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



 
 CLASS CANCELED: AN UNSUSTAINABLE PROGRAM AND ITS CONSEQUENCES FOR THE 
                            NATION'S DEFICIT

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                AND THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 26, 2011

                               __________

                           Serial No. 112-101


      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 Chairman                      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             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                  (ii)


              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          EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California         GENE GREEN, Texas
PHIL GINGREY, Georgia                DONNA M. CHRISTENSEN, Virgin 
STEVE SCALISE, Louisiana                 Islands
CORY GARDNER, Colorado               JOHN D. DINGELL, Michigan
H. MORGAN GRIFFITH, Virginia         HENRY A. WAXMAN, California (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)
                                 ------                                

                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois               EDOLPHUS TOWNS, New York
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
PHIL GINGREY, Georgia                TAMMY BALDWIN, Wisconsin
ROBERT E. LATTA, Ohio                MIKE ROSS, Arkansas
CATHY McMORRIS RODGERS, Washington   JIM MATHESON, Utah
LEONARD LANCE, New Jersey            HENRY A. WAXMAN, California (ex 
BILL CASSIDY, Louisiana                  officio)
BRETT GUTHRIE, Kentucky
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     3
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     5
    Prepared statement...........................................     8
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................    10
    Prepared statement...........................................    12
Hon. Diana DeGette, a Representative in Congress from the State 
  of Colorado, opening statement.................................    14
Hon. Phil Gingrey, a Representative in Congress from the State of 
  Georgia, opening statement.....................................    15
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    16
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    17
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................    18
Hon. Tim Murphy, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    20
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................    20
Hon. Donna M. Christensen, a Representative in Congress from the 
  Virgin Islands, opening statement..............................    22
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................    22

                               Witnesses

Hon. Denny Rehberg, a Representative in Congress from the State 
  of Montana.....................................................    25
    Prepared statement...........................................    27
Hon. Theodore E. Deutch, a Representative in Congress from the 
  State of Florida...............................................    30
    Prepared statement...........................................    32
Patrick J. Kennedy, a former Representative in Congress from the 
  State of Rhode Island..........................................    39
    Prepared statement...........................................    41
Hon. Charles W. Boustany, Jr., a Representative in Congress from 
  the State of Louisiana.........................................    45
    Prepared statement...........................................    47
Kathy Greenlee, Assistant Secretary for Aging, Administration on 
  Aging, Department of Health and Human Services.................    49
    Prepared statement...........................................    52
    Answers to submitted questions...............................   193
Sherry Glied, Assistant Secretary for Planning and Evaluation, 
  Department of Health and Human Services \1\....................
    Prepared statement...........................................    52
    Answers to submitted questions...............................   194

                           Submitted Material

Statement, dated October 26, 2011, of Senator John Thune, 
  submitted by Mr. Pitts.........................................    23
Letter, dated November 25, 2009, from Douglas W. Elmendorf, 
  Director, Congressional Budget Office, to Senator Tom Harkin...   105
Subcommittee exhibit binder......................................   114

----------
\1\ Ms. Glied did not present an opening statement. Ms. Greenlee 
  and Ms. Glied submitted a joint prepared statement for the 
  record.


 CLASS CANCELED: AN UNSUSTAINABLE PROGRAM AND ITS CONSEQUENCES FOR THE 
                            NATION'S DEFICIT

                              ----------                              


                      WEDNESDAY, OCTOBER 26, 2011

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                                 joint with
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:05 a.m., in 
room 2123, Rayburn House Office Building, Hon. Joseph Pitts 
(chairman of the Subcommittee on Health) presiding.
    Members present: Representatives Pitts, Stearns, Shimkus, 
Terry, Myrick, Sullivan, Murphy, Burgess, Blackburn, Bilbray, 
Gingrey, Scalise, Latta, McMorris Rodgers, Lance, Cassidy, 
Guthrie, Gardner, Griffith, Dingell, Pallone, Green, DeGette, 
Schakowsky, Gonzalez, Matheson, Christensen, Castor, and Waxman 
(ex officio).
    Staff present: Stacy Cline, Counsel, Oversight and 
Investigations; Andy Duberstein, Deputy Press Secretary; Paul 
Edattel, Professional Staff Member, Health; Julie Goon, Health 
Policy Advisor; Todd Harrison, Chief Counsel, Oversight and 
Investigations; Sean Hayes, Counsel, Oversight and 
Investigations; Debbee Keller, Press Secretary; Ryan Long, 
Chief Counsel, Health; Carly McWilliams, Legislative Clerk; 
Monica Popp, Professional Staff Member, Health; Krista 
Rosenthall, Counsel to Chairman Emeritus; Chris Sarley, Policy 
Coordinator, Environment and Economy; Alan Slobodin, Deputy 
Chief Counsel, Oversight and Investigations; Alvin Banks, 
Democratic Investigator; Phil Barnett, Democratic Staff 
Director; Brian Cohen, Democratic Investigations Staff Director 
and Senior Policy Advisor; Alli Corr, Democratic Policy 
Analyst; Ruth Katz, Democratic Chief Public Health Counsel; 
Karen Lightfoot, Democratic Communications Director and Senior 
Policy Advisor; Karen Nelson, Democratic Deputy Committee Staff 
Director for Health; and Anne Tindall, Democratic Counsel.

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

    Mr. Pitts. The subcommittee will come to order.
    The Chair recognizes himself for 5 minutes for an opening 
statement. On October 14, 2011, after 19 months of review and 
$15 million, HHS announced what most people, including many 
Members of Congress, independent analysts, and CMS's own 
actuary, have known about the CLASS program since before the 
health care bill became law: It is completely unsustainable.
    After determining that the CLASS program cannot meet the 
law's 75-year solvency requirement, HHS has decided not to 
implement this provision of the law. This shouldn't be a 
surprise. Months before PPACA became law, the warning was being 
sounded.
    On July 9, 2009, CMS actuary Richard Foster wrote, ``36 
years of actuarial experience lead me to believe that this 
program would collapse in short order and require significant 
Federal subsidies to continue.''
    Also that month, the American Academy of Actuaries wrote to 
the Senate HELP Committee, ``The proposed structure and the 
premium requirements within the CLASS Act plan are not 
sustainable.''
    And Kent Conrad, the Democratic chairman of the Senate 
Budget Committee famously called the CLASS Act ``a Ponzi scheme 
of the first order, the kind of thing that Bernie Madoff would 
have been proud of.''
    All of this was before PPACA was signed into law. So why 
was the CLASS Act included? Quite simply, PPACA's authors 
needed savings, and the CLASS Act provided a convenient 
budgetary gimmick. Since participants would have to pay into 
the program for 5 years before becoming eligible for any 
benefits, CBO estimated including the CLASS Act would reduce 
the 10-year cost of the legislation by $70 billion.
    By February 16 of this year, even Secretary Sebelius 
publicly admitted that the CLASS Act is ``totally 
unsustainable.''
    The CLASS Act was doomed from the start. We have a very 
serious long-term care problem in this country. Costs are 
driving people into bankruptcy, and weighing down an already 
overburdened Medicaid program. The CLASS Act should not only be 
shelved; it should be repealed. And I would like to at this 
time yield to the gentleman from Nebraska, Mr. Terry, the 
remainder of my time.
    [The prepared statement of Mr. Pitts follows:]

    [GRAPHIC] [TIFF OMITTED] T6161.001
    
    [GRAPHIC] [TIFF OMITTED] T6161.002
    
   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. Thank you, Mr. Chairman.
    And the failure of the CLASS Act really is of no surprise. 
I think most people in this room knew that the CLASS Act, the 
CLASS program was flawed from its inception. There is no way 
that the incoming premiums could ever cover the benefits to be 
paid out. Also, the unhealthy and disabled would have rushed 
into this program in such great numbers that they would have 
immediately increased premiums for everyone enrolled.
    Health care policy analysts raised a red flag on CLASS 
because they saw these flaws and understood the high likelihood 
of taxpayers later financing a CLASS bailout. So the ultimate 
question is, was that a purposeful ruse by HHS and the 
administration to make the Affordable Care Act look better, 
therefore passing? Or is this just plain old administrative 
incompetence? Hopefully, we will get a clearer view on which 
one of those it is.
    Yield back to you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman, and now 
recognizes the ranking member of the Subcommittee on Health, 
Mr. Pallone, for 5 minutes for an opening statement.

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

    Mr. Pallone. Thank you, Mr. Chairman.
    On March 23, 2010, our government made a promise to the 
American people to improve health care in this country by 
enacting the Affordable Care Act, landmark legislation that 
expanded and strengthened health coverage in this country.
    This promise included the CLASS Act, which gives HHS the 
authority to develop a voluntary long-term care insurance 
option for working families. The goal of CLASS is to provide 
Americans with an affordable method of obtaining long-term care 
benefits.
    Unfortunately, Secretary Sebelius has announced that HHS 
will not move forward with implementing CLASS. But I am here to 
tell you that if we do not move forward with the implementation 
of the CLASS Act, we will be turning our backs on the millions 
of Americans that are in need of a solution for finding long-
term care support.
    An estimated 15 million people are expected to need some 
form of long-term care support by 2020. Today, more than 200 
million Americans lack long-term care insurance. And currently, 
Medicaid pays 50 percent of the costs of long-term services. 
And that price tag is quickly rising every year. Persons that 
develop functional impairment are often forced to quit their 
jobs or spend down their incomes in order to qualify for the 
long-term care supports and services they need. The CLASS Act 
program is designed to allow people to plan in advance, to take 
personal responsibility for their own care, and obtain the 
support that they need in order to potentially remain in their 
communities and even remain active in their jobs.
    Now, instead of allowing this population an opportunity to 
remain self-sufficient, we are sentencing them to unnecessary 
poverty to receive the care that they need. If we as a country 
do not invest in fixing long-term care, people with functional 
impairments will keep returning to costly acute settings to 
address potentially preventible conditions. And I don't think 
we can sit back and do nothing.
    I do not agree that HHS has completed their work on trying 
to implement CLASS. Mr. Bob Yee, whose dismissal last month as 
the CLASS actuary, first signaled that HHS was abandoning this 
program, gave the Department a path forward to implement CLASS. 
His report to HHS states, ``That the CLASS benefit plan can be 
designed to be a value proposition to the American workers as 
the CLASS Act prescribed it.''
    Mr. Yee has developed options that address adverse 
selection and premium support. One of Mr. Yee's options is what 
he calls phased enrollment, in which large employers offer the 
plan first before individuals can sign up. Another option is 
temporary exclusion, no benefits for 15 years if the need for 
help arises from a serious medical condition that already 
existed when someone enrolled.
    Mr. Yee is an optimist. He explains how HHS should move 
forward. So why does the Department take such a negative 
approach and close the door on implementation when the work has 
not been completed? The Affordable Care Act requires that the 
CLASS Act implementation proposals be reviewed by the CLASS 
Independence Advisory Council, which HHS has yet to establish. 
This council should be convened immediately in order to better 
inform the efforts of the Department and to represent the 
interests of stakeholders that have been invested in CLASS for 
over a decade. The Department is not supposed to unilaterally 
abandon CLASS without convening the advisory council. The 
council may reveal other workable options for long-term care 
that the Department has not considered.
    The CLASS Act is the first step towards improving our 
Nation's long-term care problems. It provides an infrastructure 
that can be implemented. And this was an important part of 
health care reform. I refuse to give up on CLASS, just as I 
refuse to give up on the health care reform.
    Now, I know my colleagues on the other side want to give up 
on it all. They want to repeal everything. They want to repeal 
the whole Affordable Care Act.
    But I have to say, Mr. Chairman, I am tired of the 
Republican rhetoric that says Congress and the government in 
general can't do anything. The last two speakers on the other 
side, and I wrote it down, used terms like gloom, failure, 
can't do, no way.
    You know, why can't we do things? Part of what makes us as 
Americans is that we are can-do people. We can have universal 
affordable health insurance. We can provide long-term care 
insurance. I certainly don't think that the Department should 
play into the same negative theme that I keep hearing every day 
from my opponents on the other side. And that is what is so 
disappointing to me today, is to see HHS play the same negative 
thing; we can't do this, we can't do that.
    You know, I look on the floor today, Mr. Chairman, what are 
we doing this week in Congress? We are not doing anything. And 
this is the attitude that is pervasive around here, that we 
can't do anything.
    Well, I think we can do things. We can have affordable 
health care. We can have a plan for long-term care. And I just 
wish that we would understand that the American people expect 
us to do something and not just sit back and say, we are 
failures, we can't do this, we can't do that.
    Let's do the CLASS Act. I would ask the Department go back 
to the drawing board, be optimistic, and come up with a plan 
that implements the CLASS Act.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Pallone follows:]

    [GRAPHIC] [TIFF OMITTED] T6161.003
    
    [GRAPHIC] [TIFF OMITTED] T6161.004
    
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the chairman of the Subcommittee on Oversight and 
Investigations, Mr. Stearns, for 5 minutes.

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

    Mr. Stearns. Thank you, Mr. Chairman.
    And I welcome this opportunity to have a joint hearing 
between your subcommittee and mine.
    And I would address the gentleman from New Jersey. He 
refuses to give up. Of course, this is something that all of 
his Democrat colleagues, many of his Democratic colleagues, 
both in the House and Senate, all indicated they have grave 
concerns about this new entitlement program. It is too much 
spending. And I suspect that he wishes to continue this program 
in light of the fact that it is going to be a budget buster.
    And we are doing something here in Congress; we are trying 
to balance the budget. So we convene this joint hearing of the 
Oversight and Investigations and Health subommittees to address 
the Energy and Commerce Committee's long-standing inquiry into 
the circumstances under which the CLASS Act was passed, a 
program that was recently pronounced dead by Secretary 
Sebelius.
    The Community Living Assistance Service and Support Act, or 
the CLASS Act as we call it, is a long-term care program that 
was included in the President's health care law. It was meant 
to be self-funding. Individuals paying premiums into the 
program would cover the costs of individuals receiving 
benefits.
    However, my colleagues, even before the passage of 
Obamacare, Republicans recognized the CLASS Act had a critical 
design flaw. CLASS would never be self-sustaining, and would 
eventually go bankrupt. Some Senate Democrats even joined us, 
saying they, ``had grave concerns that the real effect of the 
CLASS Act would be to create a new Federal entitlement program 
with large, long-term spending increases that far exceed the 
revenues.''
    Perhaps the most damning indictment came from Senate Budget 
Chairman Kent Conrad, who characterized the CLASS Act as a 
``Ponzi scheme of the first order,'' as the gentleman from 
Pennsylvania mentioned when he was quoting him, ``the kind of 
thing that Bernie Madoff would have been proud of.''
    As with other provisions of Obamacare, Democrats didn't 
bother to fix the CLASS Act. They had every opportunity, and 
they didn't work with Republicans to find common ground. They 
were too busy using procedural tricks to cram through a law 
before even the public could realize what was in it. But they 
didn't just quietly sneak the CLASS Act in. They had the 
audacity to claim that it would provide $70 billion in deficit 
savings. Democrats brazenly stated, even though they knew 
better, that the CLASS Act would actually, actually save the 
American people money.
    They were deliberately ignoring the truth about the CLASS 
Act. Democrats overstated the fiscal conditions of this program 
intentionally. The $70 billion in alleged savings from the 
CLASS Act was crucial, crucial to passing the health care law. 
And this administration promised the American people that the 
bill would result in $140 billion in savings. Half of those 
savings were from the CLASS Act, and the other half were from 
tax increases and cuts to Medicare.
    So after 19 months of trying, Secretary Sebelius announced 
she does not, ``see a viable path forward for CLASS 
implementation at this time.''
    Now, the question is, why did it take the administration so 
long to figure out what everybody else, even the CMS chief 
actuary, has known for many, many years? HHS and the 
administration seem to have gone to extraordinary lengths to 
ignore the truth so that they can continue to sell the false 
savings on this program to the American people. Even staff at 
HHS knew long ago that the CLASS Act was a financial disaster 
and that it would cost money and simply not save it.
    This committee conducted a comprehensive investigation with 
Senator Thune, Congressman Rehberg, and a working group of 
other Republicans from both the House and the Senate. We 
discovered 150 pages of emails and documents from HHS 
questioning the sustainability of the CLASS Act as early as May 
2009. Staff and officials within HHS called the program a 
``recipe for disaster'' that would ``collapse in short order.'' 
Now, this is going back to 2009. These are 150 pages of 
detailed documents and emails.
    But while voices of reason questioned the program 
privately, Secretary Sebelius and other administration 
officials publicly proclaimed their support. As we have seen 
before, first with the waivers, now with the CLASS Act, the 
Obama administration overpromises, underdelivers, and waits 
until implementation to admit its policy failures.
    Under CBO rules, the CLASS failure will cost the American 
taxpayers $86 billion, the most recent CBO projection of the 
supposed savings from the CLASS Act. If CLASS had gone into 
effect, it would have increased our deficit by the third 
decade. How much will the rest of Obamacare cost us? What are 
the hidden long-term costs? And when will the administration 
tell us the truth about that?
    [The prepared statement of Mr. Stearns follows:]

    [GRAPHIC] [TIFF OMITTED] T6161.005
    
    [GRAPHIC] [TIFF OMITTED] T6161.006
    
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognizes the ranking member of the Subcommittee on 
Oversight and Investigation, Ms. DeGette, for 5 minutes.

 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you very much, Mr. Chairman.
    I particularly want to welcome our colleagues present and 
past here today, in particular our friend Patrick Kennedy. It 
is so good to see you here today. And I know we all feel that 
way.
    I hope this hearing will help us to find a path forward to 
develop a plan to provide and pay for the ongoing burden of 
long-term care. Millions of seniors, disabled individuals, and 
their families face this challenge today, and tens of millions 
more will face it in the future. The CLASS Act was an effort to 
address these burdens. The program was added to the health care 
bill in this committee on a bipartisan voice vote. It was 
designed as a voluntary insurance program to provide 
beneficiaries with a cash benefit to help pay for institutional 
care or assistance to live independently in the community. Now, 
as we have all been discussing, the administration announced 
last week that it would not move forward with the 
implementation of the CLASS program because it was currently 
unable to do so in an actuarially sustainable fashion.
    I am interested in hearing from the administration's 
representatives about how they came to this conclusion and what 
potential they have for moving forward.
    Now, from this side of the aisle the reaction has primarily 
been one of disappointment. We understood the scope of the 
Nation's long-term care problems and the impact that these 
problems had on seniors and the disabled and their families. 
And we were hopeful, when we passed the Affordable Care Act, 
that the CLASS program would be the solution.
    Now, as you can hear from today's opening statements, some 
on the other side of the aisle seem positively gleeful that 
this CLASS program has been set aside. And that view, in my 
opinion, is really shortsighted because we have got to keep 
looking for solutions to the long-term care problem, and we 
have got to do it in a bipartisan way. We cannot and we should 
not give up.
    Ten million Americans need long-term care right now. And 
this number is expected to grow by 50 percent over the next 
decade. Long-term care, as we also know, is expensive. It wipes 
out seniors' savings, and it forces many to go on Medicaid, 
which in turn costs States and taxpayers billions of dollars. 
So the present situation is both fiscally and morally wrong.
    Mr. Chairman, many opponents of the health care law are 
using this CMS announcement about CLASS as an opportunity to 
attack the entire law. In the context of those claims, I want 
to set the record straight on two important subjects. First, 
with or without CLASS, the health care reform bill continues to 
be a financially responsible law that will reduce the Nation's 
debt. When we passed that bill, CBO told us it would save about 
$200 billion over the next decade. CLASS was responsible for 
about $70 billion of that savings. That means, even without 
CLASS, the numbers still add up. The health care law will save 
taxpayers over $120 billion over the next decade and even more 
in the decade after that.
    Second, I want to address the myth that the administration 
announcement somehow hobbles the health care law. It does not. 
The CLASS program was an important part of the law that 
provided a new and important long-term benefit. But even though 
the administration has decided not to move forward with this 
program, the rest of the bill's benefits continue to pile up. 
Millions of seniors are enjoying discounts on prescription 
drugs in the part D doughnut hole. Young adults are able to 
retain their health insurance through their parents' plans. 
Taxpayers are saving money because of the bill's initiatives to 
cut Medicare and Medicaid fraud, waste, and abuse. Millions of 
Americans are protected from the worst abuses of the insurance 
industry. Small businesses are receiving valuable tax credits 
to provide health care coverage. And by the time the health 
care bill is fully implemented, over 30 million otherwise 
uninsured Americans will have access to good, affordable health 
care law--or health care coverage.
    Now, I am disappointed about the outcome of CLASS. But even 
without this part, the health care law will continue to provide 
critical benefits for tens of millions of Americans. My hope 
was that CLASS would solve our growing problems in providing 
and paying for long-term care. And I still hold out hope that 
it can be part of the solution. It really has to be. I want to 
hear from the administration today exactly where we are. But 
more importantly, I want both of these subcommittees and the 
full committee to explore together how we move forward. Can the 
administration ultimately find a way to make CLASS a workable 
solution? Are there legislative solutions that can help make 
CLASS a workable and sustainable program? The committee and the 
Congress have a responsibility to help the elderly and disabled 
in our society who need long-term care. I hope this hearing 
will help us meet this responsibility.
    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes the gentleman from Georgia, Dr. Gingrey, for 5 
minutes.

  OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Gingrey. Mr. Chairman, thank you.
    And I will admit to being gleeful this morning. It is hard 
not to be gleeful when we just rescued $80 billion from a 
Democratic sink hole and now are returning that money to the 
American taxpayer. Yes, indeed I am gleeful.
    But to quote the President of the National Coalition on 
Health Care in a Politico story yesterday, ``The best strategy 
is to keep CLASS Act on the books until health reform takes 
hold and hope the political environment changes enough so that 
the program can be tweaked into shape.'' That, frankly, sounds 
like a recipe for disaster.
    Mr. Chairman, when a pharmaceutical drug does not work as 
intended it isn't kept on the market with the hope that one day 
it might be tweaked. It is recalled, clean and simple. And this 
CLASS program is not unlike a defective drug. And its repeal is 
a necessary step toward successful long-term care reform. And I 
agree with Ms. DeGette on that.
    CLASS does not work. The administration cannot fix it 
without massive taxpayer bailouts. And as long as it survives 
and is still on the books, it is a threat to the current 
entitlement programs and especially to Medicare. Additionally, 
a congressional report released last month on CLASS presents 
evidence that former Senator Kennedy's senior staffers and 
administration officials ignored CMS actuary Rick Foster's 
repeated warnings on the insolvency of the program. They also 
ignored studies conducted by the American Academy of Actuaries 
and the Society of Actuaries supporting Rick Foster's concerns.
    According to the report, the Kennedy staff response was, 
``decided she doesn't think she needs additional work on the 
actuarial side.'' And then allegedly told administration 
staffers she had a score from CBO on CLASS that was actuarially 
sound. And yes, it kept going.
    One month later, Richard Frank, Deputy Assistant Secretary 
for Planning and Evaluation at HHS stated publicly that we in 
the department have modeled CLASS extensively, and we are 
entirely persuaded that financial solvency over the 75-year 
period can be maintained. Yet to my knowledge, no model from 
CBO or the administration suggesting that CLASS is solvent has 
ever been produced publicly, even after repeated requests made 
by this committee, Mr. Chairman.
    That is simply unacceptable. If the warnings of CMS 
actuaries were ignored, this committee and the American public 
need to know why they were ignored. We simply cannot afford to 
let this administration hide behind any backroom deals and 
secret handshakes any longer.
    Mr. Chairman, I believe that this committee must continue 
to seek the truth from the Obama administration on the economic 
modeling used to sell us on the CLASS Act and Obamacare and, 
indeed, on the entire bill that was sold to the American 
people.
    And further, I would once again call on this Congress to 
pass H.R. 1173, a bill that my good friend and fellow physician 
Dr. Boustany has introduced to repeal the CLASS Act.
    And Mr. Chairman, with that, I would like to yield the 
balance of my time to my colleague from Tennessee, Ms. 
Blackburn.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman.
    And I thank the gentleman from Georgia. We appreciate 
having the hearing today and reviewing what is taking place 
with the CLASS Act. I think that it is apparent that, despite 
the best efforts of the Federal Government, it is very clear to 
all of us that there is no way that the Federal Government more 
effectively or efficiently runs a health care program than the 
private sector.
    Indeed, as we went through this entire debate--and for my 
colleagues across the aisle, I will remind you--there is no 
example in the United States of where the Federal Government 
has run this effectively, has saved money. Indeed, when you 
look at TennCare, you see cost overruns. There is no example 
where these near-term expenses yield you a long-term savings. 
It has not happened, not in Tennessee, not in Massachusetts, 
not in New Jersey with guaranteed issue.
    And it does bring up other problems that exist with the 
CLASS Act, indeed the budget gimmickry that was there 
throughout the entire Obamacare bill. What else is within this 
bill that would be gimmickry that was there to yield a savings? 
This is something that we need to look at as a committee, get 
to the bottom of. I think also the other thing that it 
highlights is the red flags that many of our colleagues have 
mentioned, indeed this being called a recipe for disaster, 
which now it is quite apparent that it is.
    And then I think that another concern that we will want to 
address is the lack of transparency that existed in HHS as they 
moved forward with discrepancies in public statements and 
private statements. And we will want to get to the bottom of 
that. Indeed, they have spent 19 months trying to implement an 
unworkable problem--program. And I appreciate that we are 
having a hearing to get to the bottom of it.
    I yield back.
    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes the ranking member of the full committee, Mr. 
Waxman, for 5 minutes for an opening statement.

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

    Mr. Waxman. Thank you very much, Mr. Chairman.
    Well, the Republicans are gleeful, and they are happy to 
admit that. If they are gleeful, it is because they want to 
repeal the Affordable Care Act and this particular provision, 
which attempts to deal with the issues of long-term care.
    A lot of people around the country don't realize that if 
they have health insurance, even Medicare, it doesn't pay for 
their assistance when they need what is called long-term care. 
And if they repeal the CLASS Act, they will have the following 
status quo continued.
    Right now, over 10 million Americans are in need of some 
form of long-term care, and this number is expected to increase 
to 15 million by 2020. Seven in 10 people in the country will 
need help with basic daily living activities at some point in 
their lives because of a functional disability.
    The cost of long-term care is astronomical. The average 
nursing home bill currently stands in excess of $70,000 a year. 
Monthly charges for home health services averages out at 
$1,800. Private health insurance, which my Republican 
colleagues says is the way to solve the problem, a lot of those 
private insurance policies often are too expensive or difficult 
to purchase. As a result, less than 10 percent of the 
population holds these policies.
    By far and away, the largest spender for long-term care 
comes through the Medicaid program. In fiscal year 2010 alone, 
the combined Federal and State price tag for these services was 
some $120 billion. That is a publicly-financed program.
    So the Republicans would allow this program that is 
publicly financed to be the only hope for seniors that can't 
afford a policy to cover them for their long-term care needs. 
They started off this year by saying, we want to repeal the 
Affordable Care Act, and then we will replace it. We have never 
heard what their replacement is.
    They have no idea how to deal with this problem, only to 
tear down the attempts to make the problem more manageable for 
the millions of Americans who face the dilemma of how to pay 
for their long-term care or the long-term care costs of their 
family.
    Well, it was for this problem that Congressman Pallone and 
Congressman Dingell and Senator Kennedy worked to establish an 
effort to meet the long-term care needs of our elderly and 
disabled citizens and their families, as well as to provide 
fiscal relief to the Medicaid program. The Community Living 
Assistance Services and Supports initiative, which is the CLASS 
program, was made part of the Affordable Care Act. This 
represented the first real attempt at the national level to 
tackle the country's long-term care puzzle. And it has eluded 
us for decades because of the complexity and the expensive 
price tag. We should not lose sight of all this, even as the 
program struggles to get off the ground.
    Now, no doubt the CLASS program is not crafted perfectly. 
No piece of legislation is, especially one that is as novel and 
as unique as CLASS. Everyone acknowledges that. But 
regrettably, Republicans have called this hearing today to 
dwell on the problems that have stymied implementation of 
CLASS, not how to fix those problems to deliver the promising 
future that could and should lie ahead for the CLASS program.
    Ten days ago, Secretary Sebelius announced she is putting 
CLASS on hold. That is because of unintended flaws in the 
statutory authority. She feels she could not at this time fully 
implement the law. I find that disappointing. But until she 
finds a path forward, the action she has taken is the 
responsible thing to do, fiscally and otherwise. But calling 
for a timeout is not the equivalent of throwing in the towel, 
as Republicans would have the public believe.
    Contrary to the Republican title this hearing, CLASS has 
not been canceled; rather, it simply stands in recess.
    The Republicans complain we are ignoring the truth. Well, 
they are ignoring the truth of the plight of millions of people 
to finance their long-term care. They talk about the financial 
disaster. What about the financial disaster for those families 
facing this issue? Recipe for disaster. Doing nothing and 
repealing the CLASS Act is a recipe for disaster.
    They talk about overpromising and underdelivering. They 
have promised to repeal and replace, and they have never told 
us what they would do. All they have done is pass a law that 
would make the Medicare program not a guarantee, but something 
that may be available in the future, but for most people, it 
may not.
    I want to put all this in perspective, and look forward to 
the hearing today.
    Mr. Pitts. The Chair thanks the gentleman, and now 
recognizes the vice chairman of the Health Subcommittee, Dr. 
Burgess, for 5 minutes.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. I thank the chairman for yielding.
    Welcome to our panelists this morning. A great bipartisan 
group of Members and former Members.
    And I also want to welcome the second panel from the 
agencies. We certainly look forward to hearing your testimony 
this morning.
    I am a believer in long-term care insurance. And really, 
this hearing is more about the budgetary gimmicks that were 
used to force through the Affordable Care Act, which really if 
I can't remove the Affordable Care Act, I would like to at 
least remove the word affordable from the title. But 
nevertheless, this is a hearing about the classic Washington 
whodunit; what did you know, and when did you know it?
    But I am a believer in long-term care insurance. I 
purchased a long-term care insurance policy long before I came 
to Congress, after I turned 50, on the advice of my mother. And 
I encourage other people to do the same.
    Now, Mr. Waxman says that it is going to be too expensive 
for seniors to do that. My premium is a little less than $100 a 
month. I don't know what the premiums would have been in the 
CLASS Act, but they certainly would not have been benefits as 
substantial as the ones that I have purchased in the private 
sector. And I am not always dependent upon the Federal 
Government to end up doing the right thing.
    We heard Mr. Pallone talk about a 15-year exclusion. Well, 
I didn't have a 15-year exclusion on the policy that I bought. 
Now, Congress could do something to make it easier. You could 
let me pay for that with pretax dollars, full deductibility of 
long-term care insurance. Why don't we do that? You could let 
me pay for it out of my health savings account. Why do don't we 
do that? These are simple things that are within our reach and 
grasp that I frankly do not understand why we won't tackle.
    And Mr. Pallone talked a little bit about some of the words 
that were used. I was encouraged to hear him use the word 
premium support. Yes, that is a good idea, Frank. We have got 
some place to talk about there. But he also referred to us as 
opponents.
    And I remember that night in July of 2009 when the CLASS 
Act first appeared in this hearing room. The CLASS Act appeared 
at the last minute as a placeholder language that Mr. Pallone 
brought to the markup, never had a hearing on it, never called 
a witness on it. We were just presented with this information, 
and oh, well, we will fill in the details later. Well, now it 
is later, and we are filling in those details. And some of 
those details don't look too encouraging.
    It looks like the CLASS Act was a budgetary deception to 
mask the actual cost of the Affordable Care Act. And people are 
rightly asking now, would we have passed the Affordable Care 
Act had the true extent of the budgetary impact been known? 
Again, what did they know, and when did they know it? Because 
in the spring of 2009, May 19 to be precise, the chief actuary 
for the Center for Medicare and Medicaid Services talked about 
the financial structure of this program would be ``a terminal 
problem.'' So he knew that in May 2009.
    Why didn't we discuss that in July of 2009 when we were 
doing the markup on H.R. 3200? I think that would have been a 
service to the committee and a service to the people if we 
could have had those hearings, but we didn't. So here we are. 
It is a fact of life. We all age, and at some time, we are 
going to rely on some form of long-term care insurance. I will 
just say, again, I can think of no more loving gift for parents 
to leave for their children than to take care of their needs if 
that need were to arise and relieve the children of that 
burden.
    We never got a chance to fully debate this.
    Mr. Waxman, I would say CLASS dismissed, and then we need 
to work on canceling.
    I am going to yield the balance of my time to Mr. Murphy of 
Pennsylvania.

   OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Murphy. Thank you.
    You know, I have been for some time concerned about the way 
this program was double counting premiums as both funding long-
term care insurance and contributing to the so-called savings 
in the health care law. As far back in March, I said if any 
insurance company began collecting premiums, then tried to 
spend $86 billion before paying out a single penny in benefits, 
they would rightly be prosecuted as a Ponzi scheme.
    What is of particular concern here today is the lack of 
forthrightness on the behalf of HHS and the administration 
regarding the insolvency of the program. Throughout the debate 
over the health care bill, I, other Republicans, and even some 
Democrats, again and again questioned the long-term solvency of 
this program. But the administration insisted that long-term 
solvency was not in question, and that the program would 
significantly reduce the deficit.
    In fact, the original CBO score of the CLASS Act projected 
savings of $70 billion, accounting for almost half of the total 
deficit reduction we were told the bill would achieve. And now 
Secretary Sebelius tells us it is totally unsustainable and the 
promised savings have evaporated.
    But even of greater concern is that this committee's 
investigation has uncovered evidence that the administration 
knew the program was not sustainable as early as the spring of 
2009, prior to the passage of the health care law. We are left 
with serious questions about what the administration knew and 
when they knew it. It certainly appears that the administration 
knowingly promoted the CLASS Act as a cost saver when they knew 
those savings would never be achieved.
    I yield back.
    Mr. Pitts. The Chair thanks the gentleman, and now 
recognizes the gentleman from Texas, Mr. Green, for 5 minutes.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman.
    And I thank my colleagues for the time.
    First, I want to welcome our colleagues here. I know three 
of them we see all the time still.
    But I want to particularly welcome our former colleague 
Patrick Kennedy.
    And Patrick, we worked together on lots of mental health 
issues over the years. And I want to thank you for your service 
to the American people, and particularly to your district in 
Rhode Island. But also I want to thank you for the service of 
your father. Without your father's work in the Senate, I don't 
have enough fingers and toes to list the issues that would not 
be in the law today, including the CLASS Act. And just, 
generally, thank you for the service of your family. And I 
think all of us thank you for that, and particularly knowing 
you and your service in the House.
    I think it is correct the CLASS Act was added by voice vote 
when we were working on the Affordable Care Act. But I don't 
want to use the CLASS Act as a reason to oppose the Affordable 
Care Act. There are thousands of people in our country who do 
not have the same opportunities that Federal employees have, or 
State employees, or bar association members, or American 
Medical Association members to purchase a long-term care plan. 
And that is what the CLASS Act was supposed to be about, to 
give a lot of people to do what Dr. Burgess talked about, to 
give a gift to our children, so we have that opportunity. It is 
difficult to fund it. And I know we have heard the quote of a 
Ponzi scheme. I thought up until today I heard a Ponzi scheme 
was only what the Republicans thought about Social Security. 
But insurance could be considered a Ponzi scheme, because you 
hope you pay these premiums for all these years and you will be 
able to collect it.
    But that is not what this is about. It was to give people 
an opportunity who may not have the same opportunity as we do 
as Federal employees, or State employees in the State of Texas 
I know have that opportunity. And a lot of businesses have 
that. But most people don't through their employer. And that is 
what the CLASS Act was about.
    Is it perfect? Nothing in the Affordable Care Act is 
perfect. In fact, I continue to disagree with calling it 
Obamacare because this committee drafted that bill. The 
President didn't send us up a bill. Now, I know it is popular 
to call it Obamacare because it is a good message. But we are 
the ones that drafted that bill in this committee after a lot 
of markup, late night markups, that was not dissimilar to what 
we went through in 2003 when we had the prescription drug plan 
that the majority now pushed, that a lot of us didn't support 
because of problems in the bill. But you haven't seen us 
repealing that prescription drug plan. We want to perfect it.
    And I know we need to perfect the Affordable Care Act. And 
so that is what we need look at. If we can perfect the 
Affordable Care Act and make it better, then let's sit down 
across the aisle.
    But for 10 months in this Congress, all we have seen is 
repeal. I guess that happened after Social Security was passed 
in 1935. There were a lot of people who said, we need to repeal 
Social Security. Thank goodness the Congress in 1935 and 1936 
didn't do that.
    I would like to yield the rest of my time to my colleague, 
Dr. Christensen.

       OPENING STATEMENT OF HON. DONNA M. CHRISTENSEN, A 
       REPRESENTATIVE IN CONGRESS FROM THE VIRGIN ISLANDS

    Ms. Christensen. Thank you, Congressman Green.
    I want to welcome my colleagues.
    And it is good to see you, Patrick.
    A lot of claims have been made about a proposed repeal of 
CLASS saving taxpayer dollars. But it is my understanding that 
the CBO director has reported that repealing CLASS would have 
no impact on the Federal budget. So to claim otherwise is just 
not true.
    But repeal would have a profound effect, as Howard Glickman 
at The Urban institute recently wrote, and I agree, while the 
CLASS Act is deeply flawed, it is an opportunity to transform 
long-term care from the means-tested Medicaid program to an 
insurance-based system. If CLASS is repealed, that opportunity 
will be lost, and millions of Americans will find themselves 
with only a shrinking Medicaid benefit to support them in their 
frail old age or if they become disabled at a younger age.
    So our seniors and our disabled need this amended, not 
ended.
    And I would like to yield the balance of my time to 
Congresswoman Schakowsky.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you so much.
    We don't have a long-term care policy in the United States 
of America. The only thing we really have is finally Medicaid 
when people run out of all their money. And so the 10 million 
Americans who are in need of long-term care and services and 
support really need a program like this.
    And it is disturbing to me that when my colleague says, 
CLASS dismissed. No, if there are some problems with this 
legislation, we are all willing to sit down and figure out how 
to perhaps do it better. But the very idea that we are going to 
take away better choices for Americans--you know, already one 
out of six people who reach the age of 65 will spend more than 
$100,000 on long-term care. In this country, that is really a 
disgrace. We need a long-term care policy. The CLASS Act is a 
good start.
    I yield back.
    Mr. Pitts. The Chair thanks the gentlelady.
    That concludes the opening statements.
    The Chair has a unanimous consent request to enter into the 
record a statement by Senator John Thune. The ranking member 
has looked at this.
    Without objection, so ordered.
    [The information follows:]

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    Mr. Pitts. Our first order of business today will be our 
Members panel.
    I would like to welcome our Members and former Member, and 
all the witnesses today.
    But our first panel includes Congressman Rehberg from 
Montana. Congressman Rehberg is the chairman of the 
Subcommittee on Labor, Health, and Human Services, Education, 
and Related Agencies at the House Appropriations Committee.
    Next is Congressman Boustany from Louisiana. As we all 
know, Congressman Boustany is a doctor. So he will have plenty 
of company here at the Energy and Commerce Committee.
    Also with us is Congressman Ted Deutch from the great State 
of Florida.
    And finally, the former Congressman from Rhode Island, and 
no stranger to the Energy and Commerce Committee, Patrick 
Kennedy.
    Welcome.
    We are happy to have each of you here today. And we will 
start with Chairman Rehberg. You are recognized for 5 minutes.

 STATEMENT OF HON. DENNY REHBERG, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF MONTANA

    Mr. Rehberg. Thank you, Chairman Pitts, and members of the 
House Energy and Commerce Committee for the invitation to 
testify here today. I also want to thank the members of the 
CLASS Act working group, especially Chairman Stearns, 
Representatives Burgess and Gingrey, Chairman Pitts, and I see 
Mr. Upton is not here. He probably has something else on his 
mind at this time. Senator Thune's leadership has also been 
extraordinary.
    This hearing is really the culmination of a lot of hard 
work. And if you think about it, it has unfolded a lot like an 
episode of Law and Order. Those shows always begin with a 
mystery. Well, on March 23, 2010, the American public was 
handed a mystery when President Obama signed the so-called 
Patient Protection and Affordable Care Act. Weighing in at more 
than 2,500 pages, it calls for thousands of pages of more 
regulatory rulemaking. Even the bill's authors didn't read it. 
We were told we had to pass the bill before we could find out 
what was in it. That is what the CLASS Act working group was 
all about. We followed clues, questioned witnesses, and used 
the oversight authority of the Congress to track paper trails.
    As the chairman of the House Appropriations Committee that 
oversees the Department of Health and Human Services, I 
requested internal HHS documents that revealed the insolvent 
nature of the program. When it passed, we were told that CLASS 
is a true insurance program where the premiums collected would 
cover the benefits paid out. But as we dug deeper, that cover 
story began to fall apart. New facts came to light. Every 
actuarial expert, including HHS staff and the chief actuary 
himself, agreed that, as currently written, CLASS simply won't 
work. It won't pay for itself.
    So the government is exposed to tens of billions of dollars 
of costs, according to the CBO. And then earlier this month, we 
got the equivalent of a full confession. The Department of 
Health and Human Services has rightfully decided to cancel the 
program. This was a profound development. Once we stripped away 
the political spin, brushed off budget gimmicks, and cut 
through the bureaucratic jungle, we saw a foundational pillar 
of the President's health care law for what it really was, 
truly a Ponzi scheme that apparently was included in the bill 
solely to help the bill appear deficit neutral.
    But there is a problem. CLASS is not gone, not yet. The 
Secretary can claim that she has the authority to, in effect, 
rewrite it. There will be temptation for some in Congress to 
simply slip additional authority into an unrelated bill to turn 
CLASS into something it was never intended to be. And that is 
why we are here today. The facts are out. Now we have to decide 
what is to be done.
    I am here because I don't think CLASS should be rewritten 
or redesigned by the bureaucracy. At a time when we are 
struggling to save the entitlement programs we already have, 
good programs like Social Security and Medicare, we simply 
can't afford massive new government programs like CLASS. The 
potential costs to the government and the employers is so great 
that any consideration of a program of this type needs to be 
fully considered in a transparent and open way by the public 
and by Congress. And just as with the other entitlements in 
PPACA, a new program of this type makes the task of saving 
existing entitlement programs for existing beneficiaries even 
more difficult.
    This week I introduced a bill to repeal CLASS and other new 
entitlement programs in PPACA, as well as cosponsoring Mr. 
Boustany's CLASS repeal bill.
    Colleagues, the most important responsibility Congress has 
today is to create an environment for the economy to thrive, to 
do what we must do to reduce government spending and onerous 
regulations. Out-of-control government spending leads to higher 
taxes, lower government debt ratings, and uncertainty. And 
onerous regulations lead to higher costs of doing business and 
barriers to business growth.
    We have come to the final act in any Law and Order episode. 
We have seen the crime. We have uncovered what happened. We 
have got the confession. Now it is time to pass sentence. 
Congress has a chance to act decisively to protect the 
hardworking American taxpayer from the consequences of an 
unsustainable new government program.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Rehberg follows:]

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    Mr. Pitts. The Chair thanks the gentleman.
    We will just go in the order in which you are seated.
    And the Chair recognizes Congressman Deutch for 5 minutes 
at this time.

   STATEMENT OF HON. THEODORE E. DEUTCH, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Deutch. Thank you, Chairman Pitts, Chairman Stearns.
    Thank you for the opportunity to discuss the CLASS Act. I 
am privileged to be joined on this panel with our former 
colleague, Mr. Kennedy.
    I am also grateful to Mr. Pallone for his commitment to 
making the late Senator Kennedy's dream of dignity and hope for 
elderly, sick, and disabled Americans a reality.
    Senator Kennedy so eloquently captured the failure of our 
long-term care system when he said, too often, they have to 
give up the American dream, the dignity of a job, a home, and a 
family so they can qualify for Medicaid, the only program that 
will support them.
    CLASS brought so many Americans hope because it was the 
first real path to delivering real, affordable long-term care. 
Just 10 percent of Americans over age 50 have long-term care 
insurance, yet 70 percent of them will need long-term care at 
some point.
    The remaining 90 percent of Americans rely on Medicaid. 
That is why over a third of its dollars go toward long-term 
care, and why cuts to Medicaid at the Federal and State levels 
demand that we make affordable, cost-effective long-term care 
insurance available to the American people.
    The current system incentivizes poverty. It forces seniors 
to blow through their life savings and spend down in order to 
qualify for Medicaid. This perverse incentive forces struggling 
families into unthinkable positions. Take, for example, a man 
in his 50s with early-onset Alzheimer's. He is ineligible for 
long term care through Medicaid due to his wife's salary as a 
teacher. At $50,000 a year, her salary is too high for Medicaid 
but not nearly enough to pay for the nursing home care that can 
cost up to $90,000 annually in Florida. She could leave her job 
so they could fall into poverty. She could divorce her sick 
husband, leaving him destitute but eligible for expensive long-
term care through Medicaid.
    These choices are not unique. These are the current 
system's incentives. Save nothing, pass what you do have onto 
your children before you get sick, own little property, do not 
purchase long-term care insurance. Follow this plan, and you 
will be eligible for expensive long-term care through Medicaid.
    Triumphant statements from opponents of health care reform 
at the suspension of CLASS do nothing for the grandmother in my 
district who must choose between helping her grandson pay for 
college or paying her own tuition at a nursing home. Cheering 
the halted implementation of CLASS does nothing for working 
families I represent with no way of paying for the long-term 
care their elderly loved ones need.
    I visit nursing homes in Florida and am pained to hear 
constituents tell me they miss their homes in Century Village, 
Kings Point, and other retirement communities. Sadly, Medicaid 
steers them into institutional care, despite their preference 
for less costly in-home care and other community-based options.
    I have heard from seniors facing foreclosure due to a 
spouse's exorbitant nursing home bills. I have heard from young 
families who cannot afford quality care for the ailing parents 
they love, yet long-term care insurance remains out of reach 
for most Americans.
    No one is immune from the frailty of old age. Anyone can 
fall ill or become disabled. Take, for example, the case of 
Alan Brown, a 20-year-old in 1988, when he was struck by a 
strong ocean wave that severely damaged his spinal cord, 
leaving him a paraplegic. From wheelchairs to transportation to 
long-term care, his costs are astronomical. Even with two jobs, 
he struggles to get by.
    Those who are young and healthy may not always be. Any one 
of us could become disabled like Mr. Brown. And if that is not 
compelling enough, the inevitability of aging should be. 
Critics of CLASS primarily focus on sustainability. If that is 
a concern, let's fix it. HHS was given statutory latitude. And 
I join the CLASS actuary and CLASS advocates in believing that 
the Secretary has enough authority to make the program work.
    Others disagree and imply that a legislative fix is needed. 
So let's fix it. Just as Social Security succeeded as a wage 
insurance, reducing elderly poverty from 50 percent to 10 
percent, Americans should have an affordable way to finance 
long-term care.
    For the 200,000 seniors I represent, the jovial reaction to 
the suspension of CLASS was both disheartening and predictable.
    Mr. Chairman, my constituents, our constituents deserve 
more. We must seize this opportunity to get long-term care 
right in America. Together, I believe we can improve upon an 
incredibly promising idea: Reduce entitlement spending and 
ensure Americans' greater financial security.
    Thank you, Mr. Chairman, and I yield back.
    [The prepared statement of Mr. Deutch follows:]

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    Mr. Pitts. The Chair thanks the gentleman and is pleased to 
welcome our former colleague, Congressman Patrick Kennedy, for 
5 minutes.

   STATEMENT OF PATRICK J. KENNEDY, FORMER REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF RHODE ISLAND

    Mr. Kennedy. Thank you, Chairman Pitts and Chairman 
Stearns, and Ranking Members Pallone and DeGette, and all of my 
colleagues who welcomed me back today. I appreciate the 
opportunity to testify.
    Let's just think for a moment and step back and use our 
common sense. All of our family members are going to need 
supportive living services. And the question is not how and 
what program we are going to put those costs on. Is it going to 
be at the State level, the local level, or the Federal level? 
The notion is you can't turn away from this problem and think 
that the problem is going to go away. Someone is going to have 
to be there for our people and our families who are going to 
need supportive living services.
    So the question for Congress is really, how are they going 
to address this problem? And so you can say that actuaries say, 
oh, CLASS Act is going to cost money, but the whole point of 
health care reform is that we take a broader look at all the 
costs associated with health care and really see the forest 
from the trees.
    So we are well aware that our health care system has been 
about cost shifting. You take the uncompensated care and you 
put it on the private pay and you hope that someone pays for 
the bills of those who can't afford to pay. When are we going 
to start to be realistic about this? Because just turning away 
from the problem is not going to make the problem go away. So 
people will say, oh, this is a program that costs money. You 
know, in my father's case, who needed supportive living 
services, and my Uncle Sarge Shriver's case, who needed it when 
he had dementia, it was nonmedical supportive living services 
that helped them in their lives. It was the guy that helped my 
Uncle Sarge up from the living room and into the dining room, 
and who helped him, you know, get transported around. This was 
someone who didn't have a medical degree, doesn't have big 
student loans because they went to get a doctor's degree or a 
nursing degree. But they were the most essential person in my 
Uncle Sarge's life in giving him dignity and giving him a life.
    And guess what? It is the least expensive. I should be 
getting all the chorus of support from my Republican friends. 
If you want to reduce medical costs, try using nonmedical 
support services. So you will hear a lot about, oh, you know, 
this is going to cost money. Let's just step back and 
understand, someone is going to pay. Someone is going to pay. 
And so let's be realistic here. Let's also do the right thing 
by our family members, and give them the kind of lives of 
dignity that they deserve, that we would want for any one of 
our family members.
    And I hope that we get away from this notion that, let's 
place the blame game, because Washington is good at that.
    But at the end of the day, our country is facing a 
demographic tsunami. It is going to bury this country in red 
ink. And the question is, do you want to take all of your tools 
out of your toolbox now? Because CLASS Act can be one of the 
tools that you use to help address the overall costs of trying 
to take care of long-term care. And in my mind, you can either 
pay high-priced acute care, institutionalized care costs, or 
you can pay for nonmedical supportive living service costs that 
will keep people out of acute care settings. The whole notion 
of health care reform was to move us from a sick care system to 
a health care system. Because it is less expensive at the end 
of the day to keep people independent and not dependent, if you 
will, on our medical system, which is costly. CLASS Act is a 
tool. And let's make it work for all of your constituents who 
are going to need the supportive services that are going to 
give them the human dignity that each of us would want for our 
own family members.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Kennedy follows:]

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    Mr. Pitts. The Chair thanks the gentleman and now is 
pleased to recognize Dr. Boustany for 5 minutes.

STATEMENT OF HON. CHARLES W. BOUSTANY, JR., A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Boustany. Thank you, Chairman Pitts and Ranking Member 
Pallone, members of the Energy and Commerce Committee, for 
allowing me to testify today.
    Chairman Pitts, I ask unanimous consent that my full 
statement be made a part of the record.
    Mr. Pitts. Without objection, so ordered.
    Mr. Boustany. I appreciate you allowing me to testify in 
support of H.R. 1173.
    The bill is really simple. It repeals the CLASS Act, as the 
program has been shown to be fatally flawed, fiscally 
irresponsible, and irreparable. I opposed the CLASS Act and 
have worked to highlight the problems and fatal flaws of the 
program.
    And I can tell you as chairman of the Oversight 
Subcommittee on the House Ways and Means Committee, the 
bicameral congressional oversight efforts were vigorous, 
extensive, committed, and necessary to expose the truth about 
this program.
    In fact, Mr. Chairman, this is a victory, a congressional 
oversight victory on behalf of the American taxpayer.
    Leaving the statute on the books is irresponsible, and it 
must be removed. Keeping the law on the books gives bureaucrats 
a creative license to keep trying to implement it. And it is an 
opening for Congress to keep trying to tweak a failed program. 
CLASS is unsustainable and a new unfunded entitlement that we 
cannot afford. I agree with employer groups and taxpayer 
advocates who have no doubt CLASS will return if Congress fails 
to strike it from the books.
    Liberal special interest groups insist that HHS has the 
broad legal authority to fix the program by excluding eligible 
Americans from the program.
    Mr. Chairman, I have to say that I am deeply disappointed 
that Secretary Sebelius refused to testify today. She should 
come here. She should explain why she ignored warnings of the 
insolvency of this program and falsely claimed that she had the 
authority to change the program.
    Lawmakers consistently ignored warnings by the 
Congressional Budget Office, the chief Medicare actuary, and 
the American Academy of Actuaries when they inserted this 
budget gimmick in the Affordable Care Act. After months of 
refusing to answer questions, HHS finally--finally--conceded it 
lacks the legal authority to make CLASS sustainable. Congress 
should repeal it instead of waiting for bureaucrats to change 
their mind.
    Mr. Chairman, CBO's credibility should also be called into 
question for scoring the program as a saver when they knew it 
would need a bailout. And in fact, I want to quote from former 
CBO official Jim Capretta. Capretta wrote, ``What remains most 
perplexing in this whole episode is why CBO played along with 
the CLASS charade. They had access to all the same actuarial 
data as everyone else. Their own numbers showed the program was 
unstable beyond 10 years. The Gregg amendment gave them the 
perfect excuse to conclude that CLASS would never be launched 
because it could never be viable without massive taxpayer 
subsidies. And yet they kept showing the $70 billion, 10-year 
surplus in their estimate. Among the many questions about the 
sorry episode that are worth pursuing, the role of CBO is 
surely one.''
    Mr. Chairman, as a physician who has dealt with many, many 
patients--I was a cardiac surgeon, and I saw a lot of these 
very complex conditions, and saw the entire spectrum of care 
and the needs that are out there. I can surely tell you as a 
physician there are many, many other options that are much more 
responsible, fiscally responsible and sustainable than what 
this program was.
    My colleague Dr. Burgess mentioned a number of options that 
were never entertained as we went through this process. So 
beyond CLASS, we must continue to encourage middle class 
Americans to plan. That is the fundamental issue here, is 
planning ahead, starting at an early age and planning for these 
kinds of things. You can't do this at a late stage.
    Planning for retirement security, purchasing long-term care 
insurance policies. We can do a number of things to make that 
even better if we look at these options very carefully.
    And finally, on a personal note, I can tell you, from 
having dealt with my own father and my wife's stepfather, there 
are viable ways to deal with this. And what we need to do now 
is be responsible. Let's repeal this failed program. Let's move 
forward and come up with responsible policies and move the ball 
forward in health care.
    [The prepared statement of Mr. Boustany follows:]

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    Mr. Pitts. We will call the second panel to the witness 
table, and the Chair will turn over the chair to Mr. Stearns 
for the second panel.
    Mr. Stearns. We have the Honorable Kathy Greenlee, who is 
assistant secretary for aging, the Administration on Aging, 
U.S. Department of Health and Human Services. The other 
individual is the Honorable Sherry Glied, assistant secretary 
for planning and evaluation, U.S. Department of Health and 
Human Services.

 STATEMENTS OF KATHY GREENLEE, ASSISTANT SECRETARY FOR AGING, 
    ADMINISTRATION ON AGING, DEPARTMENT OF HEALTH AND HUMAN 
 SERVICES; AND SHERRY GLIED, ASSISTANT SECRETARY FOR PLANNING 
    AND EVALUATION, DEPARTMENT OF HEALTH AND HUMAN SERVICES.

    Mr. Stearns. Good morning. You are aware that the committee 
is holding an investigative hearing and, in doing so, has had 
the practice of taking testimony under oath.
    Do you have any objection to testifying under oath?
    No, OK.
    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? In that case, if you would please 
rise and raise your right hand, I will swear you in.
    [Witnesses sworn.]
    Thank you. You are now under oath, and subject to the 
penalties set forth in Title 18, Section 1001 of the United 
States Code. You are now welcome to give your 5-minute summary 
of your written statement.
    Please begin, Ms. Greenlee.

                  STATEMENT OF KATHY GREENLEE

    Ms. Greenlee. I apologize, I was expecting questions for 
the first panel.
    So I thank you, Chairman Pitts, Chairman Stearns, Ranking 
Members Pallone and DeGette, and members of the subcommittees.
    Thank you for the opportunity to discuss with you today the 
CLASS Act. I'm pleased this morning to be joined by my 
colleague, Sherry Glied, who serves as assistant secretary for 
the Office of Planning and Evaluation for the Department of 
Health and Human Services.
    As our population ages, there is an increasingly urgent 
need to find effective ways to help Americans prepare for and 
finance their individual long-term care needs. Almost 7 out of 
10 people turning 65 today will need help with daily living 
activities at some point in their remaining years. And many 
younger people, particularly those living with significant 
disabilities may also need assistance.
    But this care is expensive. Nationwide, the median annual 
cost of a nursing home in 2010 was $75,000. An attendant who 
provides home care and no medical tasks, like the dispensing of 
medication, is paid approximately $19 an hour.
    As this committee knows well, Medicare only covers short-
term and limited long-term care services, and the Medicaid 
safety net is only available to those who have depleted 
virtually all of their resources. And long-term care insurance, 
by and far the most popular private option, can be costly and 
difficult to purchase, particularly for those people who have 
preexisting health conditions or disabilities.
    The status quo is unacceptable, which is why Congress 
created the CLASS program. The program's distinguishing 
features include an offer of lifetime benefits, a prohibition 
on underwriting, and availability of a cash benefit.
    Congress also made clear that no taxpayer funds could be 
used to pay those benefits and the program must be solvent over 
a 75-year period. Over the last 19 months since the passage of 
the CLASS Act, HHS has worked steadily to find a financially 
sustainable model for CLASS. We conducted substantial analysis 
of a wide variety of possible implementation options. We 
examined the long-term care market, modeled possible plan 
designs, and studied the CLASS statute, and consulted with 
actuaries, including an in-house actuary and two outside 
actuarial firms, insurers and consumer groups.
    On October 14, as you know, we submitted to Congress a 
report indicating that we have not identified a way to make 
CLASS sustainable, legal, and attractive to potential buyers at 
this time. For all of us working on this urgently needed 
program, it was a very difficult conclusion, but one we had to 
make.
    It's crucial to recognize that this does not affect the 
Affordable Care Act. Our Department continues to work across 
the administration to implement the provisions of the law that 
will provide coverage for millions of Americans and will 
eliminate the worst of abuses of the insurance industry and 
work to control health care costs.
    Even without the CLASS programs upfront revenue, the 
Affordable Care Act will reduce the deficit. And we will also 
continue our work to improve America's long-term care choices. 
By 2020, we know that an estimated 15 million Americans will 
need long-term care. If we want our family members, friends, 
and neighbors to be able to live with the maximum amount of 
freedom and independence, we need to make sure they have access 
to the long-term supports that make that possible.
    In addition to the CLASS Act, to the Affordable Care Act 
included other policies to strengthen the choices for long-term 
care, such as Community First Choice, the new home and 
community based options and an extension of the successful 
program of Money Follows the Person.
    We believe that our CLASS implementation has shed valuable 
light on long-term care challenges. And in the months to come, 
we look forward to having a healthy and substantive dialogue 
with all interested stakeholders as we continue to seek real 
solutions to those challenges.
    For that reason, we welcome the opportunity to discuss this 
important topic with you today. Thank you for the opportunity 
to testify. Assistant Secretary Glied and I are prepared to 
answer your questions.
    Mr. Stearns. Thank you.
    Dr. Glied, you are welcome.
    Ms. Glied. I have no statement.
    [The prepared statement of Ms. Greenlee and Ms. Glied 
follows:]

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    Mr. Stearns. That is fine.
    OK, I will start with my opening questions.
    I guess the first question we are all just waiting with 
baited breath is, has the CLASS activity been shut down?
    Ms. Greenlee. If I may respond by first describing what 
that activity has consisted----
    Mr. Stearns. No, no, I am just asking. You answer the 
question. The way we work in O&I, we ask a question, and 
hopefully, you can give a yes or no.
    Ms. Greenlee. We are moving to stop implementation and 
reassign the staff that have been working on implementing the 
program.
    Mr. Stearns. Could I interpret that to mean that you have 
shut down the program?
    Ms. Greenlee. The program that remains within the CLASS 
office is a long-term care awareness campaign. That project----
    Mr. Stearns. So it is now shut from the actual CLASS Act to 
now an awareness program? Would that be a fair statement?
    Ms. Greenlee. That was continued both in the CLASS program 
and the deficit reduction act----
    Mr. Stearns. Dr. Glied, the question to you, have we shut 
down the CLASS Act program?
    Ms. Glied. We don't have a CLASS Act program in ASPE.
    Mr. Stearns. Right now, we do not have a CLASS Act program.
    Ms. Glied. We never had a CLASS Act program at ASPE.
    Mr. Stearns. So when we passed the legislation for the 
CLASS Act, you didn't interpret that as legislation that for 
implementation of the----
    Ms. Glied. We don't implement programs within ASPE, so we 
conduct analysis of all sorts of things, but we don't actually 
implement programs.
    Mr. Stearns. So can I interpret your answer as--will the--
is the CLASS Act shut down now in your opinion?
    Oh, would the clock start to make sure my time is moving.
    Yes, I am sorry.
    So we heard from Ms. Greenlee.
    Dr. Glied, the question is, has the CLASS Act been shut 
down as a program? Just your answer.
    Ms. Glied. Secretary Greenlee runs the CLASS Act office.
    Mr. Stearns. So she has interpreted that way.
    To follow up, another area that I am concerned about is the 
very high level uncertainty that was surrounding assumptions in 
the actuarial models.
    Were you familiar with those back in 2009, Dr. Glied?
    Ms. Glied. I was not familiar with them in 2009.
    Mr. Stearns. Are you familiar with them now?
    Ms. Glied. Yes, sir.
    Mr. Stearns. And Ms. Greenlee, were you familiar with 
those, the uncertainties surrounding those assumptions back in 
2009?
    Ms. Greenlee. No, sir. I did not begin working until 2010 
in May on the CLASS program.
    Mr. Stearns. When you came in May, how soon afterwards were 
you aware of the uncertainty surrounding those assumptions? Or 
are you aware of them today?
    Ms. Greenlee. I am aware of them now. It was several months 
after I began working on them that I got up to speed on the 
activity prior to enactment.
    Mr. Stearns. OK, 2011 was more than a year after--in June 
of 2011, more than a year after Obamacare passed and 2 years 
since initial concerns were raised about the CLASS, what did 
HHS do to make the public aware of this uncertainty when 
projecting $70 billion in saving before the bill was passed?
    Now you were not there, but Dr. Glied, perhaps you can 
answer that question?
    Ms. Glied. I was not there either. I would just point out 
that the HHS actuary, the CMS actuary, Mr. Foster, published 
three separate analyses of the CLASS Act before and during the 
time that it was passed. Those were publicly available on the 
HHS Web site. They were frequently quoted in the news media, 
and in fact, several of the statements already this morning 
have referred to them. So the uncertainty about the estimates 
was very evident before the legislation passed.
    Mr. Stearns. Do you know of any other government actuaries 
that discussed this and when, and in your opinion, do you know 
of any other besides Rick Foster?
    Ms. Glied. The Congressional Budget Office also conducted 
analyses of the program, and they came up with a different--
they used different assumptions and had a different result.
    Mr. Stearns. Now, as I understand, they made those 
assumptions before the Obamacare passed. Is that your 
understanding?
    Ms. Glied. So, both Mr. Foster and the CBO actuaries and 
analysts analyzed various versions of the CLASS Act and other 
provisions as the legislation was moving along.
    Mr. Stearns. I think, as you have pointed out, Rick Foster 
raised concerns about the $70 billion in savings, and you said 
other sources did, too, so I guess the question perhaps is 
difficult for you to answer, but how is it possible that Health 
and Human Services didn't figure out the problem with the CLASS 
Act until 2 month after passage of the law?
    Is that a question either one of you posed while you were 
working there, while you were going forward with the bill in 
which Rick Foster and other government agencies indicated that 
it was not sound financial, long term, kind of make it 
actuarial is not there? Were you aware of that after you were 
working there?
    Ms. Glied. There was robust and vigorous debate about the 
assumptions and the modeling behind CLASS before it passed with 
very respected analysts arguing that it was viable and other 
respected analysts arguing that it was not viable. That is a 
quite common occurrence when you talk about a program that is 
as novel and unique as the CLASS Act.
    What was different about the CLASS Act and I think special 
is that included in it this twin test that required that the 
Secretary only proceed if she could show that it was solvent 
over 75 years and that it was entirely self-sustaining. So I 
think----
    Mr. Stearns. So if I can interrupt you, Dr. Glied, what you 
are saying is that after the bill passed, based upon Rick 
Foster's analysis as well as CBO and others, you started an 
analysis of your own. Is that correct to say?
    Ms. Glied. As we've--we've sent over documents.
    Mr. Stearns. You started doing an analysis to see if it 
would pay for itself?
    Ms. Glied. We actually had done analyses in the fall as 
well.
    Mr. Stearns. Did your analysis show anything different than 
Rick Foster or----
    Ms. Glied. Yes, our analysis was completely consistent with 
the CBO estimates.
    Mr. Stearns. So, actually, it became apparent to you that 
this was not actuarially sound?
    Ms. Glied. No. CBO actually thought the program was sound, 
and the estimates that we had conducted in the Department that 
we sent over to you already, sir, are completely consistent 
with the CBO.
    Mr. Stearns. Do you state here today that you think it is 
financially sound, too?
    Ms. Glied. No. I state here today that at the time, in the 
fall of 2009, based on the models that we had available at that 
time, we believed the program was actuarially sound. We were 
dealing in the area where there was considerable uncertainty.
    Mr. Stearns. From our standpoint, at least, I would say, 
from this side, we are a little concerned that it appears that 
there was sort of a deliberative effort on the part of HHS 
before passage of the law to avoiding these unpleasant 
realities. And of course, as pointed out on our side, Senator 
Gregg and Senator Conrad were very concerned and indicated the 
whole thing wouldn't work. Was Secretary Sebelius aware of the 
uncertainty in the models during the Obama debate for health 
care? Were they aware before we passed it of these 
uncertainties in your opinion?
    Ms. Glied. I think that Mr. Foster's analyses had been 
published very widely. I wasn't here, so I can't say precisely, 
but his analyses were published very widely in the news media 
and spoken about in Congress. It seems unlikely that people 
were not aware of them.
    Mr. Stearns. All right. My time is up.
    The ranking member of the subcommittee, Mr. Pallone, is 
recognized for 5 minutes.
    Mr. Pallone. Mr. Chairman, without undue respect, I mean, I 
know the clock didn't start until almost a minute after you 
started your questioning, and then you went 30 seconds over. So 
just keep that in mind in terms of the rest of us as we proceed 
here with the time.
    You know, I just, again, I heard from my colleague, the 
chairman from Florida, again, all of this negative stuff: Let's 
shut down. Shut down. Repeal. Gloom, failure, can't do.
    I have to tell you, when I go home--and we just had another 
one of these recesses because the Republicans never meet. We 
meet for two weeks, and then we go home for a week, and then we 
come back, and they don't have anything to vote on. But when I 
go home, I hear this over and over again: Why doesn't 
Washington do something? Why are you guys so negative? Why 
don't you take action?
    I am not going to beat up on you guys today. But I do want 
to say that I am looking for a path forward. I don't want to 
accept this doom and gloom that we can't do it, OK? And I am 
trying to find a way through my questioning to get to actually 
move forward and not go into recess or hold or whatever it is 
that is being described here today.
    So, Secretary Greenlee, my hope is that this CLASS 
Independence Advisory Council, which is established under the 
statute, can be a way to move forward and implement the CLASS 
Act. The law stipulates that members of the council are to be 
appointed by the President; the council is to be comprised of 
important stakeholders, people with expertise in long-term care 
insurance and actuarial science and those who may participate 
in the program, to name a few.
    Now you testified that the Department wants to have 
dialogue with stakeholders like these as you continue to seek 
solutions. I understand that HHS has received over 140 
nominations for this 15-member council. Yet the council members 
have not been appointed. Why hasn't that been done? And is this 
a pathway forward? You seem to say you are putting this in 
recess or on hold. Can we appoint this council, and let them 
look at the methods of implementation, so that we don't just 
put this on hold?
    Ms. Greenlee. Congressman, you are correct in your 
statement that we are very interested in working with 
stakeholders of all types, with Congress; with the consumer 
advocates, who fought so hard for this bill; with employers, 
who are critical to a success. We do want broad engagement and 
recently met with the advocates and made that most sincere 
gesture and overture to them that we do want to have broad 
conversation.
    Mr. Pallone. Yes, but can we move----
    Ms. Greenlee. The Secretary has announced that we are 
suspending implementation. The Independence Advisory Council 
because it is a part of the CLASS act has not been implemented. 
At this point, when we seek broad dialogue, we would like to 
discuss both CLASS and issues broader, more broadly than CLASS. 
I don't see right now moving the Independence Advisory Council 
because we want to discuss this in a more broad perspective.
    Mr. Pallone. Well, see, I disagree with you completely 
because you seem to be suggesting that you are going to decide 
whether to move forward, and if you decide not to, then you 
don't need to have this council because they would look at what 
you are proposing.
    But the way I see this council, they are charged--and I am 
now quoting directly from the statute--with advising ``the 
Secretary on matters of general policy in the administration of 
the CLASS program.'' So it seems to me that this council could 
be not just there to implement what you decide or not to decide 
but actually a way of looking at alternatives and coming up 
with suggestions and come back to you or the President and say, 
look, maybe HHS doesn't think we can move forward, but we have 
got some ideas, and we can show you the way to move forward.
    I think that the President--and you make that suggestion 
that this is the way we move forward. We maybe right now don't 
think we can do anything. I disagree. But let this other group 
take another look and take a try.
    Let me just ask you, would you agree that this expert group 
could be useful in helping the Secretary looking at options for 
moving forward, even though you now feel that there aren't any?
    Ms. Greenlee. Congressman Pallone, we are most sincere in 
saying that we have suspended implementation. I do not want to 
send a mixed message by saying we are continuing to work on 
CLASS when we are not. We do want to engage with stakeholders. 
All of the type of stakeholders that were mentioned in the 
statutory section that you read we would be glad to have 
further conversation with.
    Mr. Pallone. I don't think it is going to be very effective 
engaging us or engaging everyone, based on what you said today. 
I really would urge this administration to move forward with 
naming the members of this panel and using this panel as a way 
to move forward. I personally and many of us do not agree with 
your decision to put this on hold. And I think if you have this 
advisory council in place, hopefully they can look at 
alternatives and come back and make some additional 
suggestions.
    I am just looking for something here, Madam Secretary. I am 
not trying to be difficult, but too many of us have worked too 
hard on this, and we feel very strongly that this can be 
implemented. And we don't want to give up. And I am not just 
speaking for myself. And I have got to be honest: The American 
people want this Congress to take action on long-term care and 
on so many other things. And it is not a good thing to simply 
say, we are going to put it on hold. Let this advisory council 
meet and find a way forward. And I will follow up further on 
that.
    Mr. Stearns. Thank the gentleman.
    I recognize the chairman of the Subcommittee on Health, the 
gentleman from Pennsylvania, Mr. Pitts.
    Mr. Pitts. Thank you.
    Secretary Greenlee, why did it take until 11 months after 
PPACA passed for the Secretary to publicly acknowledge that 
there were flaws with CLASS?
    Ms. Greenlee. Chairman Pitts, I believe that Secretary 
Glied has acknowledged that there was broad discussion at the 
time the law was passed about both the opportunities and the 
potential problems with the law. What the Department began to 
do immediately after the law was passed was further develop 
models that truly modeled the law as it was presented, because 
there were various options before the law was passed.
    It took some time for us to put those models together, and 
we began what was an iterative process to look at the basic 
plan, the bare law, the natural reading, and to begin from 
there finding if there were other methods that could help us 
achieve solvency and legality. It took just a matter of time to 
do that detailed and very thorough work.
    Mr. Pitts. You testified before the committee in March. Why 
didn't you indicate at that time there were significant 
problems with the program?
    Ms. Greenlee. Mr. Chairman, at the time I testified in 
March, we, in dialogue with the committee, discussed the degree 
that the Secretary may have some discretion to modify the 
program. That is a good reflection of where we were at that 
point in time. We had done the basic analysis and knew that the 
statute, the bare bones statute, would produce a premium that 
was unworkable.
    We were at that point exploring the degree to which the 
Secretary had discretion to make a few modifications. Following 
that work, we did additional developmental work that led us to 
this conclusion. So what I had explained at that point in time 
was very accurate with regard to the work that we were doing 
last spring.
    Mr. Pitts. Now, at our last hearing on CLASS, you and 
Chairman Emeritus Dingell had the following exchange, and I 
will quote:
    ``Dingell: I begin by welcoming the Secretary, and I ask, 
do you have all of the authority you need in the Department to 
ensure that this program gets off to a start in an actuarially 
sound manner?''
    Ms. Greenlee: ``Yes, we do.''
    Mr. Dingell: ``And you lack nothing?''
    Ms. Greenlee: ``No. We can make it solvent. We have the 
authority.''
    Why did you think that the Secretary had the legal 
authority to make the CLASS program solvent?
    Ms. Greenlee. At that time, we were looking at three 
different items that we discussed, that I testified about in 
front of the committee: The anti-gaming provisions; the need to 
possibly index premiums; and the need to raise the earnings 
level. We felt that in that area, the Secretary had some degree 
of flexibility or discretion. And I was truthful when I talked 
about that we were exploring that and felt very positive.
    We did further analysis that led us in a different 
direction after we made those initial changes to the model. We 
found that even with those, we would still produce a premium 
that we felt like was higher than could produce a reasonable 
take-up rate.
    Mr. Pitts. This question is--and when did the legal 
analysis come?
    Ms. Greenlee. The final legal analysis was prepared earlier 
this month as we did the final report. We had been engaged with 
our legal counsel all along as we have surfaced different 
ideas, such as the three that I just explained, and asked them 
for initial guidance. We didn't get the full guidance until we 
did the final report.
    Mr. Pitts. Now, for both of you, can you please provide an 
overview of how much has been spent by the Department during 
this administration to review, analyze and implement the CLASS 
program to date?
    Ms. Greenlee. Yes, sir, I can respond to that.
    The Department in fiscal year 2010 and 2011, between the 
two offices that Assistant Secretary Glied and I run spent just 
under $5 million. That is a reflection of the work from both 
endeavors.
    Mr. Pitts. Now according to the e-mails, Secretary Glied, 
and other documents obtained by a bicameral working group, the 
Office For Planning and Evaluation, which you now run, had 
prepared technical comments on the CLASS program in December of 
2009 for congressional consideration.
    During your time at HHS, have you been briefed by your 
colleagues or staff regarding ASPE's 2009 analysis of CLASS and 
the process under which the ASPE comments were received and 
reviewed by congressional offices, and what happened with these 
technical comments?
    Ms. Glied. I am somewhat aware of what happened. I was not 
here at the time. And I don't know the precise details of what 
happened. I have seen some of the of documents that were turned 
over to you, sir.
    Mr. Pitts. Were any of the 75-year actuarial analyses 
conducted before PPACA passed?
    Ms. Glied. Before the legislation passed, we had a 
contract, an ongoing contract, with Actuarial Research 
Corporation, and we sent over to you the estimates of premiums 
and prices that they calculated at the time. They did not have 
a full model with which to calculate 75-year solvency. In fact 
those were the models that were developed in the subsequent 19 
months. They had a model to calculate premiums, and that was 
the model that we were using to provide technical assistance. 
We were focused on looking at how different changes in the law 
would affect those premiums over time.
    Mr. Pitts. And finally, the $5 million you mentioned, does 
that include contract work?
    Ms. Glied. Yes, it does.
    Mr. Stearns. The Chair recognizes the gentlelady from 
Colorado, the ranking member of the Oversight and 
Investigations Subcommittee, Ms. DeGette.
    Ms. DeGette. Secretary Greenlee, you testified that it is 
urgent to find effective ways to help Americans prepare for and 
finance their long-term care needs. And I think it is safe to 
say that all of us agree with that statement.
    Now, I believe that you stated that 15 million Americans 
will need long term care by 2020 is that correct.
    Ms. Greenlee. Yes.
    Ms. DeGette. And there are a range of long-term care 
options now, nursing homes, assisted living, and home health 
care to name a few. The previous panel talked about some of 
those. But most of Americans with long-term care needs live at 
home. And so, in your testimony, you talked about the 
importance of Americans with disabilities living the maximum 
amount of freedom and independence. Can you briefly describe 
some of the benefits of receiving long-term care services 
within the community?
    Ms. Greenlee. Congresswoman, I certainly can.
    I would also like to say that I thought Congressman Kennedy 
did also an excellent job of framing the two critical issues. 
One is it is less expensive to provide services in the 
community. Regardless of the payer source, whether it is the 
individual, the family, Medicaid, it is cheaper in the 
community. It is also the setting that overwhelmingly people 
desire, regardless of age. It helps most preserve a quality of 
life, dignity, independence, connection to their families and 
communities, the important things in life and that is why 
community service is so critically important to people.
    Ms. DeGette. Right. Now, you were the former administrator 
of Kansas' Medicaid program, so I know you have some experience 
on the topic of Medicaid, which is the primary payer of long-
term care in this country. And I am assuming that you have 
experience in the impact of long-term care spending on State 
and Federal governments; is that correct?
    Ms. Greenlee. Yes.
    Ms. DeGette. So if we rely on--and I agree with you. I 
thought former Representative Kennedy and also Representative 
Deutch spoke quite eloquently about the impact of having to 
rely primarily on Medicaid for funding long-term care on 
families. In other words, middle class families having to make 
these terrible decisions about having to get divorced or 
putting themselves in poverty or something. Did you see some of 
that when you were the--when you were administering this 
program in Kansas?
    Ms. Greenlee. Yes, ma'am.
    As you mentioned, currently Medicaid pays for half of the 
long-term care services in this country. This has a very 
significant effect on State budgets that many are just really 
laboring under at this point. Not just State budgets but the 
Federal budgets in terms of the Medicaid program.
    But the opportunity that CLASS presents is a way for people 
to take responsibility for some of their own long-term care 
financing, a way to help working Americans so that they can 
afford to provide some protection, so that they are not in a 
situation where they have to spend down and impoverish 
themselves in order to get care.
    Ms. DeGette. So the concept of the CLASS system is that 
people will buy long-term insurance and be able to take care of 
their needs without making these terrible decisions, right?
    Ms. Greenlee. Yes. It will provide additional cash 
assistance so that they have more flexibility for their needs.
    Ms. DeGette. So it seemed to me from listening to the 
testimony on the last panel, from what my colleagues on the 
other side are saying, is we don't need CLASS to do that. We 
would just have everybody go out and buy long-term health 
insurance. Is that the sense you get?
    Ms. Greenlee. The private long-term care insurance market I 
believe is an option for some individuals, but the private 
long-term care insurance market will not be the solution for 
everyone.
    Ms. DeGette. Why not?
    Ms. Greenlee. There are some of their premiums that are not 
affordable, and the private long-term care market underwrites 
their product, meaning many people with chronic conditions or 
disabling conditions do not qualify to purchase the insurance.
    Ms. DeGette. I was just telling the staff I have had two 
hip replacements myself, and when I went to buy long-term 
health insurance for myself, the insurer said, well, we will 
sell it to you, but we are going to exclude anything from your 
hips, which, you know, if someone has a preexisting condition 
and that is excluded, then they are going to end up either 
having to pay out of their own pocket for care related to that 
or go on to Medicaid, right?
    Ms. Greenlee. Yes. And that is why I think we are all 
looking for broad options----
    Ms. DeGette. Right.
    Ms. Greenlee [continuing]. Single options, so that we can 
tailor to each person.
    Ms. DeGette. Now, let's go back to the States' budgets. 
Let's say we don't have something like the CLASS Act, some kind 
of a viable solution to helping people get long-term health 
insurance that they can afford and that doesn't exclude 
preexisting conditions, what is going to be the impact on the 
States' budgets?
    Ms. Greenlee. Well, you mentioned that I had worked in 
Medicaid in Kansas. I have not seen recent kind of trends in my 
home State. But I know that we continue to pay half of the 
long-term care costs through Medicaid. We have increasing 
numbers of seniors in this country which will help drive up 
further demand for Medicaid services, whether they are in 
institutions, like nursing homes, or in community, that we need 
to have other options so people have somewhere else to go to 
help finance long-term care.
    Ms. DeGette. Thank you. Thank you very much.
    Mr. Stearns. Recognize the gentleman, Mr. Shimkus, for 5 
minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. It's kind of good to 
follow my friend from Colorado with my line of questions. But 
first, I want to say that I am not gleeful that CLASS got 
shelved, but I am kind of relieved because of the--it was 
actuarially unsound that the Secretary even agreed to. And I 
agree. So I am actually pleased that HHS and Secretary Sebelius 
did make what I thought was the proper decision.
    But following up on long-term care, I do believe that if 
you incentivize individuals early in the system, like any 
insurance product, you have effective costs. But we don't have 
a system right now to adequately reinforce long-term care 
insurance. And that is, I think, something that would be 
beneficial to all of the questions my colleague from Colorado 
asked.
    So I would be willing to work with anyone on this 
issue.Congressman Deutch and Congressman Kennedy both noted 
that HHS had studied scenarios to make the problem solvent. And 
of course, in the report that I have would kind of identify 
some of these, so I am going to go on a question of three, 
which I think is pretty telling just about the whole actuary 
process and on insurance itself, is that, is it true that the 
Department looked into a 15-year waiting period for the receipt 
of benefits for enrollees with certain health conditions or 
what can be classified as preexisting conditions?
    Ms. Greenlee. Congressman, that proposal that you are 
mentioning had been presented and developed by the CLASS 
actuary, Mr. Yee. It was contained in the overall document as 
well as in his report. It wasn't an idea that he suggested as a 
way to mitigate or manage the adverse selection. We never 
modeled it extensively because we had concerns about the 
legality of being able to use a preexisting condition.
    Mr. Shimkus. Right. And in the report here, I mean, it does 
identify this as an option but was ruled that you had no legal 
authority to implement this.
    Ms. Greenlee. That is correct.
    Mr. Shimkus. So my point is, there was consideration of 
using preexisting conditions as an enrollment process to make 
CLASS affordable. And for, you know, my friends on the other 
side to say, don't do preexisting conditions, and then 
actuarially, in a government-run program, we can't do it, then 
obviously there is a reason why the insurers do that.
    Let me go to another question. Is it true that the 
Department looked into providing lower benefit amounts for 
individuals who become eligible in the first 20 years of their 
enrollment in the program? Yes or no.
    Ms. Greenlee. Yes.
    Mr. Shimkus. And another way to adjust and modify--and 
these are the same practices that insurers do that we get--that 
the private insurance markets get attacked for. What about, is 
it true that the Department looked into a possible plan with 
premiums nearing $400 a month? Yes or no.
    Ms. Greenlee. Yes, that reflects the basic CLASS program 
un-amended any in any way.
    Mr. Shimkus. That is correct. And it says here, with full 
waiver of premium, while in the claim ranging from $235 a month 
to $391 a month. So I guess, you know, the point is, to make 
this financially sound, you had to actuarially do adjustments 
that many times a private insurance market is attacked for. And 
it is just a statement. And the report, in essence, supports 
that.
    The $70 billion of savings when passed, when we passed H.R. 
2, it was up to $86 billion. Now, to my friends who say that 
the health care law still has real dollar savings, go back to 
our first hearing this year with Secretary Sebelius when she 
admitted that we had double counted Medicare. The $500 billion 
Medicare cuts were scored for health care and they were scored 
for extending Medicare solvency.
    Now you add the $70 billion double counting or that is 
going to be revenue to help make this affordable--now, you are 
at the $570 billion of money that was planned to help fund 
Obamacare that isn't available. Then you talk about the $800 
billion in tax increases. You get 1.37 and that is where we are 
moving with the health care law today. I appreciate your time. 
I yield back.
    Mr. Stearns. The gentleman yields back. I recognize the 
ranking member of the full committee, Mr. Waxman, the gentleman 
from California.
    Mr. Waxman. Let me follow up with the last questioner's 
comments.I understand the health care reform bill cuts the 
long-term debt. I know that is hard for the Republicans to 
accept, but it is the facts. The new benefit of the bill--the 
new benefits of the bill are entirely paid for and more by new 
revenues and by improvements that cut the overall cost of 
health care, cut waste, fraud, and abuse from the Medicare and 
Medicaid programs.
    When the health care reform law passed, the CBO said it 
would save $200 billion over the next decade. About $70 billion 
of this savings was from the CLASS program, savings that 
obviously will not materialize.
    Dr. Glied, the Republicans have stated if the $70 billion 
in savings was crucial to the passage of the health care law. 
Let me ask you, even without the CBO-scored savings from the 
CLASS program, do you still anticipate that the health care 
reform law will cut the debt over the next decade.
    Ms. Glied. Absolutely, sir. We anticipate that the health 
care reform law, without the CLASS program, will save $127 
billion in the next decade and over a trillion dollars in the 
decade following that.
    Mr. Waxman. Now critics of the CLASS program have also 
raised the fact that the program's costs will explode in future 
years and that CLASS will set saddle taxpayers with future 
debt. Those worst-case scenarios obviously will not happen if 
the program does not go into effect; isn't that correct?
    Ms. Glied. That is correct, sir.
    Mr. Waxman. Of course, the benefits of having something in 
place for long-term care won't happen either.
    We are going to hear a lot of rhetoric complaining about 
budget gimmicks and budget deficits today, but there is a 
difference between the Republican rhetoric and the facts. The 
facts are that even with the news about the CLASS program, the 
health care reform law will cut the long-term deficit and save 
taxpayers money.
    As you know, the Republicans' bicameral CLASS working group 
released a report last month which included documents obtained 
through an investigation of the CLASS program. The report 
asserts that the administration supported the CLASS Act because 
the Congressional Budget Office or CBO scored the program as 
reducing the deficit over the first 10 years. I would like to 
ask you a few questions about this decision.
    Secretary Glied, why did the Obama administration support 
the CLASS program during the health care reform debate?
    Ms. Glied. The administration supported the program because 
of the indisputable need to protect people from the cost of 
long-term care services, to allow them to buy themselves 
protection, and to ensure that disabled people would have 
opportunities to work and to get themselves the services to do 
that, and because the law included this twin test that required 
that it be entirely self-financing and fiscally solvent over 75 
years, so that it was also fiscally prudent for us to do so.
    Mr. Waxman. What role of any about the CBO score play in 
the administration's analysis of the program and ultimate 
support for the program?
    Ms. Glied. It was certainly encouraging that the CBO 
analysts also believed that the program would be viable, 
fiscally viable, fiscally solvent and therefore able to address 
the needs that we had set forth to address with the program.
    Mr. Waxman. Without the Affordable Care Act, people with 
preexisting medical conditions can't get insurance, or they 
have to pay an extraordinary amount for their insurance, which 
means that many people with preexisting conditions don't have 
insurance.
    One of the purposes of the Affordable Care Act was to say 
that we are not going to allow that discrimination against 
people with preexisting conditions. The way the act handled 
that matter is to say if everybody got insurance, then we could 
spread the costs and not have those with preexisting medical 
conditions as a group charged so much that they can't afford 
it. My colleague on the other side of the aisle raised this 
issue. Wasn't that the approach that we took in the Affordable 
Care Act for insurance? Either one of you.
    Ms. Glied. Yes.
    Mr. Waxman. Now that solved the problem for people who want 
to get acute care insurance, medical insurance as we know it. 
But medical insurance, even Medicare, doesn't cover the long-
term care needs of people who are disabled. It may for a short 
while if they go to a nursing home after some spell of illness, 
but that is only for a short period of time. After that, if 
they need to be in a nursing home or they need home health 
care, the Medicare doesn't pay for that assistance that they 
may need. Isn't that correct?
    Ms. Glied. Yes.
    Mr. Waxman. Well, one of the problems people have in trying 
to buy insurance for long-term care is that if they had any 
kind of preexisting condition, they can't buy it.
    Ms. Glied. That is right.
    Mr. Waxman. That is the issue, isn't it?
    Ms. Glied. Yes, sir.
    Mr. Waxman. That was never solved--and the Republicans have 
offered no solution to it, except to say, isn't it a terrible 
problem? But that wasn't even solved by the CLASS Act, except 
it would have allowed people to buy into a program even with 
their disabilities. Isn't that correct?
    Ms. Glied. Yes, sir.
    Mr. Waxman. So we still need to address this long-term care 
insurance?
    Ms. Glied. Very much, sir.
    Mr. Waxman. Thank you.
    Thank you, Mr. Chairman.
    Mr. Stearns. Thank the gentleman.
    And the gentleman from Nebraska, Mr. Terry, for 5 minutes.
    Mr. Terry. Thank you, Mr. Chairman.
    Thank you, Secretary Greenlee and Glied, whichever, the ACA 
included money. I think your testimony is that that money has 
stayed in for the provisions on educational efforts on long-
term care, that CLASS has been shelved, but you said the 
educational component is still going forward, right?
    Ms. Greenlee. That is correct. The Deficit Reduction Act in 
2005 first provided money so that we could do public outreach 
and education about the need for long-term care, long-term care 
awareness campaign. Many States have used this to provide kind 
of an own-your-futures campaign. That was picked up.
    Mr. Terry. Is that what this awareness program is? Since 
CLASS doesn't exist or isn't going to be rolled out, the only 
thing left to become aware of would be private long-term health 
care plans. Is that what the campaign is doing, is telling 
people that they should get a policy for long-term health care?
    Ms. Greenlee. I think there are two issues. One is to 
educate the people about the need as well as the misconception 
that Medicare covers long-term care when it doesn't, and then 
provide education about how individuals may take responsibility 
for meeting that need.
    So it covers all of the different options and really raises 
awareness.
    Mr. Terry. So it does include the private sector.
    Ms. Greenlee. Yes.
    Mr. Terry. Which right now is the only thing that, if the 
person becomes aware, that they can go out and purchase. So--
well, other than Medicaid, buying down your assets or purging.
    So you plan to continue to go forward with the awareness 
campaign.
    Ms. Greenlee. Yes, sir.
    Mr. Terry. All right. How much is put aside per year this 
year?
    Ms. Greenlee. Just about $3 million a year set aside for 
the long-term care awareness campaign. That was provided for 
separately in the Affordable Care Act.
    Mr. Terry. And you were moved, as I was, in Patrick 
Kennedy's testimony, especially it hit--was his testimony about 
his uncle, Sargent Shriver, and the companion care that he was 
given at home, which is different than skilled nursing care or 
a nursing facility; you know, the person that would help him 
get from the living room to the dining room so he could eat. 
Was companion care part of CLASS?
    Ms. Greenlee. The cash benefit that was provided in CLASS 
would have allowed the consumer to direct their own choice of 
services. We fully anticipated that that type of companion care 
or attendant care would be one of the primary items that 
someone would----
    Mr. Terry. That is good, and I really believe that 
companion care can keep somebody like Sargent Shriver out of a 
skilled nursing facility that would be on a daily basis 
probably 20 times more expensive.
    Ms. Greenlee. I agree with you, sir.
    Mr. Terry. Are you aware, have you had any contact or work 
with the Department of Labor, who is trying to pass a rule to 
make all caregivers subject to the FLSA, therefore making it 
unaffordable for many middle class families to use caregivers?
    Ms. Greenlee. No, sir. I have not engaged with the 
Department of Labor on that issue, either in my role as 
assistant secretary with the Older Americans Act or----
    Mr. Terry. I would think that the Department of Labor, if 
they are going to affect senior care so dramatically, that they 
would have reached out to your Department. I think that is odd 
that they haven't.
    Ms. Glied, have they asked you to run any models about how 
FLSA will make the companion care more expensive, therefore 
making it unaffordable?
    Ms. Glied. I am not sure, but we can get back to you on 
that.
    Mr. Terry. I would appreciate that.
    Also, then, I agree with home health care. My personal--my 
mother battled cancer, and she was always bouncing between 
hospital to skilled nursing when my father and I felt that she 
would be better off at home with some home health care, but 
Medicare wouldn't pay for those health home care, changing IVs, 
those types of things. So we had to go with the more expensive 
option. So home health care, unfortunately, though, has been--
costs for home health care and access--has actually been cut 
over the last 2 years. And within the savings in Medicare from 
the ACA, home health care has been diminished. Have you been 
working with the administration, the White House, to champion 
home health care?
    Ms. Greenlee. I am looking at Dr. Glied. The main 
conversations I have had in this area are actually not 
Medicare-related but Older Americans Act-related because that 
has also been another critical support.
    Ms. Glied. There have also been substantial increases in 
Medicaid programs that provide home and community based 
services. So those have been a major focus within the 
Affordable Care Act. We have got more money going to Money 
Follows the Person, and we have new community first choice 
options for Medicaid programs that are all intended to help 
people stay in the community. So we have actually expanded 
access to home health care for most people.
    Mr. Stearns. The Chair thanks the gentleman, recognizes the 
ranking member emeritus, Mr. Dingell, for 5 minutes for 
questions.
    Mr. Dingell. Mr. Chairman, I thank you for your 
courtesy.Madam Secretary, long-term care insurance helps 
American workers to prepare for future long-term care needs. Do 
you believe that the private market is currently providing 
long-term care options for working Americans? Yes or no.
    Ms. Greenlee. Primarily, no. It is very limited.
    Mr. Dingell. All right. As you know, the CLASS Act is 
designed to be a voluntary insurance program to help American 
workers to pay for long-term care services that they will need 
in later years.
    The program was created to help address the needs of ailing 
Americans, both young and old, because alternatives can be 
impossibly costly to American families. And Medicaid is only 
accessible after they have exhausted all of their savings.
    Do you agree that the CLASS Act was intended to help fill a 
need in affordable options for long-term care for working 
Americans? Yes or no.
    Ms. Greenlee. Yes, sir. Definitely.
    Mr. Dingell. Now. Madam Secretary, when you testified 
before this committee, you will recall I asked you whether you 
had all of the authority you needed in the Department to ensure 
the program gets off to the start in an actuarially sound 
manner. At the time you answered you did.
    However, the report issued on October 14th tends to 
indicate that the Department does not have the authority it 
needs to develop a program that will meet the solvency tests. I 
would like to ask you again, then, whether you have the 
authority you need in the Department to implement the CLASS Act 
so that it is actuarially sound and provides a an affordable, 
long-term care to working Americans? Yes or no.
    Ms. Greenlee. Mr. Dingell, may I respond other than yes or 
no----
    Mr. Dingell. All right. If you please, but quickly.
    Ms. Greenlee. My statements were correct at the time I made 
them in March, that we were very optimistic about the types of 
flexibility through the discretion that the Secretary might 
have----
    Mr. Dingell. I am not coming down. I just want the answer.
    Ms. Greenlee. After we did further analysis, we found that 
that was not the case. We do not have the authority we need at 
this point.
    Mr. Dingell. All right. Then, if you would, please, tell us 
what additional authority do you need to implement the CLASS 
Act in a fashion that results in an actuarially sound plan?
    Ms. Greenlee. Sir, I would need to refer you back to the 
reports to look specifically at the type of actuarial modelling 
we were looking at as well as the legal issues that were raised 
as we continued to model the program.
    Mr. Dingell. All right.I would ask you, along with my 
friend Mr. Pallone and others, that you submit to me a list of 
the authorities that the Department needs to properly implement 
this plan.
    Ms. Greenlee. We do not currently have a list. I will take 
your request back, so we can be responsive. We don't have a 
list at this time.
    Mr. Dingell. OK.
    Madam Secretary, in your memorandum on the CLASS program to 
Secretary Sebelius stated, quote, you do not see a path to move 
forward with CLASS at this time, close quote. Until a list of 
needed authority is provided to this committee, will you commit 
to working with the Congress, industry, and the consumers to 
continue to work to find options for affordable long-term care 
options for Americans? Yes or no.
    Ms. Greenlee. Yes, we are committed to working with you.
    Mr. Dingell. Now, Mr. Chairman, I want to make a couple of 
observations here.I heard my Republican colleagues in this 
committee, on the floor, and in speeches in and outside the 
Congress, tell everybody what an evil thing the health 
insurance bill, Affordable Care Act, is. And I, quite frankly, 
don't agree.
    But I am curious. What is it that our Republican colleagues 
suggest to us we ought to do? What should we do, my dear 
friends, about the CLASS Act, so that we provide long-term care 
programs for Americans who desperately need it? So that they 
won't be destitute, and so that they can have an actuarially 
sound program which will enable them to have a program of long-
term care to take care of themselves and their families.
    What is it my Republican colleagues want to do to see to it 
that we get ourselves a program which addresses problems like 
preexisting conditions and all of the other things that they 
have been introducing legislation to repeal, to strip the 
American public of the rights and opportunities we have given 
them in a piece of legislation which they opposed with enormous 
vigor and which they continue to oppose, without any particular 
apparent care, other than that we continue the reliance on the 
same unworkable situation that we have.
    Mr. Gingrey. Will the distinguished gentleman yield?
    Mr. Dingell. I will be happy to yield if I have time. But I 
want to make this observation. We have a serious problem that 
the American people confront. All we hear from my Republican 
colleagues is no, no, no, no. They sound like----
    Mr. Gingrey. Mr. Chairman, the gentleman's time has 
expired, but he did ask a specific question of members on this 
side of the aisle, and if you would allow me 10, 15 seconds to 
respond to that.
    Mr. Stearns. Any objection? Do you have any objection?
    Mr. Pallone. Why doesn't he use his own time?
    Mr. Dingell. I would love to have it if it can be done.
    Mr. Gingrey. The gentleman is requesting that we respond to 
that.
    Mr. Stearns. The gentleman seeks unanimous consent for what 
15, 30 seconds.
    Mr. Gingrey. Sure.
    Mr. Stearns. To respond to Mr. Dingell.
    Without objection.
    Mr. Gingrey. Sure. I thank all members for the unanimous 
consent.
    You know, in regards to the question, what could we do, Mr. 
Pallone earlier in his line of questions asked about the 
advisory council on long-term care. Secretary Greenlee talked 
about that and said that implementation has been stopped, and 
therefore, we are not going to go forward with that advisory 
council. I think that was my understanding. I don't see any 
reason in the world not to have Mr. Dingell and Mr. Pallone to 
come forward, make a standalone bill creating an advisory 
council on long-term care and let us look at it and essentially 
start over and get it right this time.
    Mr. Stearns. The Chair thanks the gentleman.the Chair 
yields to Dr. Burgess for 5 minutes for questions.
    Mr. Burgess. I thank the chairman for yielding.let's just 
for a moment go back, Ms. Greenlee, to Mr. Dingell's 
questioning. He talked about--he had questioned you and your 
previous appearance here and you said you had everything you 
need. Then, apparently, you didn't. And he asked, what did you 
lack as far as being able to provide the tools? Really there 
are only two variables you have to manipulate, and that is the 
premium and the benefit. Is that correct? When you are 
structuring a program, when Richard Foster was looking to 
provide the actuarial information as to whether this was sound 
or not, you can alter the premium. You can restructure the 
benefit. Mr. Pallone said you can have a 15-year vesting period 
as opposed to 5. But really those are the variables that you 
have got to manipulate. Is that correct?
    Ms. Glied. As you can see in our report, sir--I am sorry. 
Is it oK--I mean, we actually considered a lot of different 
options, and they varied----
    Mr. Burgess. Maybe this is--perhaps this is how I need to 
ask the question. Ms. Greenlee, did you do modeling to look at 
what the premium point would have to be to support the CLASS 
Act?
    Ms. Greenlee. Yes, sir.
    Mr. Burgess. And what is that number?
    Ms. Greenlee. It depended, depending on the different model 
that we were running. The CLASS Act, as modified----
    Mr. Burgess. Give us a range. Can you give us a range?
    Ms. Greenlee. May I refer to Ms. Glied. I mean, the 
modeling numbers are really something that she is more equipped 
to answer for you correctly I think.
    Ms. Glied. So I would like to emphasize that there isn't a 
single number out there that we know.
    Mr. Burgess. Great. Look, my time is very limited. I don't 
mean to be rude. I am not allowed extra time, like other 
members are. Can you get this for me?
    Ms. Glied. There is not a number.
    Mr. Burgess. There is not a number?
    Ms. Glied. There is not a single number. There are a lot of 
numbers in the report----
    Mr. Burgess. Now, initially, when Mr. Pallone brought this 
to us, the number was $60 a month. Is it likely to be higher 
than $60 a month for the premium?
    Ms. Glied. If you could look at the report, the premiums 
are in there. They are all higher than $60 a month.
    Mr. Burgess. Let me ask you this. Let me ask you a couple 
of questions. You referenced $5 million in money that has 
already been spent in the implementation of this program. And 
please, if it is information that you need to get back to us 
with, I am going to ask that you do that. But how--of that $5 
million, does that include the money that has been spent on 
outside contractors?
    Ms. Greenlee. Yes, sir.
    Mr. Burgess. And will you be willing to provide us a 
balance sheet showing how and when and for what purpose the 
money was expended?
    Ms. Greenlee. Certainly.
    Mr. Burgess. The figure of $5 million is helpful, but it is 
not all that useful in understanding where the expenditures 
occurred.
    Ms. Greenlee. We will be glad to. We think we may have 
provided it already, but we are willing to provide if we have 
not.
    Mr. Burgess. Then how much money has ASPE itself expended 
in this regard? Is it different from the $5 million?
    Ms. Glied. It is included in that figure.
    Mr. Burgess. How much money is available for further 
planning in ASPE?
    Ms. Glied. ASPE doesn't have a separate budget for CLASS. 
We have a Division of Aging and Long-Term Care Policy. We have 
had it for 30 years, and that continues.
    Mr. Burgess. Do you have a budgetary line item for CLASS?
    Ms. Glied. No, we don't.
    Mr. Burgess. Let me ask you this: We talked--Mr. Terry 
talked some about the informational aspects of long-term care 
insurance. And in 2005, when the Deficit Reduction Act was 
being debated in this committee, I think we got information 
that if one-third of the projected seniors moved off of 
Medicaid into a private long-term care product, that the 
savings would be substantial. I think $160 billion was the 
figure this committee received over 10 years. I guess that 
would be even larger now a few years later. $160 billion is, 
even today, a significant amount of money. Have we harmed the 
long-term care, the private long-term care market with the 
activities of the CLASS Act over the last 19 months? Has it 
made it more difficult for companies to develop these products 
and market them?
    Ms. Greenlee. Sir, I don't think so in any way.
    Mr. Burgess. Would it not, if someone were developing a 
product in the private market, and they are looking over their 
shoulder at what is occurring within the administration, 
wouldn't that alter their thinking on what type of product to 
offer?
    Ms. Greenlee. Because you have acknowledged that you have 
private insurance, I know you are aware that the private market 
offers a comprehensive product, which is far different than 
what the minimum benefit is, the minimal support that CLASS 
would provide. I don't believe we have, in any way, hampered 
the ability of the market to learn from what we have learned 
and modify their products. They also have other tools available 
to them that we would not have had in the CLASS program.
    Mr. Burgess. Let me just ask you this, Ms. Glied. Did you 
serve on President Clinton's health care task force?
    Ms. Greenlee. I did not.
    Ms. Glied. I did.
    Mr. Burgess. You did. And as I recall, when President 
Clinton had his comprehensive health care reform, there was a 
long-term care piece to that. Is that correct?
    Ms. Glied. Yes, there was.
    Mr. Burgess. Did you encounter any of these same questions 
or concerns during the development of that product for the 
Clinton administration?
    Ms. Glied. I was not involved in that part of the reform 
proposal at all.
    Mr. Burgess. But you have been involved in these 
discussions before. Did any of the information you got during 
that time inform any of the decisions that are being made now?
    Ms. Glied. I am quite sure they did, but I don't--can't 
point to specifics.
    Mr. Burgess. Mr. Chairman, I hope we have time for a second 
round. I will yield back at this point.
    Mr. Pitts. The Chair thanks the gentleman, and recognizes 
the gentleman from Texas, Mr. Green, for 5 minutes for 
questions.
    Mr. Green. Thank you, Mr. Chairman. It is no secret that 
our colleagues on the other side of the aisle don't like the 
historic health care reform law that we passed in 2010. And 
they have been eager to jump on the problems of the CLASS Act 
to imply that the entire health care reform law is a failure. 
Dr. Glied, can you offer us some perspectives here? And I don't 
want to minimize the CLASS Act. It was an important part of the 
bill. And whether the CLASS Act or another approach, we need to 
find a solution for long-term care in our country. With the 
huge increase in Alzheimer's, with dementia, that needs to be 
part of the solution, even though the CLASS Act may not be that 
solution. But my understanding is there are many critical 
benefits of the health care law that have nothing to do with 
CLASS. And I would like you to walk through with me on the 
benefits. My first question is how are seniors benefiting from 
the health care reform law now?
    Ms. Glied. We have made many changes already that have 
benefited seniors. For one thing, we are working on closing the 
doughnut hole in Medicare part D. And already about 4 million 
seniors have benefited from that.
    Mr. Green. I will just interrupt you. I probably would have 
voted for the 2003 plan if it hadn't been for that doughnut 
hole in there. So I am glad we are closing it.
    Ms. Glied. We are also providing seniors with new 
preventive benefits that are free of cost sharing. There is a 
new annual wellness visit in the Medicare program thanks to the 
Affordable Care Act. We have taken aggressive steps to reduce 
fraud in the Medicare program. And that is a benefit to 
everyone. And as we mentioned earlier, in the Medicaid program, 
we have also expanded opportunities for home- and community-
based services.
    Mr. Green. How about small businesses? We hear a lot about 
that. In fact, having helped manage a small business, outside 
of basic payroll, our insurance costs was one of our biggest 
issues in a 13-employee company. Can you say how the health 
care reform law deals with small business?
    Ms. Glied. We have already put in place a small business 
tax credit to help small businesses provide health insurance to 
their workers. And that tax credit is actually going to expand 
beginning in 2014.
    Mr. Green. How about young adults?
    Ms. Glied. So one of the very, very first provisions in the 
Act to take effect was a provision that allowed young adults to 
stay on their parents' health insurance coverage. We have now 
got back responses from three separate national surveys. And 
they all show that the number of young adults in this country 
who are uninsured has dropped by a million because of that 
policy.
    Mr. Green. Well, and I am getting calls, how about 
Americans with insurance? Because I know we heard this last 
week that WalMart was increasing their premiums. We all get 
calls every day saying my insurance premium from my company 
insurance is going up. What are the new protections that we 
have under the health care reform law to protect Americans who 
actually have insurance?
    Ms. Glied. So some of the provisions that have already 
taken effect will eliminate some of the most egregious 
behaviors of the private insurance industry like rescissions. 
So that has already taken effect. As well, there are now 
provisions that allow States to take a very careful look at 
unreasonable rate increases and negotiate with insurance 
companies to keep those down.
    Mr. Green. OK. And I know the uninsured and how they 
benefited from the new health care law. And let me give you 
some perspective. In the 2000 census, I had 33 percent of my 
constituents who had insurance through their employer. Forty-
three percent of them worked and didn't qualify for Medicaid, 
but they were uninsured because their employer did not provide 
insurance coverage. How will the health care reform law help 
that 43 percent in my district?
    Ms. Glied. So we are expecting that over 30 million people 
will gain health insurance coverage when full implementation of 
the Affordable Care Act starts in 2014.
    Mr. Green. Are there any of these benefits by the 
administration's decision on the CLASS program?
    Ms. Glied. No, the CLASS program is really a stand-alone 
and distinct part of the health care reform bill. It addresses 
a very important need, but it is quite distinct from the rest 
of the legislation.
    Mr. Green. So whether it is the decision of the Department 
or decision of Congress, everything else in the law is working 
and functioning and going into effect as we are moving?
    Ms. Glied. Absolutely, sir.
    Mr. Green. I am disappointed that the new CLASS program as 
currently constructed will not be in effect because we have to 
have a solution. And I hope we can reach across the aisle 
legislative-wise and come up with something that will deal with 
long-term care. Because like I said earlier, a lot of my 
constituents don't have the same opportunities that Federal 
employees have, State employees have. I don't know of many 
companies except very large ones that apply some long-term--
allow for long-term care for their employees. It means that we 
have to continue to work to address the solution of our long-
term care needs. But it does not have the impact on the success 
of the health care reform law that you just expressed. Millions 
of Americans, young and old, will continue to benefit from this 
law even though the CLASS Act may not be part of it.
    Ms. Glied. Yes, sir.
    Mr. Green. Mr. Chairman, I actually yield back my 23 
seconds.
    Mr. Pitts. The Chair thanks the gentleman, and recognizes 
Dr. Murphy for 5 minutes for questions.
    Mr. Murphy. Thank you, both Secretaries. It is good to meet 
with you. Particularly, Assistant Secretary, I appreciate your 
forthrightness during our hearing last March, where you and I 
discussed this, and discussed the administration was double 
counting funds from the CLASS program as funding both the CLASS 
program and the health care bill. And I appreciate your 
forthrightness at that time we had that discussion. I want to 
ask you a couple questions, though. Did members of the CLASS 
working group or the CLASS office ever discuss the CLASS Act 
with the White House, including White House Office of Health 
Reform, the White House Counsel's office, or the Office of 
Management and Budget about the problems with resolving the 
program within your authority? Was there any discussions that 
took place like that?
    Ms. Greenlee. As typical with large policy issues, 
especially those as important as health reform, we are in 
contact with the White House as policy issues arise. This is no 
exception.
    Mr. Murphy. Can you tell us who was involved with those 
conversations and what was said?
    Ms. Greenlee. Sir, over the 19 months that we have been 
working on the program, I honestly don't have a list.
    Mr. Murphy. Is that something you can get to the committee? 
I wouldn't expect you to remember all that. I appreciate that. 
I wasn't trying to quiz you on that part of it. If you could 
let us know, I would really appreciate that. Thank you.
    Ms. Greenlee. I will see how to follow up, sir.
    Mr. Murphy. Thank you. Do you have any idea who at the 
White House was consulted before Secretary Sebelius decided 
that, as was cited before, she didn't see a path forward for 
implementation at this time? Do you have any idea who she met 
with or consulted with at the White House?
    Ms. Greenlee. No. As I mentioned, this is a major policy 
decision. So it is something that we would want to talk to the 
White House and get their guidance. I can't tell you who 
specifically the Secretary has spoken to.
    Mr. Murphy. When you say it was a major policy decision, 
who made the decision?
    Ms. Greenlee. The Secretary did.
    Mr. Murphy. The Secretary did. And it was also a decision 
she had in consultation with the White House?
    Ms. Greenlee. They certainly needed to be informed of this 
decision, and involved as she was making it.
    Mr. Murphy. And who at the White House agreed with her 
decision?
    Ms. Greenlee. Sir, I would have to--I can't answer that 
specifically, because it was the Secretary's decision. And 
her--she was the primary one who would have been involved.
    Mr. Murphy. What I am trying to find out, and again I 
appreciate your forthrightness here, I mean something of this 
magnitude on which the health care bill really hinged on in 
terms of trying to balance the books on it, of which the CBO I 
think told us--I think when you were here before I think this 
is the number, correct me if I am wrong--that withdrawing it 
from the health care bill would leave a gap in the health care 
bill of $80 or $85 billion or something like that. It is a 
decision of some magnitude. And so I am wondering if there were 
someone else in the White House very high up that would have to 
say, OK, well, we are going to pull the plug on this.
    Ms. Greenlee. It clearly was the Secretary's decision. That 
is what it lines up in the law. She is the one that has 
submitted the report, based on my recommendation. I can't 
respond to or be responsive with regard to else she may have 
consulted as she was making that decision.
    Mr. Murphy. Thank you very much. Mr. Chairman, I have no 
more questions. But I would be glad to yield to my colleague, 
Dr. Burgess.
    Mr. Burgess. And I thank the gentleman for yielding. Just 
to follow up on some of the budgetary questions, the committee 
staff does not believe that they do have the breakdown of the 
expenditures. That may have gone to the Appropriations 
subcommittee. So would you be sure to work with our staff to 
make certain that we have that? And really, we are kind of 
looking for some of the fine detail. Even the money that was 
spent on staples and staplers, we would like to see that.
    And again, a breakdown or a breakout of the dollars that 
were expended for outside contracting. Because my understanding 
is there was, some of this work that had to be done on the 
modeling did require the participation of outside contracts. Is 
that correct?
    Ms. Greenlee. Yes, sir. And we are willing to provide that 
information to you.
    Mr. Burgess. Now, Ms. Greenlee, I think you mentioned that 
both Chief Actuary Foster and Doug Elmendorf at the CBO 
performed an analysis on the cost of the total health care bill 
that included, of course, the offset that was going to be 
provided by CLASS. It has been said that in the last Congress 
we didn't do a lot of oversight over the implementation of the 
health care law. But there were two resolutions of inquiry that 
were heard by this committee, and one of them dealt with 
exactly this set of facts, that is, was the Congress provided 
accurate financial information before the actual vote on the 
bill that became law occurred March 21 of 2010?
    Now, in retrospect, to me at least, it does not seem like 
Congress had all of the information. And now with the 
information that we are getting out of the documents provided 
that Mr. Foster, in fact, questioned himself in June of 2009. 
So do you see why some of us are uncomfortable with the notion 
that you couldn't have known until after the bill was signed 
into law how much it actually was going to cost?
    Ms. Greenlee. Congressman Burgess, as Secretary Glied has 
said, the work that was done by Mr. Foster was publicly 
available before the bill was passed, as was work done by other 
outside professionals such as the American Academy of 
Actuaries. So the information was in the public domain at the 
time the law was passed.
    Mr. Pitts. The Chair thanks the gentleman, and yields to 
Dr. Christensen for 5 minutes for questions.
    Ms. Christensen. Thank you, Mr. Chairman. Good morning----
    Ms. Greenlee. Good morning.
    Ms. Christensen [continuing]. Secretaries. Ms. Greenlee, as 
you have heard, I am not the only person in this room who is 
disappointed by the HHS announcement that you will not be 
moving forward at this time to implement the CLASS program. It 
has been 18 months since the Affordable Care Act was passed, 
and we were really hoping that this part of the legislation 
would allow the Nation to begin addressing the burden of long-
term care. That is not the case. But I hope that we can at 
least say that the amount of time and the money that we have 
spent on CLASS to date has not been wasted.
    And we have had a lot of questions about how much money you 
have spent, and you are supposed to supply documents on even 
the staples that you bought and all of that. So can you tell us 
a bit about the expenses? And in particular, can you assure 
this committee that you have used those funds in a manner that 
is consistent with the statute and in a way that has advanced 
our understanding of long-term care?
    Ms. Greenlee. Yes. I am certainly willing to provide the 
information that Congressman Burgess has requested. We have 
been prudent and practical, very responsible, and also done at 
the same time a very thorough analysis of the law that we think 
will help advance the conversation about how a voluntary 
insurance program could work, what the problems are with the 
law that we have seen. We have learned a lot, and have gained 
from this investment in a positive way.
    Ms. Christensen. That is what I thought. Because just the 
information that you have gathered going through this has been, 
I am sure, worth the expenditure. What are some of the lessons 
that we have learned as we have sought the solutions to the 
Nation's long-term care problems? Are we back at square one, or 
can we build on the CLASS framework and the work and the 
analyses that you have done?
    Ms. Greenlee. I don't think we are back at square one. I 
think we can continue to move from here. There is much to be 
learned by looking at the report as well as the different 
modeling exercises. There are real critical needs that this 
program is meant to address. And as we move forward, one of the 
reasons we are suggesting that we have as broad a conversation 
as possible is that the CLASS program would serve a lot of 
different kind of people. And we want to make sure that we as a 
Nation cover the waterfront in terms of having solutions and 
options for all of those individuals.
    Ms. Christensen. Thanks. Mr. Chairman, the HHS announced 
that last week was not the end of this story. And I would say 
that to my colleagues as well. The burden of long-term care, as 
was said very clearly by our colleague Congressman Kennedy, it 
is not going to go away. Millions of Americans will need long-
term care, and we have to figure out a way to help them. So I 
wish the CLASS Act had not been the final answer. But to the 
extent it is not, we need to work as a committee and as a 
Congress to find out how to provide and pay for long-term care.
    And I just want to add that one of the reasons that I am so 
much in support of the CLASS Act is as a family physician, we 
have the opportunity to take care of patients in many different 
ways. And one of those is when they are chronically disabled or 
at end of life. And I always encourage my patients to stay at 
home if that was at all possible. And the benefits of that to 
the individual who was sick, to be able to be cared for in 
familiar surroundings with their family, and with the proper 
support, the family really got a lot of satisfaction out of 
taking care of their loved ones at home. And so I am looking 
forward to working with the Department and my colleagues to 
find a way forward. Thank you. I yield back the balance of my 
time.
    Mr. Pitts. The Chair thanks the gentlelady, recognizes the 
gentleman from Georgia, Dr. Gingrey, for 5 minutes for 
questioning.
    Mr. Gingrey. Mr. Chairman, thank you. And my colleague, Dr. 
Donna Christensen's line of questioning and comments kind of 
segues into what I am going to say. I want to, at the outset, 
tell you that I am for closing this office down and not leaving 
a remnant, a crack in the door, if you will. And I am going to 
ask you a few questions to show you why I feel that way. 
Secretary Glied, you testified earlier that your office had 
conducted studies in 2009 that were consistent with the CBO's 
findings that the program was actuarially sound. Were those 
studies modeled just on the first 10 years of the program, or 
were there any studies you modeled on, say, the 50- or 75-year 
estimates?
    Ms. Glied. We did not have a model at that time that could 
estimate fiscal solvency over a 75-year period. We only had a 
model that could calculate premiums. That is the information 
that we have provided to you. So what we were able do was 
calculate premiums based on different takeup rates. And what 
was reassuring to us at that time was that we got premiums that 
were very similar to the ones that CBO was reporting. We did 
not have a full actuarial solvency model.
    Mr. Gingrey. Not modeled out 75 years. Because Richard 
Frank, the deputy assistant for planning and evaluation, I 
guess someone who works under you, stated publicly that we in 
the Department have modeled CLASS extensively, and we are 
entirely, entirely persuaded that financial solvency over the 
75-year period can be maintained. That is a direct quote from 
him.
    Ms. Glied. Correct. And I think that he was--I was not 
there yet, but I think that what he was saying was that the CBO 
had run a very similar model with the 75-year projection and 
came up with very similar premiums so that the consistency----
    Mr. Gingrey. Well, if that modeling is available, and you 
didn't see it, but I would very much appreciate it if you would 
get that to this Member or Members on both sides of the aisle.
    Ms. Glied. We provided those to you, they are actually in 
your report.
    Mr. Gingrey. Let me go to the second question. IOS, 
Immediate Office of Secretary of HHS, cited in the working 
group report as stating that Senator Kennedy's staffer, and 
this is a quote, ``had CBO do lots and lots of runs out to 50 
years to ascertain solvency. She is going to send to me to 
forward on.'' Have either of you ever seen such a report from 
CBO on the 50-year solvency of the CLASS program?
    Ms. Greenlee. I have not.
    Ms. Glied. No.
    Mr. Gingrey. Are you aware that any such CBO report ever 
existed? Because this is a quote from a senior staffer in 
Senator Kennedy's office in regard to seeing those studies, 
those models.
    Ms. Glied. It is quite possible they existed. I wasn't at 
HHS at the time, so I do not see them.
    Mr. Gingrey. OK. Secretary Greenlee, you stated in 
testimony before this committee on March 17, 2011, that we 
should not repeal CLASS until we have made every effort to 
reform the program. Just this month, HHS concluded in a report 
that the administration has, quote, ``not identified a way to 
make CLASS work at this time.'' In light of this announcement, 
will HHS now support repeal of the CLASS program?
    Ms. Greenlee. Congressman Gingrey, we feel that repealing 
CLASS would serve no useful purpose at this point.
    Mr. Gingrey. Would you say that again?
    Ms. Greenlee. We feel that repealing the law would serve no 
useful purpose at this point. We have stated publicly we do not 
intend to implement, and have no plans to move forward on 
implementation.
    Mr. Gingrey. Let me then suggest a useful purpose to you 
that you may want to take under consideration. Section 3203 of 
the Patient Protection and Affordable Care Act requires the 
Secretary to designate a benefit plan as the CLASS Independence 
Benefit Plan no later than October 1, 2012. That is a year from 
now. Absent repeal, if the Secretary cannot find a way to make 
CLASS work by October 1, 2012, I am concerned that some private 
citizen or interest group, for instance, one very vocal in the 
press lately, could sue the Secretary for not following the 
statute.
    Has the Secretary of Health and Human Services created any 
contingency plans in case she can not make CLASS solvent and is 
sued for not following the statute? Now, before you answer 
that, obviously if we repeal CLASS, that would not be a 
problem.
    Ms. Greenlee. As you know, the statute requires that the 
Secretary determine that the program could be solvent over 75 
years. She can not make that determination, so she will not be 
moving forward. So even though the law states the October 2012 
date, she does not have a way to achieve that, and will not be 
working to implement.
    Mr. Gingrey. That is my point, Madam Secretary. You are 
saying exactly what I said, that she can't do it. So why leave 
this statute on the books there just almost begging someone to 
come forward and sue the Department and the Federal Government 
for not providing something that we have a law that has been 
passed and has been pledged by a date certain? It would be a 
lot safer to just go ahead and have a very clean like 1173, Dr. 
Boustany's bill, and repeal the CLASS Act.
    Ms. Greenlee. Again, I don't think that serves a helpful 
purpose. We need to talk with people about the broader issue 
instead of focusing on repealing the law.
    Mr. Gingrey. I know my time has expired. Mr. Chairman, 
thank you for your patience.
    Mr. Pitts. The Chair thanks the gentleman. And recognizes 
the gentlelady from Illinois, Ms. Schakowsky, for 5 minutes for 
questions.
    Ms. Schakowsky. Thank you, Mr. Chairman. To me this 
conversation is so incredibly unrelated to the real lives of 
real Americans. As former Representative Kennedy said, 
repealing the CLASS Act doesn't mean that the widespread 
financial and physical and emotional suffering of older and 
disabled Americans goes away. Somebody is going to pay. And we 
can talk about actuarial tables, and we can talk about staples 
and staplers all we want to, but it seems to me that we would 
be a heck of a lot better talking about how we address this 
problem. And if we want to talk about actuaries, by the way, we 
can go back to 2003 when the Republicans shut down the actuary 
when we were talking about the prescription drug bill, and 
actually said if the actuary puts out the costs that he has 
actually estimated for the program, there were threats that 
were made on that person. Some of us actually remember that. 
But I actually want to quote some of the conversation that I 
think would be more productive of some of our Members.
    Chairman Pitts, you said, I believe we can all agree that 
we do have a serious long-term care problem in this country, as 
the costs are driving people into bankruptcy and weighing down 
the Medicaid program. We do need to address this issue. 
Chairman Emeritus Barton said long-term care is a serious 
issue. I believe myself and all Republicans are very willing to 
support some sort of program for long-term care, but it must be 
one which is sustainable and fiscally responsible. And 
Congressman Shimkus, my colleague from Illinois said, but if we 
would like to work on Medicaid dollars following the individual 
and not incentivizing institutional care, and freeing up the 
disabled to choose the areas where they want to live and how 
they want to live, I am willing to work with you. That is the 
kind of conversation that we need to have. Because the status 
quo, does it not, Ms. Greenlee, say that we end up with the 
most expensive possible way to fund long-term care, and as you 
point out, the least desirable for most Americans?
    Ms. Greenlee. That is correct. If people have only the 
choice of nursing home care, it is the most expensive setting, 
and their least preferred setting. We need to explore all the 
options.
    Ms. Schakowsky. In the time I have remaining, my 
understanding, and I think you just mentioned it about the 75-
year solvency that you want, so are private long-term care 
insurance companies required to meet the same standards that 
the CLASS Act required? Are they required to be actuarially 
sound and financially solvent for 75 years to ensure that those 
who pay for this insurance and who count on it most have access 
to long-term care services when they need them? The way I see 
it, so in other words, in the status quo now, if you have long-
term care insurance, you pay all the way, and then somehow the 
company disappears, there is no recourse. Am I right about 
that?
    Ms. Greenlee. Congresswoman, of course the rate setting for 
the private long-term care insurers would be handled at the 
State level. So I can't answer your question specifically with 
regard to the length of time. You mentioned 75 years. Certainly 
as a former insurance regulator, I can tell you they are 
required, when they seek approval, to demonstrate that their 
models are actuarially sound. I can't give you the specific 
State by State or the length of time.
    Ms. Schakowsky. And is that by law?
    Ms. Greenlee. Yes, it would be the individual State laws.
    Ms. Schakowsky. OK. It seems to me that we have, at hand, a 
number of things that are in the CLASS Act that we don't want 
to repeal it and throw out every single piece of the CLASS Act, 
and that we need to continue to have this conversation. How do 
we do that if the CLASS Act is not implemented? How do we go 
forward?
    Ms. Greenlee. I believe that, as I mentioned to 
Congresswoman Christensen, we have learned a lot from the 
investment that we have made. And now is the best opportunity 
that we have possible to talk to as many different people from 
every sector, to share with what we have learned, and figure 
out if there is more solution that people want to explore from 
Congress with CLASS, if there is other kinds of proposals that 
would meet this need. That this is the time to broaden our 
approach rather than to narrow it. The need continues.
    Ms. Schakowsky. Let me just say from 1985 to 1990, I was 
the director of the Illinois State Council of Senior Citizens. 
And the number one issue that we were dealing with then was 
long-term care and the failure of our country to have any kind 
of policy that made it possible for people to live their lives 
in dignity and get the kind of care that they needed, persons 
with disabilities and all of those of us who are going to age, 
we hope. And I think the time is long past that we do that. 
Thank you.
    Mr. Pitts. The Chair thanks the gentlelady, recognizes the 
gentleman from Ohio, Mr. Latta, for 5 minutes for questions.
    Mr. Latta. Thank you, Mr. Chairman. And thank you very much 
for appearing before us today. I really appreciate you being 
here and hearing your testimony today. If I could just go back 
to our last hearing, one of the things that I had asked, and 
this was a statement that was in your testimony at that time, 
you said President Obama and Secretary Sebelius have 
acknowledged the CLASS program needs improvement. Many of the 
changes proposed to the Senate health reform bill that would 
have improved the CLASS program's financial stability were not 
included in the final legislation reflected in the 
Congressional Budget Office assumptions that scored the CLASS 
program. If I could, I heard you a little bit earlier, if I 
understood it correctly, that about $5 million has been spent 
on the CLASS to date. Is that correct?
    Ms. Greenlee. That is correct.
    Mr. Latta. From the time of our last hearing until, I 
believe it was October 14, do you have any idea how much of 
that $5 million was spent in that period of time?
    Ms. Greenlee. I would have to go back and break it down. 
Our expenses, they were primarily staffing.
    Mr. Latta. But it is still $5 million of taxpayers' money. 
What was the date that it was actually determined that the 
CLASS Act could not go forward?
    Ms. Greenlee. I don't have a specific date. The final 
report was October 14. So it was----
    Mr. Latta. Wasn't there something before that that somebody 
had to make a determination before the 14th? Before October 14, 
didn't there have to be a determination?
    Ms. Greenlee. We received the final report from Mr. Yee on 
September 20, began working on the comprehensive Department 
report, including finalizing the legal analysis. I can't give 
you a specific date, but because we produced the report on the 
14th of October, I would say earlier this month, the Secretary 
made her final decision so we could prepare a report to present 
to you.
    Mr. Latta. OK. Let me ask this either to either one of you. 
On page 14 of your report you say that HHS contractor ARC began 
preliminary modeling of CLASS in late 2009. Did the CBO see the 
preliminary work from ARC?
    Ms. Greenlee. I am sorry, would you just said that again?
    Mr. Latta. Did the CBO see the preliminary work of your 
contractor ARC, A-R-C?
    Ms. Glied. I was not there, but I doubt it. I don't know. I 
can get back to you. I don't think so.
    Mr. Latta. You say you don't think they saw it?
    Ms. Glied. It would be unlikely that they would, but I 
wasn't there, so I could get back to you on that.
    Mr. Latta. OK. If I could find that out, because my 
question would be why didn't CBO see the report? OK. Let me 
just go on. Following passage of the ACA, ARC began to 
systematically review previous assumptions and premium 
calculations for accuracy, and made major revisions to the 
model. Question. Whose previous assumptions and premium 
calculations were reviewed?
    Ms. Glied. So ARC had a long-term care insurance model that 
they had been using for other purposes. And I think, I am not 
actually sure exactly what purpose, some State programs, I 
believe. And we didn't have any model in house, so we asked 
them if we could use that model, they could use that model to 
do some preliminary technical assistance for us.
    Mr. Latta. OK. If I may, did they find any problems as they 
were doing their calculations, do you know?
    Ms. Glied. So at the end of the day--they revised their 
model comprehensively. And at the end of the day last June, we 
had a technical expert panel that reviewed both their model and 
a separately contracted model with Avalere Health, and actually 
pronounced that the parameters were pretty good, in their view.
    Mr. Latta. Let me go on, if I may. On page 12 of your 
report you state, that by April 2010, it became clear that 
existing actuarial models that had been used before enactment 
of the CLASS Act would be insufficient to provide CLASS 
estimates, and new models would have to be developed. Which 
models were insufficient?
    Ms. Glied. At that point we only had the ARC model. And I 
think we had the ARC model----
    Mr. Latta. I am sorry, could you say that again, please? 
Which model?
    Ms. Glied. At that point we had the ARC model. And that was 
the one that needed revision. I am not sure, I think Avalere 
might have done something already. I am not sure.
    Mr. Latta. Do you know why they were insufficient?
    Ms. Glied. Well, one of the reasons that we have come to 
realize is the challenge of a program like CLASS is actually in 
the details of the program. And those models didn't have enough 
granularity to capture all the details of the program.
    Mr. Latta. Let me ask this: Did anyone warn the Secretary 
that the models were insufficient? Was the Secretary brought 
into the loop?
    Ms. Glied. We were doing modeling. I don't know that we 
ever told her anything--I mean, modeling is an iterative 
process. You are always improving the models. The actuary's 
office improves their models all the time. We were doing it 
too. I don't think it would have been a special conversation.
    Mr. Latta. So what you are saying is she was not informed 
of this?
    Ms. Glied. There wasn't some fatal flaw in the model. We 
were improving the model consistently over time. I don't think 
we briefed her on that.
    Mr. Latta. Thank you. Mr. Chairman, my time has expired, 
and I yield back.
    Mr. Pitts. The Chair thanks the gentleman, and recognizes 
the gentlelady from Florida, Ms. Castor, for 5 minutes.
    Ms. Castor. Thank you, Mr. Chairman. And thank you both for 
being here today. And I would really like to urge my colleagues 
to use this as an opportunity for all of us to work together to 
tackle this very daunting challenge of how we can become 
smarter in addressing the long-term care needs of American 
families. Our goal really should be to work together to design 
better solutions, and not give up. I mean, we have this, under 
the CLASS Act, this voluntary initiative, not based on taxpayer 
dollars, but on the health care dollars of American families. 
It faces some challenges. The Department doesn't have all the 
authority it needs to make it work.
    Fortunately, we have leaders like Frank Pallone and John 
Dingell who have been at this for some time, and I can tell 
from their remarks today they are not going to let us give up. 
And really that should be a call for all of us to work 
together, because the demographics are daunting, particularly 
coming from the State of Florida.
    I am going to borrow Patrick Kennedy's language of a 
demographic tsunami because here comes the baby boom 
generation. And if we don't get in front of this, he is 
absolutely right, we are going to be paying on the back end on 
Medicaid. And that is not entirely smart. In the State of 
Florida alone right now, we already have $3 billion of our 
State budget that goes to long-term care. And we have heard a 
lot of testimony today, and I know my colleagues appreciate 
this, that that skilled nursing is very expensive. It is 
necessary for many who are disabled who need that. But let's 
turn this system around and begin to invest maybe a portion of 
those dollars, and I know we have had testimony that we are 
doing more on in-home care and providing families with the 
tools they need so that their family members can stay in the 
home at a much more cost-effective rate. But we can't just play 
ostrich on this and turn it into a political football and say 
this isn't going to be a problem. We have got to work together 
constructively to address it.
    And just, if we can, come up here in the near term with 
some other plan of action to give families this modest bridge 
to be able to live their lives in dignity when they are 
disabled or elderly, that would be the best-case scenario. But 
I am concerned that it has been turned into a political 
football because some of my Republican colleagues on the 
committee released a report last month that made some very 
alarming allegations, charging that the administration ignored 
and silenced the HHS actuary when he raised concerns about the 
financial viability of the CLASS program. And Ms. Greenlee, I 
would like to provide you with an opportunity to address those 
allegations head on.
    In the report that was released in September, the 
Republicans published a series of internal CMS emails 
describing concerns that the actuary and other CMS staff had 
about the financial sustainability of the CLASS program as it 
was being drafted. But that didn't strike me as unusual in the 
legislative process. Is it unusual for these kind of concerns 
to arise as legislation is being drafted and debated?
    Ms. Greenlee. Congresswoman, as Secretary Glied and I have 
testified, we were, neither one, at the Department at the time 
the bill was being considered. But the work that you are 
referring to did occur in the Department section that she 
leads. So if I could have her respond to kind of the pre-
decisional pre-passage issue.
    Ms. Glied. Mr. Foster's actuarial analyses were actually 
publicly released. They were posted on HHS's own Web site. They 
were widely reported in the news media. They were discussed in 
Congress. He was in no way silenced.
    Ms. Castor. And is it unusual, you all have been around the 
legislative process for many years, is it unusual that during 
the debate over legislation, there are discussions over 
financial viability of certain programs and that changes are 
made?
    Ms. Glied. Not at all. There is frequently robust and 
vigorous debate around programs. And I think as the 
Congresswoman from Illinois pointed out, in some cases, 
especially with novel programs, the CMS actuary and CBO can 
have very, very different estimates, which was the case in this 
situation as well, where the CMS actuary had one set of 
assumptions, and the assumptions at CBO were different. That is 
not at all unusual.
    Ms. Castor. Did you all review that report that my 
Republican colleagues sent out? It struck me that there were a 
lot of unfair allegations. I think they understand the 
legislative process just as well as we all do, and they 
understand that legislation changes as it is drafted. Do you 
have any other comments on that report?
    Ms. Glied. So I think it is also important to note that the 
CMS actuary released those reports over time, and there were 
changes made to the CLASS Act over time in response to his 
concerns.
    Ms. Castor. Ms. Greenlee?
    Ms. Greenlee. No, nothing further.
    Ms. Castor. OK. Well, I just wanted to allow you all an 
opportunity to address that. Because, you know, in the 
legislative process changes are made, updates, financial 
reviews are a natural part of the legislative process. And I 
thought their allegations that something untoward was happening 
because changes were being made simply was not accurate.
    And again, I really want to urge everyone to work together 
to address the real challenges facing every family across 
America, and urge us all to develop some solutions for the 
elderly, folks with Alzheimer's, the disabled, and how they are 
cared for in a dignified, cost-effective manner. Thank you.
    Mr. Stearns. [presiding.] Thank the gentlelady. Mr. 
Guthrie, the gentleman from Kentucky, is recognized for 5 
minutes.
    Mr. Guthrie. Thank you, Mr. Chairman. Thank you for coming 
today. It has been good testimony, I think. I have enjoyed 
listening and trying to learn more, because I do think we have 
a long-term care issue that we are going to have to address 
this in country, and what it is doing to families. But one 
thing first, Secretary Glied, when you were talking with Mr. 
Green from Texas, he went through a list of benefits. And I 
think I heard, I am not sure that I heard, but I think it was 
like the policy, you are 26, preexisting conditions for 
children, and the end of the caps, that that hasn't been 
reflected in premiums? Did you say premiums haven't increased?
    Ms. Glied. I don't think I spoke to premiums at all.
    Mr. Guthrie. He said something about WalMart and premiums. 
That is what I wanted to clarify, that those mandated benefits, 
you didn't say they haven't reflected premium increases in the 
private market. I thought I heard him say something about 
WalMart's premiums.
    Ms. Glied. I don't think I said anything about that.
    Mr. Guthrie. OK. OK. I just wanted to clarify then. All 
right. So the issue isn't whether or not we want people to have 
long-term care insurance, it is the issue of how you pay for 
it. And that was concerning if you look at different things in 
the health care bill, that people were paying into this program 
for 5 years, and that was just going to offset other costs in 
the health care bill before it was going to be recouped on the 
back end.
    And so my concern, as you look into the third decade, this 
is just kind of overall, it showed that this was going to be an 
unsustainable program, which I appreciate you all making that 
declaration and saying we can't go further with the way that we 
have. I think that was the right way to go. Because I am 47, my 
daughter is 18, she will be 48 in 30 years. And 30 years, if 
you look at all the CBO projections if we don't change, is when 
100 percent of Federal revenues will be Social Security, 
Medicare, and Medicaid.
    And so if you are putting a new policy in place, which you 
are not doing, I understand that would be unsustainable, that 
was the concern that a lot of us were raising. It is not that 
we are gleeful that we are not going to have long-term care 
insurance. And that is not the case at all. But if you create a 
program that people pay into that is not sustainable, and they 
believe they are going to get a benefit in the end, and then we 
are here 30 years from now, or somebody that follows me is 
trying to make it balance and trying to take benefits away from 
people with plans, we do have to come up with a way that is 
sustainable that people know the money is going to be there 
when they get there. Because I think Secretary Greenlee, you 
said that you were in Kansas? Is that where you were the 
insurance commissioner?
    Ms. Greenlee. The Secretary was the insurance commissioner. 
I was her general counsel.
    Mr. Guthrie. OK. When you were in the insurance 
commissioner's office, that you make sure plans are sustainable 
before you approve a private plan. And I think that is probably 
what we got into with this, is that unless you can mandate 
people purchase at a young age, all the different things, there 
is no way to make it affordable. Or it didn't appear like you 
could come up with a premium that you would consider 
affordable, given the conditions that you had. That is kind of 
what drove the final decision?
    Ms. Greenlee. Yes. There were three factors at play that we 
kept circling as we made the final decision: An actuarially 
solvent program or plan that we could market so that there 
would be takeup rate that complied with the statute that was 
passed and the intent of Congress. And we needed all three of 
those factors to line up together in order to be able to move 
forward, and could not find the right alignment of those three.
    Mr. Guthrie. But when you mandate benefits--I am from 
Kentucky, and was in the general assembly. And we always 
wrestled with benefit mandates to the insurance policies, 
health insurance particularly. And as you allow more coverage, 
which everybody wanted, you also drove up the price, which left 
more uninsured. And so I think you saw--and you are an expert 
at this, in wrestling with how to come up with the proper 
benefits versus the costs, that that is another thing that, at 
least from my perspective and some of the health care benefit--
the laws with benefits, one of the things we mentioned is that 
is going to drive more and more people, or make health 
insurance more unaffordable. Because I do think premiums--I am 
not sure what he said about WalMart. I am sorry if I implied 
that you said that. But I thought I heard a discussion with 
what he said about WalMart's premiums.
    But that is the problem that we look at. And it is what 
Representative Kennedy said, who is going to pay in the end? 
And it is a question of who is going to pay. And as we drive up 
insurance policy rates, that is my concern. More people are 
going to fall out of the market, therefore they are they are 
going to end up in the exchange, and it is going to be a more 
expensive bill on them than we think. But you all have had a 
forthright conversation. I appreciate you coming here and 
sharing what you have done today. I have 20 seconds. Mr. 
Burgess, you are looking for 20 seconds?
    Mr. Stearns. Dr. Burgess, we are going to do a second round 
here.
    Mr. Guthrie. I will yield back.
    Mr. Stearns. You will yield back. OK. We will keep moving 
Mr. Griffith from Virginia is recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. Your report says on 
page 12, ``By April 2010 it became clear that existing 
actuarial models that had been used before enactment of the 
CLASS Act would be insufficient to provide CLASS estimates, and 
new models would have to be developed.'' I am guessing that, 
based on the report, that the new models would be all of the 
things other than the basic model. Is that correct? Looking at 
the report, there were like seven or eight different models 
that were looked at. Is that not correct?
    Ms. Glied. I just want to clarify two things. The word 
``model'' is used in two different ways in the report. And I 
think the way that you are referring to it is talking about an 
actuarial model, which is like a mechanical Excel spreadsheet 
sort of thing, whereas the plan options, those were developed 
over the full 18 months.
    Mr. Griffith. All right. I guess what I am trying to get at 
is that you all developed over the 18 months you spent a sum of 
money, what did I hear, about $5 million working on putting 
together these various options. And I heard you say earlier 
that the full, and I am speaking to Secretary Greenlee, that 
the full legal opinion wasn't known until fairly recently. I 
guess I am wondering why you would pursue models, referring to 
options, why you would pursue options that you hadn't had fully 
cleared as to whether or not those options would be legal under 
the bill?
    Ms. Greenlee. I had addressed this briefly in a prior 
question, that as the Assistant Secretary said, we had to build 
the models based on the law that actually passed, not on 
iterations that were there before. And after those were built, 
we started with the basic design of the law. And then knew, 
because those premiums were so high, that we would need to make 
adjustments.
    As we began surfacing ideas of possible adjustments, we did 
engage with counsel internally to talk to them about what our 
ideas were, and continued to talk to them until the final 
product. The final product is the culmination of all of those 
different ideas pulled together in one place for final 
analysis. But we did need to consult with counsel about things 
that were very important to us. What is absolutely prohibited? 
No underwriting. It must be cash. Some of those things are well 
known. Where might we have some flexibility or discretion so we 
could additional work. It was a dynamic process that involved 
various experts within the Department to come to a final 
conclusion, and over a course of time.
    Mr. Griffith. But at least some of those things, I know 
that some of them are questionable, but some of those things, 
in reading the report, legal counsel says, well, there is no 
authority at all for the Secretary to do that. I am just 
wondering why that some of those options would have been 
pursued even for a brief period of time if there was no legal 
basis in the statute for them.
    Ms. Glied. I mean both of these things had to happen. We 
had to figure out whether it would be solvent, and we had to 
figure out whether it was legal. So sometimes we figured out 
whether it was legal before we figured out whether it was 
solvent, and sometimes we figured out whether it was solvent 
before we figured out whether it was legal. Both of those tasks 
had to be completed. And so I am not sure why it would have 
mattered which way we went at it.
    Mr. Griffith. Here is why it matters to me. If it is not 
legal and you make that determination first, then you don't 
spend the money finding out whether they are solvent.
    Ms. Glied. Once we built the model--it costs money to build 
the model, which allows to you test many different things. Once 
you have the model, it costs almost nothing to test a different 
option. So it makes fiscal sense to do it in the direction we 
did it.
    Mr. Griffith. All right. Having asked that, earlier--I 
forget which one of you said it, and I apologize for that--you 
said that you didn't have some of the tools that were available 
to the private sector. What tools that are available to the 
private sector did you not have that you would have liked to 
have had?
    Ms. Greenlee. I can respond. I can't respond in saying I 
would have liked to have had them. I mean, the primary 
difference that is generally known is that the private sector 
uses underwriting, which was not available to this program. 
They have a mechanism, by doing so, to address adverse 
selection that was not available as we developed the CLASS 
program. So we needed to look for other types of options to 
deal with adverse selection. And that is reflected in the 
various ideas that we have about different models. That is, and 
there may be others, that is the clear distinction between what 
the private market can do and what we could not.
    Mr. Griffith. All right. And because of that, doesn't it 
make some sense to go with the option that the doctor mentioned 
earlier in regard to having private pay long-term care be paid 
for with pretax dollars or allowed to use your medical account? 
Doesn't that make sense? Because it looks like even though the 
products are substantially different, and I understand that, it 
looks like that the government can't compete with the private 
sector because you have to take on so many people. I understand 
that. But wouldn't it make sense then to enhance the ability of 
the private sector?
    Ms. Greenlee. As we move forward with more conversations 
and pull insurers in, I think a component of that is, with 
support, what could the private market do? But because they use 
these mechanisms, like underwriting, they will never be able 
to, with that mechanism, serve all of the people that CLASS was 
designed to serve. So not everyone will be taken care of. I 
don't know better how to say that. So we need to move forward 
on multiple options, coming back to who are we trying to serve 
and what is the best solution for those individuals. It may not 
be one thing for every single person. There may need to be 
different options.
    Mr. Griffith. I yield back.
    Mr. Stearns. I thank the gentleman. Dr. Cassidy is 
recognized for 5 minutes.
    Mr. Cassidy. Thank you, Mr. Chairman. Really the question, 
one, everybody agrees we need to come up with a solution for 
the problem of long-term care. I don't think any of us argue 
that. But as a physician who works in a public hospital caring 
for the uninsured on the receiving end of poorly planned 
programs enacted by posturing politicians, a nice alliteration 
there, I am aware if we don't come up with something 
sustainable, we end up worse off.
    Now, clearly, this was not sustainable. Secretary 
Sebelius's letter said that you ended up testing premiums of 
$3,000 a month, and still clearly it was not sustainable if you 
are looking at that. The question before us isn't whether or 
not we need to do something about long-term care. We all agree. 
The question before us is whether or not the American people 
were almost duped into thinking that this was $70 billion of 
revenue that folks, reasonable folks would have assumed not. 
Now, that is the question before this committee. Now, I note--
and by the way, this is more than just a partisan issue. I am 
looking here at a book, Fresh Medicine, by Phil Bredesen, 
Democratic former Governor of Tennessee, which goes on to say 
in our government it is as important to have honest work 
presented to the American people.
    He goes on to say the CLASS Act is a great example of how 
that was not done. Now, this is a Democrat casting aspersions 
upon this. Now, that said, it is clear, as you mentioned, 
before the CLASS Act was passed that there were concerns. I 
note that Ezra Klein recently--Ezra Klein, the liberal--
recently had a blog in which he said the administration was 
concerned that the CLASS Act was not fiscally sustainable. As 
Secretary Sebelius points out in her testimony, or in her 
letter, even before PPACA was passed, there was concerns 
regarding the CLASS Act's fiscal responsibility. You point out 
that actuaries were there. Frankly, the fact that Klein is 
saying that it was internal debate in the administration and 
the Secretary is acknowledging concerns, Paul Ryan pointed it 
out in February of 2010, why did the administration insist that 
this was fiscally responsible? Why does Phil Bredesen have to 
write a passage in his book saying this is a great example of 
how the American people were deceived in terms of how an 
important bill was financed?
    Ms. Glied. Sir, we had every reason to believe it was 
fiscally responsible when we moved forward. And indeed, it was 
fiscally responsible. After we did our analysis----
    Mr. Cassidy. Wait a second. We just heard from your 
associate that without the ability to medically underwrite, 
that inevitably there would be anti-selection, as Mr. Foster 
said, and that you would end up with something without an 
individual mandate would not be sustainable. Now, this was a 
first-pass read. You are telling me, you are telling me now 
that the very construct of it meant that it was unsustainable. 
So tell me why, in retrospect, it was sustainable.
    Ms. Glied. Actually, if you--first of all, there was 
considerable differences of opinion at the time that the 
legislation passed about whether it was possible to make this 
model work. But at the same time----
    Mr. Cassidy. Let me ask you, your colleague, I don't mean 
to interrupt, but we have kind of been covering this, and yet 
when I hear your testimony, that without the ability to have an 
individual mandate and without the ability to have a medical 
underwriting, it is a nonsustainable model.
    Ms. Glied. Actually, our report shows that there are 
sustainable models that don't have medical underwriting and 
that don't have an individual mandate.
    Mr. Cassidy. OK. What I read from Sebelius is that you had 
to test premiums up to $3,000 a month.
    Ms. Glied. That was not one of those, but there are eight 
options in there.
    Mr. Cassidy. And that the only way it would be sustainable 
if premiums were less than $100 a month, I am reading your 
material, and yet it could not be done for anything less than 
$300 a month.
    Ms. Glied. That is not the case, sir. If you read our 
report, you can see that some of those options would have been 
actuarially sustainable, but they were not viewed as being--the 
legal counsel informed us they were not consistent with the 
statute. That is not the same thing as saying that it would be 
impossible to do this.
    Mr. Cassidy. Now, Mr. Foster apparently knew this before 
the bill was passed. The Moran report said the only way it 
worked basically is with an individual mandate. Others were 
pointing it out. It was kind of a critical issue to come to the 
answer that was apparent to so many so long after the fact. 
Again, going back to what Bredesen says, this really is a 
concern regarding how honest we are with the American people.
    Ms. Glied. As Joe Antos testified before this committee----
    Mr. Cassidy. I am sorry, I didn't hear you.
    Ms. Glied. Joe Antos testified before this committee last 
March, and he pointed out the difference between the CBO and 
CMS estimates of the cost of this bill. And he noted that that 
was a good reflection of the tremendous uncertainty----
    Mr. Cassidy. CBO actually said, though, it was only 
sustainable in the first 10-year window because you didn't 
pay--you collected premiums for the first 5 years. And so that 
was clear that their $70 billion-plus was only because they 
could only grade for the first 10 years. It is a little 
disingenuous to suggest that they thought that long term that 
was a viable model.
    Ms. Glied. They made a projection that it was--I believe 
they made a projection it was fiscally sustainable.
    Mr. Cassidy. No, they did not. Would you show me that? I 
don't mean to be rude, but please, if you can show that to me, 
I don't see evidence for that.
    Ms. Glied. I will have to follow up, because I do not have 
the CBO analysis memorized.
    Mr. Cassidy. Let me ask one more thing. I am out of time. I 
apologize. Thank you very much. I didn't mean to be hostile, 
but it is such an important issue, and again, the American 
people frankly do feel duped. I yield back.
    Mr. Stearns. The gentleman yields back. Mr. Bilbray from 
California is recognized for 5 minutes.
    Mr. Bilbray. Thank you, Mr. Chairman. Mr. Chairman, let me 
just say this to my colleagues on both sides of the aisle. I 
hope that we address this issue and remember the bigger picture 
here. As somebody who just went through 25 years of home 
services to a grandparent, and then my mother who just passed 
away, I think we have got to remember that people like Mr. 
Pitts talks about the family unit being essential in this 
Nation, we talk about it like it is an abstract.
    Here is a situation where family units really do matter. 
And the breakdown in those family units are creating crises not 
just for the individuals in those families, but also the 
community at large. And so maybe when we talk about how 
important the family is, we remember it is just not an 
abstract, it is dollars and cents and quality of life. And 
maybe we ought to be reminding all of us that we have just as 
much responsibility to take care of our mother and father in 
their later years as they had to take care of us in our early 
years. And we approach that as being some strange antiquated 
concept. And that is why I always remember be nice to your 
children, they are going to choose your retirement home. And 
hopefully, they won't choose a retirement home, they will allow 
you to live like I did.
    I moved in with my--actually, my wife and I moved in to 
take care of my mother as part of a not only a responsibility, 
but a privilege of being a child. That aside, addressing that, 
Ms. Greenlee, don't we have the answer to this problem right in 
front of us? And that is all we have to do, rather than suspend 
the program, is go back to the basic assumption that all we 
have to do is mandate that every able-bodied young person in 
this country pays $100 to $200 a month and we can finance this 
program, be able to guarantee the program within 75 years?
    Ms. Greenlee. Congressman, if I could make two points. What 
you described with your family is actually very typical. In 
addition to running a CLASS program, of course, as the 
Assistant Secretary, I know that 80 percent of long-term care 
is still provided by family members. We did not have the 
option, it was clear to us in this law, that mandates for 
individuals or employers were not options.
    Mr. Bilbray. But Congress does have the option of 
revisiting, if we maintain this program and not put it on ice, 
if we do not eliminate it, Congress does have the option to go 
back and revisit this and modify the law to allow or to require 
that every able-bodied person in the United States be required 
to contribute a portion of their salary, $100 to $200, to 
guarantee this program will be available whenever they need it.
    Ms. Greenlee. Well, of course, if Congress passes a law 
Congress can revise the law. I don't want to make a commitment 
on any particular revisions that you may consider. That is why 
I believe we need to all keep talking. It was clear to us that 
a mandate was not an option, and it is not something that we 
have developed or pursued in any way.
    Mr. Bilbray. Wait a minute. When you said that, when you 
say that it was not an option, the issue was the law didn't 
allow that option. But I will allow you to jump in on this. 
Then that was the law, the law limited you there. Why wasn't 
that identified as being the Achilles heel in this before we 
were asked to vote on this legislation, before we were asked to 
assume this huge amount of revenue generation? Why wasn't that 
up front that this was a desperately needed mandate if you were 
going to have the system work?
    Ms. Greenlee. As we both testified, we weren't at the 
Department when the debate was happening. In the conversation 
about adverse selection the reason why that conversation was so 
important, regardless of perspective, is that this is a 
voluntary program. So adverse selection is different. You must 
overcome it with large participation, how to achieve large 
participation if there is no mandate. All of those components 
work together. They can't be separated.
    Mr. Bilbray. I don't understand, though, the big picture of 
the law. This is one small section, but it was a huge part of 
the savings. The rest of the bill was built on the assumption 
that if you mandate every able-bodied person in the United 
States to participate in a program, there will be such huge 
savings, and now--and then we were sold that this small little 
side one was not going to have the mandate that the rest of the 
program had and was going to be 50 percent of the savings. That 
doesn't sound like somebody really doesn't follow a continuum 
of thought and reason. It's sort of going over that the great 
secret of the Affordable Care Act was mandate everybody had to 
play and participate and pay in except for a part that was 50 
percent of the savings.
    Ms. Greenlee. It was voluntary. That is correct. I can't be 
more responsive than that. That's different from other sections 
of the law. This law always was designed to be a voluntary 
program.
    Mr. Bilbray. Do you think that that was a reason why it had 
to be put on ice is because you don't have the mandatory 
revenue flow to be able to support the long-term commitment.
    Ms. Greenlee. With the voluntary program, the key to 
participation is having a price that will sell in the market so 
you can get high participation. And that's the way to achieve 
the law of large numbers.
    Mr. Bilbray. Wouldn't a mandate eliminate the problem if we 
just mandate that able-bodied people had to pay into a 
requirement and eliminate the voluntary program?
    Ms. Greenlee. I can't take a position on a specific change 
because we've not identified specific changes. You can 
certainly go back and look at the problems that we have 
identified, and then have a conversation about which of those 
might be the most approachable, but we have not done that. We 
knew that this was not something we could pursue.
    Mr. Bilbray. Thank you very much, Mr. Chairman. I would 
just point out there is an answer here. It is an answer that 
nobody wants to talk about. And we should be up front. The 
mandate could avoid this problem, but it also eliminates the 
selling point for the program. I yield back.
    Mr. Stearns. I thank the gentleman, and I would say to our 
witnesses we have a few more people with questions. We 
appreciate your forbearance here. So we are going to go a 
second round. There is a few of us who would like to ask 
questions. So we should be through shortly. So I will start 
with my questions.
    Secretary Glied, and I guess also Ms. Greenlee, the 
question is, our investigative report from September 15 
uncovered e-mails in which the Health and Human Service staff 
discussed the possibility of using employer mandates to make 
certain employers offer enrollment in the CLASS program. Is 
that an option you are still considering, yes, or no.
    Ms. Greenlee. No. It was never considered.
    Mr. Stearns. Dr. Glied?
    Ms. Glied. No.
    Mr. Stearns. Was this option discussed among the people 
modeling class and drafting its regulations ever?
    Ms. Greenlee. No. In the draft regulation, it is always 
very clear that this was an option for employers and employees 
both. We never pursued a different path.
    Mr. Stearns. And during and after the bill passed, you 
never discussed that? Yes or no?
    Ms. Greenlee. No.
    Mr. Stearns. Dr. Glied?
    Ms. Glied. I never discussed it.
    Mr. Stearns. You never discussed it. Did your staff ever 
discuss it?
    Ms. Greenlee. I am not aware of any discussion that took 
place. I think there was a working group. I don't know what 
they talked about.
    Mr. Stearns. Did Secretary Sebelius ever talk to you or do 
you know if she understood that discussing employer mandate as 
an option for the CLASS program?
    Ms. Glied. I don't believe she did.
    Mr. Stearns. You say no?
    Ms. Greenlee. I have no other reason otherwise.
    Mr. Stearns. Let me read an email to you that we actually 
have. It is in the book here. HHS explain this in December 
2009. ``One possible alternative is to move to a mandated offer 
approach where employers over a certain size, for example, 50 
employees, would be required to offer enrollment.'' Had you 
ever heard of that?
    Ms. Glied. Before I saw that that email went to you, I 
hadn't seen it at any other time, but I know that many, many 
options were considered as a robust policy.
    Mr. Stearns. Many options is one thing. But this is a 
distinct departure that I think many Americans don't realize--
--
    Ms. Glied. But we didn't pursue it, Mr. Stearns.
    Mr. Stearns. No, but I have an email that it is discussed 
here in an email.
    Ms. Glied. Mr. Stearns, we discuss all sorts of things all 
the time.
    Mr. Stearns. So your position is this morning that this was 
never, after the bill passed, it was never discussed in your 
opinion?
    Ms. Glied. In my opinion, it was not discussed after the 
bill passed. The bill did not include a provision for an 
employer mandate.
    Mr. Stearns. Ms. Greenlee, is that true that it was never 
discussed by you or anyone else?
    Ms. Greenlee. It was never discussed unless it was 
inapposite. We don't have this option, so we must do this 
instead. It was never a viable option to us once the bill was 
passed. It was always very clear that we were working with a 
program that was voluntary. To the degree that it was 
discussed, it was discussed as a door that was closed to us, 
not something that we could pursue.
    Mr. Stearns. Let me just ask--I have a little extra time 
here and just talk to you a little briefly. I am a little 
concerned in our discussion about Rick Foster and his release 
of his analysis which came after the bill was passed. I think 
many of you were aware of his concern before the bill passed. 
And then coincidentally, almost 30 days after the bill passed, 
his analysis came.
    Did you or anyone on your staff, either one of you know 
about his analysis, shall we say, he projected in 2025 that 
expenditures would exceed premium receipts. Did all of you know 
that from his analysis? Did you read and fully understand that?
    Ms. Glied. He made various analyses. He published them in 
December of 2009. He published several before the bill passed. 
He also published a comprehensive analysis of the entire bill 
after it passed. That is what I think you are referring to.
    Mr. Stearns. I think his analytics were not that definite 
back before the bill passed. It just seems coincidental to us 
that what he projected for 2025 were the expenditures would 
exceed premium receipts was clear, but it came 30 days after, 
and the question would be, did anyone on your staff know about 
this analysis before April 22, 2010?
    Ms. Glied. Before he published it? No. I don't believe so.
    Mr. Stearns. So part of his concern, never a draft of this 
before was ever provided?
    Ms. Glied. He had expressed many concerns. He had not 
shared the last analysis he did with us before he published 
them. He certainly vocally shared his concerns with many 
people.
    Mr. Stearns. In your opinion then, Rick Foster was not 
asked to hold off his analysis publishing?
    Ms. Glied. Not only was he not asked but he actually 
responded to a reporter and said he was not silenced in any 
way.
    Mr. Stearns. OK. Well, it is obvious if we had his analysis 
before the bill passed I think that would have had a big 
impact.
    Ms. Glied. He didn't have that analysis either, that April 
analysis wasn't done until after the bill was passed. It was 
actually reflecting what was in the bill.
    Mr. Stearns. On April 22, barely after a month the bill 
passed, he released this report saying the CLASS program 
projected savings are due to the initial 5-year period during 
which no benefits would be paid. Over the long run expenditures 
would exceed premiums, receipts, and he projected in 2025 
expenditures would exceed premium receipts.
    Ms. Glied. He disagreed with CBO. He had a very different 
estimate.
    Mr. Stearns. OK. My time has expired. And with that, the 
gentleman from Pennsylvania, Mr. Pitts.
    I need to go to a Democrat. I thought you told me you folks 
didn't want to participate. But if you want to, we are very 
glad to have you.
    Mr. Pallone. Mr. Chairman, you asked if we wanted to have a 
second round. We said no. But that doesn't mean if you have 
one, that we don't speak?
    Mr. Stearns. Absolutely, you get every opportunity. We 
recognize the gentleman from New Jersey for 5 minutes.
    Mr. Pallone. I think part of my problem here with the panel 
is that I just disagree with I guess HHS counsel or whoever is 
advising you both with regard to the CLASS independence 
advisory council and also with regard to what authority you 
have under the law. So maybe at some point, I will have an 
opportunity to meet with the counsel and talk to them, because 
I simply disagree with whatever recommendations they are 
making.
    Secretary Greenlee, you said that because you suspended 
implementation of the CLASS program, that the council could not 
be appointed. But in the statute it says the CLASS Independence 
Advisory Council shall advise the Secretary on matters of 
general policy in the administration, and I stress ``in the 
administration'' of the CLASS program, and then it talks about 
the various categories of the administration.
    So it doesn't say that they are only there for 
implementation once you decide that the program is sustainable 
and can be implemented. It says in the administration. So you 
are still administering the CLASS program. So why would you say 
that the council couldn't be involved in the administration and 
the development of the benefit plan and the determination of 
monthly premiums and the financial solvency.
    It just seems to me that precluding this council which 
exists under the law is wrong, and I don't understand if they 
are supposedly involved in the administration, you are still 
administering the program, why they can't be convened?
    Ms. Greenlee. Mr. Pallone, this is similar to the concern 
you raised earlier. I am willing to go talk to the Secretary 
about your concern. Like I said, she has been very clear that 
we have suspended implementation of the CLASS Act. The only 
item that is in the CLASS Act that we will continue to work on 
is what I have referred to as the long-standing, long-term care 
awareness campaign. So to the degree that you are talking 
about----
    Mr. Pallone. I understand what you are saying.
    Ms. Greenlee. I don't want to be contrary to what the 
Secretary is saying. I will take to her your concern.
    Mr. Pallone. My point is that it seems that since you are 
still administering the program, there is an obligation to 
start this council and get it moving. I would ask and you have 
now said, and I appreciate that, you will go back to the 
Secretary and ask that, because that is one way for us to look 
at alternatives and keep this alive.
    Now, the second thing is, I know that Ms. Glied mentioned 
the models that were outlined in the report and there were 
several that I think you said in response to some of my 
Republican colleagues that were sustainable, but for legal 
counsel saying there was insufficient authority. Now again I 
disagree with the legal counsel about the sufficiency of 
authority.
    But could you tell us, in terms of those models that you 
outlined were sustainable, was there one or more that you felt 
were preferable, that you thought would be the most 
sustainable, if you, in fact, had the authority and the council 
said you had the authority, leaving that aside for the time 
being, what would you have recommended? Which one of those 
would be best, or maybe talk about one or two that would be 
best, because we are not even getting that opportunity now, if 
you would. Just tell us a little bit about one, and if there is 
one that you think was better, or one or two that you think 
would be better than the others, I would like to know what you 
thought.
    Ms. Glied. Several of them looked like they might be 
actuarially solvent, they usually had many changes from the 
natural language of the statute, generally increasing the 
earnings requirement, altering the benefit design, phasing in 
benefits over time so that only some people could participate 
in the program initially. Those were all options that were 
incorporated in the programs that seemed to be more actuarially 
solvent.
    Mr. Pallone. Did the counsel ever explain why he thought 
there wasn't sufficient authority to move on some of these? Did 
they explain that?
    Ms. Greenlee. The report actually describes the legal 
opinion. I am not a lawyer, so I can't speak much more to it 
than what is in the report.
    Mr. Pallone. I think at some point if you could ask the 
Secretary, I would like to also meet with the counsel because I 
simply disagree with those recommendations. I think it can--
that some of those options would meet the legal authority. If 
you could meet with the Secretary, I would like an opportunity 
to meet with the Secretary.
    Ms. Greenlee. I will convey your request, sir.
    Mr. Pallone. Thank you.
    Mr. Stearns. The gentleman yields back the balance of his 
time, and the gentleman from Pennsylvania is recognized for 5 
minutes.
    Mr. Pitts. Your report says that in December of 2009 and 
January of 2010, Senate staff asked HHS to begin developing a 
list of technical corrections to the bill. We have seen drafts 
of those technical corrections and none of your corrections 
made it into the final bill. Do you know why?
    Ms. Greenlee. My understanding is there was a procedural 
mechanism that allowed them not to be amended. But again, I was 
not here. I am telling you second-hand information. It was 
offered, but I can come back and tell you.
    Mr. Pitts. And provide us the information, provide the 
committee the information?
    Were the concerns of career HHS staff that were raised in 
2009 and early 2010 over the sustainability of the CLASS 
program ever relayed to Congress prior to the passage of the 
PPACA?
    Ms. Glied. I am not sure exactly what you are referring to, 
but I believe the concern about adverse selection in the 
program that was raised by a member of the staff in the ASPI 
office, and that was the same concern that Rick Foster had 
raised many times in his published report as well. So that was 
a concern that had been very vocally voiced.
    Mr. Pitts. That was relayed to Congress?
    Ms. Glied. I believe Mr. Foster published his reports and 
Congress was well aware of them and he actually raised exactly 
that point. So the concern about adverse selection had been 
very widely discussed prior to passage of the legislation.
    Mr. Pitts. The recommendations, the American Academy of 
Actuaries, were these recommendations provided to Congress?
    Ms. Glied. I believe the American Academy of Actuaries 
published those recommendations, and they were discussed in the 
committee, I believe. I am not sure. I wasn't here.
    Mr. Pitts. They weren't adopted, these technical 
corrections. Was your office ever given an explanation as to 
why these recommendations were not accepted?
    Ms. Greenlee. Again, Mr. Chairman, I will get back to you 
on that. My understanding is it was a procedural issue with 
regard to the offering of the amendment and not being able to 
move it. But we can certainly answer that.
    Mr. Pitts. Your report said that ``Many of the regulations 
related solely to operational aspects of the CLASS program have 
been drafted.'' Why did you have staff do the work of drafting 
regulations before you had determined whether it was possible, 
or it would be possible to implement the program?
    Ms. Greenlee. In order to meet the time line set out in the 
statute that the Secretary would designate a final benefit plan 
in October 2012, we needed to begin the initial analysis of how 
we would operationalize the program and do that at the same 
time as we were exploring the models and benefit designs in 
order to have a chance of being able to meet the statutory 
deadline. That is also very well described in the report that 
we, aside from the policy issues, needed to issue or look at 
potential regulations, how we would bill an assessment system, 
an IT system. These were the other functions that the staff 
were initially looking at as required by law in order the meet 
the deadline.
    Mr. Pitts. Can you send us a list of the offices to which 
you forwarded, or the offices that received the technical 
corrections? Can you send us a list of those offices that 
received those from you?
    Ms. Greenlee. I want to make sure I am clear. Are we 
talking about the technical corrections to the statute, not the 
regs that you just asked me about?
    Mr. Pitts. Yes.
    Ms. Greenlee. I will go find out. This is an area that I 
don't know. So I will tell you what I can about the procedural 
and how that was presented.
    Mr. Pitts. You have talked several times, you have 
mentioned long-term care awareness campaign. I think we can 
agree that the long-term care market is a vulnerable one; as to 
the long-term insurance product is difficult to sell, and it 
can often be expensive and more commonly attracts the most 
sick.
    Implementation of the CLASS program may have been a lesson 
for the Federal Government in how not to meddle with the 
private industry. What impact do you believe the mishandling of 
the CLASS program implementation and the suspension of all 
CLASS program activity will have on consumer confidence in 
long-term care insurance overall?
    Ms. Greenlee. Mr. Chairman, I do just note that I don't 
agree with the mishandling characterization, but I would like 
to be responsive. I believe that there is great opportunity 
through the long-term awareness campaign to continue to work 
with private insurers, and that the investment that we make to 
tell the American people about this issue benefits that private 
market, as well as the general public. So I don't find that 
there is a negative or chilling impact on the private market at 
all because of our studied look at the CLASS program.
    Mr. Pitts. OK. Thank you, Mr. Chairman.
    Mr. Stearns. And the gentleman from Texas, Dr. Burgess. I 
am sorry.
    The gentlelady from Colorado is recognized for 5 minutes.
    Ms. DeGette. Here is what I have been sitting here thinking 
about as we have been having this discussion today, and I want 
to ask both of you your honest opinion about this.
    My colleagues on the other side of the aisle have talked 
about kind of two ways we can help older Americans get, and 
also disabled Americans get long-term care. One of them is if 
we somehow do what I help my children do, which is have some 
kind of moral and familial responsibility towards aging parents 
or disabled relatives, and I think that is a noble hope that we 
would have, but not one--I don't think anybody in this room 
would think that we should legislate some kind of personal 
mandate that individuals provide those care responsibilities.
    So then that leaves us with a second alternative, which is 
to try to encourage people to purchase long-term care 
insurance. And this is one thing that the agency is trying to 
do right now.but the issue with the long-term care market is 
two-fold. Number one, since it is not widely--since people 
don't widely take advantage of it, premiums are very expensive 
because only the more risky population is involved in this 
market. And the second problem is people with preexisting 
conditions under current law are excluded from that market.
    So long-term care insurance solely through private 
insurance really isn't an option.
    And then I get to the report that the Department prepared 
that said that the CLASS plan option is not going to be 
sustainable from an actuarial standpoint because it is not 
going to attract a broad enough population because of the high 
estimated monthly premiums. And also because it is not a 
mandatory program.
    So as I sit here and think about what our options are, I 
guess I would ask the both of you to just tell me what you 
think we can do to enroll more people either in private 
insurance or some kind of insurance program because we do see, 
all of us, on both sides of the aisle, see this tsunami coming 
towards us, and I haven't heard any real good practical 
solutions suggested here in the last 3-1/2 hours we have been 
sitting here.
    Ms. Greenlee. Congresswoman, to me it makes sense to 
explore, if there is a way, for the private market to do more. 
I am not someone who is opposed to the private market. It will 
never solve the whole need. If there is things we can do and 
continue to talk to Congress about the private market, then we 
are certainly willing to have that conversation. But we must 
understand that there will be a group of people for whom that 
is not the right solution for a number of reasons, from 
affordability to preexisting conditions to the fact that that 
is a product that is different than what the CLASS product. It 
is comprehensive in the private market. CLASS is a more minimal 
benefit. We need to analyze how everything could blend together 
to meet the whole range of needs. And I think we are willing to 
have that conversation.
    Ms. DeGette. Thank you. I yield back.
    Mr. Stearns. The gentleman from Texas, Dr. Burgess, is 
recognized for 5 minutes.
    Mr. Burgess. Let's keep on that same line of thinking. How 
do we enhance the availability of this type of insurance to the 
private market? I talked about tax consequences in my opening 
statement. Certainly in the Deficit Reduction Act of 2005, we 
expanded the partnership program so that those people who do 
spend their own money on their own private long-term care 
insurance product, if they outlive their benefit, which is 
rare, but if they do, then they don't have to spend down to get 
into the Medicaid program. I am oversimplifying it. But States 
now have the option of opting into that long-term care 
partnership, and I think that is certainly something if we want 
to work on the awareness side, to work on the awareness at the 
State level.
    I do think, and Mr. Pitts brought it up again, I think the 
activities of the CLASS, the implementation of the CLASS Act, I 
think that has had, if not a chilling effect, at least caused 
some stagnation in the private market, because if I am working 
on a long-term care product or I have got one on the market, I 
am kind of holding back to see what you guys are going to do.
    I would be interested to know did you ever talk with any of 
the larger players in this market to see if there was a way to 
also partner with those products that are already out there, 
those projects that are already offered?
    Ms. Greenlee. We are both nodding because we did.
    Ms. Glied. One of the options in the report actually 
includes an option for CLASS that would involve a partnership 
with the private market. So that was something that we did 
actively pursue.
    Mr. Burgess. What happens now in that, and again, I am 
concerned that the people that do provide this in the private 
market, again, they are going to be waiting for Congress or the 
agencies to do something, and they are kind of frozen in time 
while that happens.
    Ms. Greenlee. I was just looking at data on sales of long-
term care insurance recently, it doesn't look like beyond the 
effects of the weak economy that there has been any particular 
effect of the CLASS.
    Mr. Burgess. Maybe it is a positive aspect for us doing the 
hearing today, and maybe someone out there will recognize that 
perhaps this is an activity that they should undertake for 
themselves.
    Just a couple of things to tie up some loose ends we are 
getting asked from the other side. Losing half of the savings 
from the CLASS Act for the Affordable Care Act, but there were 
still savings. The savings, of course, come from Medicare cuts, 
certainly cuts in the Medicare Advantage program and the Home 
Health benefit that was cut in Medicare, the device tax, which 
is likely to be problematic for our device manufacturers, the 
changes in the income tax law where people have a lower 
deductability of their actual medical expenses, the Cadillac 
tax, and then always my favorite, the tanning tax. And the 
recent evidence that the tanning tax receipts are lower than 
expected because people do behave in a rational fashion and if 
you tell them you are going to tax your tanning activity, 
sunlight is free and people will go that route.
    On the issue of the premiums, and I have asked you for a 
premium range, I did find it in your HHS report, the premium 
range, $235 a month to $391 a month, this was under the 
assumptions designated as scenario two, average premium of--for 
$50 a day with the two-plus activities a day living trigger, 
that is a pretty stout premium for what really isn't a really 
long-term care policy.
    So I can certainly understand that people would be 
reluctant to voluntarily opt into that program. That is going 
to be an enormous barrier to participation.
    Now, the issue of pre-existing conditions came up, and 
honestly, I think the whole concept of the individual employer 
mandate for the CLASS Act would be wrong. But I honestly don't 
see how you get there without that because unless you coerce 
people to spend what is that multiply up to $4,700 a year, 
unless you coerce that purchase, I can't see anyone in the 
world making that purchase, particularly when you can go to one 
of the large insurers and buy an individual policy, middle of 
the road as far as its benefits and get that for just a little 
over $1,000 a year.on the issue of the independent advisory 
council, has that been named?
    Ms. Greenlee. No, sir.
    Mr. Burgess. Do you have a list of people from which you 
are expecting to draw, or were expecting to draw on their 
expertise to name for that?
    Ms. Greenlee. We had quite a number of people respond to 
the Federal Register notice. A final--a list was never 
finalized. We looked at those names when they first came in. I 
have not looked at them for a while.
    Mr. Burgess. You didn't have a preferred list of people 
that were going to be contacted?
    Ms. Greenlee. We had looked at the list. There are some 
specific requirements in the law that different interest groups 
or sectors be, I guess that is a better description, sectors be 
covered, but I don't have a final list that this was narrowed 
down to.
    Mr. Burgess. Do you think that if this program is unfunded, 
but still in existence, will you still proceed with naming 
those people?
    Ms. Greenlee. I just refer back to my conversation with Mr. 
Pallone. The Secretary said very clearly that we are suspending 
implementation of the program. We want to have a broad 
conversation with a wide range of individuals. I will carry Mr. 
Pallone's request back to the Secretary. I believe we can do 
that in a number of fashions. I don't know that she wants to 
set up an advisory committee when she has already said we are 
not going to move forward to implement.
    Mr. Stearns. The gentleman from Virginia, Mr. Griffith, is 
recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman, I appreciate that. A 
couple of things just in comment to some of the things that 
have been said. I notice that in reading the legal counsel's 
opinion that while they may have been conservative and there 
were areas where they were definitely said you can't go, they 
also had some of the options they said you might be able to 
make an argument, but I appreciate the fact they were 
conservative in the sense that they said, but it is clearly 
challengeable and if it goes to court, and the court rules that 
the program is not set up correctly, it could void the program. 
And that one of the options the court might have is to just say 
whatever moneys are not yet expended get returned to the people 
who bought in, but obviously, a big chunk of the money would 
have already been expended.
    So I do appreciate that because we have had some other 
situations in front of this committee where folks just charged 
in and didn't come back to Congress to get the legal changes 
necessary. And while we may agree or disagree on some of those 
legal changes, if we are going to go forward with something, I 
think it needs to come back to Congress. So I appreciate the 
legal counsel taking a position that recognizes the position of 
Congress.I did also notice that in one of the options, at 
least, there was a preexisting condition requirement that if 
you had a preexisting condition, you had to wait, I think, 15 
years. Seems like an awful long time. And again, it is just, I 
recognize the Secretary's frustration because it is going to be 
hard to get there from here, even if we change some of that 
law.
    I did note one thing in some of the notes that are in front 
of me, and that is, that it appears that ASPI's analysis is 
that the administrative costs should run somewhere between 6 
and 20 percent, with the code on after 3 percent. I would have 
to assume--would I be correct in assuming that that is part of, 
even if it is a small part, that is a part of what makes the 
financial models, the actuarial models not work is that there 
is not a large enough administrative component?
    Ms. Glied. It was a concern that the Federal actuaries 
raised when they met and reviewed the various options that the 
3 percent was not going to be sufficient.
    Mr. Griffith. And then one thing that I might suggest that 
you all take a look at in various programs. I just came from 
the Virginia legislature about a year ago, and just before I 
left, I patroned a bill that allowed us to have Statewide 
zoning ordinances for med cottages. As we look at this issue 
and work together, this is a facility that you put in the 
backyard of a family member for somebody who has two tasks that 
they need assistance on for daily living requirements. It kind 
of is a mix for the person that doesn't have the ability to 
stay in their own home and their family member doesn't have 
room in their home. This gives you kind of a mix. There are 
certain requirements that are required by the Virginia 
Statewide zoning that we got through.
    But needless to stay, it brings jobs to Virginia because we 
are manufacturing these items. And it does it at a lower cost 
than a permanent assisted living facility can do and keeps the 
individual close to their loved ones. So I would recommend that 
maybe not on this program, but on other programs that you all 
keep that in mind or take a look at that as an option. As I 
understand it, North Carolina, with minor exceptions, adopted 
the Virginia law this year. It may be a way that we can save 
money and provide quality care for people, if not in their own 
home, at least in the yard of a family member. I thank you, Mr. 
Chairman, and I yield back.
    Mr. Stearns. And Dr. Cassidy is recognized for 5 minutes.
    Mr. Cassidy. Yes. First, for the record, I would like to 
submit the testimony from Richard Foster, I believe--from the 
CBO, at least--to Tom Harkin's committee dated November 25, 
2009, and I think there was a little bit of an issue as to----
    Mr. Stearns. By unanimous consent, so ordered.
    [The information follows:]

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    Mr. Cassidy. Thank you. I think there were some concerns, 
some questions as to whether CBO had concerns.
    And technically you are right. In the second decade, it 
said it might be cost neutral, but if I go on, and again in the 
spirit of what Governor Bredesen is saying how forthright are 
we being with the American people. The CLASS program would add 
to the budget deficit in the third decade and succeeding 
decades by amounts on the orders of tens of billions of dollars 
for each 10-year period, and the CLASS Act would inevitably add 
to future deficits on a cash basis by more than it reduces 
deficits in the near term, etc., etc.
    Ms. Glied. Is that Mr. Foster speaking?
    Mr. Cassidy. This is the CBO. In my mess of papers, I have 
lost the last page, but it came out of CBO. And this is 
November 2009. So again, were you--I don't know this. I am 
asking. Were you part of the deliberation as to include the 
CLASS Act in the final?
    Ms. Glied. No. I hadn't come to Washington.
    Mr. Cassidy. So you wouldn't know whether Mr. Klein was 
correct in saying that the administration was initially opposed 
to including it, perhaps on the basis of fiscal concern?
    Ms. Glied. I do know that the fact there was this twin test 
in legislation was something that certainly gave the 
administration more reason to go ahead. We were not going to 
proceed. I am struck by the fact that everyone agrees this was 
an enormous need, and that we passed a piece of legislation 
that said given a great deal of uncertainty, we are going to 
let you explore this, figure out if you can make it work and 
then go ahead and address this need. We realize we can't do 
that.
    Mr. Cassidy. The only thing that gives me pause on that is 
that I heard you speak, Ms. Greenlee in times past, very 
impressed with your body of knowledge, as I am with yours, and 
you clearly know what is key to what is a successful program, 
and it is not just us. The GAO has a report that for fiscal 
solvency, you need to have an accrual basis of accounting, not 
a cash flow basis. That is GAO talking about entitlements in 
general.
    We have here on page 39 of your report on the Actuarial 
marketing and legal analysis of the CLASS program, a list of 
the things that would make the program viable as it turns out 
they are everything that the private sector employs, and yet 
you are not allowed to do. So I think that CBO and CMS's 
initial concerns were so kind of grounded in practical 
experience, that it concerns me that that practical experience 
was ignored as a credit of $70 billion was counted towards the 
overall cost of the President's health care bill. That is just 
an aside.
    That said, my concern about that leads me to a concern 
about other things. Clearly a way that insurance is provided to 
others is by an expansion of Medicaid. Ms. Greenlee, I think 
you are from Kansas?
    Ms. Greenlee. Yes.
    Mr. Cassidy. And I think I heard you earlier that you work 
in the Medicaid program?
    Ms. Greenlee. Yes.
    Mr. Cassidy. And I saw that it is bipartisan, that we know 
that there is a problem here. Mr. Deutch, in his testimony, 
spoke about Medicaid being on the chopping block on State 
budgets and stressing Federal, somebody else spoke about the 
labor of the budgets under the cost of Medicaid. What is it 
going to do to the State of Kansas' budget to expand Medicaid 
as the President's health care plan does, and knowing that many 
more people potentially go on long-term care because of this 
expansion. Will that be positive or negative for the State of 
Kansas' budget?
    Ms. Greenlee. Mr. Cassidy, I have been here now for over 2 
years, so I can't give you current information about the impact 
on the State of Kansas. The lieutenant governor from the State 
visited me several months ago, and I know that they, like other 
States, are looking at a managed care option for Medicaid in 
the State of Kansas. I don't have a current budget information.
    Mr. Cassidy. So knowing that you have to be careful in how 
you speak, but let's just again kind of resort to common sense. 
If already, I think as Deutch said, it is on the chopping block 
because of the fiscal strain Medicaid is playing, specifically 
the long-term care aspect of Medicaid, if we are about to 
expand the eligibility thereof, knowing that we also have, as 
former Representative Kennedy said, a tsunami of people who are 
going to qualify, so older population, more people and more 
people eligible, can that do anything but further strap a 
budget which is laboring under the cost of Medicaid?
    Ms. Greenlee. I am sorry, sir, I really can't be responsive 
to the current Kansas situation.
    Mr. Cassidy. I keep on thinking about what Breseden said. 
It is hard to get the American people an honest answer. Not 
that you are being dishonest. Lastly, you are just being so 
totally honest that it is a little disingenuous, I must say. I 
am sorry. That is just my impression.
    Lastly, let me ask--I am out of time. I yield back.
    Mr. Stearns. We have finished our hearing. By unanimous 
consent, I would like to put the document binder in the record. 
Any objection? If not, so ordered.
    [The information follows:]

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    Mr. Stearns. Also I would say to the gentleman from New 
Jersey if indeed he meets with the council as he requested from 
Ms. Greenlee, perhaps we can assume that the Republicans will 
be invited and will be part of that conference. Is that fair to 
say?
    Mr. Pallone. First of all, I would like to see whether or 
not we are even going to have a meeting. I know today I struck 
an optimistic note. So we will see if the optimism holds and we 
actually have a meeting, and then I will get back to your 
question.
    Mr. Stearns. With that optimism, we will close the hearing. 
And I thank you very much for your testimony.
    [Whereupon, at 11:42 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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