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






THE VIEWS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES ON REGULATORY 
                           REFORM: AN UPDATE

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 13, 2011

                               __________

                           Serial No. 112-60










      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



                                _____

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

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

                                 _____

              Subcommittee on Oversight and Investigations

                         CLIFF STEARNS, Florida
                                 Chairman
LEE TERRY, Nebraska                  DIANA DeGETTE, Colorado
SUE WILKINS MYRICK, North Carolina     Ranking Member
JOHN SULLIVAN, Oklahoma              JANICE D. SCHAKOWSKY, Illinois
TIM MURPHY, Pennsylvania             MIKE ROSS, Arkansas
MICHAEL C. BURGESS, Texas            KATHY CASTOR, Florida
MARSHA BLACKBURN, Tennessee          ANTHONY D. WEINER, New York
BRIAN P. BILBRAY, California         EDWARD J. MARKEY, Massachusetts
PHIL GINGREY, Georgia                GENE GREEN, Texas
STEVE SCALISE, Louisiana             DONNA M. CHRISTENSEN, Virgin 
CORY GARDNER, Colorado                   Islands
H. MORGAN GRIFFITH, Virginia         JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California (ex 
FRED UPTON, Michigan (ex officio)        officio)

                                  (ii)











                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     1
    Prepared statement...........................................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     8
    Prepared statement...........................................    10
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    48

                                Witness

Sherry Glied, Assistant Secretary for Planning and Evaluation, 
  Department of Health and Human Services........................    12
    Prepared statement...........................................    15
    Answers to submitted questions...............................    49

                           Submitted Material

Chart, ``Estimates of the Cumulative Percentage of Employer Plans 
  Relinquishing Their Grandfathered Status, High-End Estimate,'' 
  from June 17, 2010, Federal Register, submitted by Mr. Stearns.     3

 
THE VIEWS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES ON REGULATORY 
                           REFORM: AN UPDATE

                              ----------                              


                         MONDAY, JUNE 13, 2011

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:07 p.m., in 
room 2322 of the Rayburn House Office Building, Hon. Cliff 
Stearns (chairman of the subcommittee) presiding.
    Members present: Representatives Stearns, Bilbray, Scalise, 
and Waxman (ex officio).
    Staff present: Allison Busbee, Legislative Clerk; Todd 
Harrison, Chief Counsel, Oversight and Investigations; Sean 
Hayes, Counsel, Oversight and Investigations; Debbee Keller, 
Press Secretary; Alan Slobodin, Deputy Chief Counsel, 
Oversight; Sam Spector, Counsel, Oversight; John Stone, 
Associate Counsel; Kristin Amerling, Minority Chief Counsel and 
Staff Director for Oversight; Brian Cohen, Minority Senior 
Policy Advisor and Staff Director for Investigations; Karen 
Lightfoot, Minority Communications Director and Senior Policy 
Advisor; Bruce Wolpe, Minority Senior Advisor; Anne Tindall, 
Minority Counsel; Stacia Cardille, Minority Counsel; and Ali 
Neubauer, Minority Investigator.
    Mr. Stearns. Good morning, everybody, and the Subcommittee 
on Oversight and Investigations is convened. I will start with 
my opening statement.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    We have convened this hearing of the subcommittee to 
examine how the Department of Health and Human Services is 
implementing President Obama's executive order, which was 
announced on January 18, entitled ``Improving Regulation and 
Regulatory Review.'' Regulatory reform has been a priority of 
this subcommittee in the 112th Congress and will remain so as 
long as Americans suffer from prolonged high unemployment and 
sluggish economic growth.
    A 2/10 study commissioned by President Obama's Small 
Business Administration places the total annual compliance cost 
of federal regulations at $1.75 trillion, a number that trumps 
the record federal budget deficit. Cass Sunstein, the head of 
the office of Information and Regulatory Affairs, a primary 
overseer of the administration's reform efforts, disagreed with 
this study in his testimony before this subcommittee on June 3. 
This seemed to be a theme of the administration. If a study or 
report comes out that they disagree with, it is denounced as 
inaccurate or labeled an outlier, even if the administration 
actually commissioned the study themselves. Case in point is a 
White House response to a recently released study by the 
McKinsey Group, indicating a radical restructuring of employer-
sponsored health benefits, following the passage of the 
President's health care plan.
    Overall, 30 percent of the employers surveyed said that 
they will definitely or probably stop offering health care 
coverage in the years after 2014, due to the overwhelming 
burden and expense of Obamacare, and an incredible 50 percent 
of employers with a high awareness of the laws say they will 
stop offering coverage.
    White House Deputy Chief of Staff Nancy-Ann DeParle 
shrugged off the report saying it misses some key points and 
doesn't provide the complete picture. This study, however, is 
not an outlier. Two other reports have been released by 
reputable independent experts within the last month. Each one 
concludes that the Obamacare has made coverage more expensive 
and that many individuals who like their current plan will 
simply be dropped from it.
    In fact, according to the administration's own estimate 
cited in the interim final rule implementing the grandfathered 
health plans, its regulations will force half of all employers 
and as many as 80 percent of small businesses to give up their 
coverage in the next 2 years, as this graph clearly shows.
    [The information follows:]



    
    President Obama's executive order requires agencies, when 
promulgating rules, to consider costs and benefits to ensure 
that the benefits justify the costs and to select the least 
burdensome alternatives. It requires increased public 
participation. It directs agencies to take steps to harmonize, 
simplify, and coordinate rules. And finally, it directs 
agencies to consider flexible approaches that reduce burdens 
and maintains freedom of choice for the public.
    I do not see how the regulations that will force as many as 
80 percent of small businesses to drop their employees' health 
coverage can possibly pass any of these tests and criteria that 
the President outlined. Quite frankly, it seems like Obamacare 
itself has received a waiver from this executive order itself.
    In addition to prospective requirement agencies are 
supposed to adhere to while promulgating regulations, the 
executive order directs agencies to conduct ongoing, 
retrospective analyses to identify rules that should be 
streamlined, reduced, improved, or eliminated.
    HHS arguably touches more aspects of America's daily lives 
than any other agency. FDA in itself regulates more than 25 
percent of the U.S. economy. We need to ensure that the 
regulations it has on the books as well as the ones it is 
currently drafting promote public health as well as private 
sector innovation and job creation. After all, the health and 
well being of our citizens is inherently tied to the health and 
well being of our economy. The number and size of the 
regulations that have been expedited through the review process 
at HHS and ORIA is matched only by the number and size of the 
rules still in the queue. Among these is the establishment of 
an essential benefits package, which will increase premiums and 
further put people's coverage at risk.
    Hopefully our witnesses today--our witness today will share 
with us what HHS has learned from the process used to 
promulgate such rules and regulations as the grandfathered 
health plans rule. HHS will hopefully do better, while 
reviewing the essential benefits package and other large rules 
coming down the pike.
    An unprecedented amount of authority has been delegated to 
HHS and other agencies in the administration. The principles 
President Obama affirms in his executive order are important. 
We agree. I am just concerned they are being ignored when it 
comes to the actual implementation of large scale government 
program such as the President's health care plan.
    I would like to welcome our witness, Sherry Glied, who is 
the assistant secretary for planning and evaluation at the 
Health and Human Services Department. And with that, I 
recognize the ranking member of Energy and Commerce, the 
distinguished Henry Waxman from California.
    [The prepared statement of Mr. Stearns follows:]



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

    Mr. Waxman. Thank you, Mr. Chairman. The subject of 
regulatory reform deserves review, and Congress has a 
legitimate interest in making sure that the administration is 
living up to its promises with regard to making the regulatory 
process simple and more transparent. But as we investigate 
regulatory reform, we need to make sure we consider both the 
costs and the benefits of regulations.
    This is the third hearing in this committee on regulatory 
reform this year. In these hearings, the administration's 
opponents have relentlessly focused on the negative with no 
regard for why we need regulations or for the good that they 
do. Regulations aren't pulled out of thin air for no reason. 
They exist to implement laws Congress enacted to help protect 
taxpayers' funds, improve public health and safety, keep our 
air and water clean, and keep consumers safe.
    Today's hearing is a good illustration. Some of the 
administration's recent health regulations will do enormous 
good for American families. New food safety regulations 
promulgated by FDA will reduce salmonella contamination and 
prevent as many as 79,000 illnesses each year. New tobacco 
control regulations promulgated by FDA will protect children 
and adolescents from the dangers of addiction to cigarettes and 
smokeless tobacco.
    New regulations issued by CMS under the Affordable Care Act 
will end the insurance industry's worst abuses. They will 
prevent health insurers from rescinding policies when 
beneficiaries get sick, end discrimination against children 
with preexisting conditions, prohibit the imposition of 
lifetime caps on coverage and require all health plans to put 
more of consumers premium dollars into actual care and less 
into insurance company profits.
    Another set of CMS regulations also authorized by the 
Affordable Care Act will cut Medicare and Medicaid fraud and 
save taxpayers millions of dollars. No one wants unnecessary or 
duplicative regulations, but at the same time, no one should 
want to eliminate regulations that save taxpayers money and 
protect the health and welfare of America's families.
    That is why we must look at both the costs and benefits of 
regulations. When we focus solely on costs, as often seems to 
happen in this committee, we lose sight of the critical 
benefits these regulations provide.
    Before I yield back my time, I want to note that Ranking 
Member Diana DeGette regrets being unable to attend this 
hearing. Today is a return day. We don't have votes until 6:30, 
and unfortunately the ranking member of the subcommittee was 
not consulted about the hearing that was going to be called 
today before 6:30. In the last Congress, we engaged in a lot of 
these consultations. I think they are useful for everybody 
involved, and I would urge the majority to be sure to consult 
with the minority so that the minority ranking members of the 
subcommittee can change their schedules or can be accommodated 
in some possible way.
    I have completed my opening statement. I want to welcome 
Ms. Glied to be here. We are looking forward to your testimony. 
I think what HHS is doing by way of regulations is very 
important, very worthwhile, and while any regulation may have 
some downsides, we have to realize that many of them have very, 
very important upside for the American people. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Waxman follows:]



    
    Mr. Stearns. I thank the gentleman from California. I would 
point out that we gave 1 week's notice according to the rules 
for this hearing, but I also want to again reiterate we welcome 
Sherry Glied. She again is the assistant secretary for planning 
and evaluation at the U.S. Department of Health and Human 
Services.
    And, madam, as you know, the testimony that you are about 
to give is subject to Title 18, Section 1001 of the United 
States Code.
    When holding an investigative hearing, this committee has a 
practice of taking testimony under oath. Do you have any 
objection to testifying under oath?
    Ms. Glied. No, sir.
    Mr. Stearns. The chair then advises you that under the 
rules of the House and the rules of the committee, you are 
entitled to be advised by counsel. Do you desire to be advised 
by counsel during your testimony today?
    Ms. Glied. No, sir.
    [Witness sworn.]
    Mr. Stearns. You may now give your 5-minute opening 
statement. Thank you.

TESTIMONY OF SHERRY GLIED, ASSISTANT SECRETARY FOR PLANNING AND 
    EVALUATION, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Ms. Glied. Mr. Chairman, Congressman Waxman, other members 
of the subcommittee, my name is Sherry Glied, and I am the 
Assistant Secretary for Planning and Evaluation in the U.S. 
Department of Health and Human Services. I am grateful to have 
the opportunity to appear before you today to discuss issues 
relating to regulation and to Executive Order 13563, Improving 
Regulation and Regulatory Review.
    I will focus in particular on the retrospective review of 
the existing rules. The President's order laid the foundations 
for a regulatory system that is designed to protect public 
health and welfare while also promoting economic growth, 
innovation, competitiveness, and job creation. On May 18 and in 
compliance with the executive order, HHS released our 
preliminary plan. HHS's systematic review of regulations will 
focus on eliminating rules that are no longer necessary and 
strengthening or modernizing rules where appropriate.
    For example, the Centers for Medicare and Medicaid services 
is working to address conflicting requirements between Medicaid 
and Medicare that potentially create barriers to high quality, 
seamless, and cost-effective care for dual eligible 
beneficiaries.
    The Administration for Children and Families is also 
encouraging State's child support programs to use cost-
effective technologies like electronic signature and document 
storage. And the Food and Drug Administration is going 
paperless with its adverse events reporting requirements for 
medical devices.
    HHS's retrospective review plan has 4 goals: to increase 
transparency, to increase opportunities for public 
participation, to set retrospective review priorities, and to 
strengthen analysis of regulatory options. This administration 
believes that retrospective regulatory review must be 
accompanied by efforts to make more information available to 
all interested parties and that regulations and the regulatory 
process should be as clear as possible.
    HHS will increase transparency in its regulatory process by 
making available to the extent feasible and permitted by law 
information that is useful for businesses, States, local and 
travel government, and the public. It is essential that people 
be able to understand the basis of a proposed regulatory 
activity including the science or evidence base for a 
regulation.
    Public participation is a very important part of our 
retrospective review plan. We are currently soliciting public 
comment on the HHS preliminary plan on the www.hhs.gov/open Web 
site through June 30. Suggestions are welcome, and HHS will 
carefully review all comments before finalizing our plans. HHS 
also intends to increase the breadth and quality of public 
participation in its role-making and retrospective review 
activities.
    All HHS agencies already reach out to obtain public input 
and advice on regulation subject to review and modification. 
For example, twice a year, FDA sends letters to State and local 
elected officials and to small businesses, highlighting 
upcoming regulations and seeking suggestions o FDA's regulatory 
activities.
    FDA also recently established a new web page specifically 
devoted to its regulatory review activities. CMS conducts 
monthly open-door forums and provider outreach activities. 
Feedback from these activities allows CMS to identify and 
change obsolete regulatory requirements and to reduce 
regulatory burden.
    Moving forward, HHS is establishing a public participation 
task force within the department to explore way to increase 
interactivity in the public comment process including the use 
of podcasts, webinars, video teleconference sessions, wickeys, 
YouTube, and other social media.
    HHS has also actively encouraged public participation as we 
implement the Affordable Care Act. For example, we solicited 
public comment even before putting out rules around medical 
loss ratios, grandfathered health plans, and rate review. 
Similarly, CMS held public forums on wellness and exchanges to 
provide opportunities for public input by effected 
stakeholders.
    The last cornerstone of our plan is to strengthen the use 
of regulatory analysis such as cost/benefit analysis. The 
secretary has asked me to establish an agency-wide analytics 
team to share information, make the quality of analysis more 
consistent across the department, and ensure the integration of 
such analysis into regulatory decision making to improve the 
quality of the regulations we promulgate.
    We have also redoubled our longstanding commitment to 
making regulatory review an integral part of our operations and 
culture.
    As our work continues in the months and years to come, we 
will rely on the four key principles I have just highlighted: 
increasing transparency, improving public participation, being 
clear about our priorities, and ensuring that analysis guides 
our efforts. Our department's mission is to protect the health 
and safety of all Americans. The plan we will be discussing 
today does that while promoting economic growth, job creation 
and innovation.
    I look forward to working with you in this endeavor and am 
happy to answer any questions.
    [The prepared statement of Ms. Glied follows:]



    
    Mr. Stearns. Dr. Glied, thank you very much. I will start 
the questions here. What we have in the Oversight and 
Investigation Subcommittee is a little different. We try to get 
succinct answers because we are more of an investigative body 
rather than a legislative body. So if you possibly can, just 
keep your comments short. Just by background, I understand you 
are an economics professor at Columbia. Is that correct?
    Ms. Glied. Yes, sir.
    Mr. Stearns. Did your background include any health-related 
things at being an academic professor at Columbia?
    Ms. Glied. Yes, sir.
    Mr. Stearns. Did you--is this your first job working in the 
administration?
    Ms. Glied. No, sir.
    Mr. Stearns. What other administrations did you work for?
    Ms. Glied. I worked for the first Bush administration back 
in 1992 and for the Clinton administration in 1993 at the 
Council of Economic Advisors.
    Mr. Stearns. And was that dealing with health too?
    Ms. Glied. Yes, sir.
    Mr. Stearns. So when you walked into this job, you didn't 
feel like you were walking into a brand new storybook?
    Ms. Glied. No, sir.
    Mr. Stearns. OK, how does Health and Human Service identify 
which rules that are already on the books will be reviewed?
    Ms. Glied. We have laid out, after process of public 
comment, a set of principles that are going to guide which 
rules we want to look at. And we have also opened our plan up 
to the public for further comment so they can also suggest 
rules they would like us to look at. But the main principles 
that guide our decisions are situations where circumstances 
have changed since the rule was originally promulgated, where 
new technologies or innovations have come along that should 
lead us to change how we do something, or there has been a 
failure to realize public health benefits that were anticipated 
on passing a rule.
    So for example, HRSA, the Human Resources and Services 
Administration, has rules that were promulgated back in the 
1970s defining health professional shortage areas. That is a 
real priority for us to go after because it has been a long 
time since we have looked at those rules.
    Mr. Stearns. You indicated there might be public comment to 
or--
    Ms. Glied. Yes, sir.
    Mr. Stearns. --the public can submit to you rules that they 
think are outdated too.
    Ms. Glied. That is correct. The Web site is open for 
comment through June 30.
    Mr. Stearns. Once a rule is identified for review, possibly 
reform or elimination if it goes back to 1970, what is the next 
step, and how long does the process take?
    Ms. Glied. I think that we will see that as we go through 
each rule. Each rule will go through a careful analysis 
including redoing the regulatory impact, trying to assess what 
the impact of that rule is, and what potential for modification 
or rescission of that rule might be appropriate.
    Mr. Stearns. So is it possible that you could interpret 
through your office a way to enforce a rule in a totally 
different manner?
    Ms. Glied. We have to abide by the statutory authority 
under which the rule was promulgated, but we could look at that 
rule and come up with better ways of doing it.
    Mr. Stearns. But you are saying you could also decide not 
to enforce it.
    Ms. Glied. Only if that would be consistent with the 
statutory authority under which the rule was promulgated.
    Mr. Stearns. Well, if it is on the books and it is 
statutory authority, how could you suddenly decide not to 
enforce it?
    Ms. Glied. We would have to enforce it. We might come up 
with a different way to enforce it, a different way to 
implement the authority.
    Mr. Stearns. So you would come up with a new 
interpretation?
    Ms. Glied. Correct.
    Mr. Stearns. Would this go to public comment?
    Ms. Glied. All of our laws do go to public comment, yes.
    Mr. Stearns. And how long is that public comment?
    Ms. Glied. There is a standard process where we might put 
out a notice of proposed rulemaking and seek public comment on 
that. I don't remember exactly how long it is. A couple of 
months, I think.
    Mr. Stearns. Have you identified any rules already? I mean 
how many rules have you identified today?
    Ms. Glied. The first part of this process was for the 
various agencies within HHS to identify rules that they thought 
were important. We have identified many rules. I would say 
dozens of rules already that we are looking at. In a separate 
and parallel effort, CMS has looked at its own ways of doing 
business and has identified 80 practices including rules that 
it is going after. So there is a large number that we are 
investigating.
    Mr. Stearns. So you are saying at this date you have 
identified, in your office, 12 rules?
    Ms. Glied. No.
    Mr. Stearns. You said dozens.
    Ms. Glied. More than dozens. More than a dozen.
    Mr. Stearns. More than? So would you say 48 or 24?
    Ms. Glied. I don't have the exact number before me, and we 
are waiting for public comment to get more rules in. So we 
anticipate that we will get quite a few.
    Mr. Stearns. Anybody on your staff that could tell you how 
many rules you have identified so far? Just approximately.
    Ms. Glied. Probably----
    Mr. Stearns. Are we talking about 10?
    Ms. Glied [continuing]. 20, 25 so far.
    Mr. Stearns. Twenty? Twenty-five, OK.
    Ms. Glied. I am not--I don't want to be, you know----
    Mr. Stearns. No, I am not going to hold you to it. It is 
just a round figure.
    Ms. Glied. And we are waiting for public comment to get 
many more.
    Mr. Stearns. Of any of those 25, have you decided not to 
enforce any of those 25?
    Ms. Glied. We haven't--no, we have not decided not to 
enforce any of them. We are looking at ways to revise them. For 
example, to recalculate how we would determine to help 
professional shortage area or to change the way we use symbols 
and device labeling at FDA.
    Mr. Stearns. And so the criteria--I would like to 
understand how you decided to select those roughly 20 rules. 
How did you single those out? Was it age on the books or based 
upon implementation not working, or is it based upon not clear? 
What--
    Ms. Glied. We laid out five, a series of criteria including 
that there were new technologies, that there had been changes--
--
    Mr. Stearns. Which you mentioned earlier.
    Ms. Glied. Right, the ones that I had mentioned earlier.
    Mr. Stearns. Those are the criteria you mentioned earlier.
    Ms. Glied. So we looked at them. We asked all of the 
agencies to look at the rules on their own books to see ones 
that made the most sense to modify where they had opportunities 
to modify those rules and see that it looked like it was 
important. And now we have opened it up for public comment so 
that other people can also tell us where they think we should 
be looking.
    Mr. Stearns. It seems to me that, you know, the executive 
branch issued this executive order to look at these rules, but 
as I recollect, it is already on the books that HHS should be 
doing this on a regular fashion. Isn't that true?
    Ms. Glied. That is true. There are several authorities 
under which we already look at rules, the Regulatory 
Flexibility Act.
    Mr. Stearns. So would it be fair to say that the executive 
order really wasn't necessary because the legislation is 
already on the books to do exactly what you are doing, and it 
wasn't necessary for the executive order to be issued?
    Ms. Glied. We have routinely within the department looked 
over our rules, and we--even before the executive order came 
forward, we had rules that we were working on. But the 
executive order does tell us to prioritize this activity, and 
that is what we have done.
    Mr. Stearns. In your plan, it says ``the priority will be 
to identify regulations that agencies can easily modify, 
streamline, or rescind to address regulatory burdens or 
inefficiency.'' You feel this is strong enough?
    Ms. Glied. I think those make sense as a criteria for us to 
look at, yes.
    Mr. Stearns. And you are saying one of your criteria is to 
take and prioritize regulations that are easiest to fix. 
Wouldn't also you determine what is the most impact?
    Ms. Glied. Of course, you want to look at both----
    Mr. Stearns. I mean I would think that that would be the 
criteria rather than easiest to fix because you might be 
putting a parentheses somewhere, and that is easiest to fix. 
But it really is a meaningless regulation. Whereas you might 
have a whole set within that 20 that has huge impact, that 
would impact constituents.
    Ms. Glied. As you know, Chairman Stearns, we want to weigh 
the costs and benefits of everything we do, including which 
regulations to pick. The ones that are----
    Mr. Stearns. Do you actually weigh the cost benefits?
    Ms. Glied. Yes.
    Mr. Stearns. Do you do an economic analysis?
    Ms. Glied. We do. For any regulation we put forward, we do 
an economic----
    Mr. Stearns. Even if it is easiest to fix?
    Ms. Glied. Well, if it is easiest to fix, the cost of 
repairing it are very small, and that has to be taken into 
account. So we take into account both what can be done easily 
and what is most important to do, and both of those things need 
to be weighed.
    Mr. Stearns. Now, I am sure this is pretty easy to 
understand for you. Aren't the most burdensome regulations the 
ones that are most complex? Is that a fair statement?
    Ms. Glied. Not necessarily, Chairman. Sometimes there could 
be very burdensome regulations that are very simple.
    Mr. Stearns. Let me give you an example. Under the 
President's health care plan, this is a regulation that those 
covering medical loss ratios--and I have talked to insurance 
companies about this--accountable care organizations and 
grandfathered health plans, these are pretty complex rules. 
Wouldn't you agree?
    Ms. Glied. Some of them are complex, yes.
    Mr. Stearns. OK, yet your plan says that that complexity on 
important rules would make it not a priority for your review. 
That is what we understand. That because of the complexity of 
it, you have not done a review. Yet everywhere I go, people are 
talking about medical loss ratio, how complicated it is and the 
impact it is going to have. It seems like that one would be one 
you would look at together with, as I mentioned, the 
grandfathered health plans, what that means in accountable care 
organizations.
    Ms. Glied. So, Chairman, you have spoken about three of our 
very important regulations under the Affordable Care Act, which 
promulgate regulations to really put forward a change in the 
U.S. health care system that I think is very important. Those 
regulations have only very recently been passed. So we are not 
going to look at them not because of their lack of complexity, 
but because there has been no change in circumstances. There 
have been no new technologies or innovations. There is really 
not much that has changed since we promulgated those rules that 
would lead it to make sense from a--to look at them again 
within this short period of time.
    Mr. Stearns. We both agree that you would look at 
burdensome regulations if they had a huge economic impact. I 
think you said you would.
    Ms. Glied. We have just completed doing the economic impact 
analysis of those regulations. So we have already weighed their 
benefits and costs and shown that their benefits considerably 
exceed their costs.
    Mr. Stearns. Well, if I identified--let us take medical 
loss ratio--as having huge economic impact, is it safe to say 
that you are going to look at that regulation in detail and 
allow public to comment on it in the very near future?
    Ms. Glied. Chairman, that regulation was actually developed 
after an extensive period of public comment, and we had 
assessed the cost and benefits. We estimate that the cost of 
that regulation for insurers are on the order of $100,000 per 
insurer for insurance to set up the plan and $25,000 per 
insurer to continue maintaining the plan over time. And then it 
is going to generate $3 billion in benefits to American 
consumers over the period from 2011 to 2013. That is a great 
benefit/cost ratio.
    Mr. Stearns. Now those analyses that you did are within--
your department made those projections, right?
    Ms. Glied. That is correct.
    Mr. Stearns. That was not done by an outside accounting 
firm or an outside economic group? It was done by your people, 
right?
    Ms. Glied. As with all regulatory impact analyses, those 
are conducted within the agency and reviewed by OIRA.
    Mr. Stearns. Have you actually sat down with the people 
that have been impacted, insurance companies? Do they agree? 
Because I heard--I have not heard any of them think that it is 
just going to cost $100,000 plus the very small figures that 
you--none of them have told me that. So I don't know where you 
get your figures.
    Ms. Glied. Chairman Stearns, the rules for the medical loss 
ratio were actually developed by the National Association of 
Insurance Commissioners, which is an organization of all the 
state insurance commissioners from around the country. They are 
the ones who developed these rules, and we worked on the 
regulatory impact analysis in conjunction with those rules that 
that had developed.
    Mr. Stearns. Well, as you know, between the cup and the 
lip, if you develop a regulation based upon someone else, there 
could be some nuisances of parse language. Because the 
insurance companies are not coming back, at least to this 
member, and feeling the costs are so diminutive that you 
pointed out. Let me go to another series of questions here. I 
think I have the opportunity to speak a little longer. I assume 
that there is no one on the Democrat side, and I am sure they 
would want me to use my time as wisely as I could so that I 
will continue. Dr. Glied, if you don't mind, we will--I will be 
glad to--if another member shows up, I would be glad to--I am 
told Mr. Waxman might come back. I hope he will. He had very 
good questions to offer you too.
    Dr. Glied, you have released your preliminary plan for 
retrospective review of existing rules. Is that correct?
    Ms. Glied. Yes, sir.
    Mr. Stearns. This is a retrospective plan though. Is that 
correct?
    Ms. Glied. This particular part of the plan is 
retrospective, yes
    Mr. Stearns. Because it only looks backwards.
    Ms. Glied. Many of the principles in the plan are also 
encapsulated in existing HHS practices, so the President 
actually specifically called for retrospective review. But we 
actually have implemented those principles both going 
prospectively and looking the regulations we are about to 
promulgate and concurrently, the regulations that we are 
working on right now as well as retrospectively, sir
    Mr. Stearns. That is a pretty good answer. You have it both 
ways there. Of the 20 regulations, how many of those are 
retrospective and how many...
    Ms. Glied. But those are retrospective. That is part of our 
retrospective review plan, but we are engaging...
    Mr. Stearns. Do you have any prospectively?
    Ms. Glied. So prospectively, we are working on many 
regulations right now, and we have already implemented those 
efforts by, for example, increasing the transparency with which 
we put forward those regulations, by putting them up on our Web 
sites in a much more easy to access way, and by getting public 
comment even before we start the rulemaking process
    Mr. Stearns. It is interesting with the passage of the 
President's health care plan, there is so much regulation that 
involves moving prospectively forward. And so yet you are 
talking at this point of retrospective. So I guess the question 
is how would your office address prospectively all of the 
regulations from the President's health care? Because as this 
is presented and enforced every year, there is going to be much 
complexity and much angst.
    As you saw the graph I showed, small, medium, and large 
businesses, particularly small businesses have decided, almost 
80 percent in the next 2 years, they are going to give up their 
health care plan, and they are going to go to the government 
option. So you see the angst is out there. So I guess the 
question is how does your plan address these prospective 
regulations that are all part of the President's new health 
care plan?
    Ms. Glied. Sir, the Affordable Care Act offers great new 
opportunities for small businesses. As you know, they are 
already eligible for tax credits, and they will be able to buy 
insurance on much better terms. We can really level the playing 
field once those exchanges get going.
    As we develop those plans to get the exchanges going to 
move into 2014, we are soliciting a lot of public comment, both 
in advance of rulemaking and as part of the rulemaking process, 
including a lot of public comment from small businesses, from 
providers, from insurers, from all affected groups.
    Mr. Stearns. Dr. Glied, I think that what you can hear from 
me is, based upon the graph I showed you and the angst that is 
out there, that retrospective is fine, but there is a huge, 
burdensome number of regulations that are being implemented as 
we move forward. And I just--I think on this side of the aisle, 
we would certainly like to feel that you are using your general 
principles that you mentioned in your opening statement are 
being applied to the rules from--for the President's health 
care.
    So that in addition to looking at rules that are obsolete, 
not effective, burdensome, complex, that same thing applies in 
probably a larger sense based upon what we see and the 
statistics and based upon that graph, that we would urge you to 
also concentrate and focus your energy on the President's 
health care plan moving forward.
    With that, my time is expired, and we recognize the 
gentleman from California, Mr. Waxman.
    Mr. Waxman. Thank you, Mr. Chairman. Dr. Glied, regulations 
have two sides to them. There are downsides because we are 
requiring some industries to have to do something often or 
regulations mean we are regulating certain activities. But 
there is an upside to it, and sometimes we don't hear about the 
upside, especially in this committee. For instance, there are 
estimated 19.4 million children living in this country with 
preexisting conditions. Until last year, it was perfectly legal 
for insurance companies to discriminate against these children, 
issuing riders that excluded coverage for critical medical 
problems or refusing to cover these children at all.
    And when the Republicans said they wanted to repeal the ACA 
and then replace it, I would have thought they were saying they 
were going to replace some of these very same provisions. 
Otherwise, what are they doing to help children and families, 
Americans that can't get insurance because they are being 
discriminated against?
    Is it true that extending coverage to children with 
preexisting conditions provides benefits to the children, their 
families, to the country as a whole?
    Ms. Glied. Yes, sir, it certainly does, and I think it also 
improves the efficiency of our economy because my providing 
coverage to children with preexisting conditions, we make it 
easier for their parents to choose the right job for themselves 
and to really seek employment opportunities that might not 
otherwise be available to them.
    Mr. Waxman. Now, HHS has also issued regulations to end the 
lifetime caps on coverage, prevent insurance companies from 
using decades-old paperwork errors to justify canceling 
someone's insurance as soon as they get sick. These practices 
also have costs. They may cut into the insurance industry's 
bottom line. But, Dr. Glied, in issuing regulations that ban 
the practices, did HHS determine that such bans would have 
significant benefits?
    Ms. Glied. They certainly did. We certainly did. In fact, 
the estimates that those consumer protections and the patient 
bill of rights would increase insurance premiums by 4/100ths of 
1 percent--between 4/100ths of 1 percent and 2/10ths of 1 
percent, a tiny increase in costs. And in exchange for that, 
all Americans would get reliable valuable coverage. And about 
25,000 people who already exhausted the lifetime limits in 
their coverage would actually have meaningful insurance for the 
first time.
    Mr. Waxman. We hear a lot about burdens on industry from 
our Republican colleagues, but I think a conversation about HHS 
regulations, their focus is exclusively on costs borne by the 
insurance industry is dangerously misleading. To understand the 
real impact of regulations, we have to consider the health 
benefits and cost savings offered to consumers as well. And I 
assume that HHS considered the full range of both costs and 
benefits in issuing these regulations?
    Ms. Glied. Yes, sir, we did.
    Mr. Waxman. Many of my colleagues on the other side of the 
aisle have raised concerns that these regulations, under the 
affordable care act, were not subject to retrospective review 
that HHS conducted. In the executive order issued in January, 
President Obama cited a number of principles of regulatory 
review. The President required regulations to be proposed or 
adopted only when benefits justified costs. He asked for 
regulations to be tailored to impose the least burden on 
society. Then he called for regulations to be adopted through a 
process that involves public participation.
    Dr. Glied, I would like to ask you some questions about 
regulations issued under the Affordable Care Act and the manner 
in which they were promulgated. Did the department issue 
regulations under the ACA only when it found the benefits of a 
rule outweighing the costs?
    Ms. Glied. Yes, sir, we did.
    Mr. Waxman. Can you provide some examples of regulations 
issued under the Affordable Care Act where the benefits 
outweigh the costs?
    Ms. Glied. Well, for example, the regulation that requires 
that insurers allow young adults up to age 26 to remain on 
their parents' insurance coverage is estimated to increase 
premiums by about 1 percent for families and to cover over a 
million young adults, up to a million young adults. And that 
will improve the earnings of those young adults, reduce 
uncompensated care, improve job mobility within the American 
economy, so the benefits are enormous.
    Mr. Waxman. In his executive order, President Obama 
emphasized the importance of public participation in the 
rulemaking process. He wrote ``regulations shall be based to 
the extent feasible and consistent with the law on the open 
exchange of information and perspectives among state, local, 
and tribal officials, experts in relevant disciplines, effected 
stake holders in the private sector, and the public as a 
whole.'' Dr. Glied, can you explain how HHS incorporated public 
participation into the ruling making process under the 
Affordable Care Act?
    Ms. Glied. Yes, sir. As you know, the rulemaking process 
has periods of public comment built into it, but we went well 
beyond those required periods of public comment and actually 
solicited public comment even in advance of beginning our rule 
making around the medical loss ratios, rate review exchanges, 
and so on. We held open forums around external review and co-
ops. We have been very proactive in getting out there and 
asking stakeholders to give us their views.
    Mr. Waxman. Well, I know that the Republicans have a 
fervent opposition to the whole law, but I hope that that 
doesn't cloud their ability to thoughtfully examine the 
administration's steps to apply executive order principles to 
the health reform regulatory process. I know that they would 
want those principles applied to all regulations, which is what 
the President intended in opposition to a certain law. It is 
the law. Shouldn't affect their appreciation that the 
department, in your case of HHS, has tried to keep within the 
President's executive order in following the regulatory 
procedures that would weigh the benefits and the costs and do 
what is best after full participation of all the parties in 
establishing those regulations.
    Thank you, Mr. Chairman. I yield back my time.
    Mr. Stearns. I thank the gentleman. We recognize the 
gentleman from Louisiana, Mr. Scalise, for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman. If I could, I would 
like to ask a little bit about the waivers that have been 
issued for Obamacare. We had a hearing on the issue in general. 
A lot of unanswered questions regarding the number of entities, 
both businesses and labor unions that have requested and 
received waivers. A lot of unanswered questions about who has 
requested and been denied waivers. So first if you can give me 
kind of the broad brush of the administration's policy on this. 
How long have waivers been granted? And can you further expand 
on who has not been granted waivers and why?
    Ms. Glied. So the criteria that we use for providing 
waivers around the annual limits within the Affordable Care 
Act, and those waivers are waivers that allow farms in the 
short run as a bridge to when we provide people with much 
better coverage in 2014, to continue to have plans that have 
annual limits in them.
    So the waivers allow plans to maintain those annual limits 
just until 2014. We have--the criteria that have been 
established to grant waivers are up on the HHS Web site and are 
available, as is the complete list of all of the entities that 
have been granted waivers. And, sir, fewer than 10 percent--
sorry, fewer than 2 percent of the health insurance market has 
been--is in plans that have been associated with waivers. So 
the waiver----
    Mr. Scalise. How many--if roughly 1,400 entities have been 
granted waivers, those are the most updated numbers I have. I 
don't know if you have more updated numbers. I think 1,372 
entities, employers, unions, other entities have been granted 
waivers. What numbers do you have?
    Ms. Glied. Those are the numbers. I am not familiar with 
other numbers, sir.
    Mr. Scalise. OK, so you would say that that is a fair 
number to use?
    Ms. Glied. I believe so.
    Mr. Scalise. And that is who have been granted. Do you know 
how many have been denied, who have requested a waiver but have 
not been granted it?
    Ms. Glied. I believe the list of entities that requested 
waivers and were denied them was actually given to this 
committee. So you actually have those.
    Mr. Scalise. OK, and I will pull those if they are here. 
When you talk about fewer than 2 percent, have--I guess that is 
of all the companies that provide health care for their 
employees, fewer than 2 percent of the companies have been 
granted a waiver?
    Ms. Glied. Less than 2 percent of the market is affected by 
these waivers, yes.
    Mr. Scalise. Yes, and when you say affected, this gets, I 
guess, into the bigger question. You know when I talk to small 
business owners, and this last week we had a district work 
period. And again I was meeting with small businesses 
throughout my district, and I hear this from other colleagues 
of mine. Small businesses I talk to, they don't even know that 
there is the ability to go get a waiver. Many of these 
companies you talk to are struggling right now with how they 
are going to comply with Obamacare. One thing they do know is 
that it is going to be very difficult for them to comply, and 
they still don't know what all the rules and regulations are 
because there are still many rules and regs still yet to come 
out.
    But what they do know from what they have already seen and 
what they have calculated, it is going to be very difficult for 
them to comply. And when I ask them about this waiver process 
and talk to them about the nearly 1,400 entities, many of whom 
were ironically entities that were asking for the bill to be 
passed. I mean you get groups like AARP, a lot of these 
organized union groups who were up here at the Capitol saying 
we need this law. It is going to be so great. And then they 
went and kind of got this secret deal with the White House to 
get a waiver.
    A lot of these small businesses that didn't want Obamacare 
in the first place don't even know you can go get a waiver. So, 
you know, was this kind of some secret memo that was leaked? I 
mean why is it that our small businesses, who are on the front 
lines of creating jobs in America, who many of whom can't go 
and create new jobs because of this law and other regulations 
like it, they don't even know that this process is out there.
    When I tell them about it, they say look, I would love to 
get the waiver. And of course, you know, they are not even 
aware of it. I direct them, you know, to go apply. I would love 
everybody to be able to get a waiver from the entire law, 
meaning repeal of the law. But, you know, can you tell me what 
process you all use to promote it? Because it seems like a lot 
of the administration's friends know about it and got the 
waiver, and a lot of small businesses across America don't even 
know it exists.
    Ms. Glied. The waiver process is--the information of the 
waiver process is publically available on our Web sites. And I 
think insurers particularly are very well aware of it. They are 
the ones who are selling the policies to small businesses that 
have the annual limits, if they have annual limits in them. 
Remember that the waiver is only applicable to 1 piece of the 
Affordable Care Act.
    Mr. Scalise. Right, I mean it is an important piece of it 
though, and it is a piece that many employers seem to have a 
problem with compliance on. In many cases, it is going to be 
yet another determining factor on whether or not these 
employers can continue to provide health care to their 
employees, and their employees like the health care plan.
    Ms. Glied. So it is providing--the annual limit regulation 
means that the health insurance that people buy actually has 
real value to them if they get sick. And the annual limit 
waiver process is simply a bridge to allow people to keep that 
coverage only until 2014 when we will have a much better 
insurance system available, particularly to small businesses.
    Mr. Scalise. Well, they are already paying higher premiums, 
but hopefully we don't have Obamacare on the books anymore, but 
it just seems like there was a favoritism that was shown 
because, like I said, ironically a lot of the companies and 
entities that have received the waivers were many of the same 
that were working with the administration to pass the law, and 
many of the people, our small businesses, our job creators 
across the country who didn't want this in the first place, 
don't even know it exists.
    So, you know, again it just seems like a real peculiar 
situation that seems like some of the biggest proponents of the 
law and the favorites of the administration are the ones who 
know about it and got the waivers. People who don't want it 
don't even know it existed. I yield back.
    Mr. Stearns. I thank the gentleman. I will continue with my 
questions. Mr. Waxman made some points in his opening 
statement. I thought I would follow up, Dr. Glied. He referred 
to the ban on preexisting exclusions for children. Are you 
aware that since passage of the President's health care plan, 
many insurers have opted not to offer child-only policies? So 
because of what the regulation says, they are getting around it 
by offering no child policies. Did you know that?
    Ms. Glied. I think it is horrifying, Chairman Stearns, that 
any insurer would choose to deny providing coverage to children 
who are sick, and I think it is one of the reasons that we 
needed the Affordable Care Act in the first place. Beginning in 
2014, these practices will not be possible, and insurers will 
be providing insurance to all Americans.
    In the meantime, the administration has taken serious steps 
to make sure that children who have been denied coverage 
because of insurance company practices can get it within every 
state.
    Mr. Stearns. So how would, for example, in the State of 
Florida, if the insurance company did not provide it, how would 
a person get it for their child?
    Ms. Glied. Chairman, I will have to get back to you about 
the details in Florida. Different arrangements have been made 
in different States.
    Mr. Stearns. Let us take your State of New York. How would 
you do it in New York?
    Ms. Glied. There is not a problem in New York because we 
have community rating and guaranteed issue already.
    Mr. Stearns. So a person would just apply?
    Ms. Glied. Yes, there is no problem in New York.
    Mr. Stearns. This whole question--we wrote a letter to Mr. 
Waxman, in all deference to him, last year, asking for a 
hearing on this. We never heard back. So he is making a point 
about this, but I just want to make it clear that we are on 
record of asking for a hearing on this.
    He also mentioned that the ban on annual limits. This 
obviously could lead to increases in the premiums or loss of 
coverage. Don't you agree?
    Ms. Glied. Mr. Chairman, the basic economics of insurance 
that says insurance is most important and most valuable to 
people when it protects them against catastrophic losses, that 
is very high losses. Insurance that includes annual limits 
doesn't meet that basic economic test for value. It is really 
critical that we get rid of those lousy policies.
    Mr. Stearns. Mr. Scalise mentioned the waivers. These 
waivers are only good for one year, right?
    Ms. Glied. Correct.
    Mr. Stearns. So these 1,400 people that got waivers, 
McDonald's, Waffle House, seven States, they are all going to 
have to come back in a year, right? Would you be giving them 
waivers again?
    Ms. Glied. I believe that the annual limit waiver process 
is under discussion right now. I am not aware of where it is 
going.
    Mr. Stearns. But isn't the reason why you have these annual 
limits--this is why you have annual limit waivers. Is that 
correct?
    Ms. Glied. The reason we have annual limit waivers is that 
we need to get from here to 2014. These provide a bridge until 
people can be assured of better, more valuable insurance 
coverage.
    Mr. Stearns. When you passed legislation and you suddenly 
give out 1,400 waivers, what does that--wouldn't that tell you 
something about the angst, the feeling of the people who are 
asking for those waivers, they can't comply? Don't you think 
that that shows that perhaps--and as Mr. Scalise said, I don't 
think anybody in my congressional district knows they could get 
a waiver either. So if you really put the word out, I think you 
would find thousands of people asking for waivers.
    Ms. Glied. That would be very disappointing, Chairman 
Stearns, because it would suggest that the magnitude of the 
problem of really lousy insurance policies in the United States 
is much greater than we had anticipated.
    Mr. Stearns. That is funny. I would interpret it different. 
That is your--my interpretation is people do not want the 
President's health care plan, and they can't comply with the 
existing strategies and objectives that are outlined in your 
legislation, and they want out. Because if they thought it was 
going to be something they could comply with, they wouldn't ask 
for a waiver. And in fact, the graph that we showed you clearly 
shows the most--that small businesses, 80 percent, and going to 
get out and just say forget it. We are not going to be 
bothered. We will just pay a fee and just let all our employees 
go into the government plan. So that is my opinion.
    Anyway, let me ask you another question. The key to this 
whole health care debate is what is the essential benefits 
package. That, I think, people have been asking me. What is the 
essential benefit package? And everybody is talking 
generalities. But what is the administration going to require, 
and what is the rule? Are you familiar with the rule yourself?
    Ms. Glied. Yes, sir.
    Mr. Stearns. And when will it be released? What date?
    Ms. Glied. Sir, we are waiting for the Institute of 
Medicine, which was commissioned to do a duty to provide us 
with principles for determining the essential benefits package. 
And that report from the Institute of Medicine, which is this 
expert group, is not expected until late September. Beginning 
then, we will be working on developing the notice of proposed 
rulemaking that will include the principles around that.
    Mr. Stearns. Within the legislation, they had sort of 
outlined what the essential benefits package. So here we are 
sometime after the passage, and yet you are saying that the 
essential rule will be released in September of this year. Is 
that fair to say?
    Ms. Glied. The Institute of Medicine--so the President's 
plan says that all Americans should be guaranteed a package 
that includes 10 critical categories of benefits----
    Mr. Stearns. Right.
    Ms. Glied [continuing]. And that is similar to that offered 
to a typical--by a typical employer today. So that is a very 
basic standard of benefits that all Americans should be 
entitled to.
    Mr. Stearns. So it has to be 10? It couldn't be 11?
    Ms. Glied. There are 10 categories----
    Mr. Stearns. 10 categories.
    Ms. Glied [continuing]. That have passed.
    Mr. Stearns. But there could be more categories, or is 10 
the----
    Ms. Glied. It says that there are at least 10 categories 
that are laid out----
    Mr. Stearns. At least, OK.
    Ms. Glied [continuing]. In the legislation.
    Mr. Stearns. OK.
    Ms. Glied. Those are things like hospital benefits, 
pharmaceutical benefits, things like that.
    Mr. Stearns. Right.
    Ms. Glied. Those are the categories. We have asked the 
Institute of Medicine, which is an august body of experts, to 
help us in defining a process for developing those benefits.
    Mr. Stearns. All right.
    Ms. Glied. They have been meeting for 6 or 8 months----
    Mr. Stearns. No, I understand.
    Ms. Glied [continuing]. And have had a lot of public----
    Mr. Stearns. It is----
    Ms. Glied. It is a very challenging project.
    Mr. Stearns [continuing]. Challenging.
    Ms. Glied. But we are trying to get to get as much 
information as possible.
    Mr. Stearns. And not everybody is going to be in agreement 
on these 10 essential benefits. I understand that, but I would 
just like to pin down a date. Can I say by 15 September this 
rule will be released?
    Ms. Glied. No, sir, we are waiting for the----
    Mr. Stearns. How about 15 of September next year?
    Ms. Glied. The Institute of Medicine is coming back in----
    Mr. Stearns. Well----
    Ms. Glied. Wait, the--pardon me. The Institute of Medicine 
is coming back in September. Then we will go into the 
rulemaking process. We are likely to put out a notice of 
proposed rulemaking. Then, of course, you would want us to wait 
for public comment on that before we finalize the rule.
    Mr. Stearns. And public comment would be 60 days?
    Ms. Glied. It will be--I don't know how long it will be. I 
believe that there is a minimum, and I confess. I apologize. I 
don't know what that minimum is. It can go longer than that.
    Mr. Stearns. No, I understand, but let us just try to come 
up with a timeline. You are saying the report, this analysis, 
this study will be done by September.
    Ms. Glied. At some point in September.
    Mr. Stearns. And then after September, they will issue a 
rule within 30 days, 60 days?
    Ms. Glied. I don't exactly know. I am not privy to what 
exactly the timeline is.
    Mr. Stearns. Get a rule for----
    Ms. Glied. We are working on that rule.
    Mr. Stearns [continuing]. Before next year?
    Ms. Glied. We are working on the development of that rule, 
and there was be a notice of proposed rulemaking that will go 
out and that will lay out that and other elements.
    Mr. Stearns. So when you sit in a meeting and you talk 
about the most important aspect about the President's health 
care bill, what the essential benefits package is, no one ever 
says there is a drop dead date when we have to get this done? 
No one ever says that in the meeting? No one ever says we 
should get this done by X time? They just say we will just do 
it when we do it? Generally in planning of something of that 
magnitude, there is generally a timeline. You and I both know, 
and I think you would respect the fact, in your position, you 
would come up with a date. Let us shoot for this date, but you 
are telling me there is no date. There is no one that has asked 
the question what is the drop date, and you are just sort of 
winging along month after month?
    Ms. Glied. We know that we need to give this information to 
States and exchanges so that they can lay out----
    Mr. Stearns. What date do you have to give it by?
    Ms. Glied. The exchanges need to be up and----
    Mr. Stearns. Anyone on staff could tell us what date you 
expect to give it to the States?
    Ms. Glied. I don't think that there is a date that has been 
written down. We are trying to figure out when we can do this, 
and there are a lot of issues that are pending right now.
    Mr. Stearns. It is a little puzzling, don't you think?
    Ms. Glied. The key here, I think, sir, is that the basic 
structure of the plan is very much defined in the legislation 
itself which calls for it to mimic a typical employer plan. So 
there isn't that much leeway here. We are trying to lay down 
the specifics of this and many other provisions in the law 
through regulation, and this is one of them.
    Mr. Stearns. You are building a ship, and you got 10 
aspects, categories of the ship that have to be built, and they 
have to be coordinated and everybody agrees upon it. But I will 
tell you, there is a date when that ship expects to be done, 
when that ship is complete and everybody knows it. So you are 
telling me here that the essential benefits package, no one in 
your office, no one in any meeting has ever said to you when 
there is going to be a date when we can provide, one, for the 
public comment, two, hopefully for the States to comply. You 
can't have it----
    Ms. Glied. Sir, I believe----
    Mr. Stearns [continuing]. 2014.
    Ms. Glied. I am aware that the noticed of proposed 
rulemaking which will include the essential health benefits is 
supposed to come out this fall. I don't have an exact date when 
in the fall.
    Mr. Stearns. OK, I mean you are not going to go through a 
trap door if----
    Ms. Glied. No, I don't know exactly what date it is in the 
fall. It is----
    Mr. Stearns. Because this trap door doesn't exist. All you 
have to do in your best estimation----
    Ms. Glied. It will be in the fall though.
    Mr. Stearns [continuing]. As the crowning chief here is to 
give us a little date.
    Ms. Glied. Fall, the fall. When in the fall? I don't know.
    Mr. Stearns. OK, the leaves turn in October.
    Ms. Glied. The leaves turn in October. It is likely to be 
in October.
    Mr. Stearns. OK.
    Ms. Glied. It could be in November, sir. There you go.
    Mr. Stearns. So we are going to say in October is when the 
rule will be released. Now, if you come back----
    Ms. Glied. It may be November. I don't want to be held to 
October, sir. I don't know.
    Mr. Stearns. Now, if I was a businessman and I felt that I 
wanted to work with you----
    Ms. Glied. Yes, sir.
    Mr. Stearns [continuing]. This uncertainty that you are 
creating by sort of double taking on this date provides me a 
feeling that I better not do anything until I start to see this 
essential rule. So you are an economics professor. You and I 
both know that uncertainty in the marketplace is not a good 
thing. Isn't that correct?
    Ms. Glied. That is correct, sir.
    Mr. Stearns. So you are creating uncertainty by giving us 
such a nebulous span here of you are not sure of a critical 
aspect for the rule to be released on the essential benefit 
package. So I would just suspect that if I went back to your 
people, you could say look, why don't we give the Oversight and 
Investigation Committee the best guess of what we can do 
because that would be better certainty than you are giving me 
today.
    Ms. Glied. I will be very happy to go back and see if we 
have a date that we would be able to give to the Oversight 
Committee.
    Mr. Stearns. Now, during this process here, are you going 
to meet with stakeholders?
    Ms. Glied. Yes, sir. We actually have an extensive plan for 
public comment. That is one of the reasons we want to get the 
NPRN out.
    Mr. Stearns. What individuals in the administration has HHS 
discussed this rule with, if any?
    Ms. Glied. Within the administration?
    Mr. Stearns. Yes, in other words, I assume these 10 
categories, that you are talking to other people within HHS 
about these. I mean who is this cadre that we are talking with?
    Ms. Glied. Well, the 10 categories, of course, are laid out 
in the legislation itself as is required...
    Mr. Stearns. I know the categories are, but how about the 
people?
    Ms. Glied. And we have already done work. We have released, 
for example, a report from the Department of Labor looking at 
what typical employer plans include.
    Mr. Stearns. I am not being too clear on the question. When 
the FCC came up with the broadband plan, they went out and 
brought all these stakeholders in to help them write it. We 
didn't like some of it, and then they paid them money. And they 
also had staff, but you are not doing that.
    Ms. Glied. No----
    Mr. Stearns. You are not bringing in stakeholders to help 
you write the essential benefits package. You all are doing it 
in house.
    Ms. Glied. No, sir. That is actually one of the reasons we 
went to the IOM. The IOM is actually already engaged in a long 
period of public engagement.
    Mr. Stearns. Who is the IOM?
    Ms. Glied. The Institute of Medicine.
    Mr. Stearns. OK.
    Ms. Glied. They actually held two large public meetings 
back in January and April. They are----
    Mr. Stearns. Will they be writing the rule?
    Ms. Glied [continuing]. Eventually going to be--they will 
be providing us with this process. We will then be working on 
the rule. We will be engaging stakeholders. We are actually 
developing a plan for actively engaging all types of 
stakeholders. Then we will release an NPRM and get even more 
stakeholder comment.
    Mr. Stearns. OK.
    Ms. Glied. This is actually anticipated to be a very public 
process, but we have to wait for the IOM report since we did 
commission it.
    Mr. Stearns. OK, my time is expired. The gentleman from 
California, Mr. Bilbray, is recognized for 5 minutes.
    Mr. Bilbray. Thank you. Look, Doctor, I would like to try 
to do something very unique in the Oversight hearing process. I 
would like to work with you to come to a consensus of a 
strategy we should go to. Rather than talking about 
stakeholders to, you know, someone to the left means political 
activist stakeholder. Somebody to the political right means 
business community. Let us talk FDA, and let us talk about real 
stakeholders, patients, people who are ill----
    Ms. Glied. Yes, sir.
    Mr. Bilbray [continuing]. People who are dying, people who 
are waiting patiently for something to save their lives. Let us 
take a look at something that I think all of us can agree was a 
bipartisan effort that probably did--was more of a medical 
movement or success than anything we have seen probably since 
polio, and that is in the '90s. We not only put massive amounts 
of research out there, but we changed our FDA oversight and 
regulatory guidance for AIDS. We did things to fight the AIDS 
epidemic that we basically hadn't done in the past, at least 
the near past, and we haven't done since as far as I know.
    And sadly, I think what happened was we were so successful 
that we walked away from that success and said OK, we have 
really done a great breakthrough here and pat ourselves on the 
back. But we left it at that. And this is what my challenge 
would be to you. What is the possibility of Democrats and 
Republicans getting together, taking a look at what we did in 
the '90s to put AIDS in that situation, move it from acute to a 
chronic, basically make it a livable, survivable process?
    What is the possibility of us going back and saying damn 
it, we had a successful formula here? Why don't we go back and 
take a look at that? And one of the most important successful 
formulas was not one of you got to have a bureaucracy that is 
totally insulated from the private sector so they are not 
polluted by capitalism. Or we have to have somebody who has 
some reality and connection to the industry so they know the 
physical movements.
    And let me tell you something as somebody who comes from 
local government, a former mayor and county chairman, building 
inspectors are required to have had private sector involvement. 
And that is one of the most successful local government aspect. 
But that aside, I think the one place we should be able to 
agree is that we should be looking at implementing the 
stakeholders' place at the table with all of these FDA reviews, 
not just on AIDS.
    And what is the possibility, do you think, of the 
administration working with us at modifying the FDA process at 
least--maybe it is some targeted issues. Maybe we talk about 
cancer. Maybe we talk about diabetes, but changing the 
oversight process to allow patients, not advocates, patients at 
the table like we did with AIDS. What is the possibility of us 
resurrecting that model and applying it as being the happy 
medium, some place the Democrats and Republicans can agree on?
    Ms. Glied. That sounds like a very interesting idea, and I 
am actually not very familiar with the FDA is doing now to 
enhance patient engagement around medical innovation. I know 
that they have--they are working very hard to try and improve 
the speed and innovation process on several different fronts. 
But I am not actually sure how much patient engagement has 
played a part in that.
    Mr. Bilbray. OK, let me just tell you----
    Ms. Glied. I will get back to you on that.
    Mr. Bilbray. Doctor, if there is any place that I think the 
administration really is very vulnerable, and I praise the 
administration on--secretary of energy. I praise him what I 
think has been--you know, praise him about the team he put 
together for national defense. But if you look at the timelines 
since this administration has taken over--and granted it might 
be a timeline that started a little bit before this 
administration.
    Patients are watching the clock slow down. They are 
watching it so much to where we end up with what happened this 
week where you had the First Lady, rightfully so, point out 
that obesity is a major crisis here. And at the same time, the 
FDA telling a drug company that may have a major breakthrough 
in obesity, we are going to require you to go 60,000 test site 
number, and they are just basically saying forget it. They are 
packing up and going to Europe.
    At the same time that our system is doubling in certain 
applications, Europe is reducing their numbers with no more 
adverse impact. So if I can say frankly to you, I think we are 
in crisis at the FDA, and I am trying, rather than just 
screaming bloody murder about patients waiting, you know, on a 
death list, while the bureaucrats are fiddling. Why don't we 
take a look at, OK, let us go back and maybe we can both work 
together and learn from the past and move it forward.
    Ms. Glied. You know, the FDA has to balance patient 
protection and trying to take care of patients in need, and I 
understand that you know that too. Let me get back to you on 
some ideas that we have.
    Mr. Bilbray. OK, my biggest point is this. As somebody that 
has worked 35 years in bureaucracy, I don't care if it is FDA, 
I don't care if it is a planning director, I don't care if it 
is somebody putting up stop signs. It is much easier to say 
stop than it is to say go. There is risk at go. The fact is the 
bureaucrat doing the oversight isn't at risk when he says stop. 
The patient who is dying of cancer, who is dying of AIDS, they 
are at risk, and they should be able to sit at the table and be 
able to look the bureaucrat in the eye, like they did on AIDS.
    Ms. Glied. Let me get back to you on what is happening on 
the FDA because I am just not very familiar with that, sir.
    Mr. Bilbray. OK, then I will ask that we look at this and 
bring in some balance, and I think that we have to understand 
there isn't balance now. As long as you have somebody who is 
coming out of the government structure and has no personal 
vested interest in the outcome, you are going to have it.
    Now, some people say business there would have too much 
financial vested interest, but I think we should both agree 
that patients have the right type of vested interest. And so 
they will encourage and, let me say, force the process to be 
more responsive without it opening itself up to being abused by 
the private sector. And I hope they will leave that as an open 
invitation.
    Ms. Glied. OK.
    Mr. Bilbray. Thank you. I yield back, Mr. Chairman.
    Mr. Stearns. The gentleman yields back. The gentleman from 
Louisiana, Mr. Scalise, is recognized for 5 minutes.
    Mr. Scalise. All right. Thank you, Mr. Chairman. When Mr. 
Stearns was asking you kind of a follow-up about the waiver, 
you had made a comment that when he said, you know, all of 
these 1,300, almost 1,400 people have received a waiver from 
the component that would take effect in 2014, you had said that 
that shows that there is a lot of lousy plans out there. I am 
not sure if you are familiar. They are not asking for a waiver 
from their plan. They are asking for a waiver from Obamacare. 
So can you explain what you meant by that comment?
    Ms. Glied. Yes, sir.
    Mr. Scalise. It is an odd comment to make.
    Ms. Glied. They are asking for a waiver from the 
requirement in the Affordable Care Act that says that plans may 
not limit the amount that an insurance plan will pay out to a 
person who is very ill. So right now, there are plans before 
the Affordable Care Act came out, that would say this plan 
covers you unless you have more than $5,000 in medical 
expenses. Now, after $5,000, hey, buddy, you are on your own. 
Which actually means hey, the rest of us, we get to pay your 
bills because you are not going to be able to do it.
    Mr. Scalise. So----
    Ms. Glied. The Affordable Care Act----
    Mr. Scalise. You know, I guess what you are saying is that 
you have defined that yourself as that is a lousy plan. Is that 
what you are saying?
    Ms. Glied. Basic economic theory----
    Mr. Scalise. You referred to it as a lousy plan.
    Ms. Glied. --as well as, I think, U.S. taxpayers ought to 
see that as a lousy plan because we are going to pay your cost 
for you if you have any.
    Mr. Scalise. So if a family has that plan and they like 
that plan, you are sitting here in your ivory tower saying that 
is a lousy plan. We need to fix it. We need to go and change 
the rules in a way that your employer might drop your coverage 
all together. Because that is what these employers are saying.
    The employers aren't saying, you know, I want to try to 
figure out how to add cost to health care in a way that they 
can't afford, they might go bankrupt. They have decided I can 
either provide health care to my employees or not provide it. 
And if I can provide a plan that gives their family something 
that their family likes, you are sitting here saying that is a 
lousy plan. We are going to change the law in a way that now 
you can't afford the plan anymore.
    The companies have told you. This isn't me suggesting it. 
You granted them the waiver because they said they can't afford 
it. They are going to have to dump all their employees off of 
that health care plan that you just called lousy. They liked 
the plan. 80 percent of the employees like those plans, and you 
are calling them lousy saying no. But if you get a waiver, you 
can keep doing it. But if you don't get the waiver, your 
employer is going to dump the plan because they can't afford to 
do it anymore. So now you don't have any insurance and you are 
off fending for yourself out there because you decided in some 
ivory tower that their plan that they liked was lousy.
    Now, you don't understand how a lot of people have trouble 
with that concept that somebody in Washington is now going to 
determine that their plan that they like is no longer valid, 
and if they get a waiver, they can keep getting it. But if they 
don't get a waiver from you, their employer said they can't 
provide it anymore. They are going to have to stop providing 
health coverage to their employees all together. And now that 
plan that they liked is no longer available for them.
    Ms. Glied. That, sir, is why we need to move to 2014 when 
everybody will have much better, more affordable coverage 
available to them. And the reason for the waivers is just to 
keep those plans, which we recognize are better than nothing, 
in existence until we can provide people with much better 
coverage that is comprehensive and that protects them against 
catastrophic expenses beginning in 2014.
    Mr. Scalise. There is a big flaw with that theory, and I am 
glad you acknowledge now that maybe it is a good plan because 
you were calling it a lousy plan earlier. That employee likes 
the plan. You might think it is lousy. That is not your 
decision. It shouldn't be your decision. I mean under 
Obamacare, I guess it is your decision. You can take it away 
from them. But the President said--I mean he pledged it time 
and time again before, during, and after this debate that if 
you like what you have, you can keep it.
    And frankly that is a tenet that ought to be established in 
the law, and it is not. Because if you like what you have, you 
are going to lose it in many cases, and there was a study done 
by McKenzie and Company. I don't know if you had looked at it, 
but a very well-respected firm who did an in-depth study, the 
only one I have seen out there that really goes into detail 
about employers who do provide health care. It said 30 percent 
of employers would drop their coverage when all the costly 
requirements of Obamacare become law.
    Now, I don't know if you have disputed the McKenzie study, 
but it is out there. It has a lot of factual basis behind it. 
They talked to real people. They talked to employers who 
provide health care, to employees who like the care, and so 
when the President says if you like what you have, you can keep 
it. According to this study, over 30 percent of those companies 
said they are not going to be able to keep providing it. So the 
employees lose the care they like. That breaks the President's 
pledge.
    Now I would like to see what your response is to the 
McKenzie study. Maybe it was flawed in how they asked the 
question. Maybe you think it is going to be a lot rosier when 
all those lousy plans are dumped, as you categorize them.
    Ms. Glied. Sir, we have actually seen many studies. The 
McKenzie study is only the most recent in a very long series of 
studies. Virtually all of them have not found anything like 
that result. They found very small changes in employer offering 
including previous surveys of employers. So the McKenzie 
study----
    Mr. Scalise. Would you dispute the findings of the McKenzie 
study?
    Ms. Glied. Wait a second. And moreover, we have one real 
world example of what happens when you do something very much 
like the Affordable Care Act, which is what happened in 
Massachusetts. And what happened in Massachusetts is that the 
number of employers offering coverage increased substantially 
and significantly even as the rest of the country----
    Mr. Scalise. Well, we have heard all kind of problems with 
Massachusetts, but regardless of that----
    Ms. Glied. Well, certainly whatever----
    Mr. Scalise [continuing]. This isn't Massachusetts. This is 
the United States, and you have 1,400 companies that your 
office has said they need a waiver. Otherwise, they are going 
to have to drop the plan. I mean if 1,400 entities, you know, 
unions and all kind of other groups that were supporting this 
law said we can't provide the health care anymore unless we get 
the waiver.
    Well, what happens at 2014 when they can't get the waiver 
anymore? What happens to the countless others who have asked 
for the waiver and couldn't even get it, now 30 percent of them 
according to study. But even if you don't go by this study, 
1,400 according to your own numbers of who you gave waivers to 
said they couldn't provide health care to their employees 
anymore. They were going to have to dump them if they didn't 
get the waiver from the component of the law.
    Ms. Glied. Beginning in 2014, everyone is going to be 
insured much better, more comprehensive, and affordable 
coverage. Right now, fewer than 2 percent----
    Mr. Scalise. I guess something magical happens in 2014 
where today they are going to have to drop--they can't even 
comply with the law. But in 2014, somehow everything is going 
to be rosy, and then they can comply with the law even though 
nothing has changed because all of these other companies have 
said they can't comply. They are going to have to dump the 
health care that their employees liked.
    Ms. Glied. 2014 will have a new, much more competitive, 
patient-centered insurance marketplace in which people will be 
able to get coverage they can afford so----
    Mr. Scalise. Hopefully by 2014, the law is repealed, and 
then people really can keep what they like that they currently 
have. Thanks, I yield back.
    Mr. Stearns. Gentleman yields back. I have a series of 
questions here. Dr. Glied, are you familiar with the recent 
rule HHS released on accountable care organizations?
    Ms. Glied. Yes, sir, I am.
    Mr. Stearns. Are you aware that a number of premier 
organizations, such as the Mayo Clinic, wrote the 
administration saying that more than 90 percent of its members 
would not participate because the rules as written are so 
burdensome it would be impossible to succeed?
    Ms. Glied. Yes, sir. That is exactly why we want to have a 
robust public comment after we put forward a notice of proposed 
rulemaking.
    Mr. Stearns. OK, if less than 90 percent of the groups that 
you need to participate would not do so, how did it come about 
that a rule was ever released?
    Ms. Glied. There are many--we have received many, many 
comments on the notice of proposed rulemaking, and they vary 
considerably in what they think should and should not be in the 
rule. The administration has to chart a course between all the 
different goals that we are trying to do here, and we really 
want to bend the cost curve and change the delivery system. So 
we are listening to all the comments, and we will incorporate 
them in the final rule.
    Mr. Stearns. But wouldn't you think that the reaction was 
pretty dramatic here that the Mayo Clinic--I mean if you try to 
create these efficient rules and balance the competing 
interests, so-called, versus the government versus the private 
sector, you know, shouldn't the reaction to a rule like this 
not be so harsh? I mean wouldn't you--doesn't that tell you 
something?
    Ms. Glied. There are--this is a very important rule. This 
is one of the main goals of the administration is to bend the 
cost curve by changing the incentives that face the health care 
system today. And, of course, there are lots and lots of 
opinions about how it ought to be done. It is not at all a 
surprise that we have heard a lot of feedback. We also took a 
lot of public comment before we wrote the rule that is 
incorporated in it already.
    Mr. Stearns. The complete rejection of this rule by 
organizations you would need to rely on for its simple success 
seems quite lopsided. I mean that is our opinion. Do you agree?
    Ms. Glied. It will be very--it is important to wait until 
the final rule is promulgated, the program is supposed to take 
effect at the beginning of next year. And I think we should 
wait and see what happens at that point. We are really working 
on improving the rule and listening to the comment, and I can't 
really speak to it any much more than that.
    Mr. Stearns. I think this quote is from the Wall Street 
Journal. It called it, ``these regulations have been called 
overly prescriptive, operationally burdensome, and the 
incentives are too difficult to achieve to make this voluntary 
program attractive.'' In light of these statements, shouldn't 
this rule be completely reworked?
    Ms. Glied. We are responding to the rule by looking at the 
comments that we have received. Remember that we have to 
balance the protection of the Medicare trust fund against our 
desire to change the incentives in the health care system. Both 
of those are competing interests, and we are working on them.
    Mr. Stearns. So you don't think the rule should be 
reworked?
    Ms. Glied. Mr. Chairman, after an NPRM, we rework a rule 
before we finalize it. We listen to the comments, and we change 
it around.
    Mr. Stearns. So it can be reworked?
    Ms. Glied. That is the point of this process.
    Mr. Stearns. Does the President's executive order require 
you to do this? Do you consider that, or is this just part of 
your normal procedure?
    Ms. Glied. It is part of our normal procedure.
    Mr. Stearns. Yes, OK. One thing many have wondered in the 
aftermath of the rule, how did this rule come to be? For 
example, we talked earlier about you communicating with 
stakeholders. Evidently you didn't communicate with 
stakeholders in this case. Is that true you didn't communicate 
with stakeholders? That is why the reaction was so harsh?
    Ms. Glied. No, sir, we had extensive communications with 
stakeholders, and this has actually been an area where there 
has been tremendous public comment.
    Mr. Stearns. The stakeholders didn't alert you to the 
problems back then before you issued it?
    Ms. Glied. Different stakeholders had different opinions, 
sir.
    Mr. Stearns. OK, so you are going to reach out to these 
same groups again, I guess, and does that mean that--did you 
reach out to the Mayo Clinic?
    Ms. Glied. The rule is closed for comment on June 6. We 
received many, many comments on the rule.
    Mr. Stearns. OK, so you are saying to me this morning 
that--this afternoon you will probably redo this rule?
    Ms. Glied. We are looking at the comments, and we will 
revisit the rule and look at what we need to do to address 
those comments.
    Mr. Stearns. OK, I think I will probably conclude here 
shortly much to the loyal opposition's concern. I want to talk 
about the Data Quality Act.
    Ms. Glied. Sure.
    Mr. Stearns. To comply with President's January executive 
order, doesn't HHS have to base its regulation on the best 
available science?
    Ms. Glied. We endeavor to do so at all times.
    Mr. Stearns. Sure, OK, what is this best available science 
that you use?
    Ms. Glied. That would depend, sir, on the question that is, 
you know, the question that is being addressed by the 
scientists.
    Mr. Stearns. In addition to or prior to the President's 
executive order, did HHS have to base its regulation on the 
best available science pursuant to the Data Quality Act?
    Ms. Glied. We have always tried to base our regulations on 
the best available science.
    Mr. Stearns. I will take that as a yes. Since that is the 
case, can you represent to the committee today that all HHS 
regulatory efforts since you have assumed office have applied 
the Data Quality Act and are in compliance with the Data 
Quality Act?
    Ms. Glied. I believe so, but let me get back to you because 
I am not familiar with the precise details of the Data Quality 
Act.
    Mr. Stearns. That is a fair answer. Would you agree that if 
HHS is to base regulations or regulatory decisions on the best 
available science that HHS cannot act on the basis of 
conflicting studies? For example, if you decide on certain 
areas and you have conflicting studies, I guess the question is 
how are you going to make your regulatory decisions?
    Ms. Glied. Chairman Stearns, if we waited for science to 
come to a definitive conclusion on everything, we would never 
be able to act. It is always going to be--there are always 
going to be conflicting studies. The best available evidence 
doesn't mean that there are no conflicting studies. I means 
that the preponderance of sensible evidence leads in a 
particular direction. Scientists thrive on controversy.
    Mr. Stearns. OK, Mr. Scalise brought up the McKenzie study, 
and I think your indication was that you weren't discrediting 
it, but you said there is more than one study. And I think the 
White House has tried to discredit this study calling it an 
outlier and implying that the McKenzie study isn't a respected, 
independent organization. Did you know of that criticism?
    Ms. Glied. I think one of the concerns that we have about 
that study is that we haven't been able to see the methods that 
they used, and they haven't made those public. So I can't speak 
to whether that is a good study or not because I personally 
have not seen the methods used.
    Mr. Stearns. So you are not implying that the McKenzie 
Organization is not a credible organization?
    Ms. Glied. I believe the McKenzie Organization is a 
credible organization. I can't speak for this specific study.
    Mr. Stearns. OK, and I agree with you. The Federal 
Government has awarded McKenzie and Company over $182 million 
in government contracts to perform consulting and analysis 
work. And as you are aware, that $182 million that is disclosed 
on U.S. spending, more than $122 million of it comes from the 
Obama administration, $21 million of which are contracts with 
HHS. So clearly the Obama administration thinks McKenzie is 
doing reliable and honest work or they wouldn't employ them and 
they are spending money with them.
    Doesn't McKenzie say what distinguishes this study from 
others is that McKenzie educated respondents on the President's 
health care requirements that will take effect in 2014? What I 
am trying to establish is once McKenzie went out and explained 
the implications, that is how they got their study, and that 
distinguished many other studies which just do analysis without 
asking and educating people about the impact of the President's 
health care plan? So I guess the answer is yes or no. So all I 
am saying is----
    Ms. Glied. We don't know how they educated them, so I don't 
know what that--I can't--I don't know what I can say about 
that.
    Mr. Stearns. OK, so you can't answer it. OK, I think we 
have covered most of the questions here. We thank you for your 
patience and with nothing else, no more on the minority side, 
the subcommittee is--before I adjourn, I would just like to let 
all members have an opportunity to offer their opening 
statements, and I ask unanimous consent that the written 
opening statements of all members be introduced in the record. 
Without objection, and I ask unanimous consent that the slide 
we had be put in part of the record. And with that, the 
subcommittee is adjourned.
    [Whereupon, at 3:25 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]




                                 
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