    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

    THE CONSEQUENCES OF OBAMACARE: IMPACT ON MEDICAID AND STATE HEALTH CARE
                                     REFORM

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

                                    HEARING

                                   BEFORE THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 1, 2011

                                   __________

                               Serial No. 112-11

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

                      U.S. GOVERNMENT PRINTING OFFICE
    66-822 PDF                WASHINGTON : 2011
    -----------------------------------------------------------------------
    For sale by the Superintendent of Documents, U.S. Government Printing
    Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
    area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC
    20402-0001

                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

    JOE BARTON, Texas                    HENRY A. WAXMAN, California
      Chairman Emeritus                    Ranking Member
    CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
    ED WHITFIELD, Kentucky                 Chairman Emeritus
    JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
    JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
    MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
    GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
    LEE TERRY, Nebraska                  ANNA G. ESHOO, California
    MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
    SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
      Vice Chair                         DIANA DeGETTE, Colorado
    JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
    TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
    MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
    MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
    BRIAN P. BILBRAY, California         JAY INSLEE, Washington
    CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
    PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
    STEVE SCALISE, Louisiana             ANTHONY D. WEINER, New York
    ROBERT E. LATTA, Ohio                JIM MATHESON, Utah
    CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
    GREGG HARPER, Mississippi            JOHN BARROW, Georgia
    LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
    BILL CASSIDY, Louisiana
    BRETT GUTHRIE, Kentucky
    PETE OLSON, Texas
    DAVID B. McKINLEY, West Virginia
    CORY GARDNER, Colorado
    MIKE POMPEO, Kansas
    ADAM KINZINGER, Illinois
    H. MORGAN GRIFFITH, Virginia

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     2
        Prepared statement...........................................     3
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     6
        Prepared statement...........................................    31
    Hon. Joseph R. Pitts, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................    34
        Prepared statement...........................................    35
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................    38
    Hon. Cliff Stearns, a Representative in Congress from the State
      of Florida, prepared statement.................................   186
    Hon. Cathy McMorris Rodgers, a Representative in Congress from
      the State of Washington, prepared statement....................   187
    Hon. Cory Gardner, a Representative in Congress from the State of
      Colorado, prepared statement...................................   189
    Hon. John D. Dingell, a Representative in Congress from the State
      of Michigan, prepared statement................................   191
    Hon. Edolphus Towns, a Representative in Congress from the State
      of New York, prepared statement................................   192
    Hon. Bobby L. Rush, a Representative in Congress from the State
      of Illinois, prepared statement................................   193
    Hon. Eliot L. Engel, a Representative in Congress from the State
      of New York, prepared statement................................   197
    Hon. Lois Capps, a Representative in Congress from the State of
      California, prepared statement.................................   201

                                   Witnesses

    Gary R. Herbert, Governor, State of Utah.........................    41
        Prepared statement...........................................    44
        Answers to submitted questions...............................   205
    Deval Patrick, Governor, Commonwealth of Massachusetts...........    64
        Prepared statement...........................................    67
        Answers to submitted questions...............................   210
        Letter to Mr. Cassidy, dated March 23, 2011..................   224
    Haley Barbour, Governor, State of Mississippi....................    79
        Prepared statement...........................................    81
        Answers to submitted questions...............................   227

                               Submitted Material

    Reports on The Benefits of Health Care Reform in Massachusetts,
      Mississippi, and Utah, March 2011, submitted by Mr. Waxman.....     7
    Letter of February 3, 2011, from Kathleen Sebelius, Secretary,
      Department of Health and Human Services, to Governors, with
      Medicaid Cost-Savings Opportunities report, submitted by Mr.
      Waxman.........................................................    16
    Letter of February 24, 2011, from Marina L. Weiss, PhD, Senior
      Vice President, Public Policy and Government Affairs, March of
      Dimes, to committee leadership, submitted by Mrs. Capps........   115
    Statement of Pat Quinn, Governor, State of Illinois, dated March
      1, 2011, submitted by Ms. Schakowsky...........................   125
    Statement of Service Employees International Union, dated March
      1, 2011, submitted by Mr. Waxman...............................   130
    Statement of National Partnership for Women & Families, dated
      March 1, 2011, submitted by Mr. Waxman.........................   132
    Statement of the American Orthotic and Prosthetic Association
      concerning Medicaid, dated March 1, 2011, submitted by Mr.
      Waxman.........................................................   133
    Letter of March 2, 2011, from ACCSES et al. to Members of
      Congress, submitted by Mr. Waxman..............................   143
    Statement of the Pharmaceutical Care Management Association,
      dated March 1, 2011, with February 2011 report ``Potential
      Federal and State-by-State Savings if Medicaid Pharmacy
      Programs were Optimally Managed'' by the Lewin Group, submitted
      by Mr. Bass....................................................   148
    Letter of March 1, 2011, from Robert F. McDonnell, Governor,
      Commonwealth of Virginia, to Republican leadership, submitted
      by Mr. Griffith................................................   177
    Letter of February 28, 2011, from Nathan Deal, Governor, State of
      Georgia, to Mr. Gingrey........................................   184

    THE CONSEQUENCES OF OBAMACARE: IMPACT ON MEDICAID AND STATE HEALTH CARE
                                     REFORM

                                  ----------

                             TUESDAY, MARCH 1, 2011

                              House of Representatives,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The committee met, pursuant to call, at 9:47 a.m., in room
    2123 of the Rayburn House Office Building, Hon. Fred Upton
    (chairman of the committee) presiding.
        Members present: Representatives Upton, Barton, Stearns,
    Whitfield, Shimkus, Pitts, Walden, Terry, Rogers, Myrick,
    Sullivan, Murphy, Burgess, Blackburn, Bilbray, Bass, Gingrey,
    Scalise, Latta, McMorris Rodgers, Harper, Lance, Cassidy,
    Guthrie, Olson, McKinley, Gardner, Pompeo, Kinzinger, Griffith,
    Waxman, Dingell, Markey, Towns, Pallone, Eshoo, Engel, Green,
    Capps, Doyle, Schakowsky, Gonzalez, Inslee, Baldwin, Weiner,
    Matheson, Butterfield, Barrow, and Matsui.
        Staff present: Gary Andres, Staff Director; Michael
    Beckerman, Deputy Staff Director; Mike Bloomquist, Deputy
    General Counsel; Allison Busbee, Legislative Clerk; Howard
    Cohen, Chief Health Counsel; Marty Dannenfelser, Senior
    Advisor, Health Policy and Coalitions; Andy Duberstein, Special
    Assistant to Chairman Upton; Paul Edattel, Professional Staff
    Member, Health; Julie Goon, Health Policy Advisor; Todd
    Harrison, Chief Counsel, O&I; Sean Hayes, Counsel, O&I; Debbee
    Keller, Press Secretary; Ryan Long, Chief Counsel, Health; Jeff
    Mortier, Professional Staff Member; Monica Popp; Professional
    Staff Member, Health; Heidi Stirrup, Health Policy Coordinator;
    John Stone, Associate Counsel; Phil Barnett, Democratic Staff
    Director; Jen Berenholz, Democratic Chief Clerk; Stephen Cha,
    Democratic Professional Staff Member; Brian Cohen, Democratic
    Investigations Staff Director and Senior Policy Advisor; Alli
    Corr, Democratic Policy Analyst; Tim Gronniger, Democratic
    Senior Professional Staff Member; Purvee Kempf, Democratic
    Senior Counsel; Karen Lightfoot, Democratic Communications
    Director, and Senior Policy Advisor; and Karen Nelson,
    Democratic Deputy Committee Staff Director for Health.
        Mr. Upton. I would just note that some of the governors
    have been here in town for a couple of days. They are anxious
    to get back to their home States. We know that the airport is
    only minutes away, but because of that, we are going to be
    right on in terms of the clock, so expect a fast gavel for all
    of our members.

       OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Upton. This month marks the 1-year anniversary of the
    President's signing into law a pair of controversial health
    care bills that are transforming the way Americans receive and
    pay for health care. We convene this hearing today to hear from
    the governors about what impact the health care law has had on
    their States thus far and what they believe to be the toughest
    challenges we face in implementing the President's health care
    reform package over the coming years.
        Medicaid currently covers nearly 54 million Americans, and
    the Administration's chief health actuary has estimated that
    the Medicaid expansions included in the law could increase the
    Nation's Medicaid rolls by at least 20 million beginning in
    2014.
        While the President's health care reform package altered
    the relationship that the Federal Government has had with the
    States by requiring that States drastically expand their
    Medicaid populations, governors are also deeply concerned about
    the new unfunded mandates in the law and their impact on
    current State budgets.
        The CBO estimates that these mandates and expansions will
    cost the States at least $60 billion but the States themselves
    estimate the cost to be nearly twice as much. Today I join
    members of the Senate Finance Committee to release the first
    comprehensive analysis of what the States themselves expect to
    spend as a result of the health care law and the results are
    sobering. Even using conservative estimates, the States expect
    to face an additional $118 billion in costs through 2023 as a
    result of the law's mandate.
        Today's governors cannot afford to continue offering the
    same benefits in the same way to their existing Medicaid
    populations. However, the health care law puts them between a
    rock and a hard place. They cannot make eligibility changes in
    their options programs because the health care law freezes
    their current programs in place for years.
        This hearing will be an opportunity to hear from three of
    the Nation's most thoughtful governors. Although as governors
    you are following very different roadmaps concerning health
    care reform, I believe that you can all agree that State
    innovation and flexibility are key.
        [The prepared statement of Mr. Upton follows:]

        Mr. Upton. I yield now 1 minute to Mr. Barton.
        Mr. Barton. I thank you, Mr. Chairman, and I welcome our
    governors here, who right now are empty chairs but I am sure
    they will be here at the appropriate time.
        Mr. Barton. I am going to put my entire statement in the
    record, Mr. Chairman. Simply put, this is the same old story,
    just a new chapter. We have heard year after year that we need
    more flexibility for our Medicaid partners at the State level.
    My Governor of Texas has sent a letter that I will put in the
    record at the appropriate time, and he points out that in Texas
    alone, Medicaid is going to be 25 percent of the entire budget,
    and over the next 10 years it is going to cost an additional
    $27 billion in State matches to the Federal Government.
        So this is a very good hearing. I look forward to listening
    to the three governors today and working with all governors of
    the 50 States to try to find a solution to help maintain this
    program and continue the benefit package but also find a way to
    impact the cost curve.
        Thank you, Mr. Chairman, for the hearing.
        Mr. Upton. I yield the balance of my time to Dr. Burgess, 2
    minutes.
        Mr. Burgess. I thank the chairman and I thank the governors
    for being here. I know it is an extra effort on your part. I do
    want to thank the chairman for his commitment to listen to the
    States in this exercise because it is so critical what happens
    at the State level.
        Mr. Burgess. There are a handful of people on this panel
    that have actually seen a Medicaid patient in their
    professional careers before coming to Congress. I am one of
    those. So when I point out the massive flaws in the system, it
    is not out of a lack of compassion but precisely the opposite.
    The Federal Government created this system to care for the poor
    and poorest in society but it has really now become an empty
    promise because oftentimes it is a bait-and-switch. The
    countercyclical nature of the program encourages growth in
    times of financial excess and then you are hit with maintenance
    of effort when the economy goes bad. Those with Medicaid find
    themselves unable to access services because Medicaid pays so
    much less than comparable services. Even Medicare pays better
    than Medicaid.
        If we were to start fresh with a blank sheet of paper, what
    would it look like? Would it look like it does today? And
    really, very few of us on this side doubt that it would. Time
    after time, providers cite the lower reimbursement the
    paperwork as the two more important reasons for limiting their
    participation, and then we expanded the situation without
    improving it, so we made it worse. Here is the question: Why do
    we even still have Medicaid in 2014? The answer is, some people
    involved in the genesis of the law signed a year ago didn't
    care about how to provide the best care or how to coordinate or
    to get more people to purchase innovative insurance products.
    They needed to keep the CBO score down and that meant lumping
    everyone into Medicaid right at the last minute.
        Mr. Chairman, I thank you for your indulgence. I will yield
    back.
        Mr. Upton. I would recognize the ranking member of the full
    committee, the distinguished gentleman from California, Mr.
    Waxman, for 5 minutes for an opening statement.
        Mr. Waxman. Thank you, Mr. Chairman.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Today we will hear the views of several of the
    Nation's governors on the impact of the Affordable Care Act and
    on the Nation's critical safety net health program, Medicaid.
    Medicaid and the ACA are both partnerships between the federal
    and the State governments. We share the responsibility for
    making these programs run efficiently and serve the needs of
    the populations that depend on them. So this can and should be
    a productive dialog. But in my view, that does not include re-
    litigating the Affordable Care Act.
        ACA is already delivering important benefits: prohibiting
    insurance companies from rescinding insurance when someone gets
    sick, requiring coverage of preventive care for no cost,
    allowing young adults to stay on their parents' insurance up to
    the age of 26.
        Three new reports we are releasing today highlight the
    benefits of the new law in the States represented by the three
    governors who will be testifying. They show, for example, that
    in Utah, 1.8 million residents are already receiving consumer
    protections against the worst abuses of the insurance
    companies. In Mississippi, over 30,000 seniors have already
    saved hundreds of dollars on high Medicaid drug costs, and I
    would like to ask, Mr. Chairman, that these reports, which show
    precisely how much the Affordable Care Act will help millions
    of Americans, be included in the record.
        Mr. Upton. Without objection.
        [The information follows:]

        Mr. Waxman. The Affordable Care Act gives States a major
    role in its implementation. It allows great flexibility for
    States to run new health insurance exchanges and to continue to
    run their Medicaid programs, the subject of today's hearing.
        At this time I would like to submit for the record a
    February 3rd letter from Secretary Sebelius describing the
    flexibility that exists in the Medicaid program, and without
    objection, Mr. Chairman----
        Mr. Upton. Again without objection.
        [The information follows:]

        Mr. Waxman. It is no secret that States are having problems
    with their budgets and that the recession is a significant
    contributor. When unemployment increases, State revenues
    decline and more people rely on Medicaid and CHIP, and Medicaid
    has been working exactly as intended. Medicaid has enrolled an
    additional 6 million people during the recession, many who lost
    other forms of insurance when they lost their jobs. Medicaid is
    the final safety net for these families, but the program is
    still extremely efficient. As a matter of fact, Medicaid
    spending growth on a per-enrollee basis has been slower than
    increases in private health premiums.
        What would be helpful here is to make Medicaid a program
    that automatically corrects for recessions and disasters with
    additional federal support so States are not stretched beyond
    their means at a time of economic stress when Medicaid
    enrollment grows to help people losing their jobs or in a
    crisis.
        I want to highlight other important facts about the
    program. Medicaid covers 45 million low-income children and
    adults. It assists almost 9 million seniors and people with
    disabilities with Medicare costs. It covers 70 percent of
    nursing home residents and 44 percent of people with HIV/AIDS.
    It is the Nation's safety net program that helps those most
    severely in need. The program's benefit package responds to the
    needs of the population it serves, providing prenatal and
    delivery care, speech and occupational therapy, case management
    and community-based care that helps individuals with
    disabilities stay out of a nursing home. Medicaid offers States
    considerable flexibility in the management and the design of
    the program.
        To be clear, there are aspects of the program we can
    improve. We can reduce costs for 9 million dually eligible
    beneficiaries, low-income seniors and disabled that are
    eligible for both Medicare and Medicaid. This group accounts
    for just 15 percent of total enrollment but 39 percent of total
    Medicaid costs.
        Here is where the ACA helps the States. It establishes the
    Federal Coordinated Health Care Office to reduce the cost and
    increase the quality of care for the individuals. It
    established a Center for Medicare and Medicaid Innovation with
    a charge to identify and develop policies to improve care and
    cut costs.
        These are the changes we need to concentrate on, not
    radical changes that will add to the number of uninsured. A
    number of governors have suggested a Medicaid block grant with
    no standards for coverage or care. This idea was discredited 30
    years ago, and it will be discredited again. It will leave
    States with inadequate funding and remove the federal
    commitment to be a full partner. It will result in loss of
    coverage for the most vulnerable and severely disabled adults
    and children, people needing nursing home care, and poor
    children and families, and it will exacerbate unfair
    distributions of dollars among the States. Calls to block
    grant, cap or cut this program under the guise of flexibility
    and fiscal restraint are shortsighted.
        I hope today we can concentrate on how we can work together
    to make our programs run better, not destroy them.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Waxman follows:]

        Mr. Upton. Thank you.
        I would now recognize the chairman of the Health
    Subcommittee for 5 minutes, Mr. Pitts.
        Mr. Pitts. Thank you, Mr. Chairman.

    OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Pitts. Right now, States across the Nation are
    struggling to balance their budgets and reduce costs without
    sacrificing the quality of care for their current Medicaid
    enrollees. Many States have already made deep cuts trying to
    achieve balanced budgets. But under the maintenance of effort
    provisions in Obamacare, if a State takes any action that makes
    eligibility for Medicaid more restrictive than the standards in
    effect for the State's program as of March 23, 2010, that State
    could lose all federal funding. If States can't change their
    eligibility criteria, governors are left with little
    flexibility and few choices but to cut payments to providers or
    cut other parts of the State budget, for instance education and
    transportation, in order to maintain federal Medicaid spending.
        What does this look like for my home State of Pennsylvania?
    In an op-ed on USAToday.com, Pennsylvania Governor Tom Corbett
    today wrote, ``Pennsylvania's Medicaid program, for example,
    has seen steady, unsustainable increases in the number of
    people it serves and the cost of those services. The Keystone
    State's Medicaid budget is growing at nearly 12 percent a year,
    while the Commonwealth's general revenues have grown by just 3
    percent a year. It is a trend that simply cannot continue, but
    one that will be unavoidable as long as inflexible federal
    rules guide State policies.''
        A May 2010 Kaiser Family Foundation report found that by
    2019, Pennsylvania's Medicaid rolls may grow by an additional
    682,880 people and may cost the State an additional $2.041
    billion over the 2014-2019 time period.
        Many of our governors, including Governor Herbert of Utah
    and Governor Barbour of Mississippi, who are with us today,
    have already spoken out and asked the Secretary of Health and
    Human Services to relieve them of some of the restrictive
    healthcare-related federal mandates, including the maintenance
    of effort provisions. The responses they have received have not
    been encouraging.
        So I look forward to hearing from our witnesses today and
    learning firsthand what the impact of Obamacare will be on
    State Medicaid programs and other State health programs. I am
    also interested in hearing their ideas to provide access to
    quality care for greater numbers of people, while keeping costs
    under control.
        [The prepared statement of Mr. Pitts follows:]

        Mr. Pitts. At this time I would like to yield 1 minute to
    Dr. Gingrey of Georgia.
        Mr. Gingrey. Thank you for yielding.
        New CBO numbers on Obamacare out in the news are definitely
    not good. Costs have increased by $460 billion in just 2 years
    and State Medicaid costs rose by 300 percent from $20 billion
    to $60 billion. Can States reform their programs or do a better
    job of screening out individuals who don't belong in the
    program in order to deal with these crushing costs? No, they
    can't. Obamacare expressly forbids them from making eligibility
    changes that might remove people who are illegally in the
    program until at least 2014. Well, can States afford to wait
    until 2014? Rhode Island sure can't. The city of Providence
    just sent termination letters to every single teacher it has,
    2,000 in all, in order to give themselves as much budgetary
    flexibility as possible. In fact, 34 States and the District of
    Columbia have already cut K-12 education programs and 40 States
    have cut higher education over the last year due to budgetary
    problems.
        So today this country is forced to stare at an inconvenient
    question: How can our children compete in the global economy
    without a quality education? President Obama has often said
    that we need to stick with this health reform proposal because
    it lets children up to age 26 stay on their parents' insurance
    policy. Well, Mr. President, when your economic policies make
    our college graduate children less likely to find a good job,
    they are going to need to stay on their parents' health policy,
    and I yield back.
        Mr. Pitts. I yield at this time 1 minute to Ms. Blackburn
    of Tennessee.
        Ms. Blackburn. Thank you, Mr. Chairman. Welcome to our
    witnesses.
        Our chairman mentioned that the States were expecting the
    cost to be twice what the Federal Government had estimated. I
    would like to make everyone aware, we have had a test case for
    Obamacare. It was in the State of Tennessee. It was called
    TennCare. Costs were not twice what were estimated, they were
    four times what were estimated.
        Mr. Chairman, our former Governor, Phil Bredesen, had a
    great article in the Wall Street Journal on this. I would like
    to submit it for the record, as well as ``A history ignored''
    by Edward Lee Pitts from World magazine. This lays out what
    happens. TennCare ate up 35.3 percent of the State budget
    before it was addressed. There was no more money for higher ed,
    no more money for education. If you want a program that is
    going to eat up every dollar and is too expensive to afford,
    this is it.
        I am looking forward to talking with our governors.
    Governor Patrick, looking forward to what you have to say about
    a failed program in your State, Massachusetts Care. Yield back.
        Mr. Upton. The chair will recognize for an opening
    statement the gentleman from New Jersey, Mr. Pallone, for five
    minutes.
        Mr. Pallone. Thank you, Mr. Chairman.

    OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Today we meet again as our Republican
    colleagues continue their assault on the Affordable Care Act
    and the many positive benefits it offers Americans nationwide.
    The specific focus on Medicaid in this hearing has little to do
    with our newly enacted health reform legislation. It is simply
    an extension of Republicans' decades-long interest in
    undermining and ultimately dismantling the Medicaid program.
        I point out that under Democratic leadership, the previous
    Congress understood the dire straits States were facing and
    granted significant federal relief through the Recovery Act to
    ensure that our safety-net programs could operate as they were
    designed to: to provide Medicaid coverage for vulnerable
    Americans when they need it most.
        And this certainly should be contrasted with the recently
    passed Republican Continuing Resolution which achieves nearly
    one-third of its budgetary spending cuts by reducing critical
    aid for State and local governments. It is no surprise to
    anyone that the Medicaid rolls are expanding right now when the
    economy is contracting. Medicaid often expands and vice versa.
    In challenging economic times, if unemployment increases and
    incomes drop, fewer people receive health insurance from their
    places of employment and more individuals meet the eligibility
    requirements for Medicaid coverage.
        Now, we have been hearing a lot about the need for
    flexibility in the Medicaid program. States already have broad
    latitude to design their Medicaid programs after meeting
    minimum health care coverage benchmarks. They may also apply
    for section 1115 Medicaid waivers to amend the program even
    further. But the flexibility my Republican colleagues seek
    seems more directed at destroying the Medicaid program than
    strengthening it. Block granting Medicaid is no panacea for
    States. It would threaten the fundamental tenet of the Medicaid
    program that it can expand and contract according to need. By
    changing the federal component of Medicaid from a fixed
    percentage to a fixed dollar amount, States could be left
    holding the bag with much higher bills in times of economic
    crisis. It could be truly catastrophic both for States and for
    the citizens who desperately require medical assistance.
        And we should also be wary of proposals to raise cost
    sharing and copayments on low-income and working families in
    Medicaid. Numerous studies, including one conducted by Rand
    Health, found that even nominal copayments lead to a much
    larger reduction in the use of medical care by low-income
    adults and children and seriously compromise access to needed
    health care.
        There are a lot more thoughtful ways to harness the costs
    of Medicaid than what our colleagues on the other side are
    proposing. The Affordable Care Act advances a commonsense
    philosophy regarding shared responsibility among individuals,
    employers, the federal and State government. The Medicare
    maintenance of effort to protect access to health care for the
    most vulnerable is the State's responsibility in the near term
    until full health reform is reached in 2014. After that, 100
    percent of the costs of the Medicaid expansion included in
    health reform will be borne by the Federal Government and then
    phased down to 90 percent in 2020.
        Furthermore, the Affordable Care Act enacted meaningful
    Medicaid reforms which slow the growth of health care costs for
    both States and the Federal Government. It promotes Medicaid
    demonstration projects that institute delivery system reform
    and finance State efforts to establish medical homes in
    Medicaid, which will improve care for those with substantial
    health needs. We also give the Federal Government and the
    States important new tools to fight fraud in Medicare,
    Medicaid, SCHIP and the State health insurance exchanges.
        We need to think carefully about the profound devastation
    some of the Republican proposals on Medicaid would have on
    working families and the State health agencies that serve them.
    I have been here for a long time, and it is almost every year
    we see another proposal by the Republicans to dismantle
    Medicaid. They don't like Medicaid. I know that. But the bottom
    line is that Medicaid has been a much-needed lifeline for the 6
    million people that enrolled in the program during this
    recession, many of whom did lose employer-sponsored health
    insurance.
        I have a minute left, Mr. Chairman. I would like to yield
    that to the gentlewoman from Wisconsin, Ms. Baldwin.
        Ms. Baldwin. Thank you, Mr. Chairman.
        Right now across the country and particularly in my home
    State of Wisconsin, we are seeing the effect of unfortunate
    attacks by some of our Nation's governors on the values we hold
    dear. I am sorry that Wisconsin's Governor, Scott Walker,
    declined the Majority's invitation to be on this panel today.
    Governor Walker's budget adjustment bill would not only strip
    away workers' rights, it would also gut Wisconsin's Medicaid
    program. It violates Wisconsin's proud tradition of providing
    comprehensive health coverage for our most vulnerable citizens
    by potentially eliminating insurance coverage for 63,000
    parents and 6,800 adults and reducing coverage for current and
    future enrollees.
        But Governor Walker's dangerous budget plan is also
    fiscally irresponsible. While Walker has offered his proposal
    under the guise of repairing the State budget and saving money,
    the proposed Medicaid provision would not yield any savings
    this year. Instead, the plan would put the State at risk for
    losing billions of dollars in Medicaid funding at a time when
    it can least afford to lose this funding.
        I stand in solidarity with my fellow Wisconsinites who have
    taken to the streets to oppose State plans that threaten the
    health, education and safety of the people of our great State.
        I yield back.
        Mr. Upton. The gentlelady's time has expired.
        At this point a quick thing. It is my understanding that
    the Democratic Steering and Policy Committee has approved Donna
    Christensen to be back with us, and even though the full caucus
    has not approved it yet, we welcome her back and we will view
    her as a member of the committee for all intents and purposes
    this morning, without objection.
        I now recognize the following gentlemen for 1 minute each
    to introduce their governors: Mr. Matheson, Mr. Markey and Mr.
    Harper. Mr. Matheson.
        Mr. Matheson. Thank you, Mr. Chairman, for holding this
    hearing today.
        I want to extend a thank you to my governor, Governor
    Herbert, for providing Utah's experiences with reforming our
    health care system. As many on this committee probably know,
    Utah is one of the few States that took the initiative before
    enactment of health care reform at the federal level to tackle
    reforms to our health care system at the State level. One in
    particular was the establishment of a health insurance exchange
    in Utah. Our State's experience can certainly testify to the
    flexibility States need in order to implement this law.
        I appreciate Governor Herbert's participation at today's
    hearing. I want to extend him a warm welcome to our committee
    and look forward to his testimony and insight.
        I yield back.
        Mr. Markey. It is my pleasure to welcome Governor Deval
    Patrick from the great Bay State here to Washington.
        In 2006, Massachusetts trailblazed the path for the health
    care reform we would see here on Capitol Hill just a few years
    later. Our outstanding governor has been the driving force
    behind successful implementation of the Massachusetts law.
        In November of 2010, he was overwhelmingly reelected to a
    second term. Under his watch, an astounding 98 percent of
    Massachusetts residents and 99.8 percent of our children now
    have good, dependable health insurance. No other State comes
    close.
        Just recently, Governor Patrick proposed new legislation to
    lower health care cost without cutting into our residents'
    quality of health care or access to services. His legislation
    focuses on quality of health care services over quantity,
    encouraging providers to better coordinate care for their
    patients. This means lower costs and healthier patients. Our
    experience in Massachusetts shows that far from being one size
    fits all, health care and reform efforts provide States with
    wide latitude.
        I can't think of a better person than Governor Patrick to
    join us this morning to highlight the great work we have done
    in Massachusetts, and I look forward to his testimony. It is
    our honor to have you with us here this morning, Governor.
        Mr. Harper. I am honored to introduce one of today's
    witnesses, Governor Haley Barbour of Mississippi, who has made
    the tough decisions in Mississippi to make sure that we have a
    balanced budget, money in the bank, and has been a true leader
    on energy issues in this country. Governor Barbour has promoted
    a healthier Mississippi by supporting Let's Go Walking,
    Mississippi, along with First Lady Marsha Barbour. The program
    is discussed in schools across the State to show kids the
    importance of exercise and healthy meals.
        Governor Barbour has worked diligently to protect the
    solvency of Mississippi's Medicaid program by controlling cost.
    Under his leadership, Medicaid changed its prescription drug
    program to better utilize generic drugs instead of more
    expensive brand-name drugs. He also promoted annual physicals
    for Medicaid beneficiaries to detect health problems early by
    checking them for diabetes and high blood pressure and making
    sure they are taking the right medications.
        But to truly understand Governor Haley Barbour, look no
    further than what happened in the aftermath of Hurricane
    Katrina to see what his leadership was about, what he and First
    Lady Marsha Barbour did. They didn't wait around, Governor
    Barbour didn't wait for somebody to come help him. He didn't
    wait for others. He didn't sit around and complain. He simply
    rolled his sleeves up and went to work, and the rest of America
    got to see what it takes to be a great leader.
        Governor Barbour, we are honored to have you today.
        Mr. Upton. Thank you.
        Governors, welcome. Take your seat at the table. We
    appreciate you submitting your testimony in advance. At this
    point we will recognize each of you for 5 minutes each, and we
    will begin with Governor Herbert from Utah. Welcome.

     STATEMENTS OF GARY R. HERBERT, GOVERNOR, STATE OF UTAH; DEVAL
      PATRICK, GOVERNOR, COMMONWEALTH OF MASSACHUSETTS; AND HALEY
                BARBOUR, GOVERNOR, STATE OF MISSISSIPPI

                      STATEMENT OF GARY R. HERBERT

        Mr. Herbert. Well, thank you, very much. Good morning. I am
    Gary Herbert, Governor of the State of Utah. I would like to
    thank Congressman Upton and other members of the committee for
    your invitation to testify here today.
        Let me begin by stating that I am a firm believer in the
    principles of Federalism embodied in the 10th Amendment. A
    balance of powers between the States and the Federal Government
    is not only right and proper, but essential to finding
    solutions to the complex problems we face today.
        Justice Louis Brandeis famously described States as
    laboratories which can engage in ``novel social and economic
    experiments without risk to the rest of the country.''
        In Utah, we began our health system reform efforts 5 years
    ago, long before the Patient Protection and Affordable Care Act
    arrived on the scene. The lessons we have learned in our
    experiments in health system reform can serve as a guide to
    other States as they begin their own reform efforts.
        The Federal Government has taken the opposite approach with
    a one-size-fits-all decree. The governors, the very people
    responsible for shoehorning the details of this decree in our
    agencies and budgets, were never invited to the table to give
    our input or asked for our opinions when the act was proposed
    by the Obama Administration or debated in Congress. I find that
    frankly unconscionable.
        The States can and should find their own solutions tailored
    to their own unique circumstances. In Utah, for example, a
    majority of Utah's uninsured population are employed. Most work
    for small businesses that do not offer health insurance
    benefits. Utah also has the youngest population in the country.
    Many of our uninsured are the so-called ``young immortals'' who
    have deemed traditional health insurance coverage to be either
    unnecessary or too expensive.
        In order for health systems reform to be effective in Utah,
    we had to respond to the needs of our small businesses and
    their employees. As part of our health system reform efforts,
    Utah small businesses have the option of using a defined
    contribution model. This model allows employers to manage and
    contain their health benefit expenditures.
        With the creation of the Utah Health Exchange, Utah
    employees also benefit from expanded access, choice and control
    over their health care options. Employees can now purchase one
    of more than 100 plans currently offered through the exchange.
        Our figures also show that 20 percent of businesses
    participating in the Utah Health Exchange are offering health
    benefits for the first time.
        Just as Henry Ford offered his first customers a choice of
    any color car they wanted as long as they chose black, the
    Affordable Care Act allows States flexibility in implementing
    the act as long as they do it the way Washington tells them.
        Another challenge for Utah is our increasing financial
    obligation for Medicaid. Even before the Affordable Care Act,
    Medicaid was already a large and growing part of the Utah State
    budget. In the 1990s, Medicaid took 9 percent of our general
    fund. In fiscal year 2010, it was 18 percent. By fiscal year
    2020, it is estimated to exceed 30 percent of my general fund
    budget, and that is without the federally mandated expansion of
    the Affordable Care Act.
        I have come to Washington to present solutions to help ease
    the burden on our State. First, I call upon the Administration
    to support an expedited appeals process to the Supreme Court
    for the health care litigation. States cannot be left with
    uncertainty in regards to the implementation of this act.
        Second, I ask Congress to gives States flexibility to find
    health care solutions based on each State's unique needs, and
    third, we have also proposed specific solutions for reform.
    These reforms will require that the Center for Medicare and
    Medicaid Services support our waiver requests.
        In the interest of time, I have included details of our
    recommendations in my submitted testimony but I will highlight
    just one example here today. In our efforts to be more
    innovative and efficient, we developed an approach which uses
    paperless technology to communicate with our Medicaid clients,
    reducing costs by the State of Utah as much as $6.3 million a
    year. With this flexibility in this one area alone, we estimate
    that all the States adopting this technology could save between
    $600 million and $1 billion per year.
        Communicating by e-mail seems like a no-brainer. However,
    we waited for 8 months to hear from the Federal Government.
    When we did hear something, it was a denial, and in a bitter
    irony, the denial came by e-mail. Interestingly, when I raised
    the issue with President Obama just yesterday, I later received
    this note from Secretary Sebelius letting me know that we could
    now in fact proceed with a paperless process. While I
    appreciate this positive response, and I do, I have to ask
    myself two questions: first, why did it take a personal
    conversation between a governor and a President of the United
    States to resolve this simple issue, and second, and even more
    important, why do we even have to ask for permission to make
    this logical cost-saving improvement?
        For me, the situation illustrates what is wrong with the
    current partnership between the States and the Federal
    Government: a partnership that is one-sided and puts the States
    in a subservient role.
        In conclusion, I emphasize again that real health care
    reform I believe will rise from the States, the laboratories of
    democracy, not from the one-size-fits-all approach imposed by
    the Federal Government. From the days of our pioneer
    forefathers, Utahans have been finding Utah solutions to Utah
    problems. I am here today to assert our right and our
    responsibility to continue to do so. Thank you.
        [The prepared statement of Mr. Herbert follows:]

        Mr. Upton. Thank you.
        Governor Patrick.

                       STATEMENT OF DEVAL PATRICK

        Mr. Patrick. Thank you very much. Mr. Chairman, Mr. Waxman,
    to all the members of the committee, thank you for the
    opportunity to be here today. Thank you, Congressman Markey,
    for the warm welcome and generous introduction. I am looking
    forward to discussing with you the impact on the States of the
    Patient Protection and Affordable Health Care Act and the next
    steps in implementing national health care reform. And thank
    you in advance, Mr. Chairman, for your understanding about my
    having to leave by 11:30 to catch a plane to get back home.
        In the interest of time and with your permission, I will
    simply submit for the record the written testimony that we have
    provided and offer a shorter statement now.
        As many of you know, the Affordable Care Act enacted last
    year is modeled in many respects on our reform measure in
    Massachusetts enacted in 2006. Our experience with our own
    reform in Massachusetts may forecast what other States may
    expect from national health care reform in a couple of
    respects.
        Today, thanks to effective implementation of our 2006
    reform legislation, more than 98 percent of Massachusetts
    residents have health care coverage today including 99.8
    percent of our children. As the Congressman said, we lead the
    Nation in both categories. More people are getting preventive
    care instead of waiting until they have to go to the emergency
    room. Workers and their families no longer have to worry about
    a catastrophic illness forcing them into bankruptcy or being
    denied coverage because they are already sick. We have not had
    the problem of crowd out where companies have abandoned
    insurance plans for their employees in favor of publicly
    subsidized plans. In fact, the percent of private companies
    offering health insurance to their employees has increased from
    70 percent before the bill was passed to 76 percent today.
        We paid for expanded coverage just as we said we would: by
    delivering more care in primary care settings than in emergency
    rooms. In 2005, Massachusetts paid over $700 million for health
    care for the uninsured and underinsured. In 2010, we spent $405
    million, nearly $300 million less. With 98 percent of our
    residents covered, universal coverage has increased State
    spending by about 1 percent of our total State budget. Overall,
    Medicaid represents 32 percent of annual State spending today
    and has grown about 2.7 percent per capita since our reforms
    were enacted.
        Ours is a hybrid solution. Like the Affordable Care Act, it
    emphasizes private insurance purchased in the open market at
    competitive prices and service delivered by private clinicians.
    People choose their own doctors.
        We still have challenges, of course. For example, even with
    the highest per capita ratio of primary care physicians to
    residents in the country, there are not enough primary care
    physicians. The wide variance in the reimbursement rates at
    provider hospitals is another challenge. But these are
    challenges all over the country. The point is, that in
    Massachusetts we stopped limiting our thinking to the same old
    two choices between a perfect solution or no solution at all.
    We chose to try something and we moved, and it has worked.
        The process of developing our reform measure is something I
    am proud of too and I just want to touch on very briefly. Then-
    Governor Mitt Romney, a Republican, working together with a
    Democratic State legislature, a Democratic United States
    Senator, Ted Kennedy, and a broad coalition of business and
    health care leaders, labor, patient advocates, came together to
    invent our reform bill and then stuck together to adjust it as
    we have gone along and to refine it. That bill was an
    expression of shared values of our belief that health care is a
    public good and that everyone in Massachusetts deserves access
    to it.
        So for Massachusetts, the Affordable Care Act is familiar.
    Like our law, it improves health security for all our citizens.
    It takes a hybrid approach that leverages the best of
    government, nonprofits and private industry, and with President
    Obama's leadership, it was developed and supported by a broad
    coalition of stakeholders and advocates who understood that our
    public health and economic competitiveness demanded action.
        The Affordable Care Act is also cost-effective. According
    to the Congressional Budget Office, the act will reduce the
    federal deficit by $124 billion through 2019 and by more than
    $1 trillion in the subsequent decade. So national health reform
    is an important piece of a responsible plan to improve our
    fiscal outlook for the long term.
        Based on our experience at home, national health reform is
    also good for our economic competitiveness. Matt McGinity, the
    CEO of a small technology company in Natick, a town outside of
    Boston, bought health insurance through a program created by
    the Commonwealth Connector, which is our version of a health
    exchange. The program, called Business Express, is an online
    service to help small businesses easily shop for private health
    care and find the best possible value. Using Business Express,
    Matt was able to compare health plans side by side and avoid a
    23 percent premium increase his current insurer was proposing.
    He and his employees saved $9,300. Now, that may not seem like
    much to many of you here but it is meaningful to Matt's company
    and to thousands of small businesses like it in our home State
    of Massachusetts.
        I met a young entrepreneur recently who moved his business
    up to Massachusetts from Florida--I hope I am not upsetting
    anyone here from Florida in saying this--because with a young
    family he wanted to be able to start his venture without
    worrying that his children would not have health insurance. In
    other words, universal coverage has helped our competitiveness.
        So I see my time is up. Let me just wrap up, and I hope we
    can get to what I feel is the nub of the issue, which is cost
    control, and cost control is a challenge all over the country
    in places that have a universal system and in those that don't,
    130 percent premium increases over the last decade. We have
    some strategies that we have put in place and that we are
    pursuing in Massachusetts to get at that nationwide issue, and
    frankly, there are some elements of the Affordable Care Act
    that help us in that regard as well, and I look forward to your
    questions. Thank you very much, Mr. Chairman.
        [The prepared statement of Mr. Patrick follows:]

        Mr. Upton. Thank you.
        Governor Barbour, welcome.

                       STATEMENT OF HALEY BARBOUR

        Mr. Barbour. Mr. Chairman and members of the committee,
    first of all, thank you for asking. The first thing we want to
    say is thank you. When they were doing the Affordable Care Act,
    there was a big meeting at the White House of Members of
    Congress from both parties, and there were no governors, and so
    thank you to the committee, both Republicans and Democrats, for
    asking governors what we think.
        I would like to associate myself with Governor Herbert's
    request that the cases from Florida and Virginia on the
    constitutionality of the federal act be expedited. It is in our
    interest to know the answer sooner rather than later, and the
    thing we fear the most is conflicting opinions from different
    circuits. We have already seen conflicting opinions at the
    district court level. Conflicting opinions from different
    circuits would just compound that problem. So for those of you
    who have any influence on that, we would like to get that
    question answered sooner rather than later.
        I am delighted to be here with my friend Deval Patrick.
    Massachusetts has a State health insurance program that they
    are obviously happy with, and we think that is their right, and
    when Senator Kennedy and Governor Romney and then Governor
    Patrick, if that is what Massachusetts wants, we are happy for
    them. We don't want that. That is not good for us. We don't
    want that. We don't want community rating. We don't want
    extremely high mandatory standard benefits packages. So the
    point I am trying to make is, different States have different
    problems, we have different ideas, and while you may not
    believe it, some politicians obviously who act like you all
    love our constituents more than we do, believe it or not, we
    love our constituents as much as you all do and we want to do
    right for them but we want to do what we can afford and can
    sustain.
        Medicaid is the second biggest item in my budget after
    education. We spend about 63 percent of the State budget on
    education, and Medicaid is the next biggest thing. However,
    Medicaid's growth before I was Governor, it was growing at 16-
    1/2 percent a year and we were cutting our community colleges
    and cutting our universities because the money was having to be
    diverted to Medicaid.
        In my 7 years as Governor, we have reduced Medicaid
    expenditure growth to 4 percent. We have not changed
    eligibility with one exception. The people who we used to give
    pharmaceuticals through the Medicaid program who are dual
    eligibles now get their pharmaceuticals through Part D. So in
    full disclosure, I want to say that. The reason I do is because
    of this, because we have got the flexibility to do it, we
    reduced our pharmaceutical program's cost from $697 million
    annually to $279 million, a 60 percent reduction. A little bit
    of that came from Part D but primarily by going to generics. We
    are 78 percent generic now and the meds are great for people.
    If somebody has to have a brand name, we do that.
        Flexibility to do that kind of stuff is critical for us.
    That is what we need. One of the things we were allowed to do
    my first year is, our Medicaid roll had gone from 510,000 to
    750,000 in 4 years. Forgive me for thinking maybe that wasn't
    the way it should have been. So we found out that the previous
    administration had not followed the federal rule that you have
    to require people to reestablish their eligibility annually.
    They weren't doing that. We require our beneficiaries to
    reestablish their eligibility annually in person, and a lot of
    people who probably had once been eligible for Medicaid but
    weren't anymore didn't come to try to requalify. We make
    exceptions for people in nursing homes, for disabled children,
    for people who are homebound because they are sick, but this is
    a benefit on average that is worth somewhere between $6,000 and
    $7,000 and we don't think it is a burden once a year to go to
    one of about 70 places just to reestablish your eligibility for
    this program. We do that for everybody.
        What we would like is the ability while they are there to
    mandate that they take a physical. We offer at this meeting
    every Mississippi Medicaid beneficiary a health assessment, and
    hardly any of them take us up on it. We would like to be
    allowed, and we don't think we ought to have to ask for
    permission to make that mandatory. But there are a lot of
    things you have to get permission to do. Waivers are a problem
    you will hear from many people but I want to tell you, State
    plan amendments can be just as big a problem. We have a State
    plan amendment where they met the 180-day requirement to
    approve our State plan amendment but then it took them a year
    to approve the contract that was going to be part of the State
    plan amendment. That doesn't help.
        Let me just make one other point about this, and I know my
    time is up but I think it is important. We have $7 million in
    Medicaid that comes from fines paid by nursing homes that had
    some violation. We have to get CMS's permission to spend that.
    We asked for permission to spend it to build a facility for the
    20 to 25 very sick children, typically vent patients, that
    right now we have to put in the hospital, very expensive care,
    or send them out of State because the regular nursing home is
    really not set up to have 79 senior citizens and one 5-year-
    old. We were told well, you can do that if you remodel an
    existing building but you can't do it if you build a new
    building on our University Medical Center State hospital
    campus. Those kinds of things, we should not be required to ask
    permission to do those kinds of things, whether it is to save
    money or provide better care.
        My time is up and I would be glad to take any questions.
        [The prepared statement of Mr. Barbour follows:]

        Mr. Upton. Thank you all. We will ask questions alternating
    between sides until you all have to get on your planes to go
    back again. We appreciate you being here.
        Governor Herbert, you mentioned that in Utah you have
    nearly 100 different exchanges that folks are able to
    participate in. Has your State examined how any of those would
    still be around when the Affordable Care Act would be fully
    implemented?
        Mr. Herbert. Well, it is uncertain. The hope is that we
    would be able to maintain our exchange even during the
    implementation of the Affordable Care Act as part of the
    discussion right now for States to do their own exchange or the
    Federal Government will come in and do one for you. I think
    that because we got an early run on this that we are probably
    going to be able to maintain. We have 100 plans and a number of
    different providers, and it is growing, and small businesses
    for the first time are finding a way to provide a benefit
    package of health care.
        So our exchange is working the way we thought it would
    work. It has only cost us about $500,000 to $600,000 to set it
    up, and so we only have about three people on staff that are
    running it. So it is a very different approach than Governor
    Patrick's, and I am not saying it is the approach, it is an
    approach, and I would just echo what Governor Barbour said. You
    know, all States ought to have opportunities to find the
    solutions to the problem and so ultimate flexibility is
    probably what we need, and I think we will find solutions to
    the health care issue that represent the demands and needs of
    our own respective States.
        Mr. Upton. Now, as I understand it, many of your plans are
    health savings accounts, HSAs. Does your State anticipate
    seeking a waiver to try and keep those alive then?
        Mr. Herbert. We don't have health savings accounts that
    have been put into place or at least in any dramatic form right
    now with our health exchange. What we have provided really is a
    defined contribution as opposed to a defined benefit where the
    small business people now can identify how much money will you
    put towards health care. Then the consumer takes that money,
    goes to a portal of information and then shops for whatever is
    best for them in their own individual interest, and it
    introduces private competition as people search for their
    business and try to compete, and it puts the consumer in
    control of that money, and so it is similar to health savings
    accounts. It allows the consumer to spend the money as they see
    fit as opposed to how the insurance company sees fit or the
    business sees fit. There is not a third-party purchaser now and
    it is not a one size fits all for the individual.
        Mr. Upton. Last question. Governor Herbert, Governor
    Barbour, as you look at expanding the Medicaid population up to
    138 percent, how is your State going to be able to pay for your
    State's share of that expansion?
        Mr. Herbert. Well, again, the eligibility requirement going
    up is going to cost my State an additional $1.2 to $1.3 billion
    over the next 10 years, and for a State the size of Utah, that
    is real serious money, and the only way we can afford to do
    that is, we are going to have to cut from some other program,
    whether it be education or health and human services and other
    areas of transportation needs that we have in a fast-growing
    State or raise taxes, which will probably have a dampening
    effect on our fragile recovering economy. So the options are
    not good for us with that request.
        Mr. Upton. And Governor Barbour, how would you respond to
    that?
        Mr. Barbour. It is going to take a very big tax increase.
    The federal act would require us to increase the rolls by about
    two-thirds from about 600,000 people, 20 percent of our
    population, to a million, a third of our population, and
    because the costs are back-loaded, you know, the first few
    years there is very little cost, a billion three to a billion
    seven over 10 years, but by year 10, it will be $443 million is
    the estimate. Four hundred and forty-three million dollars is a
    gigantic increase in our taxes but that is what it would cost
    us.
        Mr. Upton. Yield the balance of my time to Mr. Guthrie.
        Mr. Guthrie. Thank you, Mr. Chairman. Thank you for
    yielding. That is the question I was going to go for.
        Just 3 years ago, I was a State legislator trying to make
    the budget balance, and if you looked at Kentucky's pie,
    Medicaid kept getting a bigger piece of it, and we had to take
    it out of higher education. Tuition rates are higher, other
    things are higher in Kentucky because of the growth of
    Medicaid, and now Governor Beshear has said essentially what
    you said. He said, ``I have no idea how we are going to pay for
    it.'' That is a quote. And what is this going to do to
    education or other issues? I know Governor Herbert touched on
    it a little bit but Governor Barbour, alphabetically we can
    go--I just have a few seconds but what this is going to do to
    your State budgets if we don't give you----
        Mr. Barbour. Because we can't run a deficit, we either have
    to raise taxes or cut spending for other things or more likely
    do both.
        Mr. Guthrie. Governor Herbert?
        Mr. Herbert. Our increase, as I think I had mentioned
    earlier, is that for us it will be a 50 percent increase in
    Medicaid eligibility. So it is a dramatic increase in our
    budget, and again the $1.2 to $1.3 billion additional cost has
    got to come from someplace. Either you raise taxes or you cut
    services. It is that simple. And as a State legislator, you
    know the challenge that is. We are all having challenges with
    our budgets today. It is a very difficult time and this just
    adds to the problem.
        Mr. Guthrie. Does it affect Massachusetts differently,
    Governor?
        Mr. Upton. Excuse me. My time is expired. I would yield to
    the ranking member of the full committee, Mr. Waxman, for 5
    minutes.
        Mr. Waxman. Thank you, Mr. Chairman. Thank you, Governors,
    for your testimony.
        It seems to me in both your oral presentation and your
    written testimony there are some common themes that I think we
    all can agree on. We must continue to make Medicaid a better
    program. By innovating, we can provide better quality of care
    while also reducing costs, and I think we need to work together
    to achieve that goal.
        But we also know nationally that certain populations have
    greater health care needs than others. Children are half of
    Medicaid's beneficiaries but they are only 25 percent of the
    cost. Adults including pregnant women make up 23 percent of
    beneficiaries but 13 percent of the cost. Individuals with
    disabilities make up 19 percent of the population but 44
    percent of the cost, and seniors make up 10 percent of the
    beneficiaries but 23 percent of the cost, and this is the same
    for all three of your States. Children and adults make up the
    largest share of the Medicaid enrollees but they are only a
    fraction of the cost. That is why it doesn't make sense to cut
    back eligibility for adults and children.
        First, cutting back eligibility for adults and children
    will save the State some money but not very much because these
    populations are not where the money is. Secondly, uninsured
    low-income kids and adults use the emergency rooms more than
    they would if they were insured and had a source of primary
    care. But the real problem is that the cost of that care is now
    going to be shifted to the emergency room, the physicians that
    staff it, the hospitals that operate it, or onto the people
    themselves who won't be able to get the services. The costs,
    like the people, don't just disappear once eligibility is
    terminated. They are just taken off the federal and state
    treasuries and shifted onto local community hospitals,
    physicians. That is really inefficient and unfair.
        So where is the money in Medicaid? Over half of the
    spending is for seniors and the disabled, and cutbacks on the
    disabled and seniors are unthinkable as these are some of the
    most vulnerable and medically needy in our society. So I have
    come to the conclusion we have to be smarter, we have to do
    things better, and under the Affordable Care Act, we can. For
    example, under the Affordable Care Act, we are already helping
    States and providers create demonstrations to structure and
    implement new delivery models to reduce costs and improve care
    for the dual eligibles, as Governor Barbour pointed out. That
    is the most expensive population of seniors and disabled.
        Governor Patrick, I heard you touch on delivery system
    reform in your opening statement. Can you talk about why you
    decided that expanding coverage and improving the quality of
    care are the right direction for us to move in as opposed to
    cutting back on eligibility?
        Mr. Patrick. Thank you for the question, Congressman. First
    of all, I just wanted to say that as we have implemented and
    expanded coverage, our universal plan over the last 4 years, we
    have also increased spending on public education every single
    year to the highest level in the history of the Commonwealth
    because that is another values choice that we have made.
        And for us, the discussion about whether to try to insure
    everyone or not is a question about what kind of Commonwealth
    we want to live in, and I would suggest that the discussion
    about how to do that nationally is also about what kind of
    country we want to live in. The question of cost is a question
    that is with us, that is facing small businesses and working
    families whether we have Affordable Care Act or not, whether we
    have Medicaid or not, and that is what we have focused on. That
    is our next chapter in health care reform, and frankly, we get
    some tools through the Affordable Care Act to help us with
    that.
        It turns out--and I would be interested--I know I am not
    supposed to be asking the questions but Dr. Burgess, I wonder
    if this----
        Mr. Waxman. Please don't.
        Mr. Patrick. What is that?
        Mr. Waxman. Please don't because I only have limited time.
    But your idea is to hold down costs by innovating in the
    delivery system----
        Mr. Patrick. Exactly.
        Mr. Waxman [continuing]. Not cutting people out of the
    program.
        Mr. Patrick. Exactly.
        Mr. Waxman. Now, Governor Herbert----
        Mr. Patrick. I was just going to say that what we have
    learned from clinicians, from medical professionals is that
    more integrated care is actually better care for the patient in
    terms of quality but a lower-cost care as well, and so
    realigning the incentives so that we are paying for quality of
    care rather than quantity of care is where we are trying to
    move now.
        Mr. Waxman. Thanks.
        And Governor Barbour, I have a quick question to ask you.
    We have some areas of agreement as well, support for medical
    homes, which is also authorized by the Affordable Care Act, but
    I want to focus on the eligibility cuts right now. You promoted
    the idea of flexibility that would allow you to cut
    eligibility. So my question for you is the following. Do you
    intend to cut eligibility for the inexpensive adults and
    children, possibly flooding your emergency rooms, without
    reducing the cost substantially, or do you plan to cut off
    seniors and the disabled since that is where the bulk of the
    Medicaid spending is?
        Mr. Barbour. Thank you, Congressman Waxman, for asking. As
    I said in my testimony, I reduced the cost increase of Medicaid
    from 16\1/2\ percent per annum to 4 percent. We didn't do it by
    changing eligibility except when the Federal Government set up
    Medicare Part D, there was no reason for us to have a
    pharmaceutical program anymore to duplicate that. It is a very
    small part of the savings.
        You are right. Children cost us about 1,000 bucks a year.
    Our average beneficiary costs us between $6,000 and $7,000 a
    year. That is where the savings are. The savings are in
    managing. We can give these people better care at the same time
    but we shouldn't have to come up here and kowtow and kiss the
    ring to get the permission from Washington to do that to try to
    help our people. That is what we are saying. And sir, we would
    be willing to make this deal with you: Give us a block grant
    with total flexibility and we will say limit the increase in
    our FMAP payment to half of the national average, whatever it
    is, and we will take that in a heartbeat.
        Mr. Waxman. Thank you.
        Mr. Upton. The chair recognizes the gentleman from Texas,
    Mr. Barton, for 5 minutes.
        Mr. Barton. Thank you, Mr. Chairman. It is good to have you
    three governors here. This is kind of deja vu. We did this 6 or
    7 years ago. Governor Barbour was a big part of that at the
    time.
        We have a new governor down in Georgia, Nathan Deal, who is
    a former subcommittee chairman of the Health Subcommittee of
    this committee, and when he was subcommittee chairman and I was
    full committee chairman, we passed an amendment that gave the
    States the right to actually verify eligibility, verify
    citizenship. We didn't say that States couldn't cover illegal
    aliens but we said if you wanted to restrict your benefits for
    Medicaid to U.S. citizens or legal residents, we gave you the
    right to do that. Our friends on the Democrat side changed that
    verification program to basically self-affirmation: if you say
    you are eligible, you are eligible. Governor Barbour, would one
    reform of Medicaid that we should consider be going back and
    giving States the right to actually verify citizenship before
    their extended Medicaid benefits?
        Mr. Barbour. Yes, sir.
        Mr. Barton. Governor Herbert, what is your----
        Mr. Herbert. Absolutely. I think that would just make
    sense.
        Mr. Barton. Governor Patrick?
        Mr. Patrick. I think we do it already.
        Mr. Barton. You think you do it already? Well, I would like
    to see your program then because if you do, you are the only
    State in the Nation that does, so I appreciate that.
        There has been quite a bit of talk in the last Congress of
    States beginning to opt out of Medicaid because it just gets
    too expensive. What would the tipping point be if we don't
    change the current health care law? Where would States begin to
    seriously think about opting out? At what point in their
    budget? In Texas, for example, 25 percent of the State's budget
    is for Medicaid. In some States it is higher than that and in
    some States it is lower. Do the governors have a taskforce on
    this issue, and if so, what discussion has been about where
    States begin to seriously think about opting out? Again, we
    will start with Governor Barbour and just go right down the
    line.
        Mr. Barbour. I do notice that I am on Governor Patrick's
    left, but I realize to you all I am on the right. That makes me
    feel better. I think it makes Deval feel better too.
        Mr. Barton. At least you all can joke about it. That is a
    good thing.
        Mr. Barbour. I can't imagine Mississippi opting out of
    Medicaid. We are a poor State. It is an important program. We
    just want to run it better. We want to run it better for the
    taxpayers. We want to run it better for our beneficiaries. We
    can control the cost much, much better, and if the Federal
    Government would give us more flexibility or just make it where
    we didn't have to go ask for permission like Governor Herbert
    was talking about for 8 months to do something very
    commonsensical, we could, and that is in your budget interest
    too. So I am not an opt-out advocate and I am just being
    forthright about it.
        Mr. Barton. Governor Patrick?
        Mr. Patrick. Congressman, as I said in my opening
    statement, we are so far down this path. The Affordable Care
    Act is very familiar to us in its framework because we have
    reform measures in Massachusetts that are very like it, so this
    is not so scary to us. I think there is a bigger question here
    that goes beyond Medicaid and goes to the private payers as
    well, and that is, as I said earlier, the escalating costs in
    insurance premiums that have been with us all over the country,
    certainly all over the Commonwealth, and that is where we have
    concentrated our time. We get some additional tools because of
    the act to get at that, and I would just say respectfully, it
    would be wonderful to work with the Congress on that larger
    issue because I think that is enormously important for our
    competitiveness economically.
        Mr. Barton. Governor Herbert?
        Mr. Herbert. Well, thank you, Congressman. I think it is
    like asking the question, which straw will break the camel's
    back, and we don't know which one will break the camel's back.
    We keep piling it on and eventually we are going to have some
    serious back strain. You know, in Utah, again, we are doing
    pretty well with health care. President Obama, in fact, has
    used Utah as an example as he has advocated for better health
    care. We have good quality health care at lower cost in Utah,
    comparatively speaking, to other States. So our system really
    has been working pretty well.
        Mr. Barton. So you all don't see any State really in your
    experience thinking about opting out?
        Mr. Barbour. You said opt out of Medicaid?
        Mr. Barton. Medicaid. That is correct.
        Mr. Barbour. I don't.
        Mr. Herbert. We have no plans to opt out of Medicaid. Our
    concern is really the increasing costs of Medicaid and the
    majority costs to Utah for the Medicaid expansion are coming
    from the healthy low-income adults.
        Mr. Barton. Mr. Chairman, my time is about to expire. I am
    going to submit for the record a question for them to expand on
    the constitutionality of federal mandates that the States have
    to pay, and there are a lot of federal mandates in this
    Medicaid expansion that beginning in 2014-2016, the States have
    to do it and they have to pay for it, and I would like a
    response in terms of the constitutionality of that question,
    but I will put that in writing.
        Mr. Upton. Great. Thank you. If you can respond quickly,
    that will be great.
        The chair would now recognize the gentleman from the great
    State of Michigan for 5 minutes for questions, Mr. Dingell.
        Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
        Gentlemen, welcome. I am delighted to see you, Governor
    Barbour. We are old friends and have been on the same side and
    opposite sides of many questions together. Governor Patrick,
    welcome to you, we are proud of what you are doing up there in
    Massachusetts. Governor Herbert, welcome to you also.
        Mr. Herbert. Thank you.
        Mr. Dingell. Gentlemen, very quickly. I note, Governor
    Patrick, you have had firsthand experience in implementing a
    State-level reform law and that you support the federal law and
    find that it would work well with your statutes up there. Is
    that right?
        Governor Barbour, I gather you, my old friend, have a
    different view. You supported overturning the law. Am I
    correct?
        Mr. Barbour. That is correct, Mr. Chairman.
        Mr. Dingell. And Governor Herbert, I gather you have also
    supported overturning the Affordable Care Act. Is that right?
        Mr. Herbert. We have joined the lawsuit in Florida.
        Mr. Dingell. Now, gentlemen, I want to see where we are. We
    have embarked upon a great challenge and upon a great testing
    of our national will and capability here, and so let us go
    through some of these things. In the case of Mississippi,
    Governor Barbour, you are aware that health insurance can no
    longer discriminate against 180,000 children in Mississippi
    with preexisting health conditions, and you are also aware that
    as a result of the Affordable Care Act, about 53,000 businesses
    in your State, as in other States, will be eligible for $350
    million in new health care tax credits, and Governor, you are
    also aware that a million and a half residents of your fine
    State are benefiting from consumer protections in the
    Affordable Care Act such as prohibit annual and lifetime
    coverage bans and limits banning rescissions and provides
    safeguards against unreasonable care increases.
        And you, Governor Herbert, thanks to the Affordable Care
    Act, find that 20,000 seniors in Utah have already received
    $250 rebates from high Medicare drug prices as a matter of
    relief, and again, in Utah, the Affordable Care Act now permits
    270,000 Medicare recipients in Utah to receive free preventive
    care, and in Utah again, I note that the uncompensated care
    costs borne by Utah hospitals and health care providers will be
    protected against over a billion dollars in the next decade.
    And also that in Utah the Affordable Care Act, there are over
    200,000 otherwise uninsured State residents that will be able
    to afford and to obtain affordable health coverage.
        Now, gentlemen, we have all this before us, and I am trying
    to understand. If you could assist me, starting with you,
    Governor Herbert, remember I don't have very much time left.
    What are we going to do to replace these benefits if we repeal
    them? How are we going to make whole the categories of persons
    that I have just mentioned who will be significantly benefited?
        Mr. Herbert. Well, I think, as Governor Barbour has
    mentioned, that we really do care about our people in our State
    and we will find solutions.
        Mr. Dingell. That is not an issue, Governor. I don't want
    to get into that debate. It is not a proper debate.
        Mr. Herbert. OK. It seems like the approach from Washington
    is do it our way or it won't get done. Again, Utah has good
    health care, has had good health care. I just, I guess, come
    from the position that as we look to those who need the
    benefits and we define what those benefits are, there is nobody
    that can define them better than the governors and the people
    in the States. So the eligibility, the benefits, that ought to
    be received, we can help define that better than anybody I
    think else, certainly better than people in Washington.
        Mr. Dingell. Governor, I apologize. I have 58 seconds to
    share between your two colleagues.
        Mr. Barbour. Chairman Dingell, thank you. A couple points.
    Most of our small businesses won't qualify for those subsidies.
    However, the standard benefits package that we expect to be put
    on us will cause many of our small businesses that today
    struggle to provide health insurance to their employees will
    drop that health insurance because the standards benefits
    package is going to drive the cost so high. As far as the
    preexisting condition, we recognized this issue in Mississippi
    long before Haley Barbour was governor. And for about 15 years,
    we have had a pool, a risk pool for people with preexisting
    conditions. It has about 3,600 people on it right now, and that
    is about average, as you can imagine. People move into it, and
    then when their preexisting exclusion expires, they move out.
    The federal risk pool has 58 people, even though the cost is
    less, the premium is lower, and so this is just an example of
    something that, I don't know, I am told 35 States have a risk
    pool like us or similar risk pool. There are things that we do,
    can do, and we are doing them and we think we should be allowed
    to make those decisions instead of having community rating,
    high mandatory benefits package, increase the cost of health
    insurance in our State. That is our concern.
        Mr. Dingell. Governor, I just want to hear a word from
    Governor Patrick.
        Governor?
        Mr. Patrick. Well, we see a tremendous amount of
    flexibility in the Affordable Care Act today. We see some
    further benefits in terms of federal tax credits for the next
    tier of people we are trying to reach. We see some tools to
    help us get at the dual eligibles, which as a number have
    mentioned and I know my colleagues agree is a particularly
    expensive part of the health care system, and we see some
    flexibility to try new things in terms of payment delivery
    systems and payment reform, which is where the real pickup is,
    not just in Medicaid but for the health care cost system
    generally. So for us, this is a good bill and one worth
    fighting for.
        Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
        Mr. Upton. The gentleman from Illinois, Mr. Shimkus, 5
    minutes.
        Mr. Shimkus. Thank you, Mr. Chairman. Mr. Chairman, I want
    to submit a rundown of the State of Illinois's issue. I don't
    want to go through it, but I want to submit that for the
    record.
        Thank you, Governors, for coming. I see Utah and
    Mississippi both run about a $700 million deficit right now,
    this is what I am being told, where Massachusetts has a
    billion-dollar deficit. You all have balanced-budget
    amendments. Illinois is $13 billion in the hole. Do you believe
    that the Obamacare gives you the flexibility to address changes
    in Medicaid to help get such a large budget deficit under
    control? Yes, sir, just each one.
        Mr. Herbert. In Utah, our structural imbalance, we have no
    deficit. We have a structural imbalance--we used some one-time
    money, we are not borrowing it--is about $200 million. But this
    clearly, the cost to us as we move forward with the Affordable
    Care Act will throw that out the window.
        Mr. Shimkus. So it doesn't give you the flexibility to meet
    your budgetary needs?
        Mr. Herbert. Well, again, it doesn't give us the
    flexibility. I guess the definition is how flexible is
    flexibility. You know, there are some flexibilities in it, but
    again, if we have to maintain maintenance of effort, if we have
    to in fact use the----
        Mr. Shimkus. I am going to try to get through. I don't want
    to be disrespectful but I want to get--Governor Patrick?
        Mr. Patrick. Yes.
        Mr. Shimkus. You think it does give you the flexibility?
        Governor Barbour?
        Mr. Barbour. Well, of course, the difference is, I don't
    have his State health care system. Under ours, it would drive
    up my cost. It would absolutely make a very large tax increase
    necessary. But more importantly, it will drive up the cost for
    health insurance for the individuals and the businesses that
    buy health insurance.
        Mr. Shimkus. Thank you. And Illinois is $13 billion in
    debt. That is our financial position in the State of Illinois.
    If members of the Congressional delegation would write you a
    letter saying hey, Governor, we know you have issues, can you
    get with your health and services people and let us start
    talking about how we can jointly help solve this problem, would
    you as a governor be open to a letter by members of the
    Congressional delegation to address your concerns? Governor
    Herbert?
        Mr. Herbert. Absolutely.
        Mr. Shimkus. Governor Patrick?
        Mr. Patrick. I am not sure I understand the question but we
    have been working closely with our delegation.
        Mr. Shimkus. Well, this is Medicaid. We have a large role
    in the Medicaid delivery system. We are partners with you. If
    your Members of Congress said we want to help you, would you
    say yeah, come on?
        Mr. Patrick. I never said no when our Members of Congress--
    --
        Mr. Shimkus. Thank you.
        Mr. Barbour. The answer is yes. I think to her credit,
    Christine Gregoire, who is the chairman of the National
    Governors, a Democrat, by the way, is trying to do just that,
    and the fact that you all are having governors here is
    encouraging.
        Mr. Shimkus. Just for the record, November 2009, we sent a
    letter to our Governor and we have yet to get a response, one
    that has $13 billion in debt based upon Medicaid.
        I want to address really quickly some cost issues. If we
    are going to try to help contain cost, EMTALA, which is the
    emergency room law that anyone who walks in the door has to
    receive care, even though it is not an emergent issue, if we
    address EMTALA and were able to triage and push people to
    urgent care, that would be a reform at the federal level, would
    that help you control cost?
        Mr. Herbert. I think it would. It needs some analysis by
    experts in our State but I think so.
        Mr. Shimkus. Governor Patrick?
        Governor Patrick. Yes, I think it could, and we have been
    taking those very steps.
        Mr. Shimkus. Thank you. Yes. Great.
        Mr. Barbour. I would urge you to give us permission for us
    to do something rather than telling us how to do it.
        Mr. Shimkus. Great. What about, Obamacare had--when we were
    talking about saving costs, it was $50 billion of savings if we
    would move on tort reform, lowering cost, $50 billion which
    could have gone to pay some of the expensive costs. Would tort
    reform be a good way to hold down costs, Governor Herbert?
        Mr. Herbert. Absolutely.
        Mr. Shimkus. Governor Patrick?
        Mr. Patrick. In the bill I referred to earlier, which is
    our next phase of health care reform, we have included tort
    reform in that, yes.
        Mr. Barbour. My first year as Governor, we passed the most
    comprehensive tort reform in the country. It doesn't just help
    cost, it improves the quality of care because we had doctors
    leaving to get away from lawsuit abuse and so it is more than
    cost.
        Mr. Shimkus. Last question. In federally qualified health
    clinics, we give them Tort Claims Act protection. If we are
    providing health care, Medicaid dollars, federal dollars, if we
    provided Federal Tort Claims Act protection for practitioners
    who are receiving federal dollars, would that help drive down
    cost, Governor?
        Mr. Herbert. I think so, yes.
        Mr. Patrick. I don't know how to answer that.
        Mr. Shimkus. Well, it is a tort reform issue, so----
        Mr. Barbour. Under our State tort claims act, the
    university hospital and all, they have caps under the law and
    it does help.
        Mr. Shimkus. Thank you very much. Yield back my time.
        Mr. Upton. The chair would recognize the gentleman from New
    Jersey, Mr. Pallone, for 5 minutes.
        Mr. Pallone. Thank you, Mr. Chairman.
        I wanted to go back to Governor Patrick because I know that
    in response to Mr. Waxman you were basically talking about how
    more quality care or improving coverage and quality care
    actually lowers costs, and I really believe that if you cover
    more people, you give them quality care, then ultimately you
    save the system more money, and at the risk of being critical
    of the Republicans, I am going to be anyway, you know, I just
    think it is ironic, because if you go back a few years, you had
    people like Governor Romney who were advocates for universal
    coverage because it saved money in the long run. I remember
    when the second George Bush was present, he was a big advocate
    for expanding community health centers. Now we see the
    Republicans in their Continuing Resolution cutting community
    health centers. Even the FMAP that gave more money to the
    States, that was a big thing with the Republicans too. Peter
    King introduced the legislation back in 2003, long before the
    Democrats were even doing it. But now we see the opposite. We
    see, you know, Republicans backtracking and saying that they
    don't support these efforts to expand coverage and provide the
    community health centers with funding.
        I want to ask you two things, Governor Patrick. One is, if
    you just want to expand a little, because I don't think you had
    a chance, on what Congressman Waxman asked about, you know,
    what Massachusetts did to expand coverage and how that actually
    improves quality, makes for healthier people, and in the long
    run lowers costs. Maybe you could just spend a minute or two or
    that.
        Mr. Patrick. Thank you for the question, Congressman. The
    simple fact is that more people in Massachusetts today get
    their primary care in primary care settings than in higher-cost
    emergency room settings, and that means system costs are
    smoothed, and it is a simple principle of insurance that the
    more people who are insured, the more you spread the risk. That
    also moderates cost. But premium cost, which is, you know, the
    provider rates, although there is variance, they have increased
    faster than inflation in Massachusetts and everywhere else in
    the country. This has nothing to do with universal care. This
    has to do with the way we incent, if I may use that as a verb,
    the incentives for how we pay for health care. Right now we pay
    for the number of times you are in and out of an office, the
    number of tests that are run and not the quality of that care,
    and managing that care closely, particularly for those high-
    cost chronically ill people, has been shown to be better care
    for the individual but also lower cost.
        So what we have in the Affordable Care Act are tools we
    didn't have in our own health care reform and that we are
    building on with a new piece of legislation I filed 2 weeks ago
    to realign these incentives and get at systemwide costs, and
    that is good, not just for the State and for local budgets but
    that is good for business budgets and for working families.
        Mr. Pallone. I appreciate that. And again, I didn't hear
    Mr. Barbour criticize Mitt Romney but I know he gets a lot of
    criticism and he was the one that basically came up with this
    idea. He was a governor at the time, in any case.
        Now, I wanted to ask about community health centers because
    this is another case. When I was here and the second George
    Bush was President, he really pushed for community health
    centers, opened more of them, you know, this was going to be
    our answer for people who didn't have coverage. Now we see in
    the C.R. community health centers I guess are cut by $1.3
    billion relative to the President's request, and that would
    roll back critical expansions to community health centers. In
    your State, Massachusetts, you would lose nearly $5 million in
    community health center funds which are being used to provide
    care for nearly 90,000 of your residents. I had a community
    health center that was funded in the Recovery Act wrote me a
    letter saying now that they would have to close the door if the
    C.R. becomes law.
        So, you know, how is your State going to fare if these
    funds are cut off? I mean, community health centers are a way,
    if we don't have Medicaid or the Medicaid gets cut back, people
    at least can go there. It is another backup.
        Mr. Patrick. No, I understand the question, Congressman. It
    is a worry for us. We have a broad and deep network of
    community health centers, and frankly, the community health
    centers like the community hospitals tend to be lower-cost
    settings for primary care than the wonderful downtown teaching
    hospitals that we have, and for our system to work and I think
    for a universal system to work, we have to have more community
    dispersion in where people get their primary care. So we very
    much are watching and involved in trying to assure that just as
    we keep up our end of the bargain in terms of our support for
    community health centers, that the Congress does as well.
        Mr. Pallone. Thank you.
        Mr. Upton. Mr. Pitts, 5 minutes.
        Mr. Pitts. Thank you, Mr. Chairman. Thank you, Governors,
    for coming.
        Mr. Barbour, you mentioned that a couple years ago you
    started a new program for persons to individually sign up for
    eligibility. I didn't hear after that first year requiring
    individuals to sign up personally, what happened to your rolls?
    What percentage was the effect of that?
        Mr. Barbour. Congressman Pitts, it was a combination of
    60,000 more people working in my State, Part D, but our
    program, we reduced the rolls from 750,000 to 580,000.
        Mr. Pitts. That is about 20 percent?
        Mr. Barbour. About 20 percent, that is right, and again,
    there is nobody who is not getting health care. There were a
    lot of people who weren't eligible.
        Mr. Pitts. Now, under the maintenance of effort requirement
    in the new law, can you continue that program of having people
    individually sign up for eligibility?
        Mr. Barbour. It is my understanding that we can.
        Mr. Pitts. That you can?
        Mr. Barbour. Yes, sir.
        Mr. Pitts. Can you elaborate on your State's experience in
    dealing with the CMS bureaucracy and your attempts to be
    granted Medicare waivers? Do you find the CMS bureaucracy
    helpful and cooperative? Do you find their decision-making
    process timely? Do you find their actions too burdensome? Would
    you elaborate?
        Mr. Barbour. My experience over 7 years as being Governor
    is there are a bunch of nice people who work there, they work
    hard. I have actually been up to their headquarters a few years
    ago to go through a really kind of complicated issue. But for
    whatever reason, it is slow, and I am told that the average
    waiver takes a year. I have been through personally in the last
    15 months a State plan amendment and contract that took 15
    months and at the end of 15 months it was approved except they
    told us you can't do the part that actually helps. You know,
    they didn't approve that part of the contract. These are things
    that we shouldn't have to come up here and ask for. We ought to
    have the flexibility to run the program. But I don't think it
    is because they are not good people or they are not working
    hard. It is just the process is long and drawn out.
        Mr. Pitts. Thank you.
        Mr. Herbert, you mentioned an anecdote. Could you elaborate
    on your dealings with CMS bureaucracy?
        Mr. Herbert. Well, again, I have already given the example
    of wanting to go paperless, which again I think most people
    here can see that is kind of what we are about today, and it is
    a voluntary basis so you don't have to do it, it is not
    mandated but it would save us about $6.3 million. But after 8
    months we were getting nowhere. I actually came to meet with
    CMS and to get things moving. We couldn't understand why we
    were getting a denial, and the denial being sent by e-mail we
    thought was just ironic. That kind of got things moving but it
    was really the conversation yesterday with President Obama that
    allowed us to finally get this logjam removed and do something
    that is just sensible.
        But we have other waivers out there that we want to look at
    that would allow us to in fact put together a Medicaid rainy-
    day fund to help us slow down the costs that are rising in
    Medicaid, to start providing fee for service to payment for
    healthy outcomes, not just for procedures, to incent on the
    right side of the health care equation. But that will require
    some waivers from CMS to allow us to go forward. So again, we
    will come up with ideas, other States will come up with ideas
    but we need to have the ability to have this dialog and get
    some waiver to allow us to find efficiencies in the system.
        Mr. Pitts. Thank you.
        Mr. Patrick, during the debate on the Obamacare law, the
    proponents of the law stated passing the bill would get people
    to stop using the emergency room for their care. In
    Massachusetts, do Medicaid patients visit the ER more or less
    than those with private insurance?
        Mr. Patrick. About the same.
        Mr. Pitts. I have a study September 2011 paper by Douglas
    Holtz-Eakin suggesting that from July 2007 through March of
    2008 Medicaid patients visited the ER at a rate more than three
    times those with private insurance. Do you think that figure is
    in the ballpark?
        Mr. Patrick. No, that figure it not current. It is about
    the same, and the total population has gone down. We started
    implementing health care reform, Congressman, in 2007, at the
    beginning of 2007, so we have had a little bit more than 4
    years of getting at that, and total utilization in the ER for
    primary care has gone down in both the private payer and public
    payer.
        Mr. Pitts. The half minute I have left I will yield to Dr.
    Cassidy.
        Mr. Cassidy. Thank you.
        Mr. Patrick. Congressman, I am sorry, if it is all right,
    do you mind if I also say something about our experience with
    CMS?
        Mr. Pitts. Go ahead.
        Mr. Patrick. I would just like to--you know, we have
    negotiated now two waivers with CMS in order to do our own
    experiment, and I want to say that our experience has also been
    a very deliberate, sometimes feeling tedious experience with
    the current Administration and the Administration before. Now,
    when we have raised these issues in the past, they have
    expressed what I think is the perennial concern, which is that
    they know that they also have--just as much as we want
    flexibility, they know that we have to be accountable. But if
    there is a way to smooth that out, I think that is something
    that we would love to work together.
        Mr. Pitts. Thank you.
        Mr. Upton. The gentleman's time is expired. I would
    recognize the gentleman from Massachusetts, Mr. Markey.
        Mr. Markey. Thank you, Mr. Chairman.
        Mr. Patrick, Governor Barbour said that he could accept a
    deal where his State received 50 percent of the Medicaid money
    they receive today, and he could live with that deal.
        Mr. Patrick. I will take his 50 percent.
        Mr. Markey. What would be the impact in Massachusetts if
    there was a 50 percent cut in the Medicaid funding that went to
    the State in terms of the impact on the health care of our
    residents?
        Mr. Patrick. Well, I think that would jeopardize universal
    care. I mean, that would be profound for us.
        Now, we are working very hard, just to repeat myself, to
    get system costs down, the cost of care down, because that is
    important not just for Medicaid but across the economy, and as
    we gain those savings, that is good for the Federal Government
    just as it is good for those small businesses that are in the
    private market. But, no, we are not looking for that.
        Mr. Markey. No, Governor----
        Mr. Barbour. Congressman Markey, if I may, what I said was,
    we would take 50 percent of the increase, not that we would cut
    our total FMAP in half, just when the increase came we would
    take only half as much. So I am glad you said that because I
    hope others didn't understand what I said that way.
        Mr. Markey. Half of the increase?
        Mr. Barbour. Thank you for clearing that up.
        Mr. Markey. I think that is important for everyone to hear.
    Mississippi is more than willing to accept that money.
        The next question is, Governor Barbour spoke about how he
    felt that the private sector would not insure as many of its
    employees under this kind of a system. What has the experience
    in Massachusetts been?
        Mr. Patrick. That phenomenon I understand is called crowd
    out, and actually, I will tell you when I was looking at this,
    you know, I have spent most of my life in the private sector,
    so when I was looking at this when it was being debated, it
    seemed to me a business could make a rational decision to stop
    offering health care for their employees and say, you know, you
    go on the publicly subsidized. It has actually been the
    opposite result in Massachusetts. There are more businesses
    offering employees health insurance today than before our
    health care reform went into effect.
        Mr. Markey. So it has actually gone up, not down, in terms
    of the businesses providing health insurance?
        Mr. Patrick. Correct.
        Mr. Markey. Now, what about your work with the insurance
    itself to contain costs? How has that proceeded since the bill
    has been implemented?
        Mr. Patrick. Well, our work with the insurers has proceeded
    on a parallel course, not necessarily because of the Affordable
    Care Act meaning, you know, we have been seeing small
    businesses, and I suspect everybody here does, who are seeing
    their commercial activity pick up and then they get that
    increase in their premium at 2030, 50 percent in some cases,
    and they can't see a way to add that one or two employees, and
    that is important for us because 85 percent of the businesses
    in our Commonwealth, as you know, Congressman, are small. So if
    they don't start hiring, we don't get a recovery. It is as
    simple as that. And so we engaged with the insurers about a
    year ago using existing State authority to disapprove excessive
    rate increases, and we did just that, and then we had a tussle
    and everybody eventually got to the table, and what were 20 and
    30 and 40 percent increases last year are single digit base
    rate increases this year. But that is a step. It is a temporary
    step. What we need more to the point is comprehensive payment
    reform and delivery system reform, which is what we are moving
    on now and what is accelerated frankly by provisions in the
    Affordable Care Act.
        Mr. Markey. Now, there are some who say that universal
    health care harms the economy, leads to higher unemployment,
    hurts the bond rating of a State. What has been the experience
    in Massachusetts?
        Mr. Patrick. Well, our budgets have been responsible,
    balanced and on time for each of the last 4 years and we are
    working with the legislature to assure that again this year.
    Our bond rating started out strong, has remained strong through
    the recession and just recently was upgraded from AA to AA
    positive outlook. I think we are the only State since 2007 in
    the country that has had an improved bond rating, and as I
    said, we have continued to invest in public education at the
    highest levels in the history of the Commonwealth.
        So I will also say, our unemployment rate is about a point
    and a half below the national unemployment rate but we are not
    satisfied. We still have to drive that down. But when I talk to
    those small businesses who are concerned about their premium
    increases, they appreciate that we have these additional tools
    now to be able to get at that, and as I said, I meet
    entrepreneurs who say that the security that comes from
    universal care in our State is a factor in their decisions to
    invest in Massachusetts, and we welcome that.
        Mr. Markey. So contrary to public impression, Massachusetts
    unemployment rate is down, the bond rating is up, the budget is
    balanced and we have 98 percent of the people with----
        Mr. Patrick. And we have got more work to do but I am very
    proud of where we are.
        Mr. Markey. And you have done a great job. Thank you,
    Governor.
        Mr. Upton. The chair recognizes Mr. Walden for 5 minutes.
        Mr. Walden. Thank you very much, Mr. Chairman. I want to
    thank the governors for being here today. My home State of
    Oregon has tried to innovate over the years. I was majority
    leader of the Oregon legislature when we implemented the Oregon
    health plan. I have been a small employer for 22 years and we
    paid for health insurance premiums for our workers, and I spent
    about 5 years on a community nonprofit hospital board, so I
    have sort of been on every seat at the table on health care
    reform trying to figure out how to make it more affordable and
    available.
        One of the things I recall from my days on the hospital
    board was the shift that occurs to the private sector insurance
    side when the government doesn't reimburse enough, and that
    especially is true, I believe, on Medicaid, that it is probably
    the least reimbursement, so you have cost shifting going on
    from Medicaid and Medicare onto the private sector, which
    drives up then the insurance costs paid for by those who are
    trying to provide it, the small employers of America who,
    Governor Patrick, you expressed sympathy for. I am led to
    believe, and correct me if I am wrong, but the Commonwealth
    Fund has said that Massachusetts has the highest average family
    premiums in the country. Is that still the case?
        Mr. Patrick. I don't believe it is but I will say that we
    have trended about a point or so higher than the escalation
    even nationally over a decade.
        Mr. Walden. But as you have tried to bring everybody into
    the pool, your costs have continued to escalate beyond the
    original projections, right?
        Mr. Patrick. No, not beyond the original projections, with
    due respect, Congressman, but the issue of premium increases is
    a problem, as I say, all across the Commonwealth and all across
    the country.
        Mr. Walden. Governor Barbour, I know that my senior
    Senator, Ron Wyden, and Governor Patrick, your Senator, Scott
    Brown, have teamed up to gives States more flexibility if they
    have their own plans. The President yesterday seemed to embrace
    that concept, and I would be curious to hear from all three of
    you, does that go far enough? Is it helpful to give you that
    earlier out at 2014? And if not, what should we be doing?
        Mr. Barbour. Of course, the devil is in the details, but
    the thing that concerns me, the things that are in the statute
    we are told the States will still have to do, and Governor
    Patrick has been talking about how costs didn't go up and he
    didn't have people drop insurance. Well, Massachusetts already
    had a very, very expansive mandatory standard benefits package.
    Most States, particularly rural States, don't, and if we get
    saddled with the standards benefits package like Massachusetts,
    that is why our employers will drop coverage because their
    premiums will skyrocket. So if it doesn't give us relief from
    that and similar things, it is really not much help.
        Mr. Walden. Governor Herbert?
        Mr. Herbert. Well, again, as I mentioned earlier, how
    flexible is flexible, and clearly there is not absolute
    flexibility. This is not a block grant, do it as you see fit.
    Maintenance of effort still required. The essential benefit
    package stays the same. The eligibility for Medicaid still is
    there. So if we get the outcomes that we, the Federal
    Government, say to the State, then you have got flexibility,
    and that really is not flexibility.
        Mr. Walden. Governor Patrick?
        Mr. Patrick. I think from a policy point of view,
    Congressman, the act or the bill, we are probably indifferent
    to it because as I said, we are so far down the path, and we
    have so much flexibility under our existing 1115 waiver and
    there is plenty of flexibility in the act.
        Mr. Walden. So then I want to go to another topic. There
    are some reports out in the last day or two and over time about
    the waste and fraud both in Medicare and in Medicaid, upwards
    of 10 percent of the program the GAO and the IGs have said is a
    result of waste. I met with some physicians in my district, an
    ambulance operator in another part of the State of Oregon who
    talked about some of the fraud and waste they saw occurring in
    Medicaid where somebody would feign a problem, call an
    ambulance, they would get to the emergency room so they could
    actually go to a shopping center nearby, and Medicaid gets to
    pay for it, and I heard that from three separate instances.
    What are you doing and is the Federal Government doing enough
    to get at that? We are talking, 20, 30, 40, 50, $60 billion
    perhaps annually in waste and fraud identified by the GAO and
    others.
        Mr. Barbour. One of the things we have done is, we try to
    manage the program. We have reduced our error rate to 3.47
    percent, which is the fourth lowest in the country. Our
    eligibility error rate is now one-tenth of 1 percent. Just by
    reducing our error rate as we have, we are saving the people of
    Mississippi tens of millions of dollars on Medicaid. If you got
    the national rate down to ours and got the national rate of
    Medicare down to ours, it would be tens of billions of dollars
    that the taxpayers would save just by managing the program.
        Mr. Walden. I think I am out of time, unfortunately. I
    would welcome your responses perhaps in writing afterwards but
    my time is expired.
        Mr. Upton. Mr. Green.
        Mr. Green. Thank you, Mr. Chairman.
        First, I want to mention again, and I know here that the
    health reform is not necessarily Obamacare. This committee
    spent many years dealing with health care, and as was said
    earlier, whether it be expanding community-based health clinics
    or the hours we spent over the last 2 years drafting that
    legislation.
        The testimony today sounds like the States want the Federal
    Government to write them a blank check and allow them to be
    left to their own devices to manage their health care programs
    without any guidance from the folks here in Washington who are
    going to have to vote for the money on how the federal tax
    dollars should be spent. I spent 20 years as a Texas
    legislator, State house and senate, and sat on that side many
    times and watched what happened, and let me give you some
    examples of what may not work.
        In 2003, Texas experienced a budget crisis much like we see
    now. At the time the State decided to drop 175,000 children off
    the SCHIP rolls because they couldn't come up with the State
    match. The State of Texas gets about 65 percent of federal
    dollars for SCHIP enrollment and about 70 percent of federal
    dollars for Medicaid enrollment. The Texas Medicaid provides
    coverage at only minimum levels required by federal law for
    those eligible populations. Texas Medicaid eligibility is
    granted for 6 months and recipients must reapply and continue
    to meet all the eligibility requirements, but the problem is,
    every 6 months they have to show up down at our State
    Department of Human Services. Texas has been trying since 2008
    for a section 115 waiver but it was even denied in 2008 by
    President Bush because it wanted to shift Medicaid eligibility
    of individual into private plans, and I know those private
    plans are going to have to make a profit to be able to do that
    so we will end up with scarce Medicaid dollars going to profit
    instead of going to help cover our poorest citizens. We have
    not recovered from the SCHIP disaster in 2003 and Texas still
    has the highest uninsured rate in the country, and I am a
    strong supporter of mandated 12 months' continuous eligibility
    to prevent the States from using children oftentimes as
    budgetary pawns.
        Governor Patrick, can you explain the benefits you see in
    the Medicaid program under health reform?
        Mr. Patrick. Well, first of all, Congressman, I agree with
    almost all the observations you make in terms of how we
    experience it in Massachusetts with the one exception of the
    private insurance. Our health reform is a hybrid so we
    emphasize private insurance including for Medicaid recipients,
    and so it is very much a market-based kind of solution, I guess
    is what I am trying to say, which may be why I keep coming back
    to the point about how across the market whether for private or
    public payers, we have to focus on increased costs and what is
    happening with premiums and what that is doing to our
    competitiveness. This program has worked very, very well in
    Massachusetts. The fact that we have over 98 percent of our
    residents insured today with reliable health care and that that
    has been maintained and improved even during a time of enormous
    economic uncertainty I think is something I am very proud of
    and I think has been a real help for us in our own recovery.
        But the broader question of the cost of health care, not
    the cost of Medicaid, with due respect, that is a secondary
    question. The cost of health care for which in this country we
    spend 17.6 percent of what we spend has got to be addressed,
    and the Affordable Care Act gives us some tools to do that and
    we are trying some others on the State side as well.
        Mr. Green. Let me let the other governors answer because,
    like I said, I have been on both sides of the coin and there
    were times that we could bring down some Medicaid programs in
    Texas back in the 1980s and we would get 80 percent federal
    funding and only come up with 20 percent yet we still couldn't
    do it in the State. So Texas does not have a rich Medicaid
    program by any means. So both Governor Barbour and----
        Mr. Barbour. First let me say, I don't mean any offense,
    but PPACA doesn't come out too good in my accent of the name of
    this law, P-P-A-C-A. So I didn't mean any offense by referring
    to it as Obamacare, it is just easier for me to say.
        Mr. Green. I understand. It works well on Fox for my
    Republican colleagues but it is really the Affordable Health
    Care Act, and we name things crazy but it is called health
    reform. That is the easiest thing.
        Mr. Barbour. Yes, sir.
        Mr. Green. And I don't have any problem with your accent
    from where I come from.
        Mr. Barbour. Well, I figured if there was one guy here who
    would understand, it would be you.
        I would just say that we are concerned about keeping
    provider rates sufficiently high that they will see our
    Medicaid patients.
        Mr. Upton. Mr. Terry.
        Mr. Terry. Thank you, Mr. Chairman, and with my accent, I
    still call it Obamacare too. It is easier.
        My question is for Governors Herbert and Patrick, very
    quickly. The State exchange issue I think is an interesting
    issue and how States when you do it yourselves can be a lot
    more innovative. Particularly I want to ask Governor Herbert,
    because Nebraska and Utah are similar in population and
    demographics, would it be beneficial in a State exchange to
    have the opportunity to combine with other States and form a
    regional? I will let you go first and then Governor Patrick.
        Mr. Herbert. Yes, I think it would be. I think you will
    increase purchasing power and the ability to have more
    competition and the consumer will have more options and better
    options for their own unique needs. Again, without beating a
    dead horse here, it is not a matter of is my approach better
    than Governor Patrick's approach. Again, Mitt Romney is a
    friend of mine. In fact, we looked at the Massachusetts model
    when we started out. It just didn't work for Utah. It was not
    in Utah's best interest so we picked a different pathway. There
    are probably pros and cons of both of them. It is not a matter
    of I am right and he is wrong or vice versa. But as we work
    together as States, we can probably find solutions. We talk
    about, it is a little hard to define what is the health care
    reform message, what is the issue. I don't think the public
    generally understands. Is it universal access, universal
    coverage, is it quality of care, is it affordability? It is
    probably all of the above. We are tracking it here with the
    Affordable Health Care Act probably just in one narrow area of
    accessibility. I don't know that it helps with the cost control
    measures.
        Mr. Terry. I appreciate that answer.
        Governor Patrick and then Governor Barbour.
        Mr. Patrick. I am really interested in that idea,
    Congressman. We have about 220,000 people who get their
    coverage through our Connector, our version of the exchange. I
    think that compares to about 1,500, am I right, in Utah?
        Mr. Herbert. About a thousand.
        Mr. Patrick. So it is a slightly different scale because we
    made different choices, and I agree with my colleague, Governor
    Herbert. I am not sure that every State in the context of the
    exchange needs to make the same choices but I think that
    flexibility is allowed under the Affordable Care Act. I am very
    intrigued about how we do more regional pools because, frankly,
    economically, our people are moving regionally. And the idea of
    having portability of their care I think is very responsive to
    their needs.
        Mr. Terry. I appreciate that.
        Mr. Barbour. Congressman Terry, I just wanted to briefly
    comment on your question. My State senate has passed an
    exchange bill for 3 years running and the house has not. Both
    of them have passed a bill this year. We want an exchange. We
    don't want--ours wouldn't be anything like Massachusetts'. It
    would be market voluntary and modeled on Utah's so there are--I
    just wanted you to know, even some of us that don't have the
    exchanges think that they are useful but not the way the
    federal act would require it.
        Mr. Terry. All right. Dr. Burgess, may I yield a minute to
    you?
        Mr. Burgess. Thank you, Mr. Chairman. Governor Patrick had
    a question for me and Mr. Waxman was so rude, he wouldn't yield
    time to you, so I will be happy to yield Mr. Terry's time to
    you to ask you the question.
        Mr. Patrick. Thank you, Dr. Burgess. I am good. No, you
    know, seriously, Mr. Chairman has changed. I am going to have
    to step away in order to get a plane, so unless you have a
    question for me, Dr. Burgess, I don't want to----
        Mr. Burgess. Well, I was dying to answer your question and
    I didn't want to leave the audience unfulfilled with you unable
    to ask me a question.
        Mr. Patrick. Thank you very much. If it is appropriate, Mr.
    Chairman, if there are other questions after I have to leave
    that members may have, I would be happy to respond in writing.
    I just have to make this plane.
        Mr. Pitts. [Presiding] The chair thanks the gentleman for--
    --
        Mr. Burgess. Let me just, in the remaining time I have, one
    of the issues that we lost out on in this health care reform
    was the issue of liability reform. I know I have over the years
    interviewed several doctors from Massachusetts who looked to
    move to Texas, even before we fixed the problem there. How are
    you dealing with this within your State?
        Mr. Patrick. I mentioned earlier that we filed health care
    reform two in Massachusetts, which is the next chapter. It is
    really around cost control and cost containment, and there is a
    feature of this which is tort reform. It is not because we have
    found analytically that defensive medicine is a big contributor
    to health care costs but it is a contributor, and so we used a
    model actually from Michigan, which is not caps, it is an
    apology and prompt resolution model. It has been piloted at
    Mass General Hospital in Boston, and they have had fantastic
    results. So it is a model that works for us and I am looking
    forward to working with the legislature.
        Mr. Pitts. The gentleman's time is expired. The chair
    thanks Governor Patrick for coming.
        Mr. Patrick. Thank you very much, Mr. Chairman.
        Mr. Pitts. And you will respond in writing to any
    questions?
        Mr. Patrick. I would be happy to, yes, and I hope everyone
    will please excuse my----
        Mr. Pitts. I thank the Governor and excuse him. The time
    now goes to the gentlelady from California, Ms. Capps, for 5
    minutes.
        Mrs. Capps. Thank you, Mr. Chairman, and I had a really
    good question for you, Governor Deval. I am sorry that you are
    leaving. No, I understand. If there is a way you could stay, I
    would appreciate it. But you have been an excellent testifier.
        Mr. Patrick. Can you try to do it quickly?
        Mrs. Capps. Yes, if you can sit back down. I am not going
    to make you miss your plane.
        Mr. Patrick. Congresswoman, your answer was supposed to be
    ``No, Governor, I totally understand that you have to----''
        Mrs. Capps. Well, I have other questions to ask your
    colleagues. First of all, thank you very much for coming. We
    seem to be using this opportunity to scapegoat Medicaid because
    the real bottom line is that some people just don't like this
    health care law, but you have been a success story in reducing
    the number of uninsured and helping everyone who wants to get
    any access to the health care system. My other questions are
    going to be about children. Your State has the lowest rate of
    uninsured children in the Nation with over 95 percent in the
    State having health insurance. I think that is really an
    achievement. And I want just to ask you, and you can be quick
    and then run off. I don't want you to miss your plane. But what
    is the role that Medicaid has played in this?
        Mr. Patrick. Well, it has been enormous. The proportion of
    children insured today is actually 99.8 percent, and----
        Mrs. Capps. That is stunning. I just want it to be on the
    record. Just say it again.
        Mr. Patrick. Well, 99.8 percent of Massachusetts children
    have health insurance today, and I am very, very proud of that.
    Now, Governor Barbour made a point which is true, that children
    are relatively inexpensive to cover and it is a very efficient
    kind of coverage for Medicaid. It has made a big difference for
    us.
        Mrs. Capps. Thank you. We are worried about you catching
    your plane, and I do appreciate your taking the time.
        I wanted to ask unanimous consent as I continue my
    question--thank you, Governor----
        Mr. Pitts. Without objection.
        Mrs. Capps [continuing]. To insert a letter from the March
    of Dimes for the record, which explains the importance of the
    Medicaid program for women and children, and I ask unanimous
    consent if that could be entered.
        Mr. Pitts. Without objection, so ordered.
        Mrs. Capps. Thank you.
        [The information follows:]

        Mrs. Capps. Governor Barbour, I understand that you have
    said in your remarks that you support the repeal of the
    Medicaid State responsibility requirements, the maintenance of
    efforts requirements in the Affordable Care Act. When it comes
    to infant mortality, that means babies dying during childbirth
    or in the first few months of life. Our Nation has a very
    abysmal record among countries of the world. We rank 46th among
    all the nations of the world. Now, when it comes to the United
    States, Mississippi has the highest rate of infant mortality of
    any State in the United States, 10.7 infant deaths per 1,000
    live births. Now, if Congress eliminated the Medicaid
    maintenance of efforts, you would have the flexibility to
    reduce Medicaid coverage for pregnant woman and infants up to
    age 1 from the current level of 185 percent of federal poverty
    line to 133. Mississippi also has the highest rate of preterm
    births of any State in the United States and again, our country
    doesn't do well on this topic so I am not trying to pick on
    Mississippi, but nearly 19 percent of live births in
    Mississippi are preterm. Now, preterm infants are at a much
    greater risk of health complications, newborn death and even
    higher health care costs. I am one who believes that our
    country's infant mortality rate is a national disgrace. Even
    during the Bush Administration in 2006, an HHS fact sheet
    stated that programs to improve access to prenatal and newborn
    care could help prevent infant mortality, and it specifically
    cited Medicaid.
        So if I could ask you a yes or no question, do you agree
    with this assessment by the Bush Administration that Medicaid
    can help us address infant mortality?
        Mr. Barbour. A little bit.
        Mrs. Capps. A little bit? All right.
        Mr. Barbour. That is correct. I mean, most of--ma'am, if I
    could respond?
        Mrs. Capps. Of course.
        Mr. Barbour. The biggest problem we have in my State is we
    have an extremely high rate of illegitimacy. We have a lot of
    children being born to mothers who are themselves in bad
    health----
        Mrs. Capps. That is another piece.
        Mr. Barbour [continuing]. Maybe because of life choices
    like drugs----
        Mrs. Capps. Absolutely.
        Mr. Barbour [continuing]. Alcohol, and it is not the health
    care system that is the principal driver here.
        Mrs. Capps. But actually if these mothers received adequate
    prenatal care, some of these underlying issues could be
    addressed, and that is another feature----
        Mr. Barbour. Yes, ma'am, and we offer it for free----
        Mrs. Capps [continuing]. Of Medicaid----
        Mr. Barbour [continuing]. For up to 185 percent, yes,
    ma'am.
        Mrs. Capps. But now you will have the flexibility----
        Mr. Barbour. A lot of them don't take it.
        Mrs. Capps. Well, that is another issue, but the
    flexibility to raise it is going to make it tempting for States
    to do something that will be in the long run costly, costly not
    only in lives but also to the bottom line of the State's
    budget.
        Mr. Barbour. The majority of all the people on Medicaid in
    Mississippi are children or pregnant women, and it is up to 185
    percent of poverty. We are not interested in lowering it, but
    the biggest problem with our sick children at birth, low-weight
    birth is not the health care system.
        Mr. Pitts. The gentlelady's time is expired.
        Mrs. Capps. I yield back.
        Mr. Pitts. The chair recognizes the gentleman from
    Pennsylvania, Dr. Murphy, for 5 minutes for questions.
        Mr. Murphy. Thank you, Mr. Chairman, and welcome,
    Governors. Good to see you again.
        I want to go over a couple things about Medicaid expense in
    your State. In my State, Pennsylvania, Governor Corbett
    estimates that about 600,000 will eventually be $150 million
    per year. Do you both have estimates in your States of what
    those numbers might be of an additional Medicaid expense from
    this bill?
        Mr. Barbour. When it is full out, $443 million in year 10.
        Mr. Murphy. So that is what it will be.
        Mr. Barbour. One year.
        Mr. Murphy. Sir?
        Mr. Herbert. And ours is $1.2 billion over 10 years. It is
    a 50 percent increase in our numbers.
        Mr. Murphy. So that is the full cost of Medicaid in both
    your States, or that is in addition?
        Mr. Barbour. That is the increase.
        Mr. Herbert. That is the increase out of our general
    fund.added onto Medicaid, and it is going to cost the State an
    additional $100 million to
        Mr. Murphy. Now, we also know that the Congressional Budget
    Office, which admittedly can only deal with the data they are
    given, they are not allowed to surmise or assume anything, but
    based upon the data they were given when this bill passed, they
    estimate about 9 million low-income employees would lose
    coverage due to some of the exemptions that occur, but Lewin
    Group now says it could be as high as 85 million, and some
    questions are that if employers are fined $2,000 per employee
    for not offering qualified health insurance, that it might
    actually serve as an incentive to expand those numbers up to
    that upper level of 85 million or so. So are your numbers that
    your States have based upon some of these higher or lower
    numbers? I am just curious in terms of the actual population
    you think might pick up. How confident are you on the accuracy
    of those numbers, that might it even be higher?
        Mr. Herbert. Well, I don't know the numbers that you have
    given there but our estimates are based on the fact that we are
    going to have to increase eligibility up to 133 percent of
    poverty. We are not covering that much in Utah.
        Mr. Murphy. I see.
        Mr. Herbert. And the essential benefit package would have
    to be changed and modified and enriched, and so we are going to
    have to give more and so that is going to add to the cost.
        Mr. Murphy. My question is, what happens, if anybody has
    looked in your States, if more employers drop their coverage
    and put people on Medicaid?
        Mr. Herbert. Well, if more employers drop their coverage,
    then clearly the eligibility will entice people to use Medicaid
    as the insurer and so our numbers will go up. I don't know what
    the percentage of that would be.
        Mr. Murphy. Governor Barbour?
        Mr. Barbour. I am concerned that we underestimate the
    actual increase in cost, but as I said earlier, we have a lot
    of small businesses that offer insurance to their employees
    right now that won't meet what we fear the standard benefits
    package will be, and for a lot of people, they will just pay
    the $2,000.
        Mr. Murphy. Let me ask you then another area, because some
    of the talk has been, should--and I know, Governor Barbour, in
    your testimony and your written testimony too you talked about
    the delays in getting waivers taken care of, the delays in
    responses that are interminable. You mentioned things about the
    medical school and you talked about physical exams, the
    requirement is not there. If this money came to the States in
    the form of a block grant and said if you could design Medicaid
    the way you would want to do it--granted it was designed in
    1965, and that was back in the era when a hospital that had an
    X-ray machine on wheels was considered pretty modern--but if
    you could redesign it, would your States want that authority?
    Do you think you could modernize things and deliver better
    health care quality to more people at a lower cost? Do you
    think you could?
        Mr. Barbour. We think we would have a better fit for our
    State, we could move more toward an insurance kind of model,
    but we don't think it would just be better quality care, we
    could save you money. As I said at the beginning, we would take
    a 50 percent reduction in the annual increase, and that is a
    lot of money over time in savings for the American taxpayers.
    If we could cut the rate of Medicaid spending going up in half,
    and we would be willing to have a block grant and us take that
    risk.
        Mr. Murphy. Well, let me ask specifically then in terms of
    one of the things you mentioned, Governor Barbour, in your
    testimony about requiring Medicaid patients to have an annual
    medical exam. What benefits would you feel that would have in
    terms of improving quality?
        Mr. Barbour. Well, for so many people, they would just have
    a better understanding, particularly older people would have a
    better understanding of what their health risks were and are.
    They would learn more. We would try to give them a briefing
    about their medicines, but they could get much farther along on
    that, but for a lot of them, they would find out things they
    don't know. If you go to the emergency care for your care, that
    is the worst place for primary care. It isn't just expensive,
    it is not designed for primary care. So it would help these
    people, a lot of people, have a better quality of life.
        Mr. Murphy. Governor Herbert, how about in your State? What
    about Utah?
        Mr. Herbert. Well, again, I think we can do it better. I
    would advocate for States to be able to be the innovators and
    creators of success. You know, it boils down to me just the
    simple principle, do you trust the States, do you trust the
    governors to do this, and some of you do and some of you don't.
    Some of you are a little drawn aside about turning the reins
    over to the States, and I think we have proven the ability to
    in fact provide good service. We balance our budgets. We are
    out there growing the economy. We are doing things that we need
    to be doing in our respective States with our own respective
    different demographics. I have a young State. Our median age is
    only 28.8 years of age. I have a whole different demographic to
    deal with on health care than other States that may have a more
    aging population. So again, that is why I think let States and
    governors deal with it. I think that would find success that we
    otherwise would not have.
        Mr. Pitts. The gentleman's time has expired.
        Mr. Murphy. Thank you.
        Mr. Pitts. The chair recognizes the gentleman from
    Pennsylvania, Mr. Doyle, for 5 minutes.
        Mr. Doyle. Thank you, Mr. Chairman. It was interesting to
    hear from Governor Patrick about the economic impact of health
    care coverage in Massachusetts. It seemed to me that while we
    all know that providing our most vulnerable Americans access to
    health care will save individual families from extreme economic
    hardship due to medical costs, there is apparently also a
    larger economic role that health care coverage plays. Looking
    at the Massachusetts model after they rolled out their
    extensive plan, the number of uninsured shrank to an impressive
    2.7 percent statewide, and uncompensated care costs went down
    by 38 percent. That hardly seems like a failed health care
    program to me. In 2009, nationwide uncompensated care costs
    were $40 billion. If Massachusetts is an example of the
    nationwide effect, we are talking about a potential savings of
    $15 billion as we lower the rate of uninsured in the country.
        Similarly, it seems to me that cutting back on Medicaid and
    leaving more people without any type of insurance is
    shortsighted at best and more likely flat-out dangerous. As we
    all know, $1 cut from Medicaid means $2.33 cut from the State's
    economy.
        You know, it is discouraging to me that the majority
    continues to spend time arguing taking away health care from
    our most vulnerable when what we really need to focus on is
    creating jobs and incentivizing economic growth. In my State of
    Pennsylvania, where the uninsured rates are nearly 20 percent,
    we could save hundreds of millions of dollars adopting the
    Massachusetts model, hardly, in my opinion, a failed health
    care model.
        Mr. Chairman, I want to yield the balance of my time to Mr.
    Weiner for questions.
        Mr. Weiner. I thank the gentleman.
        Mr. Barbour, perhaps you and I should both have those white
    things they have at the U.N. so you could understand my
    Brooklyn accent and I can understand yours.
        Mr. Barbour. We would need an interpreter.
        Mr. Weiner. But I just want to ask you a couple of
    questions. I didn't hear you respond, the governors respond,
    about this question about tort reform. You don't want federal
    tort law to supplant and supersede State tort law, certainly,
    right?
        Mr. Barbour. I thought the question was, what happened when
    we did this in our State, and it has been very, very, very
    beneficial.
        Mr. Weiner. Would you agree, I assume you would, that you
    want State law to supersede federal law? You don't believe
    there should be a federal tort law, do you?
        Mr. Barbour. I think in federal cases, I think there ought
    to be a federal tort law, if it is about federal law.
        Mr. Weiner. Mr. Barbour, as you know, there is no such
    thing as a federal tort right now.
        Mr. Barbour. Well, if you go into federal court in
    Mississippi and a case arises in the State, State law prevails.
    We wouldn't want to change that.
        Mr. Weiner. If I can take back my time, medical malpractice
    is a State law. Are you aware of that?
        Mr. Barbour. That is correct.
        Mr. Weiner. OK. So you don't want federal law to supersede
    State medical malpractice tort law?
        Mr. Barbour. Not in State cases.
        Mr. Weiner. I didn't think you did. Can I ask you this
    question? From the conversation we are having here, you would
    think you have any additional costs at all before 2017. Are you
    both aware that you don't, you have no additional costs before
    the year 2017?
        Mr. Barbour. That is why I said, sir, when I was trying to
    say what the costs were, they are so back-loaded.
        Mr. Weiner. Right. Let me ask you this question. Do you
    anticipate in the future Mississippi will have more or fewer
    poor people with you as governor?
        Mr. Barbour. It depends on the national economy. As long as
    we have got the economy we have got now, we are going to have--
    --
        Mr. Weiner. I am just curious because----
        Mr. Barbour. We are going to have more----
        Mr. Weiner. No, I understand, but is it your policy,
    Governor, to reduce the number of poor people in your State?
        Mr. Barbour. The policy of our State is to grow the economy
    and have more people working.
        Mr. Weiner. Is that a yes, sir?
        Mr. Barbour. It should be the result.
        Mr. Weiner. It is more or less a rhetorical question. Of
    you endeavor to have fewer poor people. That would make you a
    more successful governor, maybe even a candidate for higher
    office. If you have fewer poor people, wouldn't your Medicaid
    costs go down?
        Mr. Barbour. Well, when we added 60,000 employees my first
    3 years as governor, yes, sir, people went off the rolls. Our
    Medicaid costs----
        Mr. Weiner. Right. So for your----
        Mr. Barbour [continuing]. Were better under control.
        Mr. Weiner. So if after 2017 you have fewer poor people
    than today, your Medicaid costs will go down, won't they?
        Mr. Barbour. Well, no, they will actually go up because we
    are going to put all these people on Medicaid under the
    Affordable Care Act that are not----
        Mr. Weiner. All right. I will put it this way.
        Mr. Barbour [continuing]. That are not on it now.
        Mr. Weiner. Well, let me put it in terms of the law. Under
    the Affordable Care Act, people eligible will have, a family of
    four making $30,000 a year will be the maximum coverage under
    the increase under the Affordable Care Act starting in 2017
    when the Federal Government stops absorbing 100 percent and
    absorbs 95 percent of that. If your number of poor people goes
    down a sufficient amount if you are a good governor and your
    number of poor people goes down, your Medicaid costs will go
    down, won't they?
        Mr. Barbour. The definition of ``poor'' and eligible for
    Medicaid are two different things. The number of people
    eligible for Medicaid will go up.
        Mr. Weiner. Thirty thousand for a family of four will be
    the new limit. If it goes down and you do a good job as
    governor, fewer poor people, lower Medicaid. I would endeavor
    that----
        Mr. Pitts. The gentleman's time has expired.
        Mr. Barbour. Not compared to today, Congressman.
        Mr. Weiner. Well, that is exactly the number I gave you is
    the new law.
        Mr. Pitts. The gentleman's time is expired. The chair
    recognizes the gentleman from Texas, Dr. Burgess, for 5 minutes
    for questions.
        Mr. Burgess. I thank the chairman for the recognition.
        I thank you both for being here. I just wanted to clear up
    your concern about what we call this law, and I was too. In
    fact, I spent a long night before the Rules Committee trying to
    get the word ``affordable'' struck from the title on a
    germaneness issue because I couldn't see how ``affordable'' was
    germane to the bill in front of the Congress, but I wasn't
    allowed to proceed with that. So we are stuck with what it is
    called.
        Governor Herbert, you referenced the need to expedite the
    Supreme Court review of the constitutional challenge to this
    law that was passed just less than a year ago. Now, when Judge
    Vincent in Florida issued his opinion just a few weeks ago, he
    said that injunctive relief was not necessary, that his
    declaratory judgment was all that was required because officers
    of the Federal Government would comply with the wishes of the
    court. Now, was he not correct in that statement?
        Mr. Herbert. Well, he may be, he may not be. That is still
    yet to be determined. The process is not completed yet. I know
    some States are taking the position that he is in fact accurate
    on injunctive relief. Others are saying it is not. And so for
    me as a State speaking for Utah, it is kind of like we are
    sitting on some shifting sands. We don't really know.
        Mr. Burgess. Because under normal circumstances, it would
    be likely June of 2012 before that Supreme Court ruling would
    occur. If I am to understand things correctly, officers of the
    Federal Government are not complying with the spirit of the law
    in that implementation of the law is still proceeding at a
    fairly rapid rate so this thing will be down the road another
    18 months, and then if it is struck down, you will be asked to
    unwind under a court order, unwind all of the things that have
    occurred under the Affordable Care Act and it will be difficult
    to dissect out what you were doing with the State exchanges
    before the law went into effect and now what has been struck
    down by the Supreme Court. Is that correct?
        Mr. Herbert. That would be correct. Again, the uncertainty
    is really a problem for us to know which way to go and what to
    do.
        Mr. Burgess. Again, I really do thank both of you for being
    here and there are so many things that could come up.
        In your written testimony, Governor Herbert, you talked
    about you wanted to get to a point where you pay for value.
    Now, are you aware that Donald Berwick, the head of Centers for
    Medicare and Medicaid Services, has testified that he too wants
    to go to a system that he pays for value? Have you two
    communicated on this point? Because he is the federal head of
    the Medicaid program.
        Mr. Herbert. He and I haven't. There may be some
    communication with our staff and our Medicaid people but he has
    not talked to me.
        Mr. Burgess. It seems to me that there is the common
    ground. Now, you also talked in your written testimony about
    what the accountable care model--I am sorry--the ACO model may
    be for Utah, and I don't disagree with that. The rules,
    unfortunately, that were due last September on accountable care
    organizations are still pending so it is kind of like the dog
    ate my homework over at HHS. We haven't got that to you yet.
    How are you able to proceed with this without the certainty of
    what the federal rules will be?
        Mr. Herbert. Well, it is very difficult. In fact, as
    mentioned earlier about the high-risk pool, and we had to wait
    about 6 weeks trying to get questions answered on high-risk
    pool and whether we should implement. We already had one in the
    State. Part of the Affordable Care Act requires a federal high-
    risk pool. But the answer came back, we can't answer that
    question, we haven't had a chance to read the bill.
        Mr. Burgess. Governor Barbour, you had some interesting
    comments about the high-risk pool at the National Governors
    Association on Sunday. Could I get you to quickly summarize
    those, about the number of people----
        Mr. Barbour. Well, there may----
        Mr. Burgess [continuing]. That you were covering and the
    number that are covered now?
        Mr. Barbour. It makes Governor Herbert's point about the
    need for a quick decision by the Supreme Court because we were
    required to create a second high-risk pool in Mississippi to
    comply with this law, even though we had had one since the mid-
    1990s. It insured 3,600 people. And we were forced to add
    another one and now in the course of however long it has been
    in effect, 58 people have signed up when they could have just
    taken our high-risk pool and not forced us to have another one.
        Mr. Burgess. The simplicity could be absolutely stunning in
    that, and actually Nathan Deal and I last year had legislation
    to try to do that but it didn't fly, unfortunately, with the
    Affordable Care Act.
        Let me just point out, Representative Weiner's comments
    about the State sovereignty on medical liability. There is of
    course a federal program called Medicare, and Medicare is
    equally administered across all of the States without regard to
    State sovereignty. Would it be possible to set up a medical
    liability system within Medicare, within that federal program,
    say, perhaps, patterned after the Federal Tort Claims Act that
    is in effect for the federally qualified health centers that
    could provide some relief to your practitioners on medical
    liability costs?
        Mr. Barbour. Yes.
        Mr. Herbert. I think so. It is an interesting idea, and I
    am not an attorney, I don't play one on TV, so I don't know if
    I can comment on that.
        Mr. Pitts. The gentleman's time has expired. The chair
    recognizes the gentleman from Washington, Mr. Inslee, for 5
    minutes for questioning. I am sorry, Ms. Schakowsky for 5
    minutes.
        Ms. Schakowsky. Thank you, Mr. Chairman.
        Illinois Governor Quinn has sent a statement from Illinois
    that outlines the many benefits of the Affordable Care Act.
    Among other things, he points out that the Medicaid expansion
    will cover 700,000 new adults who will have health insurance
    coverage, many for the first time in their adult lives. He
    adds, ``The Affordable Care Act is helping to make
    comprehensive health insurance affordable and accessible to all
    Americans while providing the flexibility to allow governors to
    implement innovative policies that benefit the citizens of each
    unique state. In Illinois, we do not see the Affordable Care
    Act as an alternative or distraction to the urgent need for
    jobs and economic growth. We saw the law as a vital part of our
    economic recovery.''
        Mr. Chairman, I ask unanimous consent that Governor Quinn's
    full statement be included in the hearing record.
        Mr. Pitts. Without objection, so ordered.
        Ms. Schakowsky. Thank you.
        [The information follows:]

        Ms. Schakowsky. Governor Barbour, you have talked about the
    reason that infant mortality rates, et cetera, are up in
    Mississippi and also you were talking about in terms of
    Medicaid we have people pull up at the pharmacy window in a BMW
    and say they can't afford their copayment. Well, first of all,
    let me say that the Federal Government has made fraud in
    Medicare and Medicaid a top priority and has for the first time
    really put resources into doing that. But would you say that
    Mississippi uniquely? Because other States, it is really
    provider fraud that is the bulk of the fraud that goes on in
    Medicare and Medicaid asking for reimbursements of care that
    really wasn't given or prescription drugs. Would you say in
    your State it is your people who are defrauding the big problem
    in fraud?
        Mr. Barbour. Congresswoman, my understanding is that that
    is not considered fraud, that in the federal rules if a person
    says they can't afford to pay the copayment, the provider can't
    challenge it, and of course, the sad thing about that for us
    is, the State doesn't save any money, it is the provider who
    gets shorted, but I report that because providers report it to
    me. It is not my understanding that that is, quote, fraud under
    the federal law. We have really done a good job of tamping down
    on our error rate, including fraud.
        Ms. Schakowsky. So it is really people trying to--you know,
    it is about poor people or not-so-poor people trying to cheat
    the system that has been the big problem?
        Mr. Barbour. We certainly had a problem at one time of
    people who were not eligible being on the program, and it was
    the State's fault because the State was not following the
    rules, but do we have provider fraud? Yes, ma'am, we do, and we
    also have waste from providers as well.
        Ms. Schakowsky. Which all of us, I think, agree we have to
    go after.
        You know, in Illinois we get a 50 percent match of federal
    dollars in our Medicare program. Mississippi gets almost 75
    percent match. Utah gets about 71 percent match. As a matter of
    fact, for federal spending, Mississippi gets $2.02 back for
    every dollar in federal taxes it pays. Utah gets about $1.07.
    Illinois gets about 75 cents back. So we don't do as well as
    you do.
        But do you not think that the fact that 75 percent of the
    dollars, for example, Governor, comes from the Federal
    Government that maybe the Federal Government has some right to
    set some parameters, or no?
        Mr. Barbour. Sure, the Federal Government should have some
    right to set some parameters. I think the Federal Government
    overruns the program by far. I don't think that is unique to
    Mississippi. We get 75 cents because we are the poorest State
    in the country. We would love to trade with Illinois and be a
    much richer State and get a smaller percentage, but for us, the
    beauty is, you all would save a lot of money if you would let
    us manage the program and reduce our costs. You would get $3
    out of 4 of the savings.
        Ms. Schakowsky. Well, actually, I wanted to mention that
    with Governor Herbert. You were talking about your support for
    federalism and the pitch to let Utah be Utah, but actually
    Medicaid already gives you a great deal of flexibility in
    designing your program. You can design your delivery system.
    You can set payment limits. You can do cost-sharing limits and
    benefits, and even prescription drugs are optional. So what are
    you saying? Just completely hands off, the Federal Government
    should not have a right to set some sort of limits?
        Mr. Herbert. Well, clearly you have a right, and I respect
    that right. It is a matter of, is there a better way? I think
    we ought to be more coequal partners in discussions of what the
    process is. I stipulate that the intention and objections of
    Medicaid and the health care reform act are designed to help
    the people. We all want that same goal. What we differ about is
    process.
        Ms. Schakowsky. And yet both of you say you would rather
    see it repealed, right?
        Mr. Barbour. The PPACA? Yes, ma'am.
        Mr. Herbert. I believe that parts of it are
    unconstitutional. I don't think we want to have an
    unconstitutional law on the books.
        Mr. Pitts. The gentlelady's time is expired.
        Our time is limited. The governors' time is limited. We
    want to thank the governors for their testimony. It has been an
    excellent panel. Before we adjourn, we have a couple of
    housekeeping items. The chair recognizes the ranking member,
    Mr. Waxman, for a unanimous consent request.
        Mr. Waxman. Mr. Chairman, we have had letters from many
    different groups supporting maintaining Medicaid eligibility.
    We have a statement from the SEIU opposing repeal of the
    maintenance of effort and requirements of the ACA for Medicaid.
    I would like to have that as part of the record.
        Mr. Pitts. Without objection, so ordered.
        [The information follows:]

        Mr. Waxman. And I did want to take a second or two to talk
    about the Medicaid citizen documentation. I think the statement
    by Mr. Barton was incorrect. States have two ways to establish
    whether someone is an actual citizen. One could be submit a
    name, Social Security number, date of birth, then go to the
    Social Security Administration for verification, and if the
    Social Security records match, the individual meets the
    documentation requirements. As of February, 33 States including
    Mississippi and Michigan have elected this option. In the
    alternative, a State can require an individual provide either a
    U.S. passport or a birth certificate and a driver's license or
    other photo ID. In no case may an individual self-declare
    citizenship or legal immigration status.
        Thank you, Mr. Chairman.
        Mr. Pitts. Without objection, so ordered.
        The gentleman, Mr. Bass, would like to insert for the
    record a study on how to reduce Medicaid drug prices, and Mr.
    Griffith from Virginia has a letter from the Governor of
    Virginia to insert in the record. Without objection.
        [The information follows:]

        Mr. Gingrey. Mr. Chairman?
        Mr. Pitts. Dr. Gingrey?
        Mr. Gingrey. I have a letter also from our former
    colleague, Governor Nathan Deal of the State of Georgia, who
    has some very interesting comments in his letter. I would like
    to submit it for the record.
        Mr. Pitts. Without objection, that will be inserted in the
    record.
        [The information follows:]

        Mr. Pitts. Members will have 10 legislative days to submit
    questions for the record. I ask that the witnesses please
    respond promptly to these questions. Without objection, so
    ordered.
        The hearing is now adjourned.
        [Whereupon, at 12:08 p.m., the committee was adjourned.]
        [Material submitted for inclusion in the record follows:]