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




                               BEFORE THE

                        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


66-822 PDF                WASHINGTON : 2011
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                          FRED UPTON, Michigan

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
  Vice Chair                         DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
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
GREGG HARPER, Mississippi            JOHN BARROW, Georgia
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
DAVID B. McKINLEY, West Virginia


                             C O N T E N T S

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


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



                         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.


    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 
    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 
    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 
    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.


    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 
    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.


    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 
    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 
    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 
    Mr. Pallone. Thank you, Mr. Chairman.


    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 
    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 
    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.


                  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.


    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 
    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.


    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 
    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 
    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 
    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 
    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, 
    Mr. Upton. Excuse me. My time is expired. I would yield to 
the ranking member of the full committee, Mr. Waxman, for 5 
    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 
    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 
    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 
    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 
    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 
    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 
    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.
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    Mr. Pitts. The half minute I have left I will yield to Dr. 
    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 
    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 
    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, 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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, 
    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 
    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 
    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 
    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, 
    Mr. Barbour. I thought the question was, what happened when 
we did this in our State, and it has been very, very, very 
    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 
    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 
    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 
    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 
    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 
    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 
    [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 
    The hearing is now adjourned.
    [Whereupon, at 12:08 p.m., the committee was adjourned.]
    [Material submitted for inclusion in the record follows:]