of 2007'' (H.R. 2833) to pool risk to ensure 
that individuals who suffer from chronic, disabling, and life-
threatening conditions have access to comprehensive, meaningful and 
affordable health insurance coverage.
    For more than a decade, the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA, P.L. 104-191) has provided important 
protections to individuals and families when they change health plans 
due to job-related or other transitions. HIPAA was designed to help 
guarantee the availability and renewal of health insurance coverage by 
restricting the circumstances under which pre-existing condition 
limitations can be applied to private insurance beneficiaries. Yet, 
significant gaps in the laws hamper an individuals' access to care due 
to a pre-existing medical condition.
    This legislation aims to limit the gaps in the HIPAA coverage by 
(1) shortening the amount of time during which an employer could 
exclude coverage for pre-existing conditions from 12 months to three 
months. Currently, individuals with pre-existing conditions as of a 63-
day break in coverage eliminates any prior creditable coverage, thereby 
allowing an employer to exclude coverage for pre-existing conditions 
for up to 12 months. This decrease in the number of months in which an 
individual is unable to obtain health insurance would ensure that more 
Americans receive the health care coverage they need and that the law 
is consistent with the requirements for ``state-qualified plans'' under 
the Trade Adjustment Assistance Reform Act of 2002.
    The legislation also (2) shrinks the permitted ``look-back'' period 
from six months to 30 days, thereby reducing the number of individuals 
who are caught in the pre-existing condition web. Currently, employers 
can restrict coverage for pre-existing conditions based on a six-month 
``look-back'' period. When medical recommendations, diagnoses, and 
treatments occur during this timeframe, an individual is deemed to have 
a ``pre-existing condition'' for the given ailment that was addressed. 
This ``look-back'' period is sufficiently long that it likely impacts 
all Americans with at least one chronic illness--one out of every three 
Americans.
    Finally, it will (3) apply the same pre-existing condition 
protections afforded to individuals in the group health insurance 
market under HIPAA to individuals moving to, and within, the individual 
health insurance market. Let me be clear, the legislation does not 
mandate that insurance companies uniformly accept every individual for 
coverage. It simply says that individuals who would not be subject to 
pre-existing condition exclusion in the group market as a result of 
having prior credible coverage for over 18 months should not be subject 
to a rider or be denied coverage in the individual market.
    According to the Small Business Administration, there were an 
estimated total of 347,600 small businesses in Connecticut in 2007. As 
the number of sole proprietors and small businesses grow, those 
employers and their employees need to be able to access complete health 
insurance. The ability to provide employees with health insurance is 
critical to the ability of these companies to recruit employees and be 
competitive in the marketplace. In the National Federation of 
Independent Businesses' ``Principles of Health Care Reform,'' the 
concept of portability is one of the ten principles. H.R. 2833 will 
allow for workers to transition between large corporations, and small 
businesses without fear of loosing health coverage. This levels the 
playing field between large corporations and small businesses.
    This legislation would ensure that the 158 million individuals who 
are insured through employer-based private plans and the more than 14 
million individuals who are covered by non-group, private plans would 
have far better protection when changing jobs or their health care 
plans.
    H.R. 2833 is aimed at getting at the problem that an individual, 
whether in the group or individual market faces, when trying to access 
health insurance. Even the American's Health Insurance Plans, which 
represents the private insurance companies, has acknowledged the 
problem by unveiling their proposal. The Guaranteed Access Plans (GAPs) 
would cover uninsured individuals with potentially high medical costs. 
It will increase the number of insured by making States responsible, 
with help from minimal insurers, to extend coverage to the currently 
deemed `uninsurable' or rather, those the insurance company deems 
``unprofitable.''
    Right now, individuals who qualify for health coverage have no 
choice but to forgo coverage until the ``wait period'' is over. Or, 
they are lucky enough to be covered right away but face a ``rider'' for 
an illness or injury, meaning that a specific ailment or treatment will 
not be covered for a set period of time. The beneficiary will be forced 
to pay out of pocket for the one thing that they need covered the most.
    For individuals who are denied coverage, even the insurance of last 
resort has a waiting period. Many states maintain a high risk pool, 
such as the Connecticut Health ReInsurance Association. In Connecticut, 
the individual must first satisfy all the criteria under HIPAA, 
including having 18 months of credible continuous coverage, used up any 
eligible COBRA and have applied to the pool within 120 days of loosing 
prior coverage (or 150 days if the loss of prior coverage was due to an 
involuntary job loss).
    If the applicant does not satisfy the HIPAA portability 
requirements than they are subject to a 12 month waiting period for 
coverage and a six-month `look back' period for determining a pre-
existing medical condition.
    Once the applicant is accepted into a state high risk pool, their 
premiums will be between 120 to 150 percent higher than the average, 
standard market rate. In Connecticut, the average cost per enrollee is 
$3,985 annually just for their premiums. This does not include the 
thousands in co-pays and additional medical expenses that an individual 
may be forced to pay out of pocket. That figure is of course supported 
by the $7,202 that the state must pay annually per enrollee.
    High risk pools simply transfer the cost of passing along the cost 
of insuring individuals with potentially higher medical expenses. The 
risk is in fact not pooled by the collective insurance community but 
passed along to the taxpayers.
    Once again, I would like to thank the committee and the witnesses 
for joining us today to explore the role that pre-existing condition 
exclusion in creating hurdles for accessing health insurance.
                                 ______
                                 
    Chairman Andrews. I am going to introduce the panel of 
witnesses, ask them to proceed. I will tell the panel their 
written statements are entered into the record.
    I will ask you to summarize your testimony in about five 
minutes so we can get to some questions and interaction.
    Nancy Davenport-Ennis is a cancer survivor and the Founding 
Executive Director of the National Patient Advocate Foundation. 
Ms. Davenport-Ennis also established the Patient Advocate 
Foundation, a direct patient services non-profit organization, 
in 1996. She serves as a Commissioner on the American Health 
Information Community to the U.S. Department of Health and 
Human Services and is a Co-Chair of the AHIC Consumer 
Empowerment Working Group. Ms. Davenport-Ennis holds a BA in 
English from Campbell University.
    Welcome. We are glad that you're with us.
    Rita Gould is a retired professor and diabetes patient who 
has struggled with finding and keeping health insurance. When 
she needed to cover a six-month gap between the end of her 
husband's insurance and the start of her Medicare coverage, she 
was told that her diabetes was a serious enough pre-existing 
condition to deny her coverage, even though she had never 
missed a day of work or been hospitalized because of it. She 
had done exactly what the rules suggested she was supposed to 
do. When she finally got coverage through Connecticut's high-
risk State pool, the premiums cost $1,300 a month, more than 
twice what she paid under her husband's plan. She is going to 
tell the consequence of that story. We are glad she's with us. 
Frankly, some people may not have such a good outcome. She 
received her BS from Central Connecticut State University and a 
MS from the University of Bridgeport.
    Welcome, Ms. Gould. I am glad you're with us.
    James Stirling is CEO of Stirling Benefits, a third-party 
administrator of self-insured health plans. Mr. Stirling is 
also President of the Society of Professional Benefit 
Administrators and formally served on the Business Advisory 
Council of the Universal Health Care Foundation of Connecticut. 
He was secretary of the Connecticut Benefit Brokers from 2002 
to 2007 and is a member of the New Haven Health Care Council 
and Milford Legislative Action Committee. Mr. Stirling received 
his BA from the University of Massachusetts Amherst in 1985.
    Welcome, Mr. Stirling. We are glad you're with us.
    Donna Horoschak--did I pronounce your name correctly?
    Ms. Horoschak. Horoschak.
    Chairman Andrews. Excuse me.
    She's Vice President for product policy at America's Health 
Insurance Plans. Prior to joining AHIP, Ms. Horoschak spent 20 
years with Wausau Insurance Companies, including heading up its 
government affairs department and leading the legal team. She 
received her undergraduate degree from Southern Illinois 
University and law her law degree from the University of 
Wisconsin.
    Welcome. We are glad you're with us.
    Robert Tessier--did I get that correct--is Executive 
Director of the Connecticut Coalition of Taft-Hartley Health 
Funds. Mr. Tessier previously served as the President of the 
Coalition for eight years and was the administrator for the New 
England Health Care Employees Welfare and Pension Funds from 
2000 to 2007. He served in a similar capacity for the 
Connecticut Carpenters Health Pension Annuity and Apprentice 
Training funds from 1995 to 2000. Prior to that Mr. Tessier 
served as the Legislative Director and Deputy Commissioner of 
the Connecticut Department of Labor under then Governor Lowell 
Weicker.
    Welcome, Mr. Tessier. We are glad you're with us.
    Finally, John Farrell founded J.J. Farrell Associates in 
1992 and has been representing hospitals and health systems 
since then. Prior to founding his company, Mr. Farrell served 
as Commissioner of Hospitals and Health Care for two 
Connecticut governors. Before beginning his career in public 
service, Mr. Farrell was Division Director of Blue Cross Blue 
Shield of Connecticut and financial manager for Memorial Sloan 
Kettering Cancer Center. In 1995 he helped form United Risk 
Assessment and Management, LLC, a health care actuarial firm 
which merged with Urix, LLC in 2002.
    Welcome, Mr. Farrell.
    Before we get started, a word about the light. You will see 
in front of us there is a green light, yellow and red light. 
When you start the green light will go on. You will start your 
oral testimony. When the yellow light goes on you will have 
about a minute to summarize. When the red light goes on we will 
ask you to quickly summarize. In Washington we have a different 
system, we have a trap door underneath the witness. Because we 
are in more of a laid back situation, we won't do that. We 
would ask you to move on as quickly as you could.
    The final thing, to bring focus as to Mr. Courtney's 
efforts that bring us here. I was struck by one statistic that 
comes from the Employee Benefits Research Institute which is 
this, a woman who goes to her physician today and is told that 
she has stage two cancer, which is a pretty big deal, pretty 
serious has a 90 percent chance of survival over five years if 
she has health insurance, but if that same woman goes to the 
doctor and is told she has stage one cancer, which is the best 
of all bad news, under the circumstances is what you want to 
hear. If she has stage one cancer, but no health insurance she 
has an 80 percent chance of survival over five years. That is 
what this is about. If that woman is your mom or your sister or 
your daughter, that is what this is about.
    The stark difference between what happens with and without 
health insurance is stunning. What we are trying to do here 
today is find a way so we can all agree to fix that problem. We 
are going to go through the whole panel then go through our 
questions.

 STATEMENT OF NANCY DAVENPORT-ENNIS, CHIEF EXECUTIVE OFFICER, 
              NATIONAL PATIENT ADVOCATE FOUNDATION

    Ms. Davenport-Ennis. I would like to begin my testimony by 
saying to you I am here to speak on the behalf of the patients 
we have served for over 12 years. I think our patients more 
than 21 million of them represent the aggregate of what's being 
seen in America. It is practical issues such as preexisting 
conditions that are standing in the way of access to health 
care for people in America. Mr. Courtney as you have recognized 
we appreciate so much this legislation.
    Let me share with you that in 2005 our case managers 
reported a very significant uptick in the number of preexisting 
cases. We reached out to the graduate school at Dartmouth. We 
commissioned a study to confirm what is done at the State and 
Federal level and is the issue of preexisting conditions really 
driving up the uninsured rolls. At the same time we looked at 
chronic diseases which are automatically going to disqualify a 
person from applying. You are going to be faced with a 
preexisting condition at that point. We also went to our own 
database to see what is the type of issue that these people 
with preexisting issues are facing. What we saw repeatedly, the 
loss of one insurance plan, inability even if they had the 
dollars to enroll in another health plan. Then the national 
mantra is go seek coverage in a State high risk pool. We spent 
a lot of time doing research on that. That is what I would like 
to focus on today.
    The first myth, namely the State high-risk pools provide 
coverage to millions of individuals across the country. Our 
research shows that in total, State high-risk pools cover only 
about 195,000 people and are not operational in every State. We 
have States such as Florida that say they have a high-risk 
pool. In 17 years they have not been able to accept an 
application, approve fund coverage to get to benefits.
    Myth number two, those who qualify for State high-risk 
pools are going to get their treatments, benefits and services 
covered. We actually worked with patients who sent us a copy of 
the letter from the State high-risk pool acknowledging they had 
been approved only to find out one week later in a second 
letter you're approved, but currently there is no funding 
available to fund you into this program or give you access to 
health care so you go back to creating a safety net program.
    I think myth number three, State high-risk pool coverages 
are affordable. For Connecticut the average premiums in a State 
high-risk pool is 125 to 150 percent of the average standard 
market rate for private health plans anywhere in America. What 
does this mean? What it means for a woman 50 years of age 
seeking a $500 deductible policy in Minnesota, she would pay 
$450, Oregon $560, Texas $737, and Illinois $865. Candidly, the 
patients we serve can't afford that. Over and over we see that.
    The fourth myth, the State high-risk pool insurance does 
not ban coverage for preexisting conditions. What we know from 
our experience is if we are fortunate enough to get a person 
enrolled in a State high-risk pool, as we recently did here in 
Connecticut with a 45 year old patient who had the financial 
ability to pay COBRA until she could get in the plan here in 
Connecticut she was able to do that only because she had 
resources, but without proof of creditable coverage until the 
day she was enrolled, she would have been subjected to the 12-
month preexisting period with no reimbursement for preexisting 
disease and would also be subject to the 12 month look back 
period.
    The fifth myth, high-risk pools are well funded and open to 
all applicants. Regrettably, they are not. There is not a 
finger of guilt to be pointed to anyone. It is reality. States 
don't have the dollars to fund these pools. They are not able 
to. They may go to the Federal Government to get a grant. If 
they do, the maximum amount the Federal Government contributes 
is $1 million to these pools. From our point of view, when we 
look at the work we did initially around the preexisting 
condition, we went over to meet with our friends over at AHIP 
and said let's join together to try to find a solution for the 
issue of preexisting conditions. This was about a year ago. At 
that point it was not a big problem according to the folks we 
met with at AHIP. Now there is a proposal for them to offer 
different ways to handle it.
    Way number one is to shift that to the States. We are 
insisting preexisting conditions be addressed. It's got to be 
addressed at the Federal level.
    I thank the committee for giving me this opportunity this 
afternoon.
    [The statement of Ms. Davenport-Ennis follows:]

Prepared Statement of Nancy Davenport-Ennis, Founder, President & CEO, 
  Patient Advocate Foundation and National Patient Advocate Foundation

    Good Afternoon. Mr. Chairman and Members of the Committee, my name 
is Nancy Davenport-Ennis and I am the Founder, President & CEO of 
Patient Advocate Foundation and National Patient Advocate Foundation. I 
am pleased to be here today to provide testimony in support of HR 2833, 
the ``Preexisting Condition Exclusion Patient Protection Act of 2007''.
    For twelve years, Patient Advocate Foundation has provided direct 
patient services to patients throughout the country that have been 
diagnosed with a chronic, life-threatening or debilitating illness. 
Last year, Patient Advocate Foundation received approximately 6.8 
million contacts for information or service from patients seeking 
assistance for access to care issues. Of those, 44,572 became full 
patient cases involving communications made by Patient Advocate 
Foundation staff on behalf of a patient in order to reach positive 
resolution.
    In recent years, Patient Advocate Foundation professional case 
managers have seen pre-existing conditions become a more prominent 
barrier for patients to gain and/or maintain their health insurance 
coverage. As a result, in May 2005 NPAF commissioned a study by the 
Tuck Graduate School of Business at Dartmouth College on pre-existing 
conditions and how they contribute to the ``job-lock'' phenomena. I am 
submitting a copy of the report as part of my testimony in addition to 
several briefing documents NPAF has developed on state high-risk pools. 
The report confirmed the issues our case managers dealt with when 
assisting patients with pre-existing conditions and provided a basic 
analysis of the limited role state high-risk pools play in providing 
health coverage to this population of patients.
    The Centers for Disease Control and Prevention has estimated that 1 
out of every 3 adults is living with at least one chronic condition. 
Since chronic conditions such as asthma and diabetes are often 
considered pre-existing conditions by insurers, it is very possible 
that one-third of the U.S. population could face pre-existing condition 
exclusions and waiting periods at some time during their lives.
    Through Patient Advocate Foundation's work, we know that patients 
with pre-existing conditions may delay care during their waiting period 
because they cannot pay for the care out-of-pocket. For other patients, 
they are denied insurance coverage altogether because they are deemed 
too ``high-risk''. For these patients, there are few options for 
receiving necessary care. Oftentimes, these individuals are referred to 
their state's high-risk pool.
    NPAF commissioned some background work on these high-risk pools, 
and we are very concerned about high-risk pools being used as the 
blanket solution to providing access to health insurance for patients 
with pre-existing conditions who are locked out of the insurance 
market. What we found is there are many myths about state high-risk 
pools:
    Myth No. 1. State high-risk pools provide coverage to millions of 
individuals across the country. The reality is that in total, state 
high-risk pools cover only about 190,000 individuals and are not 
operational in every state. Only 34 states have high-risk pools and 
with a total uninsured population around 47 million, high-risk pools 
are barely impacting the number of uninsured. That's less than \1/2\ of 
1% of the uninsured are able to access high-risk pools (Kaiser Family 
Foundation, December 2006).
    Myth No. 2. Those who qualify for a high-risk pool can get their 
treatments, benefits, and services covered. Again, the reality is that 
some high-risk pools have long waiting lists and admittance is not 
guaranteed. Many states are unable to accept every eligible individual 
because of funding constraints.
    Myth No. 3. State high-risk pools coverage is affordable. The 
reality is that average premiums in a state high-risk pool are 125 to 
150 percent of the average, standard market rate for private health 
insurance. Due to the fact that these premiums are actually higher than 
the average, standard market rate, individuals who were unable to 
obtain prior health insurance due to cost restrictions are still unable 
to obtain coverage through a state high-risk pool (The Commonwealth 
Fund).
    Myth No. 4. High-risk pool insurance doesn't ban coverage for pre-
existing conditions. In fact, most state high-risk pools have look-back 
and waiting periods for coverage. Most high-risk pools exclude coverage 
for a pre-set period of time, based on a pre-existing condition, for an 
average of six months. Waiting periods are implemented to prevent 
individuals from applying for coverage once they have a condition and 
then releasing the coverage once the condition has been remedied (The 
Commonwealth Fund & Kaiser Family Foundation).
    Myth No. 5. High-risk pools are well funded and open to all 
applicants. The truth is that high-risk pools are under-funded in most 
states. A majority of pools are funded through assessments placed on 
insurers, premiums collected by individuals enrolled in these pools, 
and general state revenues. Very little funding for state high-risk 
pools comes from the federal government. The State High Risk Pool 
Funding Extension Act of 2006 provided seed grants to states that 
wished to implement a high-risk pool. These grants were set at a 
maximum of one million dollars, not nearly enough to provide 
comprehensive health care coverage to the population of individuals 
with pre-existing conditions who need access to health insurance. New 
applicants are not always accepted in high-risk pools either. An 
example is that in 1991, Florida stopped accepting new applicants to 
its high-risk pool. Although it has been over 17 years since Florida's 
high-risk pool accepted new members, Florida is considered to have a 
high-risk pool (The Commonwealth Fund).
    The state of Connecticut created a high-risk pool in 1976 to help 
individuals who are unable to acquire health insurance due to pre-
existing conditions. As of December 31, 2006, 2,523 individuals were 
enrolled and the average premium paid by the patient (not including 
state contribution) for a 50 year old male was approximately $717 a 
month. The Connecticut Health Reinsurance Association, as the risk pool 
is referred, implements a 12 month pre-existing condition waiting 
period and is governed by a 6 month look-back period for pre-existing 
condition. Both of which are consistent with the HIPAA statute. In 
addition, the Connecticut high-risk pool imposes a lifetime maximum of 
$1 million for enrollees which could effectively leave a patient 
without any option for health coverage once that limit is reached 
(Kaiser Family Foundation).
    The Connecticut risk pool has worked for some patients like the 45 
year old woman diagnosed with breast cancer three and a half years ago 
that contacted Patient Advocate Foundation. The woman had been 
prescribed oral adjuvant therapy for a period of five years and had 
continued her COBRA coverage but it was about to terminate when she 
contacted Patient Advocate Foundation. She had previously attempted to 
obtain coverage through private insurance but as a result of her cancer 
diagnosis, which was considered a pre-existing condition, an 
exclusionary rider would have been placed on her health coverage plan; 
this rider would have left her virtually uninsured for her cancer 
treatment and related care services. Fortunately, the Patient Advocate 
Foundation case manager assigned to her was able to assist the patient 
in applying for coverage through the risk pool through which she later 
obtained coverage. Since this patient was very well informed, and had 
adequate financial resources, she was able to continue her COBRA 
coverage in order to maintain creditable coverage so that she wouldn't 
be subject to a pre-existing condition waiting period. I commend the 
state of Connecticut for its dedication to providing individuals with 
pre-existing conditions coverage through a high-risk pool; however, as 
I'm sure you are aware, there are many other Connecticut residents that 
find themselves unable to access health coverage through the risk pool 
for a variety of reasons, one being the high cost of coverage.
    We have also found that the application and enrollment process for 
high-risk pools is also fraught with many barriers. In most states, 
individuals applying to high-risk pools must provide proof of rejection 
from health insurance coverage, proof that an individual is presently 
insured with a rider attached or has health insurance that is rated, 
proof that an individual is presently insured with a higher premium, or 
proof that an individual is eligible for the portability option under 
HIPAA. Such enrollment requirements are particularly burdensome for 
patients struggling with chronic and life-threatening illnesses that 
should be focusing their attention on their treatments and recoveries.
    In December 2007, America's Health Insurance Plans, the trade 
association for many of the country's largest health insurers, 
recommended that states should create Guarantee Access Plans to provide 
coverage for uninsured individuals with the highest expected medical 
costs. In return, health plans would limit rescission actions and grant 
coverage to a certain percentage of applicants not eligible for the 
Guarantee Access Plan. NPAF applauds this acknowledgment that there are 
currently serious barriers in the individual market particularly for 
patients with pre-existing conditions. While their proposal appears to 
be a step forward in the effort to prevent denial of benefits based on 
health status, NPAF is concerned that the plan places too much 
responsibility on states, who are already burdened with expanding 
uninsured populations and funding obstacles associated with operating 
high-risk pools.
    In closing, while there are some patients who are benefiting from 
state high-risk pools, generally these risk pools are under-funded, 
have long wait lists, and exclude coverage of pre-existing conditions 
for a set amount of time. We strongly believe that reform at the 
federal level is necessary for individuals with pre-existing conditions 
so that they are able to access health insurance coverage in a timely 
manner.
                                 ______
                                 
    Chairman Andrews. Thank you for your testimony and personal 
experience. That is motivating. Thank you for your efforts.
    Ms. Gould, welcome to the committee.

           STATEMENT OF RITA GOULD, RETIRED PROFESSOR

    Ms. Gould. I feel strongly about H.R. Bill 2833, that it 
pass. I want to thank Congressman Courtney for going to this 
length to see it does pass. I am here to support it 100 
percent.
    My situation is probably very similar to a lot of people. 
For example, I contacted AARP when I was in need of solo 
insurance for a six-month period. And I completed a very 
detailed application. And I was very honest. And a month later 
I was told I was rejected because I had Type II diabetes and my 
medication was too costly. My question was to them why did you 
bother to have me fill out the application when you knew I was 
going to be rejected. I looked into other solo insurance plans 
and found they didn't exist or they had similar stipulations. I 
also have a friend who sells health insurance and she couldn't 
find any company to insure me. She also confirmed that 
insurance companies reject many people with less complicated 
medical issues than diabetes.
    My only option was going without insurance or being in a 
pool of high-risk ``Uninsurables'' through the Connecticut 
Reinsurance Program. I chose the latter. However, this was 
extremely costly. It was $1242.21 per month, more than my 
mortgage and more than twice what I had been paying monthly on 
COBRA which was already a financial stain. In addition to the 
premium I had $30 office visit co-pays and prescription co-
pays. Last year I paid almost $11,000 out-of-pocket in premiums 
and medication costs. I am not poor. I worked all my life and I 
do think that I was certainly discriminated against and people 
like me were discriminated against. Type II diabetes, also 
called non-insulin dependent diabetes, is the more common form 
affecting 90 percent to 95 percent of the 21 million people 
with diabetes.
    And we are not all fat couch potatoes. I have been affected 
by this disease for 15 years. Again, I never missed work 
because of it, nor have I been hospitalized. I am a very 
productive member of society, doing volunteer work and I am 
still working at Central Connecticut State University in the 
teacher education program.
    Believe it or not, I am not a fan of universal health care. 
But I do believe much can be done now to help people in such 
similar situations. This bill will not help me, but I feel very 
strongly about it. In fact, I should be home making ravioli for 
Easter, but I am here because I truly believe that Mr. 
Courtney's bill must be passed.
    I could go on and on, but I think I am just going to stop 
here and give everybody else a chance.
    I think I said what I need to say. There are a lot of 
people in situations in this State that need your help and 
again I agree with my colleague here, it needs to be on the 
Federal level. And I will do whatever I can to help get this 
bill passed. Thank you.
    [The statement of Ms. Gould follows:]

         Prepared Statement of Rita D. Gould, Retired Professor

    I contacted newly elected Congressman, Joseph Courtney in February 
2007 after being refused solo medical insurance for a six-month period 
(March 1, 1007--September 1, 2007). Up until that time, I was covered 
under COBRA for the maximum time allowed on my husband's United 
Technology Corp. insurance. I was allowed to remain on his insurance 
for five years after his retirement at 65 and then on COBRA. However, 
there were no company options to cover me for that six-month period 
until I turned 65.
    I contacted AARP and completed a very lengthy, detailed application 
for their solo plan. After a month, I received a letter telling me that 
my application was refused because I had Type II diabetes and that my 
medication was too costly. Panicked, I looked into other health plans 
and found that solo plans either didn't exist or had similar pre-
existing stipulations. I have a friend who sells health insurance, but 
she could not find any company to insure me. She confirmed that 
insurance companies reject many people with less complicated medical 
issues than diabetes.
    My only option was going without insurance or being placed in a 
pool of ``Uninsurables'' through the Connecticut Reinsurance Program. I 
chose the latter; even though the monthly cost of this insurance was 
$1242.21 per month--more than my mortgage and more than twice what I 
had been paying monthly on COBRA, which was already a financial strain. 
In addition to the premium, I had $30 office visit co-pays and 
prescription co-pays. At this time, my husband was retired and I was an 
adjunct professor in the teacher education department at Central 
Connecticut State University. Could I afford this? Not really. Was I 
angry? To say the least. I appreciated Congressman Courtney's office 
staff, namely Dorothy Grady, listening to my plea and subsequently 
organizing a neighborhood meeting at my home with the congressman and 
some neighbors to discuss healthcare concerns.
    Type II diabetes, also called non-insulin dependent diabetes, is 
the most common form of diabetes, affecting 90%-95% of the 21 million 
people with diabetes--and we are not all fat couch potatoes. I have 
been affected by this disease for 15 years and have never missed work 
because of it nor have I been hospitalized. However, that didn't matter 
to AARP. In 2007, the cost of my insurance premiums and prescription 
drugs was $10,872! By the way, when it came time for me to select a 
Medicare supplement, AARP and others wouldn't stop soliciting me. My 
diabetes hadn't disappeared.
    In all 45 years of my professional working life, I have willingly 
paid my fair share toward caring for the less fortunate, believing that 
it is my moral and Christian obligation to do so. But being denied 
insurance because of having a bad gene, made it quite evident that 
welfare recipients aren't the only ones discriminated against. The 
government is not doing enough to extend medical coverage to hard-
working citizens like me at a reasonable cost or from preventing people 
from going bankrupt because of an uninsurable pre-existing condition.
    As an educator, I have witnessed what the Department of Education 
did to dilute the American educational system, so it is not surprising 
that I am NOT a proponent of universal healthcare and believe that if 
medical care is expensive now, wait until it is ``free.'' However, I 
applaud Congressman Joe Courtney for tackling the difficult subject of 
insurance companies' right to deny coverage to consumers regarding pre-
existing medical conditions. He is enthusiastic and sincere about 
helping his constituents in what can constitute a fight for their 
lives, and I sincerely hope that his bill is passed.
    While passage of this bill will help many people, in order to make 
a real difference in healthcare, you need to address the Employee 
Retirement Income Security Act of 1974--ERISA--in its entirety. This 
act allows insurance companies to do basically whatever they wish. 
Perhaps the standards for these voluntarily established health plans in 
private industry should be more stringent in order to protect 
employees. The COBRA amendment was necessary, but when people lose 
their jobs, they usually don't have enough money to pay the COBRA 
premiums. Further, HIPPA is a noble effort but it isn't working. If the 
idea of HIPPA is privacy, why am continually inundated with diabetes 
newsletters and information about purchasing diabetic supplies from 
sources I've never contacted? Let's face it; once your name is in a 
computer, anyone in the world can access it easily. And when will there 
ever be parity for mental health coverage? Discrimination is alive and 
well in healthcare.
    Even as a diabetic, I am still a productive member of society. As 
much as I believe Medicare might like it, I am not dead yet, nor am I 
here to make Congress's job easy. I should be home today making ravioli 
and Easter bread, but I believe wholeheartedly that Congressman 
Courtney's bill must be passed and will do whatever I can to see that 
it does. This bill won't help me, but it may help at least 21 million 
others. I truly believe that it is high time the inequities and 
discrimination within the medical coverage system cease. If Congressman 
Charlie Wilson single-handedly can wage a war with the Mujahideen 
against the USSR, just think what 100 congressional representatives 
working together for the welfare of Americans' health can do. I 
sincerely hope they are up for the challenge?
                                 ______
                                 
    Chairman Andrews. Ms. Gould, thank you. We wish you'd 
brought some of the ravioli with you. We regret keeping you 
away from your kitchen. Thank you for sharing your story.
    Mr. Stirling, welcome to the committee.

STATEMENT OF JAMES STIRLING, CHIEF EXECUTIVE OFFICER, STIRLING 
                            BENEFITS

    Mr. Stirling. Thank you, Mr. Courtney, for setting this up. 
And, Congressman Andrews and your staff, thanks for making sure 
we got here. I appreciate you coming to Connecticut instead of 
having this in Washington.
    For the record, my name is James Stirling. I am delighted 
to be able to testify on H.R. 2833.
    When HIPAA required group health plans to modify their 
preexisting condition periods in 1996, many groups dropped 
their limits altogether. They did this because number one, 
groups do not like denying coverage to those employees who need 
it. Number two, HIPAA made the cost of administering their 
credible coverage statements not worth the claim savings.
    HIPAA gutted the preexisting condition provision except for 
these five or six million people. I think H.R. 2833 will 
continue that trend in the group market, but it may have some 
unintended problems with the individual market.
    H.R. 2833 treats all plans equally, regardless of if the 
plan is self-funded, fully insured, or collectively bargained. 
This keeps the playing field level. With a 30-day look back, 
three-month limitation many more group plans will drop their 
pre-ex entirely. Employees will be able to move more fluidly 
from one employer to another, thus reducing ``Job Lock'' and 
will have positive consequences even if it does cost the plan 
some more money. Indeed, those costs will be passed on to the 
sponsor who will pass them on to their employees either by 
lower wages, higher contributions, or they will be forced to 
raise the prices for their goods and services.
    So the question for the group market really is, how much 
will such a bill cost employees and consumers ultimately? So 
long as all plans are treated the same, I come to conclude the 
answer is not too much. In 1986 some thought that COBRA was so 
onerous it would end employer-sponsored coverage. It did not 
whatsoever. The same with HIPAA. But the group market adapted. 
The individual market will also adapt.
    But there are some more significant unintended financial 
consequences. Individual plans are inherently prone to adverse 
selection. To make a profit, maybe that is the key point here. 
Selection carriers utilize several tools to make a profit. They 
can limit coverage for preexisting conditions, reduce benefit 
levels, increase rates for new policies, or increase premiums 
at renewal.
    H.R. 2833 dulls one of these tools. And to continue 
profits, carriers will have to sharpen the others. I am afraid 
that may have a sting all of its own. This does not mean this 
approach should be abandoned, but we should be cognizant of 
this potential consequence and the rates will likely increase 
to cover the preexisting conditions of a minority of 
policyholders. That said, the individual market reforms must 
continue.
    I believe we are at the point where defined benefit pension 
plans were 20 years ago. Then employers defined what pension 
benefits employees received, just like employers now define 
what health benefits their employees receive today. Now 20 
years later, the employee controls the investments in their 
portable 401(k)s. With some reforms, a parallel shift may be 
under way with our nation's health programs.
    To your point Chairman Andrews, entire peoples coming in 
higher access, low cost plans across the board, similar to how 
Social Security provides a base for retirement savings, Federal 
and State governments could provide health care with employer 
and individual plans building on that base.
    For this option to develop we will need to make the 
individual market function more like the group market. And H.R. 
2833 moves us in that direction. But we will need to go further 
than your bill shows. Perhaps, with some combination of 
community rating, broad based pooling and carrying health 
credits forward from one plan to another similar to the way you 
carried forward credits from a previous plan.
    At its heart, H.R. 2833 is an insurance reform bill. I must 
conclude no amount of insurance reform will by itself be able 
to make the cost of our health care system sustainable. Until 
we find ways to pay for health instead of paying for 
healthcare, we will only be tweaking at the edges.
    H.R. 2833 will increase parity for all types of plans and 
that is a good step.
    Thank you for opportunity to share my views. And thank you 
for furthering the work in this area.
    [The statement of Mr. Stirling follows:]

Prepared Statement of James Stirling, Chief Executive Officer, Stirling 
                                Benefits

    For the record my name is James Stirling. I am CEO of Stirling 
Benefits, Inc. a Third Party Administrator (TPA) of group health plans 
located in Milford CT and Chairman of the Board of the Society of 
Professional Benefit Administrators (SPBA) in Washington, D.C. Thank 
you for this opportunity to testify on HR 2833.
    When HIPAA required group plans to modify their pre-existing 
condition periods in 1996, many groups dropped their limits altogether. 
They did this for two reasons: 1) groups do not like denying coverage 
to employees that need it, and 2) the cost of administering the 
credible coverage statements was not worth the claim savings compared 
to their pre-HIPAA plan provisions. This bill will further this trend 
in the group market, but may have unintended consequences in the 
individual market.
    HR 2833 treats all plans equally, regardless if the plan is self 
funded, fully insured or collectively bargained. That keeps the playing 
field level. The result will likely be that many group plans will drop 
their pre-ex clauses entirely, continuing the trend started with HIPAA 
portability provisions in 1996. Employees will be able to move more 
fluidly from one employer to another. This reduction in ``Job Lock'' 
will have positive consequences for our dynamic economy, even if it 
does increase costs for plans.
    There will be added costs. Insurance carriers or administrators 
will shift the added cost to the plan sponsors. Employers will pass 
these on to their employees via lower wages or higher contributions, or 
increase the cost of their goods and services to pay for the increase.
    So the question for the group market is: how much will such a bill 
cost employers and ultimately consumers? I think the answer is not too 
much. In 1986, some thought that COBRA was so onerous that it would end 
employer-sponsored coverage. It did not. We heard the same predictions 
with HIPAA portability a decade later, but group coverage continues. In 
the group market, this bill will have a minimal overall cost impact.
    The individual market will also adapt, but there may be more 
significant unintended consequences. Individual plans are inherently 
prone to adverse selection. To offset that selection carriers utilize 
several tools to make a profit. They can limit coverage for pre-
existing conditions, reduce benefit levels, increase rates for new 
policies, or increase premiums at renewal. By dulling one of these 
``tools,'' they will have to sharpen the others. The remaining tools 
may have a sting of their own. This does not mean this approach should 
be abandoned, but we should be cognizant of this potential consequence 
and seek to combine the pre-ex modifications with other needed reforms.
    I'm in favor of reforming the individual market. I believe that we 
are at the point where defined benefit pension plans were 20 years ago. 
Then, employers defined what pension benefits employees received, just 
like they define health benefits today. Now, the employee controls the 
investments in their portable 401(k)'s. With some reforms, a parallel 
shift may be under way with our nations health programs. Similar to how 
Social Security provides a base for retirement savings, the government, 
could provide basic health coverage to all legal residents, with 
employer and individual plans building on that base.
    For this option to develop we will need to reform individual market 
to create a viable, alternative to employer-sponsored coverage. Steps 
that make the individual market function more like the group market, as 
this bill does, are in the right direction. But we will need to go 
further, perhaps with some combination of community rating, broad based 
pooling, and carrying health credits forward from one plan to another.
    At its heart, this is an ``insurance'' reform bill. I must conclude 
that ``insurance'' reform, by itself, will not do enough to make the 
cost of our health care system sustainable. Until we find ways to pay 
for ``health'' instead of paying for ``healthcare,'' we will only be 
tweaking at the edges. H.R 2833 will increase parity for all types of 
plans, and that's a good step. To help those with ongoing health 
conditions, over the long term, we will need a more significant 
overhaul, not just of insurance laws, but the way care is delivered. We 
must find ways to align all our interests to pay for health, not just 
healthcare.
    Thank you for the opportunity to share my views, and thank you also 
for all that you do to serve the public good.
                                 ______
                                 
    Chairman Andrews. Thank you for your thoughtful 
contribution.
    Ms. Horoschak, glad you're with us.

STATEMENT OF DONNA HOROSCHAK, VICE PRESIDENT OF PRODUCT POLICY, 
                AMERICA'S HEALTH INSURANCE PLANS

    Ms. Horoschak. Thank you. I am Donna Horoschak with 
America's Health Insurance Plans.
    A little about our organization. Our members offer a broad 
range of health products both in the commercial marketplace and 
also have demonstrated a strong commitment to participation in 
public programs.
    We appreciate this opportunity to testify today and we 
commend the subcommittee for holding this meeting examining the 
implications of these issues both for consumers and for the 
health insurance marketplace.
    Our written testimony focuses on proposals AHIP has 
endorsed for expanding coverage to all Americans, our members, 
including that directly address the circumstances of uninsured 
persons who have preexisting medical conditions. Our written 
testimony also discusses the survey findings on the individual 
health insurance market, a survey that we conducted as well as 
research findings on the unintended consequences of a NPAF and 
in the absence of universal coverage.
    I would like to focus my testimony today on our proposals 
which are designed to insure no one falls through the cracks of 
the health care system while recognizing both the private and 
public sector and public programs have a role in meeting this 
challenge.
    In two, our proposal includes a comprehensive set of 
targeted policy proposals that would expand eligibility for 
public programs and enable all consumers to purchase health 
insurance with pre-tax dollars, provide financial assistance to 
help working families afford coverage and encourage States to 
develop and implement access proposals.
    More recently we announced a proposal for reforming the 
individual health insurance market through a new strategy that 
calls for shared responsibility between the public and private 
sectors. This three-part initiative includes first a strategy 
that States can implement now to guarantee access to health 
insurance coverage to all Americans and seek coverage in the 
individual market, including those preexisting medical 
conditions. Under our approach, we are urging States to 
establish Guarantee Access Plans to provide coverage for 
individuals who are not eligible for other coverage and have 
the highest medical costs, that is costs that exceed 200 
percent of the average claim cost. If an individual is not 
eligible for coverage under those provisions through Guarantee 
Access Plan, then they would be eligible for a guarantee issue 
policy in the private sector market that would be a premium 
capped at 150 percent of the standard rate.
    Further when a Guarantee Access Plan is first established, 
a one-time open enrollment period should be held for uninsured 
individuals where they would be able to enroll in the program 
without application of any preexisting condition exclusion.
    Our proposal also encourages States to create a sliding-
scale premium subsidy program with additional financial 
assistance for those with the highest health care costs and to 
fund Guarantee Access Plans from a broad base of sources to 
ensure that coverage remains affordable for those who are 
currently insured.
    Second, our members support a series of operational reforms 
to give consumers peace of mind when purchasing individual 
health care coverage and this includes limiting the use of the 
preexisting condition exclusions, restricting rescission 
actions and establishing a new third-party review process for 
preexisting rescission conditions and rescission decisions.
    For example, we are recommending that if an applicant for 
an individual health insurance policy makes a complete and 
accurate disclosure of a preexisting medical condition and then 
a policy is issued to that individual, then the insurer cannot 
later apply a preexisting conditions exclusion to that 
condition at a later date that was disclosed in the 
application. In addition, to make sure the applicants make 
appropriate disclosures, we would support a proposal that would 
require health insurance plans to make sure that applications 
are clear and understandable.
    Furthermore, to make the process transparent, we would also 
support an independent third-party review anytime a claim is 
denied because of a preexisting conditions exclusion. Some 
could concentrate into the group insurance market. We have 
discussed this. We anticipate they will also consider looking 
at this in the group insurance market as well as the individual 
insurance market. That when they do that they will consider the 
impact these changes could have in both of those markets.
    Third, our proposal also outlines five critical steps that 
States would need to follow if they seek to achieve universal 
participation by requiring their citizens to have coverage. If 
the State takes these steps and achieves universal 
participation, then health insurance plans could then guarantee 
coverage to all applicants without regard to preexisting 
medical conditions.
    Thank you again for this opportunity to testify. Americans 
Health Insurance Plans and members stand ready to work with us 
to develop solutions for extending health insurance coverage to 
all Americans.
    [The statement of Ms. Horoschak follows:]

Prepared Statement of Donna Horoschak, Vice President, Product Policy, 
                    America's Health Insurance Plans

    Mr. Chairman and members of the subcommittee, I am Donna Horoschak, 
Vice President of Product Policy for America's Health Insurance Plans 
(AHIP), which is the national association representing approximately 
1,300 health insurance plans that provide coverage to more than 200 
million Americans. AHIP's members offer a broad range of health 
insurance products in the commercial marketplace and also have 
demonstrated a strong commitment to participation in public programs.
    We appreciate this opportunity to testify on the needs of 
individuals who seek health insurance coverage following the onset of 
medical problems. We commend the subcommittee for examining the 
implications of these issues both for consumers and for the health 
insurance marketplace.
    Our testimony today will focus on proposals AHIP has endorsed for 
expanding coverage to all Americans, including solutions that directly 
address the circumstances of uninsured persons who have preexisting 
medical conditions. Our proposals are designed to ensure that no one 
falls through the cracks of the U.S. health care system, while 
recognizing that both the private sector and public programs have a 
role to play in meeting this challenge. For tens of millions of 
Americans, the need to repair the health care safety net is a deeply 
personal issue requiring bold solutions that can be implemented in a 
timely fashion. We are committed to working with members of Congress to 
advance meaningful reforms that provide affordable coverage options for 
all Americans.
    Other issues we address in our testimony include survey findings 
about the current state of the individual health insurance market and 
research findings on the unintended consequences of enacting certain 
health insurance reforms in the absence of universal coverage. These 
findings provide important insights into the strengths of the current 
system and lessons learned from state reform initiatives over the past 
15 years.
Solutions for the Uninsured and Those With Preexisting Conditions
    AHIP and our members have outlined a number of promising solutions 
for addressing the needs of individuals with preexisting medical 
conditions and high health care costs, while also confronting the 
broader issue of the uninsured.
    In November 2006, AHIP announced a proposal for expanding access to 
health insurance coverage for all Americans. Our proposal includes a 
comprehensive set of targeted policy proposals that would expand 
eligibility for public programs, enable all consumers to purchase 
health insurance with pre-tax dollars, provide financial assistance to 
help working families afford coverage, and encourage states to develop 
and implement access proposals.
    More recently, in December 2007, AHIP announced a proposal for 
reforming the individual health insurance market through a new strategy 
that calls for shared responsibility between the public and private 
sectors. This three-part initiative includes a plan to guarantee access 
to health care coverage to all Americans, new initiatives to give 
consumers peace of mind about individual health care coverage, and 
steps for states to take if they are considering a requirement for 
universal participation.
            State Guarantee Access Plans
    First, AHIP is proposing a strategy that states can implement now 
to guarantee access to health insurance to all who seek coverage in the 
individual market, including those with preexisting medical conditions. 
Under this plan, we are urging states to establish Guarantee Access 
Plans to provide coverage for uninsured individuals with the highest 
expected medical costs. If an individual is not eligible for coverage 
through the Guarantee Access Plan, health plans would then provide 
coverage to that individual on a guarantee issue basis with premiums 
capped at 150 percent of the standard rate.
    We are recommending that when a Guarantee Access Plan is first 
established, a one-time open enrollment should be held for uninsured 
individuals to obtain coverage with no preexisting condition 
exclusions. Our proposal also would make coverage available in the 
Guarantee Access Plan without preexisting condition exclusions for 
individuals who maintain continuous coverage. We further recommend that 
Guarantee Access Plans should be available to individuals who are not 
eligible for employer-sponsored health coverage, a government program, 
or other coverage and, additionally, whose claims costs are expected to 
be 200 percent or more of the statewide average.
    Guarantee Access Plans would offer a range of coverage options with 
varying premiums, resulting from different levels of cost-sharing. 
Premiums would be equivalent to 150 percent of standard market rates, 
and coverage options would reflect benefit packages available in the 
private market.
    Under AHIP's proposal, if an individual is declined coverage by the 
Guarantee Access Plan, all health insurance plans would guarantee 
coverage until each plan's total individual enrollment reaches a 
predetermined level (e.g., 0.5 percent of enrollment). When all health 
insurance plans have reached the predetermined level, the level would 
be raised and all plans would again guarantee coverage until they meet 
the new level.
    Health insurance plans also would provide assistance with the 
enrollment process for the Guarantee Access Plan. This includes 
informing individuals about the availability of coverage under the 
Guarantee Access Plan and, at their request, transferring information 
to the Guarantee Access Plan application.
    Finally, to keep coverage as affordable as possible, our proposal 
calls on states to allow health insurance plans to offer features such 
as pharmacy programs that promote both value and safety; disease 
management, preventive, and care coordination programs that bring 
evidence-based care into everyday practice; and new benefit design and 
payment incentives that reward quality and value. We also encourage 
states to create a sliding-scale premium subsidy program with 
additional assistance for those with high health care costs and, 
additionally, to fund the Guarantee Access Plans from a broad base of 
sources to ensure that coverage remains affordable for those who are 
currently insured.


            Operational Initiatives by Health Insurance Plans
    Second, AHIP's proposal includes a series of operational reforms to 
give consumers peace of mind when purchasing individual health care 
coverage. This includes limiting the use of preexisting condition 
exclusions, restricting rescission actions, and establishing a new 
third-party review process for preexisting conditions and rescission 
decisions.
    Specifically, our proposal recommends that if an applicant for 
individual health insurance makes a complete and accurate disclosure of 
a preexisting condition and is issued a policy, health insurance plans 
should not apply a preexisting conditions exclusion to that condition 
at a later date. In addition, to make sure that applicants make 
appropriate disclosures, our proposal emphasizes that health insurance 
plans have a responsibility to make applications clear and 
understandable.
    Furthermore, to increase transparency in how preexisting conditions 
exclusions are applied, our proposal for reforming the individual 
health insurance market also calls for a new third-party review 
process, established by state legislation, to allow consumers to 
challenge claim denials based on a preexisting conditions exclusion. 
This process should include timeframes for reaching a decision, with 
expedited review available for emergency situations, and the 
participation of at least one medical professional and one attorney on 
the independent review panel.
    Our initiatives have been developed with the goal of enhancing 
peace of mind for consumers who purchase coverage in the individual 
health insurance market and for consumers who have had a claim denied 
under a preexisting conditions exclusion in their policies. Unlike 
pending proposals that would make piecemeal changes to the parameters 
for preexisting condition exclusions, these steps provide a strong 
foundation upon which Congress can enact more comprehensive reforms.
            Constructing an Individual Mandate for Coverage
    Third, AHIP's proposal outlines five critical steps that states 
would need to follow if they seek to achieve universal participation by 
requiring that every citizen in the state have health care coverage. If 
a state takes these steps and achieves universal participation, health 
insurance plans could then guarantee coverage to all applicants, 
without regard to preexisting medical conditions.
    While AHIP is not advocating an individual mandate, we have 
explored this issue and have identified five critical steps that states 
should take as part of any strategy for achieving universal 
participation:
     develop an insurance coverage verification system;
     enforce the requirement to purchase and maintain coverage;
     establish an automatic enrollment process and be prepared 
to provide backstop funding if individuals do not fulfill their 
responsibility to purchase coverage;
     create a premium subsidy program for moderate- and low-
income individuals and families, while also providing additional 
assistance for those with high health care costs; and
     fund coverage initiatives from a broad base of sources.
    The establishment of a universal participation program, based on 
these steps, could avoid the unintended consequences that have hampered 
many well-intentioned efforts by states to assist those pursuing 
coverage in the individual health insurance market.
    Collectively, these proposals reflect our members' strong 
commitment to ensuring that no American falls between the cracks of 
public and private programs and that individuals can have their 
disputes reviewed by an objective third party.
Survey Findings on Individual Health Insurance Market
    In December 2007, AHIP released a new survey of the individual 
health insurance market. The findings of this comprehensive survey 
indicate that individually purchased health insurance is more 
affordable and accessible than may be widely known and that it offers a 
broad array of benefits.
    According to the survey, 89 percent of applicants who went through 
the application process were offered coverage in the individual market. 
Forty percent of these offers were at standard premium rates and 49 
percent were offered at lower (preferred) rates. Even among those in 
the 60-64 age category, 71 percent were offered coverage and 74 percent 
of these were at standard or preferred rates.
    Nationwide, annual premiums averaged $2,613 for single coverage and 
$5,799 for family plans in the 2006-2007 period. As shown in the table 
on the following page, premiums varied by state, reflecting a variety 
of factors, including premium rating and underwriting rules, 
differences in health care costs, demographics, and consumer benefit 
preferences. Premiums were significantly higher in states with 
``guaranteed issue'' and ``community rating'' requirements that place 
restrictions on premium variation and underwriting. However, 
approximately 95 percent of the policies surveyed were sold in states 
where the average annual premium was under $3,400 for single coverage 
or $7,200 for family coverage.

           INDIVIDUAL MARKET, AVERAGE ANNUAL PREMIUMS BY STATE
                      [Single Coverage, 2006-2007]
------------------------------------------------------------------------
                     State                        Average Annual Premium
------------------------------------------------------------------------
MASSACHUSETTS..................................                  $8,537
NEW JERSEY.....................................                  $5,326
NEW YORK.......................................                  $4,734
RHODE ISLAND...................................                  $4,412
PENNSYLVANIA...................................                  $3,949
MAINE..........................................                  $3,686
LOUISIANA......................................                  $3,377
NEW HAMPSHIRE..................................                  $3,368
NEW MEXICO.....................................                  $3,362
CONNECTICUT....................................                  $3,326
NEVADA.........................................                  $3,118
NORTH CAROLINA.................................                  $3,080
SOUTH CAROLINA.................................                  $2,981
FLORIDA........................................                  $2,949
SOUTH DAKOTA...................................                  $2,914
MONTANA........................................                  $2,866
TEXAS..........................................                  $2,782
WYOMING........................................                  $2,688
NATIONAL.......................................                  $2,613
ARIZONA........................................                  $2,591
CALIFORNIA.....................................                  $2,565
WEST VIRGINIA..................................                  $2,540
COLORADO.......................................                  $2,537
KENTUCKY.......................................                  $2,537
MISSOURI.......................................                  $2,518
NEBRASKA.......................................                  $2,505
INDIANA........................................                  $2,504
ILLINOIS.......................................                  $2,499
OHIO...........................................                  $2,498
MISSISSIPPI....................................                  $2,489
OKLAHOMA.......................................                  $2,435
MINNESOTA......................................                  $2,424
GEORGIA........................................                  $2,419
KANSAS.........................................                  $2,363
VIRGINIA.......................................                  $2,359
DELAWARE.......................................                  $2,346
NORTH DAKOTA...................................                  $2,316
TENNESSEE......................................                  $2,221
MARYLAND.......................................                  $2,208
ALABAMA........................................                  $2,208
IOWA...........................................                  $2,202
ARKANSAS.......................................                  $2,153
WASHINGTON.....................................                  $2,015
IDAHO..........................................                  $2,006
MICHIGAN.......................................                  $1,878
UTAH...........................................                  $1,574
OREGON.........................................                  $1,297
WISCONSIN......................................                  $1,254
------------------------------------------------------------------------
Source: America's Health Insurance Plans.
 
NOTE.--Results from Alaska and the District of Columbia, where the
  responding companies reported fewer than 500 policies in force, are
  included in the national totals but are not reported separately.

    AHIP's survey also demonstrates that consumers in the individual 
market were offered a wide range of benefits, including mental or 
behavioral health, prescription drugs, preventive, and maternity 
benefits. Some level of behavioral health coverage was included in nine 
out of ten policies purchased. Coverage for complementary and 
alternative therapy was also quite popular, while vision and dental 
coverage were chosen much less frequently.

        INDIVIDUAL MARKET, SPECIFIC BENEFITS PURCHASED, 2006-2007
                          [PPO/POS and HSA/MSA]
------------------------------------------------------------------------
                                       Percent of Policies in Survey
                                 ---------------------------------------
  Coverage Included in Policies         PPO/POS             HSA/MSA
            Purchased            ---------------------------------------
                                   Single    Family    Single    Family
------------------------------------------------------------------------
Adult Physicals.................     66.2%     67.1%     73.2%     74.8%
Allergy.........................     71.9%     73.7%     84.5%     90.4%
Annual Ob/Gyn Visit.............     95.8%     94.1%     87.0%     82.1%
Bariatric Surgery...............     35.8%     35.0%     23.0%     15.9%
Cancer Screenings...............     94.1%     93.9%     90.0%     81.4%
Complementary & Alternative          70.0%     71.1%     75.3%     61.3%
 Therapy (Chiropractic,
 Naturopathy, Acupuncture, etc.)
Complications of Pregnancy......    100.0%    100.0%    100.0%    100.0%
Dental..........................     14.0%      8.5%      6.2%      4.0%
Fertility treatment.............     26.7%     26.7%      5.1%      3.2%
Inpatient Behavioral Health.....     93.8%     79.1%     89.5%     89.4%
Outpatient Behavioral Health....     94.3%     84.3%     86.8%     83.3%
Normal Delivery.................     57.7%     59.5%     51.6%     40.3%
Oral Contraceptives.............     78.8%     76.6%     53.5%     46.8%
Inpatient Substance Abuse.......     85.0%     80.2%     86.2%     87.4%
Outpatient Substance Abuse......     84.1%     78.5%     82.5%     80.8%
Vision..........................      7.6%     17.8%      7.0%      4.2%
Well-Baby Care..................     88.0%     86.8%     80.2%     74.0%
Well-child visits...............     89.7%     88.5%     85.8%     79.4%
------------------------------------------------------------------------
Source: America's Health Insurance Plans.

Research Findings on Previous State Initiatives Yielding Unintended 
        Consequences
    Last year, AHIP commissioned research that yielded important 
lessons about the unintended consequences that can result when certain 
health insurance reforms are enacted in the absence of universal 
coverage. In September 2007, we released a report by Milliman Inc. that 
examined eight states--Kentucky, Maine, Massachusetts, New Hampshire, 
New Jersey, New York, Vermont, and Washington--that enacted various 
forms of ``community rating'' and ``guarantee issue'' laws in the 
1990s.
    The Milliman report found that these initiatives, when enacted 
without universal coverage, can drive up health care costs for 
consumers, limit access to coverage, and have unintended consequences 
for healthy persons. The report also found no significant decrease in 
the uninsured population in states that implemented these initiatives. 
As a result, several states that initially implemented community rating 
and guarantee issue laws have since repealed or modified their laws 
with the intent of stabilizing the insurance marketplace and providing 
consumers more choice and access to coverage.
    The experience of New Jersey is particularly noteworthy. In the 
early 1990s, the state legislature enacted a package of reforms that 
included community rating, guaranteed issue, and standardized plan 
requirements. Initially, these reforms briefly increased the number of 
carriers participating in the individual market and the number of 
persons buying individual coverage. Over time, however, these reforms 
led to dramatic rate increases for the standardized plans. By 2007, the 
number of carriers participating in the state's individual market had 
declined to only seven and the number of persons buying coverage in the 
individual market had dropped to approximately 80,000 annually--
significantly below the 220,000 persons who purchased individual health 
insurance coverage in New Jersey in 1995.
    These and other findings of the Milliman report are well worth 
considering in any congressional debate about preexisting conditions. 
The clear lesson for policymakers is that any reforms that give healthy 
people incentives to delay purchasing coverage will lead to unintended 
consequences for the broader population and diminish access to high 
quality, affordable health insurance. Instead of pursuing piecemeal 
reforms that have been tried before by states and create the unintended 
consequence of exacerbating existing problems, Congress should consider 
the challenge of ensuring that individuals with high health care costs 
receive coverage as part of broader policy changes that would bring 
meaningful relief to health care consumers.
Conclusion
    Thank you again for this opportunity to testify. AHIP and our 
members stand ready to work with you to advance solutions for providing 
health insurance to uninsured persons with preexisting medical 
conditions. We also look forward to participating in a serious debate 
on the broader challenge of extending coverage to all Americans to 
ensure that no one falls through the cracks.
                                 ______
                                 
    Chairman Andrews. Thank you very much for your views and 
positive ideas.
    Mr. Tessier, welcome to the subcommittee.

 STATEMENT OF ROBERT TESSIER, EXECUTIVE DIRECTOR, CONNECTICUT 
           COALITION OF THE TAFT-HARTLEY HEALTH FUND

    Mr. Tessier. Good afternoon. Thank you, Representative 
Courtney, it's good to see you again.
    Our coalition is a coalition of 17 jointly-sponsored labor 
management sponsored health funds. We are, taken together in 
the State of Connecticut, the second largest private payer of 
health care. Our member funds spend about $100 million on 
health care services every year. I can't so much speak to the 
problem. You, the committee, you, Representative Courtney have 
identified the problem. I can speak to what our experience is 
and tell you that for health funds that may be slightly 
different. Maybe different in some ways from the commercial 
insurers. We have a mix of funds that have preexisting 
condition exclusions that are applied. Funds that don't have 
them, never had them. Some funds, as James testified earlier, 
had such exclusions, but have since dropped them. Essentially 
what I'm here to testify today is that this has not been a 
significant cost for our funds.
    I have spoken to the administrators for all the large funds 
and several of the small funds. We are all funds that are very 
cost conscious. As you know, health care costs have continued 
to rise dramatically. Our funds get their funding through the 
collective bargaining process; the cost of health care has been 
the most controversial and difficult subject in collective 
bargaining for many years. We don't have extra money sitting 
around that we can waste. We have exhausted the areas where we 
can find savings. This has not been an area where funds have 
been able to say no, we need this. There is a significant 
problem here we need to be able to deny coverage. Our funds are 
not in the business of denying coverage in the first place. 
After discussion with those funds, I'm here to testify it's not 
as significant--on occasion it is a problem, but not something 
there is a great deal of savings for us.
    Are we different than commercial insurers? Yes. In some 
ways we are different in that access to our membership, for 
instance, with the building trades funds typically come after 
people serve in apprenticeship programs or through it; they 
have a longer relationship with both the union employer and the 
fund. So we don't have a problem--I have not seen a problem 
with employees that have a heart attack then look for work as a 
carpenter or operating engineer or something. It doesn't work 
that way.
    Also when they become eligible for coverage there is not 
the kind of election that occurs with many employers. People 
don't have a coverage problem.
    People have coverage it's automatic. It's not an election 
the individual makes.
    We are different in other ways--we are not different in 
other ways in the service industries. Access to the coverage 
and funds is very similar, to wit, the commercial insurance. 
Again there seems to be very low turnover of our membership in 
the funds even in the service industries, but there is some 
there again. It is still not a problem. The funds I know that 
do not have a preexisting condition exclusion, in fact, are in 
the service industry. Something that may be of interest to you 
on this issue, I will shed some light.
    We had a recent study done of our membership, all the 
coalition funds membership by our data analysis firm. And for a 
12-month period our funds spent $1.3 million on medical 
treatments directly and specifically identified as related to 
members with diabetes. Members and their dependents with 
diabetes. The fascinating thing was when we looked at other 
comorbidities over that 12-month period, we were 13 million 
essentially a 10 to 1 ratio. What we found fascinating those 
comorbidities covered the full range almost every body organ or 
problem there could be. It strikes me that it's impossible to 
identify and exclude things that could be related to a 
particular illness, a chronic disease that are being paid for 
already. So my point is that the existing exclusions are really 
only touching a piece of it and why do that? It's so arbitrary 
as to be patently unfair.
    Thank you.
    [The statement of Mr. Tessier follows:]

 Prepared Statement of Robert Tessier, Executive Director, Connecticut 
               Coalition of the Taft-Hartley Health Fund

    On behalf of The Connecticut Coalition of Taft-Hartley Health 
Funds, Inc. (``Coalition'') and its members, I am writing to express my 
support for H.R. 2833, the ``Pre-existing Exclusion Patient Protection 
Act of 2007.'' Before I go any further, allow me to share some 
background information regarding the Coalition and its members that may 
be helpful.
    The Coalition is a non-stock membership corporation under 
Connecticut law, and it is operated on a ``not-for-profit'' basis. The 
Coalition was incorporated in June of 1992, and the Internal Revenue 
Service has confirmed that the Coalition is a tax-exempt organization 
under Section 501(c)(6) (business league) of the Internal Revenue Code 
(``Code''). In general, the Coalition's members are tax-exempt, multi-
employer health and welfare funds which are governed by various federal 
laws, including ERISA and the Taft-Hartley Act of 1947. Each of these 
Coalition member funds has an affiliation with a specific labor union, 
and each is normally tax-exempt under Code Sec. 501(c)(9) as a 
``voluntary employees' beneficiary association'' or VEBA.
    The Coalition currently has seventeen member health funds, the vast 
number of which are located in Connecticut and cover Connecticut 
residents. I would estimate that Taft-Hartley Health Funds--the 
majority of which are Coalition's members--represent approximately 
200,000 total covered lives in the state, consisting of active 
employees, retired individuals and their eligible dependents.
    On a personal level, I have extensive experience with labor unions 
and their associated employee benefits plans. Prior to becoming the 
Coalition's Executive Director in January of this year, I was the plan 
administrator of the Connecticut Carpenters Benefit Funds for five 
years and the New England Health Care Employees Benefit Funds for eight 
years. I was also the Coalition's President from 2000 through 2007.
    Coalition funds are established and funded pursuant to the terms of 
collective bargaining agreements negotiated by the sponsoring unions 
and respective employers and/or employer groups. The individual health 
funds are independently managed and the plan of benefits for each fund 
is established by their board of trustees. They provide comprehensive 
health coverage and often include non-health benefits such as life 
insurance, disability and scholarship benefits. These not-for-profit 
health funds are unique in the health care marketplace in that they are 
both payor and consumer. Under federal law (ERISA) these funds exist 
for the sole and exclusive benefit of the participants and my 
experience is that when the funds are able to achieve savings, those 
savings are returned to the participants in the form of increased or 
improved benefits.
    Taken together, Coalition member funds represent the second largest 
purchaser of health care services in Connecticut, after state 
government. Member funds spend approximately $100 million on health 
care services each year. The Coalition's mission is to use the combined 
strengths of our members to secure the best possible health care at the 
lowest practical cost. Through various joint-purchasing initiatives we 
have succeeded in saving our member funds millions of dollars every 
year. We've established positive relationships throughout the industry 
and helped stabilize the volatile and escalating costs of health care 
for both our members and their employers.
    Some Coalition member funds do have pre-existing condition 
exclusion provisions in their plans and some do. Some funds had these 
exclusions and subsequently eliminated them in the interest of offering 
equal coverage to all participants. Funds that have such exclusions 
have indicated that denials of claims for this reason are rare 
occurrences. To the extent that our funds have members who are 
medically compromised, i.e. who are denied coverage because of a 
preexisting condition, those members may represent a safety hazard to 
co-workers on the job, especially in the construction industry.
    While there may be some costs associated with shortening the amount 
of time that an employer could exclude coverage and shortening the 
permitted ``look-back'' period, surely the benefits of increasing 
access to health insurance coverage outweigh such costs. For these 
reasons, the Coalition supports the ``Pre-existing Exclusion Patient 
Protection Act of 2007'' (H.R. 2833) and urges its passage.
                                 ______
                                 
    Chairman Andrews. Thank you. That is a point of view I had 
not thought about, that body of evidence. That is very 
interesting.
    Mr. Farrell, welcome to the subcommittee.

  STATEMENT OF JOHN FARRELL, FOUNDER, J.J. FARRELL ASSOCIATES

    Mr. Farrell. Thank you, Mr. Chairman and Mr. Courtney. I 
would like to support H.R. 2833. I think the bill helps protect 
patients whose clinical and financial condition is compromised. 
It reduces the cost shift to those with private insurance. It 
will also as well limit the broad latitude often exercised by 
health insurers in denying benefits under the umbrella of a 
preexisting condition.
    My comments today will focus on the financial aspects of 
this issue. Really using the Connecticut health delivery system 
as an example.
    It's not uncommon for people with chronic medical 
conditions to also experience a deterioration in their 
financial well-being. When one enters that situation, there are 
two possibilities. Either care is postponed or denied, or they 
seek immediate healthcare. In this case it's the hospital 
delivery system which renders that care.
    In Connecticut it is essentially a non-profit community-
based delivery system with 31 hospitals. There is no government 
hospital system.
    It is very important for us in this State and in a study we 
did about three years ago for the Universal Health Care 
Foundation of Connecticut, we showed 12 percent of hospital 
costs are shifted from those who cannot pay, that goes right to 
the insurers. As you're looking for real examples here I will 
give you an example of our largest employer which is the State 
of Connecticut. The State of Connecticut pays in excess of $800 
million dollars a year for healthcare. Three percent represents 
a subsidy of those that can't pay. As we look at this mostly 
through those insurance cross-subsidies there are also other 
subsidies in this State, there are distressed hospital pools 
funded out of Federal levels. One starts to look at exactly 
what we are talking about. There is a reimbursement system 
today. It is a convoluted system. It's insufficient and 
ineffective. When that patient does receive care through the 
emergency room, their outcome is compromised from the 
beginning. The emergency room is a poor place to receive health 
care other than in a tragic accident. We did studies that show 
for a major cancer center in an emergency setting that person's 
outcome is compromised. I look at that as a very significant 
issue for us.
    As we also look at the individual market, the effects of 
that, I think it is important to recognize now other facts. The 
individual market is a community rated market. It's not my 
direct experience. We wonder why our rates are going up 20 
percent. Nobody got sick last year. There is very little choice 
for the small employer today.
    As you look at that, I think that is very important to 
recognize in this. I think the effort selection is overrated.
    Again I support this bill very much. I think it is a 
constructive first step as you look at this.
    [The statement of Mr. Farrell follows:]

Prepared Statement of John J. Farrell, Founder, J.J. Farrell Associates

    I would like to thank you for the opportunity to note my support 
for H.R. 2833. This bill helps protect patients whose clinical 
condition has compromised both their medical and financial well-being. 
I believe this bill will reduce the cost shift to those with private 
insurance. It will also limit the broad latitude often exercised by 
health insurers in denying benefits under the umbrella of a pre-
existing condition, with minimum additional financial impact upon 
private payers.
    My comments will be from a financing perspective using the 
Connecticut health delivery system as an example.
    It is not uncommon for people with chronic medical conditions to 
also experience a deterioration of their personal financial resources. 
In addition, the physical and logistic demands their medical condition 
makes it harder to maintain consistent employment.
    To appreciate the financial impact of HR 2833, I believe it would 
be helpful to view the issue from an individual's perspective. What 
happens, for example, when a new employee with a preexisting chronic 
condition, without health insurance is in need of care?
    The answer is straight forward, they either postpone care until 
coverage begins, or they seek immediate care. If they choose the former 
option, the employer ultimately picks up the expense, now possibly 
increased by the cost of complications. More likely they seek care, 
without the financial resources to pay the full cost of care.
The Cost Shift
    In Connecticut, the health care delivery system is anchored by 31 
acute care hospitals. It is essentially a non profit community based 
delivery system. Each hospital, functions as a safety net, caring for 
all patients irrespective of their coverage status, including the 
indigent and uninsured. This system, while under mounting pressure, 
works relatively well when compared to other states.
    The health facility rendering this uncompensated care shifts this 
unmet cost to private payers, including self insured employer groups. 
This is commonly referred to as the ``cost shift''. Approximately 12 % 
of each hospital bill is attributable to the cost shift.
    While HR2833 would increase the amount directly paid by the health 
insurer, it would correspondingly reduce the amount of cost shift. On a 
net basis there would be little additional cost.
Development of Health Insurance Premiums
    It should also be noted that the aggregate health care experience 
of a population is utilized in the establishment of community health 
insurance rates. In simple terms the experience of the previous period 
is used to set prospective rates. The historic expense of caring for 
chronically ill patients are included in the aggregate plan wide costs. 
These costs are spread among the broader population and every party 
paying community rates effectively absorbs a portion of this cost.
    Thank you for this opportunity to provide the committee with my 
views on this important legislation.
                                 ______
                                 
    Chairman Andrews. Thank you. I think it is true the issue 
is how we are paying and who is paying, not whether we are 
paying. These costs are being absorbed by the system. The 
question is whether they are being absorbed in a rational, 
efficient way, or irrational inefficient way. I would like to 
ask my friend and colleague if he would like to question the 
panel first. There is no trap door.
    Mr. Courtney. Thank you, Mr. Chairman and the witnesses for 
all their thoughtful testimony here today. I want to start off 
some of the questions. I am sure the Chairman will jump in as 
well. Starting with you, Ms. Davenport.
    Can you describe the foundation--what kind of people are 
looking for help from your organization maybe just you don't 
have to do an exact case study, but a typical person that 
you're helping and how they pump up into this problem.
    Ms. Davenport-Ennis. Let me take the calendar year of 2007 
when we had 6.8 million people in America who reached out to 
us. They had been diagnosis with a chronic debilitating, life-
threatening issue. They were facing obstacles to access, 
prescribed health care. It was not able to be resolved in their 
local community, sometimes not even at their State level.
    Eighty percent of those people were in some form of 
insurance. They may have been underinsured, but they were in 
some form of insurance. Twenty percent were completely 
uninsured. When we started peeling the layers back to see why 
are you uninsured, what brought you to this point, why you need 
us today, what we saw we saw families that had been forced to 
leave one job in one community and move to another location. 
Often to take care of a senior family member, so they get to 
the new location, they are trying to buy insurance for their 
family. They have a seven-year old son who has chronic asthma. 
Every plan they try to get into, some said there will be a 12 
month pre-ex for this child with asthma, or the family has a 
situation where the husband is insured. The husband goes in for 
an examination and is told you're healthy as can be.
    That is in 2005. In 2006 he decided he wants to improve his 
insurance policy. And so he went back to this health insurer, 
he upgraded it, improved it. Six months later he went to a 
doctor, he had a strange place on his tongue only to find six 
months after that that it was a squamous cell carcinoma. Within 
four months after the diagnosis he received a letter saying we 
are going to rescind your coverage. You didn't correctly fill 
out your application to start with.
    You had a preexisting condition. There is nothing in his 
health records or examination that could have suggested to him 
in 2006 he had preexisting condition. The people who come to 
us, some of them are in financially desperate conditions. About 
16 percent of the uninsured that come to us are at the Federal 
poverty level or below.
    Then you had another slice, the next 30 percent, are still 
in a low/middle income or upper low range of income, but they 
have been hit with a diagnosis of life threatening illness, 
there is no recourse for them. When we try to get them into 
Medicaid sometimes they are over the limit, they can't qualify, 
we go to the State high-risk pools. We can't get them enrolled 
there. So the patients come to us with a number of different 
issues always in play. Pre-ex ultimately even if we can find an 
insurance plan for them ends up being the Achilles heel, having 
genuine insurance.
    What happened to the 31 year old woman in Texas? We got her 
into the Health Insurance Plans, but if she relapses there is 
not going to be any benefit. Our plan at end of the day, who 
does she have insurance with. One in three Americans live with 
probably the same thing. A suggestion to all of us, no matter 
what we have to forego, we have to get insurance. I hope that 
gives you some insight as to who is calling us.
    Mr. Courtney. You talked about cancer patients. Are there 
other sort of large types of illnesses or conditions that you 
see a lot of? I guess, there are other chronic conditions.
    Ms. Davenport-Ennis. We do. We serve every chronic 
debilitating and life-threatening condition in the country. You 
go to large pockets, anyone who's had a cardiac condition 
diagnosed even if it is as simple as a prolapsed valve, they 
are on medications, run five miles a day, healthy. If they have 
to leave the insurance policy they are in now and try to get 
insurance in another policy that becomes a preexisting 
condition.
    We have a lot of Americans that have kidney disease even 
before they are moving into dialysis, even when it is a 
diagnosis. If they try to get insurance, leaving the insurance 
they are in can be extremely difficult. You look at patients 
that have Parkinsons and HIV-AIDS even if they are not actively 
in the process of advanced disease and the disease is being 
controlled with medication, if they try to move from one job to 
another they are locked in. They are not going to get in 
another policy without preexisting condition.
    One of the things I would say to you on behalf of every one 
we served, for young Americans who really want to start a 
business maybe they have already been in business, for these if 
they are diagnosed with a preexisting condition many of those 
dreams are dashed. They can't find insurance in the individual 
market. They are not going to be in the group market if they 
are starting a new company as a rule. So often we see people 
that have been in business for themselves. They have had to go 
out of business, become employed by an employer that is large 
enough they take all comers. They may have a pre-ex period for 
them or they simply can't make the change.
    Mr. Courtney. Thank you. Mr. Stirling, I want to follow-up 
on one of your observations. I think Bob echoed it to a degree.
    Just because there is the HIPAA pre-ex time period that 
exists under Federal law, that doesn't necessarily mean 
employers or Taft Hartleys or groups have necessarily exercised 
their rights to use it. Maybe--obviously there is going to be a 
debate here about whether or not this law is going to be just 
totally unaffordable or upset the market in a way that is too 
large a ripple effect covered by other insurance. We do have 
some real life experiences where people don't use it and are 
still able to function. Could you follow-up?
    Mr. Stirling. It was our experience in 1996 when HIPAA came 
out, about half our group plans dropped their preexisting 
clause. Part of the reason there was a big debate about HIPAA 
getting one bite of the apple. If you didn't have a great 63 
days, there was no preexisting condition carried forward. Only 
if you didn't have continuous coverage up to that point. Back 
to that point in the debate if you go back 10-12 years ago. 
That was a huge change in the industry. But it hasn't eroded 
the ability of employers to offer plans. There are a lot of 
things that have driven up costs. This may have been one. This 
might be a very thin slice of the pie. Half dropped their 
preexisting condition. In the ensuing 12 years another half 
dropped. Only about a quarter of plans we administer as a 
third-party administrator still have preexisting condition. If 
this law passes the rest will drop. There still would be a thin 
slice of the pie. Employers want to provide benefits to their 
employees. They don't like the fact Bob and Sally, Bob sitting 
next to her, Bob has coverage, Sally doesn't. In the group 
market this will not have an earth shattering effect.
    Mr. Courtney. Ms. Horoschak, I want to thank you for your 
testimony today. When I was working in this building the 
Connecticut Risk Pool was something we spent a lot of time 
working on in the mid 1990s, the last wave of health care 
reform plan was going on. What I am trying to understand 
again--I want to say AHIP stepping forward saying they want to 
work on this issue, I think is a very positive thing and I 
really appreciate that is a contribution that will, as Mr. 
Anderson said, something we can work together on. What I am 
trying to understand, the Guarantee Access Plans you would have 
administered by the States, is this really just extending to 
the other 16 States that don't have a risk pool or do you see 
it different than the risk pools operating now in approximately 
30 States?
    Ms. Horoschak. I think we view this as qualitatively 
different. There are two reasons for that. The first is most 
high-risk pools today don't have the kind of qualification and 
eligibility requirement we are talking about. That is to say 
they only accept the individual with the highest health care 
costs. So we would have the Guarantee Access Plan only cover 
those individuals who have 200 percent or more of average claim 
costs. And if a person doesn't get coverage in the private 
market and goes to the Guarantee Access Plan and makes an 
application, doesn't have high enough costs then they go back 
to the private market where they get a guaranteed issued 
policy. So that is how it works.
    The second thing that I think is qualitatively different 
than the way many high-risk pools operate today, we expect the 
insurers, private market insurers to provide more assistance to 
individuals to apply to their Guarantee Access Plan. One of the 
other things we hear, it is very difficult to apply to the 
high-risk pool and the agents are not as willing as they might 
be because there are very limited fees paid for that 
assistance. Our approach, if the individual requests and of 
course, the individual plan gets the individual's consent, they 
would assist the individual with the application process.
    Mr. Courtney. Would you sort of visualize again each State 
on a State-by-State basis would have to implement this 
proposal?
    Ms. Horoschak. The way our members decide on the approach 
was to, of course, look to those States that don't have a high-
risk pool to begin with. That would be the starting point. But 
beyond that to also look at States that currently have high-
risk pools and have those either amended or in some way altered 
to incorporate the new features we are talking about. Then of 
course, perhaps, in a State like Florida where their high-risk 
pool was in effect since the early 1990s as mentioned earlier.
    Chairman Andrews. I would like to thank everyone on the 
panel for their testimony. We will try to get into couple of 
specific fact patterns we are talking about today.
    Let's say, we have a person working for Bank A, she leaves 
the bank she gets a job at Bank B. She is now a new employee. 
Three months prior to starting employment with Bank B she is 
diagnosed with Type II diabetes. As I understand the law today 
is that Bank B can decline including her in their health 
insurance plan for a year. Does anyone disagree with that? Mr. 
Stirling, what does the law say?
    Mr. Stirling. It depends on facts and circumstances of that 
transition from Employer A to Employer B. Under the current 
HIPAA requirements if she was continuously employed at Bank A 
for more than 12 months and if when she went to Bank B she had 
a break of no more than 63 days from when she left A went to B, 
when B picks her up B would be prohibited----
    Chairman Andrews. Let's say, she had a 70-day break.
    Mr. Stirling. They would look back and say how many months 
was she continuously covered in Bank A. We would look back, 
offset the amount of preexisting limitations .
    Chairman Andrews. What if the preexisting condition 
manifested itself after she started working for Bank B.
    Mr. Stirling. No, it would look back to see if she has a 
preexisting condition. But the preexisting condition would be 
offset by those months that she worked for Bank A.
    Chairman Andrews. So that would go towards the 12-month 
window?
    Mr. Stirling. Yes, sir.
    Chairman Andrews. How come it didn't help Ms. Gould?
    Mr. Stirling. You were looking for an individual policy at 
that point.
    Ms. Gould. I was looking for coverage for a six-month 
period after I was no longer eligible on COBRA through United 
Technologies.
    Chairman Andrews. Ms. Gould was under a private sector plan 
through her spouse. She tries to enroll in the AARP plan. She 
was unable to do so because of her diabetic condition.
    Ms. Gould. I would like to add when it became time for me 
to select a medicare supplement, AARP was one of the many 
companies beating down my door to get my premium money. Why? If 
they didn't want me six months prior, why are they wanting me 
now?
    Chairman Andrews. I would suggest there was a significant 
flaw in Medicare Part B that Mr. Courtney is not responsible 
for nor I. I want to ask Ms. Horoschak about how we would 
address the kind of problem we have here today. The first is 
the Guarantee Access Plan. The State Guarantee Access Plans 
simply offer a premium. There is no subsidy built into it. 
What, perhaps, to a person in Connecticut the data in your 
testimony indicates the individual market premium is $3,326. In 
my State it's $5,326. If someone is offered insurance under the 
Guarantee Access Plan that doesn't necessarily mean they get 
it, does it?
    Ms. Horoschak. Obviously, you put your finger on a very 
important issue which is affordability. That is why our 
proposal has two different subsidies. One is low and moderate 
individuals up to 300 percent of the Federal poverty level 
considering up to 400 of FPL. Second subsidy----
    Chairman Andrews. How much would that subsidy be worth to a 
person in Connecticut? Let's say, single person. It wouldn't be 
$3,300 because Ms. Davenport's testimony indicates it would be 
125 or 150 percent of that. What about a single person in 
Connecticut that's facing a $4,000 premium? How much would that 
subsidy that you're proposing be worth to them?
    Ms. Horoschak. We have not established specifics as to 
amounts. We have talked about a sliding scale subsidy then an 
additional subsidy.
    Chairman Andrews. Where would the money come from for the 
subsidy?
    Ms. Horoschak. We always call from broad-based funding. We 
would work with other stakeholders to work out what that is.
    Chairman Andrews. I think people in this room understand 
far better than I do, the State budget should come up with the 
subsidy. It's not a Federal subsidy that you're proposing.
    Ms. Horoschak. No. Although we support Federal dollars to 
assist the States with high-risk pools and Guarantee Access.
    Chairman Andrews. I think the proposal is well thought out, 
well-intentioned. States are facing fiscal problems. There is a 
rare governor that would take on new obligations. I think the 
Connecticut legislators would echo that. So I would think that 
the hope of a subsidy is not terribly well-founded. People 
would simply have the right to buy a premium they can't afford. 
Which doesn't solve the problem.
    I want to ask you about the administrative changes that 
you're proposing that I think have some merit. If there were 
full disclosure prior to someone taking employment as I 
understand it, full and complete disclosure, are you proposing 
that the look back would be abolished? What are you proposing? 
Someone comes clean with their entire medical record before 
they start working with the employer, what are you proposing?
    Ms. Horoschak. That particular portion is limited to the 
individual market where the application process is a little bit 
more important. Because you can't be turned down coverage in a 
group insurance----
    Chairman Andrews. If an application was proposed, would you 
support the same change for the group market?
    Ms. Horoschak. I don't see the two as analogous. Right now 
people don't fill out the long type of application that is 
required for an individual policy. So our proposal was intended 
to get at that process if the application--we would require 
ourselves, so to speak, to have a clear and understandable 
application. If a person gives all the answers in a complete 
and accurate way and we furnish them a policy then we don't 
have a right to impose a preexisting----
    Chairman Andrews. I understand that. I also understand the 
significant majority of Americans get their insurance through 
employers, therefore, your proposal is not really relevant to 
them, is it?
    Ms. Horoschak. That particular portion is not.
    Chairman Andrews. If I understand Mr. Courtney's bill it is 
a lot more concise. I think what it says if you're one of the 
people caught in the the trap of this preexisting condition 
world, three months is it. That is it. It is sort of a three-
month period where you're sort of new to the job. We don't want 
to disenroll people in a hurry. That is it. Three months you're 
covered.
    If I understand Mr. Courtney's proposal, also the look back 
period is significantly shortened as well. So--look, one of the 
witnesses I think said it very well. I think it was Mr. 
Stirling, there will be costs. There is no free lunch here. If 
the individuals that Mr. Courtney's plan would protect are 
protected, someone is going to pay for it. It would be in the 
form of premiums spread throughout the health care system or 
wages, what have you. I think that the cost is so relatively 
small and the payers are so relatively large, that is the 
fairest way to do this. I think Mr. Courtney's way is the 
fairest way.
    I think we have had alternatives offered in good faith. 
That is how you get legislation passed.
    I am appreciative of that. I've heard two alternatives, one 
is we are sorry, you're on your own to pay a guaranteed 
premium. You can't afford this which shifts the costs to people 
like Ms. Gould which doesn't work. The other is, well, States 
should come up with these subsidies, out-of-State income tax, 
State sales tax at a time when State governments are stretched 
beyond their max. The prospects for them doing this is zero in 
most places in the country.
    We have a controversy in our State where our governor 
inherits an enormous budget. One possibility is raise tolls on 
the Garden State Parkway. Everybody is against that. And a 
budget raise of a couple million dollars. I don't think there 
is a person in this room, very few people in the Congress, who 
would say someone like Ms. Gould shouldn't have health 
insurance, period. The question is how do you pay for it?
    I heard really three options here. Option one is she pays 
for it out of money she doesn't have. That isn't working. 
Option two, we Federal legislators say States will. The way we 
do lot of things like No Child Left Behind and lot of other 
things. That doesn't work very well either.
    Third is to say as often happens, this is a requirement 
spread among the payments in the health insurance system. It is 
a modest amount. It would do a lot of good. I think there is a 
good argument it might pay for itself, the comorbidities that 
Mr. Tessier talked about, some would be avoided. So I think the 
third way is the best way. We can't say it is not without 
costs, but I think as Mr. Stirling said it's probably a pretty 
minimal cost which is why I think Mr. Courtney's legislation is 
the right way to go.
    Joe, did you have some follow-up questions?
    Mr. Courtney. Real quick. I wanted to go back to Ms. 
Davenport. The question discussed earlier who's in and who is 
out based on calculation of the creditable coverage plan. I saw 
you kind of reaching for the microphone a little bit in terms 
the hypothetical Mr. Anderson was posing, Bank A and B. How 
effective is that creditable coverage reduction of exclusion 
under the existing law? It's a difficult place for Americans to 
find themselves in.
    In the example of going from Bank A to Bank B at least the 
employee was going from group to group. Heaven forbid if you 
got to go from individual to individual market. Because when 
you're at that point that 63-days comes in your life, you roll 
to day 64 you don't have creditable coverage. We have 106 
professional case managers in the United States who are solving 
these issues everyday and trying to get insurance for someone 
that has reached that 63 days of creditable coverage. It is 
extremely difficult. And normally the only way we are going to 
get it is to get them into a State high-risk pool, yet we 
shared that against 48 million uninsured Americans, we have 
only been successful in getting 180,000 Americans in the State 
high-risk pools. Our experience is that is not working.
    So the 63 days, let me share with you we work with AHIP on 
a lot of issues. One of the things we did was go over to meet 
with Carmelo Vaskino and several of her representatives because 
the 63-day requirement is so important in the lives of people. 
Many people don't realize it, if you breached day 64 you've 
jeopardized everything you worked for. Can we have that 63 
period in bold on the front of policies and post cards sent out 
so the consumer, that way the insured would know what it means 
to their future. I think when we were examining what happened 
with HIPAA, I had the privilege of working with Senator Kennedy 
and Nancy Kasenbaum on that legislation. We sat down. There is 
a segment that's not going to be addressed here and market you 
have to look at to try to bring some improvement. Our 
experience in the example, Mr. Anderson gave is heart 
wrenching, that breached that 63 period, didn't have enough of 
creditable coverage to offset that period, offset pre-ex, make 
sure they are insured.
    Chairman Andrews. Let me explain how the subcommittee is 
going to proceed. We are going to call on you, I am sure, for 
further comment and analysis. The subcommittee is considering 
some legislation to piecing together the number of legislation 
that would reduce the number of uninsured. Looking at the 
lifetime limit whether it should be modified or repealed. I 
think it should be repealed, but we have to debate it.
    Second, is look ERISA waivers. Presently Federal law bars 
obligation to that. For example, Maryland a few years ago 
passed a statute that required employers larger than 100,000 
employees, who did not insure their employees to contribute to 
Maryland's Medicaid fund to pay the cost. That was struck down 
by the Federal courts as a violation of the preemptive 
provision of the ERISA statute. We are taking a look at that to 
see if it it should be modified.
    Third, I think Mr. Courtney's idea fits that discussion 
very well because it is a very practical approach to reducing 
the number of uninsured. The way we work on these things is we 
try to circulate drafts among both majority, and minority 
members of our committee. I, for the record, think the minority 
should be invited to do so. Nothing is going to happen without 
the minority participation and knowledge.
    I wish to extend my appreciation to the participants for 
their excellent preparation and testimony. We will be calling 
on you. I did want to thank Joe for taking the lead on this 
issue. Again it's rare legislators that choose to get into the 
weeds on something like this. This is not an issue that will 
get you on the front page of the newspapers. Given the front 
page, the newspapers in our region, I don't think either one of 
us wants to be on the front pages in my State, or New York. 
This is not the kind of issue that gets you a lot of media 
coverage, but gets people health insurance and to understand it 
the way Mr. Courtney has is very encouraging. He's educating 
members of the committee on this.
    We will leave the record open for comments.
    I have to read this script.
    As previously ordered, members will have 14 days to submit 
additional materials for the hearing record. Any member who 
issues to the committee follow-up questions in writing or to 
the witnesses should coordinate with the majority staff within 
14 days without objection, that is accepted.
    We want to thank our hosts in Connecticut for their 
hospitality. Joe, we would like to thank you.
    The hearing is adjourned.
    [Additional submissions by Mr. Courtney follow:]
    [Letter from the Connecticut AIDS Resource Coalition 
follows:]

                                                    March 20, 2008.
Hon. Joe Courtney,
215 Cannon House Office Building, Washington, DC 20515.
    Dear Congressman Courtney: The Connecticut AIDS Resource Coalition 
(CARC) is pleased to sign on in support of H.R 2822. ``Pre-existing 
Condition Exclusion Patient Protection Act of 2007'' to ensure that 
individuals who suffer from chronic, disabling, and life-threatening 
conditions have access to comprehensive, meaningful, and affordable 
health insurance coverage.
    Incorporated in 1989, CARC is Connecticut's only statewide 
organization whose sole mission is to ensure that people with HIV/AIDS 
have the housing and services they need to live their lives in dignity.
    Clearly, legislation that eliminates pre-existing condition clauses 
would be of great benefit to people living with HIV/AIDS. If passed, 
this landmark legislation would enable people living with HIV/AIDS to 
access life-saving insurance, thus preventing them from having to rely 
on public assistance or from becoming so ill that their only option was 
expensive hospitalizations or other institutions such as nursing homes.
    Many people may not change jobs or even attempt employment for fear 
of being turned down to a pre-existing condition such as HIV/AIDS. Yet, 
quality coverage is essential for people with HIV/AIDS if they are to 
maintain any semblance of good health.
    We applaud you for taking this bold step and look forward to 
working with you on this and other issues that impact the lives of 
people with HIV/AIDS.
            Peace,
                                             Shawn M. Lang,
                                         Director of Public Policy.
                                 ______
                                 
    [Letter from the Juvenile Diabetes Research Foundation 
International follows:]


                                ------                                

    [Statement of Jennifer Jaff follows:]

              Prepared Statement of Jennifer C. Jaff, Esq.

    I want to begin by thanking Representative Courtney for introducing 
this historic legislation, as well as for convening today's event.
    I am Founder and Executive Director of Advocacy for Patients with 
Chronic Illness, Inc., a 501(c)(3) tax exempt organization that 
provides free information , advice and advocacy services to patients 
with chronic illnesses in many areas of law, including health 
insurance. Because everyone we serve has a chronic illness, every one 
of them by definition has a pre-existing condition.
    We receive several calls a week from patients across the country 
who want to know how to find health insurance that covers their pre-
existing condition.
    Because of the Health Insurance Portability and Accountability Act 
(HIPAA), people with insurance through their employers do have coverage 
of their pre-existing conditions, although they may have to wait as 
long as twelve months before coverage kicks in. HIPAA defines a pre-
existing condition as one for which medical advice, diagnosis, care or 
treatment was recommended or received within the six months before the 
enrollment date in the plan. H.R. 2833 would shorten the duration of 
the permissible waiting period from twelve months to three months, and 
the ``look-back'' period--the period we look to in order to determine 
whether a condition is pre-existing because treatment was recommended 
or received during that period--from six months to thirty days.
    These are critically important improvements on the status quo, to 
be sure. However, the most dramatic benefits of this legislation will 
be felt by people who do not receive health insurance through their 
employers and who have pre-existing conditions that preclude them from 
purchasing individual insurance.
    Currently, in most states, individual insurance is nearly 
impossible to obtain if you have a pre-existing condition. Some states 
have what are called ``high risk pools,'' which are designed for people 
with chronic illnesses, although many have pre-existing condition 
waiting periods of up to twelve months. Some states have ``guaranteed 
issue'' policies, which are policies that insurers are required to 
offer if they choose to do business in the state, although in many 
cases, these plans do not cover pre-existing conditions. Very few 
states have really good alternatives; some have no alternatives at all.
    If you have a pre-existing condition, are self-employed or 
unemployed, and need health insurance, in most states, you are out of 
luck. If you are a young adult with a pre-existing condition who no 
longer can be covered under your parents' policy and you do not have 
insurance through a job, you are out of luck. If you are unable to work 
due to your pre-existing condition but you are not yet on Social 
Security disability and, thus, Medicare, you are out of luck.
    While writing this testimony, I heard from the mother of a young 
boy with Crohn's disease whose father applied for health insurance for 
the family, and the insurer refuses to cover the young son because he 
has a pre-existing condition. This child is out of luck, too.
    This is not a Connecticut problem; this is a national problem. Its 
impact on the lives of the chronically ill cannot be underestimated. I 
get phone calls from people who work, who struggle to stay on top of 
their mortgage payments, and who cannot afford to go to a doctor 
because they don't have insurance, and can't get insurance because 
their employer doesn't offer coverage and their pre-existing condition 
precludes them from finding an individual plan. People forego medically 
necessary care every single day in this, the richest country in the 
world, because they cannot afford to pay for the health care and cannot 
find insurance that will cover their pre-existing condition.
    Nearly half of all uninsureds report having a chronic health 
condition.
     1.2 million Americans with diabetes report that they are 
uninsured, and more than half of these report having an unmet need for 
health care or prescription drugs.
     3.6 million Americans report having arthritis-related 
illnesses but have no health insurance, and again, more than half of 
these report having an unmet need for health care or prescription 
drugs.
     More than 1.7 million Americans with heart disease are 
uninsured, as are 2 million adults with asthma.
    As one would expect, the statistics show that the chronically ill 
do not get the health care they need.
     Nearly 38 percent of chronically ill adults indicate that 
they have skipped medical treatment or did not fill a prescription, as 
compared with 22 percent of healthy people.
     Only 20 to 25 percent of diabetics receive critical 
glucose monitoring tests.
     Two-thirds of patients with high blood pressure receive 
recommended care.
     Fewer than half of patients with heart disease receive 
proper medication.
     Fewer than half of schizophrenic patients receive 
appropriate medication.
     Over 27 percent of the uninsured with chronic conditions 
report that they have not seen a doctor in 12 months.
     Thirty-eight percent of the chronically ill uninsured lack 
a usual source of care, and those who do rely less on private doctors 
(as opposed to clinics) than the insured.
     Almost half of the uninsured chronically ill forego needed 
medical care or prescription drugs.
    In 2003, of the 3 million uninsured chronically ill, 42 percent 
went without needed care, 65 percent delayed care, and 71 percent 
failed to get needed prescription drugs, all because of cost concerns.
    A great deal of this would be avoided if individual insurance was 
available to the chronically ill.
    To make matters worse, even if you can find an individual policy 
that will cover your pre-existing condition, your insurer may closely 
monitor your healthcare usage and retroactively claim that you had a 
pre-existing condition, taking back any payments they have made on your 
behalf, leaving you without insurance although you've paid the premium.
    We've all read about this happening in California, where it took 
class action litigation to stop insurers from retroactively cancelling 
policies. But it happens more often than you may realize.
    I had one case in which a woman underwent some community-based 
psychotherapy and then suffered a traumatic event that resulted in a 
lengthy psychiatric hospitalization. Although her doctors clearly 
stated that her hospitalization was triggered by the trauma she 
endured, the insurer took the position that she had a psychological 
problem warranting psychotherapy before the traumatic event, so her 
psychiatric problem was pre-existing and, thus, the hospitalization 
would not be covered. Although ultimately I succeeded in winning this 
case, we are one of only two organizations in the entire United States 
that does free insurance appeals. What happens to the people who don't 
find me?
    I wish I could adequately describe the heartache chronically ill 
patients suffer when they don't have insurance through work and can't 
get insurance on their own. People lose their jobs because they forego 
medical care, and then things spiral downhill from there to the point 
at which they lose their houses, even their cars. I know every trick in 
the book--ways to help patients obtain free prescription drugs, free 
clinics, hospital charity care--if there's a resource out there, I know 
about it. But nothing takes the place of insurance for a person with a 
chronic illness.
    Those of us who need insurance the most can't get it. H.R. 2833 
will change that. It will enable people to get the care they need to 
stay employed, to remain a contributing member of society. It will 
eliminate many of the bankruptcies that result from medical debt. It 
will keep families together in their homes. It will stop punishing 
people because they got sick.
    It's incredibly difficult to be sick in America. We have to 
coordinate care among our various doctors, keep track of our 
medications, master laws like ERISA, HIPAA, COBRA, the Americans with 
Disabilities Act, Section 504 of the Rehabilitation Act, fight for our 
rights in the workplace and in school, all while holding our families 
together and trying to remain afloat in a sea of medical debt. H.R. 
2833 is a dramatic and critical step towards easing the burden on the 
chronically ill.
    On behalf of the thousands of patients we serve, I thank 
Representative Courtney for taking the lead in this critical effort. 
Thank you.
                                 ______
                                 
    [Whereupon, at 3:51 p.m., the subcommittee was adjourned.]

                                 
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