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

    STATE OF UNCERTAINTY: IMPLEMENTATION OF PPACA'S EXCHANGES AND MEDICAID
                                   EXPANSION

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

                                    HEARING

                                   BEFORE THE

                             SUBCOMMITTEE ON HEALTH

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   __________

                               DECEMBER 13, 2012

                                   __________

                               Serial No. 112-185

          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         TAMMY BALDWIN, Wisconsin
    CHARLES F. BASS, New Hampshire       MIKE ROSS, Arkansas
    PHIL GINGREY, Georgia                JIM MATHESON, Utah
    STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
    ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
    CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
    GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin
    LEONARD LANCE, New Jersey            Islands
    BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
    BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
    PETE OLSON, Texas
    DAVID B. McKINLEY, West Virginia
    CORY GARDNER, Colorado
    MIKE POMPEO, Kansas
    ADAM KINZINGER, Illinois
    H. MORGAN GRIFFITH, Virginia

                                     _____

                             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   ANTHONY D. WEINER, New York
    LEONARD LANCE, New Jersey            JIM MATHESON, Utah
    BILL CASSIDY, Louisiana              HENRY A. WAXMAN, California (ex
    BRETT GUTHRIE, Kentucky                  officio)
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Michael C. Burgess, a Representative in Congress from the
      State of Texas, opening statement..............................     1
        Prepared statement...........................................     3
    Hon. Bill Cassidy, a Representative in Congress from the State of
      Louisiana, opening statement...................................     4
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     4
    Hon. John D. Dingell, a Representative in Congress from the State
      of Michigan, opening statement.................................     5
    Hon. Phil Gingrey, a Representative in Congress from the State of
      Georgia, opening statement.....................................     6
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     6
    Hon. Tammy Baldwin, a Representative in Congress from the State
      of Wisconsin, opening statement................................     7
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, prepared statement...................................   187
    Hon. Joseph R. Pitts, a Representative in Congress from the
      Commonwealth of Pennsylvania, prepared statement...............   188

                                   Witnesses

    Gary Cohen, Deputy Administrator and Director, Center for
      Consumer Information and Insurance Oversight, Centers for
      Medicare and Medicaid Services, Department of Health and Human
      Services.......................................................     9
        Prepared statement \1\
        Answers to submitted questions...............................   190
    Cynthia Mann, Deputy Administrator and Director, Center for
      Medicaid and CHIP Services, Centers for Medicare and Medicaid
      Services, Department of Health and Human Services..............    11
        Prepared statement...........................................    14
        Answers to submitted questions...............................   205
    Dennis G. Smith, Secretary, Department of Health Services, State
      of Wisconsin...................................................    30
        Prepared statement...........................................    32
        Answers to submitted questions...............................   215
    Bruce D. Greenstein, Secretary, Department of Health and
      Hospitals, State of Louisiana..................................    50
        Prepared statement...........................................    52
        Answers to submitted questions...............................   223
    Gary D. Alexander, Secretary, Department of Public Welfare,
      Commonwealth of Pennsylvania...................................    75
        Prepared statement...........................................    77
        Answers to submitted questions...............................   229
    Joshua M. Sharfstein, Secretary, Department of Health and Mental
      Hygiene, State of Maryland.....................................   104
        Prepared statement...........................................   107
    Andrew Allison, Director, Division of Medical Services,
      Department of Health and Human Services, State of Arkansas.....   119
        Prepared statement...........................................   121
        Answers to submitted questions...............................   235

    ----------
    \1\ Mr. Cohen submitted a joint statement with Ms. Mann.

                               Submitted Material

    Letter, dated December 12, 2012, from American Academy of Family
      Physicians, et al., to Senators and Members of Congress,
      submitted by Mrs. Capps........................................   146
    Letter, dated December 5, 2012, from Academic Pediatric
      Association, et al., to House and Senate leadership, submitted
      by Mrs. Capps..................................................   148
    Letter, dated December 12, 2012, from Lucinda Ehnes, President
      and Chief Executive Officer, California Children's Hospital
      Association, submitted by Mrs. Capps...........................   156
    Letter, dated July 9, 2012, from Rick Perry, Governor of Texas,
      to Kathleen Sebelius, Secretary, Department of Health and Human
      Services, submitted by Mr. Burgess.............................   158
    Article, dated June 29, 2012, ``This Week in Poverty: 89,000
      Children in Pennsylvania Lose Medicaid,'' by Greg Kaufmann for
      The Nation, submitted by Ms. Schakowsky........................   177

    STATE OF UNCERTAINTY: IMPLEMENTATION OF PPACA'S EXCHANGES AND MEDICAID
                                   EXPANSION

                                  ----------

                          THURSDAY, DECEMBER 13, 2012

                      House of Representatives,
                                Subcommittee on Health,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:05 a.m., in
    room 2123 of the Rayburn House Office Building, Hon. Michael
    Burgess (vice chairman of the subcommittee) presiding.
        Members present: Representatives Burgess, Shimkus, Murphy,
    Blackburn, Gingrey, Latta, Lance, Cassidy, Guthrie, Griffith,
    Pallone, Dingell, Engel, Capps, Schakowsky, Baldwin, Matheson,
    DeGette, Christensen, Sarbanes, and Waxman (ex officio).
        Staff present: Gary Andres, Staff Director; Matt Bravo,
    Professional Staff Member; Howard Cohen, Chief Health Counsel;
    Nancy Dunlap, Health Fellow; Paul Edattel, Professional Staff
    Member, Health; Julie Goon, Health Policy Advisor; Sean Hayes,
    Counsel, Oversight and Investigations; Robert Horne,
    Professional Staff Member, Health; Ryan Long, Chief Counsel,
    Health; Carly McWilliams, Legislative Clerk; Monica Popp,
    Professional Staff Member, Health; Andrew Powaleny, Deputy
    Press Secretary; Chris Sarley, Policy Coordinator, Environment
    and Economy; Heidi Stirrup, Health Policy Coordinator; Phil
    Barnett, Democratic Staff Director; Alli Corr, Democratic
    Policy Analyst; Ruth Katz, Democratic Chief Public Health
    Counsel; Purvee Kempf, Democratic Senior Counsel; Elizabeth
    Letter, Democratic Assistant Press Secretary; Karen Nelson,
    Democratic Deputy Committee Staff Director for Health; Anne
    Morris Reid, Democratic Professional Staff Member; and Matt
    Siegler, Democratic Counsel.

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

        Mr. Burgess. I call the hearing to order, ``The State of
    Uncertainty: The Implementation of the Patient Protection and
    Affordable Care Act's Exchanges and Medicaid Expansion.'' This
    hearing is under the jurisdiction of the Energy and Commerce
    Committee.
        I do want to observe as we start, the chairman of the
    subcommittee, Mr. Pitts, is ill today and we all of course wish
    and pray for his speedy recovery, and I hope that is well
    underway and we look forward to his return here to join us in
    the Congress next week.
        In the meantime, it has been 1,000 days since President
    Obama signed the Affordable Care Act into law. The Obama
    administration has not provided critical information to Members
    of Congress, to the States, or to the health plans that they
    need to begin implementing the health care law's exchanges. We
    know Medicaid expansion is going to happen but we don't know
    what it is going to look like. We know insurance market reforms
    are occurring but we are not sure about what is going to be
    expected of the plans themselves.
        The President's law intends that the exchanges will be
    ready to begin enrollment by October 1st of next year. In less
    than 10 months the administration asserts they will have a
    fully functioning, technologically advanced system by which
    Americans will be able to enroll in an exchange. The
    administration has yet to explain how it will share information
    between the three different Federal agencies that are involved
    in determining eligibility for the exchange: Treasury, DHS and
    Health and Human Services. And further, the administration has
    yet to explain how it will distribute the income subsidies, the
    cash to the beneficiaries to allow them to purchase coverage in
    the exchange, or how a State will be able to afford the
    administrative costs to deal with eligibility changes.
        While the administration has the ability to push back the
    dates of implementation for Federal provisions, the States and
    the plans that are required to meet statutory standards do not
    have that flexibility. It was not until last week that the
    administration released the proposed rules regarding the State
    health insurance exchanges and the essential health benefits.
    However, the latest proposed rules and the other 13,000 pages
    of rules that the administration has released on the Affordable
    Care Act fail to address the questions that the States and the
    policymakers have asked since the law was signed.
        Medicaid accounts for a quarter of most State budgets.
    Governors cannot be expected to plan for major changes and have
    legislative authority to prepare unless the administration
    makes clear the basic ground rules. Many State legislatures
    only meet for a limited time each year, or in the case of my
    State, they only meet every other year, and that time will be
    quickly evaporated while they are awaiting instruction on these
    rules.
        There is a lot to be sorted out between now and the end of
    the year in Congress in general but in this issue in
    particular. The uncertain regulatory environment and the
    overall lack of response from the Department of Health and
    Human Services is not encouraging to States or to health plans
    to move forward in cooperation with the agency. And let us be
    honest: time is running out and the future of our health care
    system, indeed, the future of the health of America's patients
    becomes more uncertain every day.
        It is my hope that this hearing will bring light to the
    questions that the States and Congress have been asking of the
    administration for the past 2-1/2 years and provide the States
    with an opportunity to provide their perspective as they
    attempt to plan for the unknown effects of the Patient
    Protection and Affordable Care Act.
        [The prepared statement of Mr. Burgess follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Burgess. At this point I would like to yield the
    balance of the time to the Member from Louisiana, Dr. Cassidy.

      OPENING STATEMENT OF HON. BILL CASSIDY, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF LOUISIANA

        Mr. Cassidy. Thank you, Dr. Burgess.
        First, I would like to thank Mr. Greenstein from my own
    State for being here and all the other panelists, and I will
    tell you, I have multiple concerns about how this is being
    implemented but I will say it is principally today about how
    this is going to affect the average American family. There is a
    McKinsey quarterly report from February 2011 that suggests
    about 30 percent of employers will definitely or probably put
    their employees in the exchange. Now, when I speak to brokers,
    they tell me most people opt for the bronze level, which has a
    60 percent actuarial value. Then I pull up this from ASBE,
    which is a government agency which I can't recall the acronym
    for, in which it shows that roughly 98 percent of these workers
    have actuarial values of 80 percent or more. We have got a law
    inducing that we put people into an exchange in which the
    actuarial value of their policy will decrease from 80 percent
    to 60 percent. I am not quite sure how this serves the average
    American family. And just to put this in perspective, we know
    that actuarial value has a $2,000 to $4,000 deductible and an
    out-of-pocket of $6,350 before it is completely paid for. Now,
    if we are trading 80 percent for 60 percent, I don't see the
    value for the American worker, and I would love to discuss
    today how all this was determined.
        I yield back. Thank you.
        Mr. Burgess. The gentleman yields back his time. The Chair
    now recognizes the ranking member of the subcommittee, Mr.
    Pallone of New Jersey, 5 minutes for your opening statement,
    sir.

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

        Mr. Pallone. Thank you, Doctor, or I guess I should say
    Chairman Burgess. Thank you. You like doctor better? Polls
    better? OK.
        Let me start out by saying that I am beginning to learn the
    Republican playbook on the Affordable Care Act. First they
    spent a year and a half holding repeal votes, and when that
    didn't work, they advocated that the Supreme Court would most
    certainly reverse the law, and of course, that didn't happen,
    and finally they crossed their fingers and hoped that the
    President would lose the election, and when all else failed,
    their next move now is to delay implementation under the guise
    of lack of information.
        I want to stress that the President won the election.
    Implementation is going to move forward and the landmark health
    care law will continue to have a positive effect on millions of
    people's lives, and I just hope that I will be here one day
    when the Republicans finally realize that we did the right
    thing, the world is not coming to an end, and in fact, the
    Nation will be better because of the Affordable Care Act.
        Now, I wanted to clear some things up for the record. One
    of the critical goals of the Affordable Care Act was to improve
    access to health care for millions of uninsured and
    underinsured Americans because a healthy nation is a successful
    nation, and it simply is immoral to allow our fellow Americans
    to suffer because they can't access health insurance. A key
    feature to accomplish that was expanded Medicaid to help cover
    millions of low-income Americans, and when the Supreme Court
    allowed States to choose whether or not to accept the Medicaid
    expansion provision, Republican governors became nothing but
    openly hostile. But there is no question that accepting the
    Medicaid expansion is a good deal for States because it is a
    boon to the States' uninsured and its taxpayers. Today we are
    going to hear from both Maryland and Arkansas, two very
    different States, about their own cost-benefit analysis that
    proved this point with dramatic facts and figures.
        Another critical piece of the ACA is the creation of health
    insurance exchanges, which beginning in 2014 will provide a
    stronger marketplace that provides coverage options for
    millions of Americans, and plenty of States have forged ahead
    with implementation of their State-based or partnership
    exchanges. Now, those States that have not are simply using
    HHS's regulation as an easy excuse. In fact, yesterday experts
    consulting with States on exchange development insisted that
    there is enough information and time to build an exchange.
    Meanwhile, as we will hear today from the director of CCIIO,
    the administration has been steadily working with States,
    providing flexibility, guidance and resources.
        Now, a lot more work needs to be done, and I recognize that
    challenges do exist, but implementation of the Affordable Care
    Act puts this Nation on a path to better health, and we must
    not allow States to continue to play politics, which is what
    some are doing. I expect a lively discussion today, so I
    appreciate the witnesses' participation.
        I did want to yield initially to the gentleman from
    Michigan, Chairman Dingell.

    OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Dingell. I thank my good friend, and I commend you, Mr.
    Chairman, for holding this hearing today.
        In my entire career, I have fought to secure the
    affordable, quality health care our citizens deserve and need.
    The passage of the Affordable Care Act by the House and Senate,
    ratification by the President and subsequent upholding of the
    law by the Supreme Court brought to fruition a dream that began
    with my father long before me.
        The health insurance exchanges and Medicaid expansion are
    two fundamental provisions of ACA that will achieve our goal of
    providing affordable health care of high quality to every
    American. Through the exchange, patients and small businesses
    will be able to easily opt for a health plan that best suits
    their needs, and the Medicaid expansion will provide millions
    of uninsured Americans will access to our Nation's world-class
    health care system which heretofore has lacked the means of
    paying for it. Therefore, it is critical that we get them
    right, and I hope that this hearing will enable us to do so.
        Mr. Burgess. The gentleman yields back. The Chair now
    recognizes the gentleman from Georgia, Dr. Gingrey, for the
    purpose of an opening statement.

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

        Mr. Gingrey. Mr. Chairman, I thank you.
        What the distinguished Member from Michigan didn't say was
    that the Obamacare bill will cost $1.7 trillion and result in
    increased costs of health care, and it does not bring it down.
    So I find it remarkable, frankly, that 33 months after the
    passage of this bill, PPACA, a hearing like this is even
    necessary. We have States including my own of Georgia still
    looking for direction from HHS on provisions that come into
    effect within the next year. This type of uncertainty makes it
    impossible for such States to successfully budget for the
    future. What is more, State officials are left with no good
    options as HHS imposes arbitrary deadlines on them in regard to
    creation of the exchanges. That is why our State of Georgia,
    our Governor Deal, who served on this committee and indeed was
    chairman of this Health Subcommittee, has rejected the idea of
    the State of Georgia setting up its own exchange because the
    restrictions or handcuffs that are put on the States by HHS
    just almost make it prohibitive. And the same thing in regard
    to Medicaid expansion. Our State has taken the option, and
    again, I think Governor Deal is correct in doing this, in not
    expanding Medicaid because of the bottom-line cost to the State
    over an extended period of time.
        Unfortunately, this hearing today is very much needed. I
    hope that we are able to find some real answers from CMS which
    allow States to indeed plan for the future.
        And with that, Mr. Chairman, if there is anyone on our side
    that would like to have time yielded, I will be happy to do
    that. Otherwise I will yield the balance back.
        Mr. Burgess. Seeing none, the gentleman yields back. The
    Chair recognizes the ranking member of the full committee, the
    Honorable Mr. Waxman of California, for purposes of an opening
    statement.

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

        Mr. Waxman. Thank you, Mr. Chairman.
        In March of 2010, after decades of trying, Congress finally
    passed landmark legislation that extends access to affordable,
    quality health insurance to all Americans, and since then, the
    law has already provided remarkable benefits for American
    families. It has allowed over 6 million young adults to stay on
    their parents' insurance. It has extended a lifeline in the
    form of the preexisting coverage insurance plan to over 90,000
    people. It has lowered prescription drug costs for 5.5 million
    seniors and people with disabilities. It has given 86 million
    people in the private market and in Medicare access to
    preventive health benefits at no cost. And it has eliminated
    lifetime insurance company limits on coverage for 105 million
    individuals. That is an outstanding beginning. And now we stand
    on the threshold of full implementation.
        Despite the law's many benefits, it has faced united
    opposition from the Republican Party since the day it was
    passed. There have been over 30 votes to repeal this law. There
    have been numerous court challenges to the law. There are
    States that have steadfastly refused to move forward to assure
    smooth and effective implementation.
        Yet none of these efforts have been successful. The House
    votes proved to be partisan political posturing. And the
    Supreme Court declared the law constitutional. Let us be clear:
    the Affordable Care Act is the law of the land. We should all
    be united in seeing that its implementation works.
        As we will hear today, HHS and CMS have done their job.
    They have provided a constant stream of assistance and
    information to those taking steps to make this law their own.
        For Some States, no information will ever be enough. And
    that is the tragedy of politicizing a law that will benefit so
    many Americans.
        But other States are acting responsibly. Two of those
    States are here today. And there are many others. Just this
    week, for example, Nevada's Republican Governor announced that
    Nevada will move forward with the Medicaid expansion. The
    Republican Governor of Idaho said the State will set up a
    State-based exchange.
        I welcome and look forward to hearing from all of our
    witnesses. I am particularly interested in testimony from Dr.
    Sharfstein from Maryland and Mr. Allison from Arkansas on what
    they have been able to accomplish with regard to the ACA
    expansions. And I would also like to thank Mr. Cohen and Ms.
    Mann for their work, the work they have already done and the
    work we expect from them in the future.
        The Affordable Care Act is a solid law that will improve
    our Nation's health and health system for decades to come. Let
    us move forward and work together to implement it efficiently
    and effectively. Why do we have to have this political fight
    over and over again? We have a law that is doing good already.
    It is going to do so much more if we make it work effectively,
    and it is time to stop the fighting about it and work together.
        I would like to now yield the rest of my time to
    Representative Baldwin from Wisconsin.

     OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF WISCONSIN

        Ms. Baldwin. Thank you, Mr. Waxman, and thank you to our
    chairman and Ranking Member Pallone as well as all of my
    colleagues on this subcommittee. I want to appreciate your
    dedication to health care issues, and it has been an honor
    serving with you in the House of Representatives.
        On the topic before us today, the Affordable Care Act is
    the law of the land, and it is now time for all of us to come
    together and put politics aside and make American's new health
    law work for the American people. And that includes expanding
    health care coverage through Medicaid to those who need it
    most, and that includes creating health insurance exchanges
    that will provide individuals and small businesses with
    quality, affordable insurance options. If we all do our part,
    access to affordable health care will be within reach for all
    Americans and small businesses, strengthening their economic
    security.
        To that end, I am pleased to be in the same room today with
    leaders who are integral to implementing the Affordable Care
    Act. Our esteemed witnesses from HHS and State officials are
    making decisions that impact the lives of citizens, citizens
    who deserve to have us put progress ahead of politics, and I
    ask that in our discussions today, we keep those Americans in
    mind.
        I look forward to your testimony, and thank you for being
    here, and yield back.
        Mr. Burgess. An observation from a Member of this side of
    the dais is, you are already starting to sound like a Senator
    and you filibustered a little long, but notice the Chair was
    very preferential and let you go. I hope the courtesy will be
    reciprocated when you are in the august higher house. The
    gentlelady's time is expired.
        I do want to welcome our witnesses here today and make the
    observation that there will be a vote on the floor at some
    point. We generally allow 5 minutes for an opening statement,
    generally try to be pretty flexible with that. This morning I
    am going to ask if you would try to stay within the confines of
    that time so that when votes come, we perhaps could have gotten
    through the entire panel. We have a single panel today but it
    is a large one but it is a very distinguished one.
        Our first witness will be Mr. Gary Cohen, who is the
    Director for the Center for Consumer Information and Insurance
    Oversight at the Centers for Medicare and Medicaid Services,
    United States Department of Health and Human Services. We are
    also joined this morning by Ms. Cindy Mann, who is the Deputy
    Administrator and Director for the Center for Medicaid and CHIP
    Services within the Centers for Medicare and Medicaid Services.
    I am very grateful to acknowledge the presence of Mr. Dennis
    Smith, who is the Secretary of Department of Health Services,
    State of Wisconsin. We are also joined this morning by Mr.
    Greenstein, Secretary, Department of Health and Hospitals for
    the State of Louisiana. Mr. Gary Alexander, who is the
    Secretary of the Department of Public Welfare, the Commonwealth
    of Pennsylvania, Dr. Joshua Sharfstein, the Office of
    Secretary, very familiar to this committee from his time at the
    FDA, now works at the Department of Health and Mental Hygiene
    in the State of Maryland. We are also very fortunate to have
    Dr. Andrew Allison, the Director of the Division of Medical
    Services in the Department of Human Services for the State of
    Arkansas.
        Mr. Cohen, sir, we will begin with you, 5 minutes for your
    opening statement, sir.

     STATEMENTS OF GARY COHEN, DEPUTY ADMINISTRATOR AND DIRECTOR,
       CENTER FOR CONSUMER INFORMATION AND INSURANCE OVERSIGHT,
       CENTERS FOR MEDICARE AND MEDICAID SERVICES, DEPARTMENT OF
     HEALTH AND HUMAN SERVICES; CYNTHIA MANN, DEPUTY ADMINISTRATOR
     AND DIRECTOR, CENTER FOR MEDICAID AND CHIP SERVICES, CENTERS
     FOR MEDICARE AND MEDICAID SERVICES, DEPARTMENT OF HEALTH AND
       HUMAN SERVICES; DENNIS G. SMITH, SECRETARY, DEPARTMENT OF
       HEALTH SERVICES, STATE OF WISCONSIN; BRUCE D. GREENSTEIN,
        SECRETARY, DEPARTMENT OF HEALTH AND HOSPITALS, STATE OF
     LOUISIANA; GARY D. ALEXANDER, SECRETARY, DEPARTMENT OF PUBLIC
     WELFARE, COMMONWEALTH OF PENNSYLVANIA; JOSHUA M. SHARFSTEIN,
     SECRETARY, DEPARTMENT OF HEALTH AND MENTAL HYGIENE, STATE OF
      MARYLAND; AND ANDREW ALLISON, DIRECTOR, DIVISION OF MEDICAL
       SERVICES, DEPARTMENT OF HEALTH SERVICES, STATE OF ARKANSAS

                        STATEMENT OF GARY COHEN

        Mr. Cohen. Thank you, Chairman Burgess, Ranking Member
    Pallone and the members of the Health Subcommittee for having
    me here today to speak about implementation of the Affordable
    Insurance Exchanges.
        I have the privilege of serving as Director of the Center
    for Consumer Information and Insurance Oversight in the Centers
    for Medicare and Medicaid Services. I oversee Federal
    implementation of the exchanges as well as many of the
    provisions of the Affordable Care Act that are working to
    ensure more Americans have access to affordable, quality health
    insurance.
        I am confident that States and the Federal Government will
    be ready in 10 months when consumers in all States can begin to
    apply for quality, private health insurance through the
    Affordable Insurance Exchanges. Whether a State chooses to run
    its own exchange, partners with CMS or defers to the federal
    government to operate an exchange, consumers and small
    employers in every State and the District of Columbia will be
    able to shop for, select and enroll in high-quality, affordable
    health insurance beginning on October 1, 2013.
        This is a groundbreaking time for health care in our
    country. Many families will have health insurance for the first
    time, and many people who lost their insurance when they
    changed jobs or became sick will again have the security of
    knowing that their health care needs will be met.
        I know States are ready because they have the information
    and resources they need to decide whether to establish their
    own exchange or whether they need the federal government, at
    least at first, to take on some of the responsibilities of
    operating the exchange in their State. States that want to move
    forward are moving forward. For example, on Monday we announced
    that six States have already made enough progress in setting up
    their own exchanges that we have conditionally approved their
    plans.
        While there is more work to do before open enrollment in
    October, these six States, including Maryland, which one of my
    fellow panelists is representing, have shown that they are on
    track to meet all exchange deadlines.
        We are pleased that many States are taking leadership roles
    and implemented exchanges in their States. That is what the
    Affordable Care Act envisioned: States taking the lead. We will
    make more announcements about State progress in the weeks and
    months to come. We hope every State will take an active role in
    operating its exchange.
        Since the enactment of the Affordable Care Act, we have
    been working hard with States to prepare for the day when
    exchanges will be open for business. We began issuing guidance
    for the States about the exchanges over 2 years ago in November
    of 2010. Since then, we have released regulations, guidance and
    fact sheets including a final establishment rule and the
    essential health benefits proposed rule as well as detailed IT
    information about the specific processes for implementing
    exchanges. My office has been in contact with States every day
    in order to provide technical assistance and answer questions.
    We have held hundreds of hours of webinars, teleconferences and
    meetings at which thousands of State workers have participated.
    And States are helping each other as well, sharing many tools
    and documents with other States to help each other get the job
    done.
        In addition to guidance and hands-on assistance, we have
    been working to ensure that States have the resources they need
    starting with Exchange Planning Grants and progressing on to
    Establishment Grants. States that were eager to move forward to
    establish an exchange could qualify for an Early Innovator
    Grant as early as October 2010 and the general funding for
    exchange implementation has been available since January of
    2011.
        To date, 34 States and the District of Columbia have
    received about $2.1 billion in grants to fund their process and
    building their exchanges. These grants are available through
    2014 to help States build exchanges or fund first-year start-up
    activities. In addition, States that choose to partner with the
    federal government to build their exchange may receive these
    grants to establish State functions that are performed in
    support of the federally facilitated exchange.
        Many States including the six we conditionally approved
    earlier this week are moving forward, and we are working to
    support them. At the same time, we are working with States that
    want to partner with us by taking on some of the key
    responsibilities of operating an exchange, and we will be ready
    to operate a federally facilitated exchange in States that
    choose not to pursue a State-based or partnership exchange at
    this time. If a State elects to have a federally facilitated
    exchange at first, it is not a permanent choice. States may
    choose to operate a partnership exchange or State-based
    exchange in 2015 or beyond.
        Now, in operating the federally facilitated exchange, it is
    our goal to preserve the traditional State role as insurance
    regulator and not to duplicate State regulatory activity while
    also providing help for consumers based on where they live who
    have questions while selecting or enrolling in a health plan in
    their State's exchange.
        We have made significant progress in developing the IT
    systems needed for the federally facilitated exchange including
    systems for determination of eligibility for tax credits,
    enrollment in health plans and operation of the reinsurance,
    risk adjustment and risk corridor programs, which will help
    keep coverage affordable. We are now beginning to test these
    services so we can ensure they will be up and running in 10
    months.
        Since the federally facilitated exchange will need to
    interact with State Medicaid and CHIP agencies, we have been
    working with States on the technical details of those
    interactions and have held webinars with all States on these
    issues. States that defer to a federally facilitated exchange
    will not have to pay for Federal operating costs, and those
    States can apply for Federal funding for any State functions
    that they perform in support of the federally facilitated
    exchange.
        This hard work, both in CMS and in the States, is beginning
    to pay off. As I said, six States have already demonstrated
    their readiness to stand up and operate exchanges. My office
    stands ready to aid any other States who would also like to
    move forward in establishing exchanges to offer affordable,
    accessible, quality private health insurance for their
    citizens.
        Thank you.
        [The prepared statement of Mr. Cohen follows Ms. Mann's
    testimony.]
        Mr. Burgess. Thank you. The gentleman's time is expired.
        Ms. Mann, you are recognized for 5 minutes for the purposes
    of an opening statement.

                       STATEMENT OF CYNTHIA MANN

        Ms. Mann. Thank you, Chairman Burgess, Ranking Member
    Pallone and members of the subcommittee, for the opportunity to
    testify today.
        For Medicaid, the implementation of the Affordable Care Act
    is occurring in the context of an existing program that is
    undergoing rapid change. Change is being driven by the broader
    transformation in the private health care marketplace by States
    that are focused on changing the way that care is delivered and
    paid for and by Federal action, both legislative action and
    administrative action. We at CMS have a clear focus on helping
    State Medicaid programs improve care delivery and reduce cost
    through those improvements. There is no one-size-fits-all
    model. Medicaid's flexibility and the fact that it is run by 56
    different jurisdictions assure that innovation is unfolding in
    different ways across the country.
        With this backdrop, let me turn to the initiatives that are
    underway to promote timely implementation of the Affordable
    Care Act and the Medicaid provisions in that Act. People are
    often surprised to learn that Medicaid does not already cover
    all low-income people. Its coverage of children and pregnant
    women is robust, and most of its spending is devoted to care
    provided to the elderly and people with disabilities but
    millions of low-income parents are not eligible for Medicaid,
    and before the new law, other adults weren't eligible at any
    income level except through a waiver. The Affordable Care Act
    filled this gap and helps to establish a simplified,
    coordinated system of coverage. It does so by establishing one
    application, one set of eligibility rules that will apply to
    the Medicaid program, to the Children's Health Insurance
    Program and to subsidies available on the exchange in the form
    of the premium tax credit, and by having a coordinated system
    for determining eligibility. Consumers will be able to apply,
    be found eligible for the appropriate program and enroll in a
    health plan without delay, but as we all know, much work is
    needed to implement these changes, and for States to be
    successful, they do need guidance and support from CMS. We have
    been working aggressively to provide that guidance and support.
        In April of 2011, we released a final rule that increased
    the support we provide for the development and operation of
    State Medicaid eligibility systems. Forty-eight States and the
    District of Columbia have received approval for that funding.
    In March 2012, we issued a final regulation covering all of the
    major new income rules effective in the Medicaid and CHIP
    program that will be effective in 2014, and we did that
    regulation at the same time that my colleagues in CCIIO issued
    their income rules so that States would have the full array of
    rules available at the same time as they moved forward to
    implement. This fall we released comments for the elements of
    the new application and we are continuing to consult with
    States and others as we finalize that application. We have
    issued guidance on the data services hub and ways in which
    State Medicaid and CHIP programs will interface with the hub as
    well as with the federally facilitated exchange as applicable
    in a given State. And last month, we issued guidance on the
    flexibility States have to construct their Medicaid benefit
    package that will be available to newly eligible adults.
        In addition to this guidance, we have been creating and
    sharing tools that help States move forward. We have shared,
    for example, a verification plan with States so that they can
    help construct their verification rules in the way that they
    design them to be consistent with our overall regulations. We
    have sent to each State the net income standards and disregards
    that will be applicable in their States and that will need to
    be converted to the new rules.
        Throughout the years, we have had a particular focus on
    helping States accelerate their system builds to save time and
    resources. Through various venues, we are making our
    development products available to States and facilitated States
    sharing their system artifacts with each other, with CMS making
    direct links depending upon a State's design objective and the
    vendors that they are using. Complementing these efforts, we
    have conducted more than 20 webinars with States on 2014
    implementation and established a State operational technical
    assistance team for each State, which consists of a
    multidisciplinary team of CMS experts on systems, eligibility,
    benefits and outreach, so each State has one-stop shopping in
    terms of answering the questions that they individually and
    uniquely have. Since this summer, we have conducted 200 calls
    with States.
        It is important to say that the guidance and tools we have
    made available, and will continue to make available, have been
    created with substantial assistance from States themselves. We
    have numerous State work groups and learning collaboratives on
    a wide variety of topics. The vast majority of States, though
    not every State, has participated in one or more of these work
    groups. We think States have gotten the value from these work
    groups. We know we have, and we appreciate their assistance and
    contribution.
        The Supreme Court's decision did not alter the importance
    of any of this work. The decision left intact the provisions of
    the law other than the penalty provision relating to the new
    adult coverage. What the Court did was to make the decision to
    take up the Medicaid coverage expansion for low-income adults
    voluntary with each State. States are considering this
    important question. Soon after the Court's decision, Secretary
    Sebelius wrote to the governors to say there was no deadline
    for when a State had to make the decision and that the Court's
    ruling left fully intact the very significant Federal financial
    support available for that expansion. In a second letter, we
    confirmed to States that not only did they have the decision to
    decide when to come in and if to come in, but if they did
    decide to adopt the expansion, they could later drop it, and we
    also noted that the enhanced Federal funding for systems
    modernization would remain available to States without regard
    to whether a State decides to expand coverage.
        In mid-November, we issued further questions and answers,
    and on December 10th, we issued a comprehensive set of Q's and
    A's on a range of exchange and Medicaid matters. The releases
    continue as does the ongoing intensive technical assistance and
    support. Many States have been able to take the guidance, the
    tools, the technical support we are providing and move forward.
    This is a big job, and we are very much appreciative of all
    that needs to get done at the State level.
        Let me assure you that we are eager to work with every
    single State no matter what their current stage of development
    may be, and I join Gary Cohen in saying that we are confident
    that every State can be ready in time for open enrollment on
    October 1st.
        Thank you.
        [The prepared statement of Mr. Cohen and Ms. Mann follows:]

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        Mr. Burgess. Time is expired. Let me just note that the
    bells are signaling that the House is in recess subject to the
    call of the Chair. It is not a vote.
        So I will recognize Mr. Smith for 5 minutes, sir.

                      STATEMENT OF DENNIS G. SMITH

        Mr. Smith. Thank you, Mr. Chairman. It is a pleasure to be
    with you and all the members of the subcommittee today. I thank
    Senator-elect Baldwin for being here and congratulate her. We
    look forward to your service in the Senate, ma'am.
        I want to preface my remarks. I have a lengthy statement
    for the record, and really did take my statement from the
    perspective of implementation. I bring with that perspective
    two things. First, Wisconsin already has done much of the work
    that the Nation is going to be catching up to. We have 90
    percent insurance coverage in the State, over 90 percent if you
    add in the people who are today already eligible for Medicaid.
    If they simply showed up and enrolled, we would have 93 percent
    coverage for the State. We also have, I think, been one of the
    leaders in integrated eligibility systems in which people can
    apply on the Internet as well as by mail, phone, and of course
    face to face. So we have done a lot of the work of what to
    expect an exchange would be faced with.
        And I also bring experience from implementation at the
    Federal level. I was at the Centers for Medicare and Medicaid
    Services shortly after the Medicare Modernization Act of 2003
    was passed, so was charged with part of the responsibility of
    preparing for implementation of the drug benefit. I would say
    CMS has a much more daunting job today than what we did in 2003
    and yet in 2003 we were adjusting through the very last minute
    and in fact, even months into it, we still had State partners
    assisting the Federal Government because we couldn't quite pull
    it off all at once. But at that point in time, we had another
    eligible system called the Social Security Administration as a
    major partner that was trusted by our senior citizens. We had
    many things that were already intact. We knew exactly who we
    were enrolling. We were simply extending a new benefit to a set
    group of people. We knew a lot about their health care. So CMS
    has a far more daunting job than what we were charged with at
    that point in time.
        There are lots of good people doing their very best at CMS.
    I do not envy for the job that they have. But from the
    perspective that I have been looking at this throughout, that
    we take deadlines seriously. The deadline that States faced was
    the Secretary of HHS was going to start reviewing States
    January 2013, as in next month, to see if we were going to be
    ready. We took that deadline very seriously and decided a year
    ago that that job was too big, and I would say today, we still
    do not know who is eligible, who will get paid, how will cost
    sharing be transferred between the Federal Government to a
    health plan or to someone else. We do not--again, all of the
    rules and everything else, we have still some very fundamental
    things. At the end of the day, you are trying to connect a
    buyer to a seller, and the fundamental things that are required
    to do that are not yet in place. So we would not have been
    ready to have that review. We took that deadline very
    seriously.
        The Wisconsin experience again, we submitted as part of my
    statement real-life eligibility standards of what is going to
    be faced out there in converting to Modified Adjusted Gross
    Income, MAGI. MAGI inherently has marriage penalties involved
    in it. You are going to have different outcomes for similarly
    situated households making the very same income, and you are
    very going to have different outcomes of whether or not
    different members of the family are going to be eligible for
    Medicaid, whether they are going to be eligible for the tax
    credit or not eligible at all. I think when some of those
    inequities start coming to light, there are going to be a lot
    of unhappy people. I think in the Federal exchange again, and I
    gave some of our Wisconsin experience in terms of volume of
    what needs to be anticipated, we don't know again, call
    centers, who is that going to be for, what are the standards to
    be able to answer the phone in what period of time. The idea
    that you are going to train a whole set of eligibility workers
    who are going to know Wisconsin's Medicaid eligibility, it is a
    little hard to accept that, given the short period of time.
    Again, we are 10 months away.
        Finally, affordability. Again, with the agreement of our
    partners at the Federal Government, we have been since last
    July modeling affordability. That is, we have been applying the
    percentage of income towards premiums because, again, Wisconsin
    has already expanded eligibility. We have parents, caretakers,
    adults up to 200 percent of the Federal poverty level, people
    on transitional medical assistance who have income well above
    200 percent of the Federal poverty level. So we have been
    modeling those premiums, and again, that experience, I think,
    needs to give everyone pause for what we have found. People at
    the lower income level, they aren't thinking in terms of
    percentage of income. They think in dollar amounts: how much
    money is this going to cost me on a monthly basis. The good
    news at the lower income levels, we predicted pretty accurately
    what they were going to be willing to pay on average amounts of
    around $59 a month for their care, for their premium, and
    again, this is just the premium, this is not cost sharing. That
    is going to be applied on top of that. But when you get above
    200 percent and that dollar amount has now gone above $200 a
    month, individuals have dropped by half. The law does not
    determine what affordability is. People will determine what
    affordability is, and I think it is going to be a vastly
    different experience.
        Thank you.
        [The prepared statement of Mr. Smith follows:]

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        Mr. Burgess. Thank you. Time is expired.
        I recognize Mr. Greenstein for 5 minutes for purposes of an
    opening statement, sir.

                    STATEMENT OF BRUCE D. GREENSTEIN

        Mr. Greenstein. Thank you, and good morning, Vice Chairman
    Dr. Burgess and Ranking Member Pallone and the distinguished
    members of the subcommittee. Thank you for the invitation to
    testify on Louisiana's position regarding the implementation of
    the Patient Protection and Affordable Care Act, PPACA,
    particularly as it relates to exchanges and Medicaid expansion.
        My name is Bruce Greenstein. I am the Secretary of the
    Louisiana Department of Health and Hospitals, and Senior Health
    Policy Advisor to Bobby Jindal. Earlier in my career at CMS
    during the Bush administration, I oversaw Medicaid programs in
    the Northeast and led the Federal Government's efforts to
    reform the Medicaid programs in several States. In fact, I have
    two of my previous bosses here on the panel.
        In my current role, I have broad responsibility over an
    array of health service areas including Medicaid, behavioral
    health, public health and disability and aging services. Before
    I begin, I would like to pause to recognize the position that
    we are in. It feels somewhat awkward to be here testifying on
    the implementation of one of the largest expansions of
    entitlement programs in nearly 50 years at the same time as
    ongoing discussions about Federal spending reductions to avert
    the fiscal cliff and raising the debt ceiling takes place. It
    is a little bit of a parallel universe.
        Nevertheless, we are here. As you know, Louisiana has
    continually shared its concerns regarding the practical and
    policy ramifications of PPACA. Our decision not to assume the
    risk of building a State-based exchange is not the product of
    political positioning, rather it was made after careful
    analysis of the laws and regulations.
        Beyond the past and ongoing legal challenges of the law, we
    have broad concerns about PPACA as policy. While the concept of
    a health insurance exchange is a good one, the PPACA-defined
    exchanges provide for rigid Federal control over coverage
    options available to consumers, raising costs and limiting
    choice. In fact, a study recently released by AHIP and the
    Louisiana Association of Health Plans estimates that PPACA
    premium tax will force policyholders in my State to pay over
    $2,000 more for single coverage and $4,500 more for family
    coverage for individuals over the next 10 years. Similar
    increases are noted for small and large group employers. This
    is a significant burden on individuals and families in
    Louisiana and across the country.
        Beyond these concerns, there are major practical and
    implementation hurdles. With guidance having been largely
    delayed or altogether missing, the October 1, 2013, deadline to
    begin open enrollment seems unrealistic, considering the scope
    and complexity of building an exchange. The FAQs released
    earlier this week is certainly helpful but it is simply too
    little and too late.
        The State's decision not to build an exchange should not be
    taken as general unwillingness to tackle a complex reform
    project. Rather, the number of remaining concerns and
    unanswered questions simply do not give us the needed
    confidence. Regardless of the type of exchange that will
    operate within a State, there are five key issues fully
    outlined in my written testimony that need attention from
    Congress and action from HHS including administrative
    simplifications and adjustments to make timelines more
    realistic.
        In addition to our concerns regarding the exchanges, we
    have serious reservations about blanket expansion of the
    existing Medicaid program without fundamental reforms to
    improve health outcomes and lower costs. While States now have
    a choice, it is not surprising that many remain reluctant, even
    with enhanced Federal funding. Some organizations have heralded
    the expansion as ``a great bargain'' for States. However, State
    leaders must be careful before accepting the long-term
    liabilities of expanding a 1960s-era entitlement program.
         A recent Kaiser Family Foundation and Urban Institute
    report reveals that expansion creates winners and losers among
    States. There are cost estimates which we believe actually fail
    to capture the full administrative costs and other impacts.
    They vary widely among States. For example, the New England and
    Mid-Atlantic States combined will save almost $16 billion in
    State funds over 10 years. At the same time, South Atlantic
    States will be paying about $22 billion more. Governors in
    States like Massachusetts, New York, Maryland and Vermont
    combined will shift nearly $23 billion of State costs to
    Federal taxpayers. At the same time, my State alone is
    projected to pay nearly $1.8 billion, and this all comes from
    the same report.
        Beyond the costs, we want to make sure we are providing
    individuals with access to coverage that makes sense for them,
    that it is cost-effective and gives them access to high-quality
    services. While groups like those who publish the report might
    declare victory through the simple act of handing out a
    Medicaid card, we know that that is simply not enough.
        However, I believe this if administration and Congress
    begins to engage with States interested in pursuing market-
    driven health care reform, we can create a more sustainable and
    effective program. Specifically, these discussions should be
    driven by several tenets of Medicaid reform that include
    eligibility simplification and flexibility that would allow us
    to keep families together on one coverage product. These points
    are fully outlined in my testimony, and again in even more
    detail in a 31-point report issued by Republican Governors last
    summer.
        President Obama himself said, ``We can't simply put more
    people into a broken system that doesn't work.'' He is right.
    Today's Medicaid model doesn't give States adequate flexibility
    to improve health outcomes or lower overall costs. Instead of
    rushing to expand, the administration should first engage in
    earnest discussion with States like Louisiana that are eager to
    further reform their existing programs now rather than spend
    more money on a rigid and expensive program that will not work
    for all States.
        Thank you. That concludes my testimony. I look forward to
    questions at the appropriate time.
        [The prepared statement of Mr. Greenstein follows:]

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        Mr. Burgess. Thank you. Time is expired.
        I recognize Mr. Alexander for 5 minutes for purposes of an
    opening statement.

                     STATEMENT OF GARY D. ALEXANDER

        Mr. Alexander. Good morning, Vice Chairman Burgess, Ranking
    Member Pallone and members of the committee. My name is Gary
    Alexander and I am the Secretary of Public Welfare for the
    Commonwealth of Pennsylvania. Thank you for asking me to
    discuss the operational implementation impact of the Affordable
    Care Act on the Commonwealth, and I encourage you to review my
    entire printed testimony.
        We in the Commonwealth have never witnessed a law so vast
    with such demands on State resources and lack of Federal
    guidance. The ACA is not just about the expansion of Medicaid
    or establishing an insurance exchange. It is about the hundreds
    of Federal mandates and procedural requirements that have
    escaped public attention but which we must, by law, obey. The
    fine print of this legislation is so complex, even the Federal
    Government struggles to understand it. Consequently, the States
    cannot fully understand the law's impact on finances, staffing
    requirements, systems changes and operations. In short, this
    law completely overwhelms society's safety net for the needy.
        Here are just a few of the problems in Pennsylvania created
    by the ACA. The law mandates that we expand our provider
    enrollment system to check with our Medicare data. Medicare
    databases, however, cannot handle automated changes. We will
    have to add staff resources to respond to 100,000 inquiries
    every month. We are mandated to create separate databases to
    accommodate IRS exchanges and some databases such as the
    Federal Death Master File we have not been given access to.
        The ACA mandates that we adopt passive Medicaid renewals,
    radically changing Pennsylvania's tailor-made renewal systems
    that took years to refine and perfect. Unlike today, the ACA
    verification system will not be coordinated with other welfare
    programs, creating eligibility verification issues.
        The ACA mandates that we use the National Correct Coding
    Initiative. Pennsylvania already performs this task through
    Claim Check, a federally approved system that cost Pennsylvania
    $12 million to develop. The difference now is that the new
    system will be micromanaged by the Federal Government.
        The ACA mandates that we create new transaction methods for
    claim status and eligibility verifications. Our technology is
    more advanced than what is mandated, and no one will use the
    outmoded ACA method, but CMS has told us that the law requires
    us to develop it anyway.
        The ACA mandates that States implement the Modified
    Adjusted Gross Income methodology to determine Medicaid
    eligibility by 2014. This mandate requires extensive
    eligibility changes and enhancements. That timeline is much too
    short for large IT system changes, which will prevent us from
    developing a system that delivers the best value to the
    taxpayers. This one change will cost the Commonwealth $250
    million.
        The ACA mandates that States have an HHS-approved single
    streamlined application. Pennsylvania already has one. We are
    struggling to include the changes and enhancements necessary to
    incorporate MAGI rules of Federal data.
        The ACA mandates that we use Medicaid to cover the health
    care needs of children between the ages of 6 and 18 living in
    households with incomes between 100 and 133 percent of the
    Federal poverty level. Pennsylvania already provides health
    coverage for these children through CHIP, a much less costly
    program. The Federal Government is thus mandating that we
    switch to a more costly and less efficient program.
        The ACA mandates that we cannot use asset tests, a welfare
    eligibility tool. When we removed the asset limit test for food
    stamps, we ended up with lottery winners on the program. We
    have since reinstituted the asset limit test but we are
    precluded from considering this tool for Medicaid.
        The ACA allows hospitals to do presumptive eligibility
    determinations for Medicaid. This change could create conflicts
    of interest. As with many other aspects of the law, CMS has not
    provided the guidance necessary to implement this requirement.
    This may leave the States to pick up additional costs.
        The ACA mandates us to pay primary care physicians Medicare
    rates. The feds will pay the difference through 2014.
    Thereafter, the States will be hit with increased costs.
    Starting in 2015, this change will cost Pennsylvania $45
    million a year.
        To summarize, some of the timelines in the law are
    unrealistic and many of the mandates impose unnecessary
    duplications of effort that some of our States have already
    achieved. These changes add to our costs, and as mandates often
    do, impose a one-size-fits-all approach, making our processes
    less efficient, not more.
        We are told that the Federal Government will pay 90 percent
    of the costs of the ACA, making this a good deal. That claim
    overlooks the magnitude of the costs to the States. Ten percent
    of a huge number is still a very large number. Beyond that, the
    magnitude of the Federal deficits shakes our confidence that
    the Federal Government will be able to fulfill its end of the
    bargain. The ACA will likely have broader economic impacts that
    will also directly impact the Commonwealth. We do not have the
    time to go into these, but we note that businesses are already
    changing their hiring practices in order to transfer health
    care costs to the State. Perhaps the largest cost of the ACA is
    the failure to treat the States as true partners, which was the
    original intent of the Medicaid program. The Federal Government
    now dictates the States almost every detail of how to run this
    program. How is that a partnership?
        Finally, the ACA invites bureaucratic gridlock that works
    against its desirable goal of securing greater affordable
    health coverage for more Americans. To fix the problem, States
    and localities must be engaged and viewed as partners to create
    innovative solutions. There is a great deal of work to be done
    to make this law more reasonable and less burdensome for
    States, businesses and all Americans. Thank you.
        [The prepared statement of Mr. Alexander follows:]

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        Mr. Burgess. The gentleman's time is expired.
        I recognize Dr. Sharfstein for 5 minutes for the purpose of
    an opening statement, sir.

                   STATEMENT OF JOSHUA M. SHARFSTEIN

        Mr. Sharfstein. Thank you. Good morning, Chairman Burgess,
    Ranking Member Pallone, members of the Health Subcommittee. I
    am Dr. Joshua Sharfstein, Secretary of the Maryland Department
    of Health and Mental Hygiene. In this position, I oversee our
    State's Medicaid program and I also serve as Chair of the Board
    of the Maryland Health Benefit Exchange. I am grateful for the
    opportunity this morning to speak with you about the
    implementation of the Affordable Care Act in Maryland. I am
    also a pediatrician, and with respect to the last three
    speakers, all my distinguished colleagues from other States, I
    think I am the answer to the Sesame Street question of ``Which
    one of these is not like the other?''
        My testimony today will include, one, background on the key
    elements of Maryland's health care system and the importance of
    improved access to care and cost control; two, a description of
    how broad public engagement has guided Maryland's process
    implementing the Affordable Care Act; three, specific details
    on how Maryland with the support of HHS is customizing the
    tools in the new law; and four, a summary of the economic value
    of health care reform implementation in our State.
        So first, a little background. Over the course of several
    decades, Maryland has pursued innovation in health care
    financing and insurance markets to expand access to care,
    control costs and promote health. Important aspects of
    Maryland's system include a unique all-payer approach to
    hospital payment; a small group market that has modified
    community rating and serves more than 400,000 Marylanders; a
    high-risk pool, a health information exchange that includes
    data from all hospitals and allows doctors to have access to
    help patients at the point of care; An all-payer pilot for
    medical homes to improve primary care; and a Medicaid and CHIP
    program that covers children up to 300 percent of the Federal
    poverty line and expanded in 2008 to include parents of
    dependent children with incomes up to 116 percent of poverty.
        Now, I came onboard a couple years after that expansion,
    and I met some of the more than 97,000 Maryland parents who are
    covered, and I heard how the coverage allowed them to get back
    to work, to get over injuries that had happened, and I have met
    one like the mother on the Eastern Shore who said that because
    of coverage, ``Now if I have to pick up a prescription, it is
    not I am not going to have to have the money, I am going to
    have to take it away from groceries.'' You know, hearing that
    from somebody where they don't have to take money from
    groceries in order to pay for health care is something that,
    you know, we deal with all the time at the State level, and I
    think it was the legacy of expanding Medicaid and having it be
    positive for the State that kind of overshadowed the
    implementation and kind of was what happened right before the
    Affordable Care Act passed.
        Now, despite this progress, major challenges face our
    health care system, challenges that are common to many States
    including significant numbers of citizens who are uninsured,
    substantial disparities in health care, rising health care
    costs.
        So the second thing I would like to talk about is public
    engagement in the State. From the day after the Affordable Care
    Act was signed, Maryland has been working with hundreds of
    interested people from doctors, hospitals, insurance brokers,
    businesses and others, carriers, to design and think through
    how this set of tools could work for the State. That is
    included in early consensus that it made sense for Maryland to
    operate its own health insurance exchange, expand Medicaid and
    take advantage of other options within the law. There was wide
    understanding that the various aspects of the law that included
    allowing kids to stay on their parents' coverage, improving
    seniors' access to prescription drugs also provided great
    benefits to the State. There was a major report in 2011 that
    led to the exchange getting established in the legislative
    session. There are nine members of the board including six
    public members, and we have had more than six advisory
    committees with all sorts of representation and engagement
    across the State. They have met dozens of times. We have had
    numerous public input sessions, and that led to a second law
    that passed in 2012 that adopted a series of recommendations,
    27 recommendations on how to structure the exchange. All these
    things were up to Maryland under the way the law was
    structured.
        We have made multiple decisions to tailor the law. These
    include allowing insurance brokers to sell inside the exchange
    and continue to be paid directly by carriers like they are now,
    selling adult dental plans as an option for participants,
    designing the Maryland Health Connection as a consumer portal
    for access, and today Marylanders can send a text message of
    ``connected'' to be notified when coverage is available. We
    have been customizing Medicaid including women in private
    health plans to become newly eligible for Medicaid to stay in
    their private plans while having Medicaid dollars pay for their
    premiums, and in making all these individual decisions, and
    there are many more in my written testimony, we have had
    tremendous support from both CCIIO and Medicaid as part of the
    regular process that they use to engage with State officials,
    and that is extended across into development of an integrated
    IT system which we have been working on for the last 2 years
    and will really be a leap forward for the State in terms of
    access to care and coverage.
        The last thing I just wanted to mention is that there was
    an independent economic analysis by the University of Maryland,
    Baltimore County, on the impact of health care reform
    implementation in Maryland, and the study found that
    implementation would benefit the State economy by about $3
    billion per year and create more than 26,000 jobs. It would
    benefit the State's budget by more than $600 million through
    2020 through a series of mechanisms that are described in the
    testimony, and that it would generate more than $800 million in
    additional tax revenue just because of the economic activity.
    This incoming revenue exceeds the State cost of the Medicaid
    expansion, both considering the direct expansion and the
    potential woodwork effect.
        So I go around the State talking about all this work that
    is being done in the State, and people don't ask me about the
    rules and the guidance and our decisions; they ask me about
    when help is coming, and we are really excited for this to
    really launch next year.
        Thank you.
        [The prepared statement of Mr. Sharfstein follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Burgess. The time is expired.
        We will note that there is a vote on the floor. I believe,
    though, we have time for Dr. Allison to go ahead with your 5
    minutes at which time we may take a brief recess for votes, so
    proceed, sir.

                      STATEMENT OF ANDREW ALLISON

        Mr. Allison. Thank you, Mr. Chairman. My name is Andy
    Allison. I am the Medicaid Director in Arkansas. I am also the
    President of the National Association of Medicaid Directors. I
    appreciate the committee's invitation to Arkansas and to other
    States represented on this panel to hear about these important
    issues.
        My written testimony, which I have submitted, addresses the
    two main challenges that Medicaid faces today. Foremost is the
    challenge of the fiscal duress brought on by long-term rates of
    growth in the Medicaid program and also by the loss to our tax
    base suffered as a result of the economic shift that occurred
    in this country beginning in 2008. The second challenge is
    really an opportunity, and that is, the option for States
    created in the Affordable Care Act to extend health insurance
    coverage to poverty-level adults through the Medicaid program.
    I want to focus my brief remarks this morning on the decision
    Arkansas faces about whether to take up this option.
        Governor Beebe expressed his support for the Medicaid
    expansion this summer. His decision came after CMS confirmed
    that the expansion remains optional and could be revoked in the
    future. His support for the expansion is driven by the benefits
    it would provide to State taxpayers, for the State's safety
    net, especially hospitals, and to the beneficiaries of the
    expansion themselves.
        Arkansas has a great many low-income uninsured adults, and
    we know that Medicaid saves lives, it improves health and it
    provides financial protection. The decision of whether to
    expand Medicaid in Arkansas now rests with its General
    Assembly, who meet beginning in January for three months. A
    supermajority, a 75 percent vote, is required to appropriate
    funds in Arkansas regardless of their source. This is the
    challenge. The legislature's decision may rest heavily on the
    financial implications of expansion for the State. Arkansas's
    estimates of the size of the Medicaid expansion use as a
    starting point the Urban Institute's March 2011 State-level
    projections of the expansion. To those estimates, Arkansas
    added both costs and enrollees. The estimates include some
    crowd-out of private insurance, include the woodwork effect.
    Current eligibles represent about 14 percent of the expected
    new enrollment. It also includes the added administrative
    costs. Overall, the gross costs of the expansion total about
    $900 million per year including both Federal and State
    payments.
        But there are also expected savings for the State of
    Arkansas associated with the expansion. The first source of
    savings stems from our expectation that a number of populations
    currently served through traditional Medicaid will migrate or
    will otherwise transition into the new expansion group of
    eligibles, thereby qualifying for a much higher Federal match
    rate. Key examples are individuals who currently enroll in
    Medicaid because of pregnancy or because they have suffered a
    catastrophic, high-cost medical event. In the future, these
    populations will already have health insurance when these
    changes in their health status occur, and there will be no
    reason for them to switch to the old eligibility categories,
    which carry with them a much lower Federal match rate.
        The second source of savings to the State is a reduction in
    State spending on uncompensated care. If Medicaid expansion is
    approved, more than 200,000 additional Arkansans will have a
    payer for their health care. Consequently, uncompensated care
    provided by State programs outside of Medicaid should decline
    significantly. Program areas affected include health costs to
    the Department of Corrections as well as State subsidies to
    community health centers, community mental health centers and
    public hospitals.
        Finally, because of the unusual nature and size of the
    optional Medicaid expansion, Arkansas is making the unusual
    decision to consider its macroeconomic impact. If the State
    legislature approves the expansion, Federal Medicaid payments
    to the State are expected to grow by around $800 million per
    year. Given Arkansas's small size versus the Federal tax base,
    Arkansas assumes in its estimates that Federal Medicaid
    payments for the expansion will come from taxpayers in other
    States. Put simply, Arkansas's economy will be hundreds of
    millions of dollars larger if it chooses to expand Medicaid,
    and this difference in the State's tax base will have some
    impact on tax revenue. All told, we estimate that the fiscal
    benefits will outweigh the costs and the expansion on net is
    expected to save or increase State tax dollars by $44 million
    in fiscal year 2014, $115 million in State fiscal year 2015,
    and about $700 million between now and 2025.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Allison follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Burgess. The gentleman's time is expired.
        I would note that there is still over 7 minutes left on the
    vote on the House floor, so if it is agreeable with everyone,
    we will start with questions. I would ask that members who feel
    it necessary to leave because they are so slow that it takes
    them 7 minutes or over 7 minutes to get to the floor, that we
    do leave quietly, but the committee will remain in session and
    we will recess when there is literally no time left on the
    votes.
        So I will start with myself, and Director Cohen, if I
    could, sir, I ask you, on November 26 of this year, Health and
    Human Services released the long-awaited rule detailing the
    essential health benefits that must be covered by any health
    plan offering a plan in the PPACA exchange. While I understand
    this rule has far-reaching consequences on health care
    premiums, benefits that must be provided to those newly
    eligible for Medicaid and Federal and State budgets. Now,
    according to the notice in the Federal Register, the rule was
    approved at the Centers for Medicare and Medicaid Services by
    Administrator Tavenner on August 1, 2012. That is 3 months
    before. Yet the rule did not receive approval from Secretary
    Sebelius and the Office of Management and Budget until 2 weeks
    ago. So what this committee would like to know is, why did it
    take nearly 3 months for the administration staff to conduct
    technical work and review and yet the public will have only 4
    weeks to review during this period of public comment on the
    rule that was issued on November 26? And I would also note that
    this is a time of year where people's focus is generally on
    things other than long-awaited rules. So can you speak to that,
    sir?
        Mr. Cohen. Thank you, Chairman Burgess. I would be happy
    to. You know, we put out a bulletin on the essential health
    benefits quite some time ago and got comment on that bulletin
    and so the public and interested parties had an opportunity to
    provide public comment on essential health benefits before the
    proposed rule was put out. There were some changes in the
    proposed rule from what had been in the bulletin but by and
    large what is in the bulletin is what is in the proposed rule,
    so actually I think there has been ample opportunity for the
    public to comment on the rule, and they will have the
    additional formal comment period as you mentioned.
        Mr. Burgess. So it is your opinion that Wisconsin,
    Pennsylvania and Louisiana had actually during that 3-month
    hiatus from the time the rule left HHS and circulated through
    OMB and came back, they actually knew what the rule was going
    to be and could be confident that they knew what the rule was
    going to be and could begin to make their plans accordingly?
        Mr. Cohen. They had the bulletin, which laid out our
    approach to essential health benefits using the benchmark
    approach, which basically said as the law does that essential
    health benefits are based on what is in a typical employer plan
    and they knew that the State had the option to choose from a
    range of available benchmark plans. Yes, they knew that.
        Mr. Burgess. All right. I didn't plan to ask this question,
    but Mr. Smith, can you tell us, was Wisconsin absolutely
    confident that what came out in August was circulated in a
    bulletin or a pamphlet was going to be what the rule eventually
    would be?
        Mr. Smith. Well, again, I think we still have questions
    about what the essential health benefit package is.
        Mr. Burgess. Thank you. I accept that as your answer. That
    is going to be a no.
        So let me just ask you, Mr. Cohen, on November 20th, a
    paper that I don't normally read that is called the New York
    Times--some people have heard of it--published an article by
    Robert Pear that the essential health benefits rule had been
    delayed--I am quoting here--``had been delayed as the
    administration tried to avoid stirring up criticism from
    lobbyists and interest groups in the final weeks of the
    presidential campaign.'' Now, that is accurate that there was a
    presidential election between August 1, 2012, and November 26,
    2012. That is a fair statement, is it not?
        Mr. Cohen. Yes. I believe President Obama was reelected.
        Mr. Burgess. Well, that being the case, was the rule
    delayed so as not to interfere with that happy occasion that
    you just referenced?
        Mr. Cohen. I am not aware of what Mr. Pear's sources might
    be for that and I am not aware that that happened, no.
        Mr. Burgess. Well, certainly for, you know, those of us who
    were preparing to lay down in the Elysian Fields of the
    Affordable Care Act, it did strike us as strange that the rule
    was available for discussion in August but not published as a
    rule until after Election Day, and not just under the auspices
    of the Affordable Care Act, there does seem to be a regulatory
    push now out of several Federal agencies to get things moving
    and up off the deck now that the election is settled. I know
    that--I am not cynical but, you know, there are people in
    Washington who are and would look at that and, again, I don't
    read that newspaper, but apparently they felt that there was
    some relationship.
        Thirty-three months delay on the fundamental rule necessary
    for the operation of these exchanges does cause some of the
    people who are cynical in this town to repeatedly ask the
    question: what is the holdup? And this an important deal what
    you all are doing and it does seem to be--it appears to me that
    it is possible that these cynical people could be correct, that
    it was held up for political reasons.
        So what I am saying to you is, we are going to have a
    series of questions, and it is too long to go into here but I
    would appreciate--it has been hard to get information out of
    your agency, in all honesty, sir. The Governors have had
    trouble. Members of Congress have had trouble. I would
    appreciate the expeditious handling of those questions when
    they come to your attention.
        Mr. Cohen. We will do the best we can.
        Mr. Burgess. My time is expired. All right. The vote on the
    floor is a motion to instruct conferees on the National Defense
    Authorization Act. The committee will stand in recess and will
    convene immediately after the last vote.
        [Recess.]
        Mr. Burgess. The committee will reconvene. The committee is
    reconvened, and the Chair recognizes the ranking member of the
    subcommittee, Mr. Pallone of New Jersey, 5 minutes for
    questions, sir.
        Mr. Pallone. Thank you, Mr. Chairman. The title of this
    hearing is: ``State of Uncertainty: Implementation of PPACA's
    Exchanges and Medicaid Expansion.'' I want to say, Mr.
    Chairman, that I think the title is provocative and I think it
    does a disservice to the progress and the people of this
    country with regard to the ACA. The fact is, the ACA has
    prevailed and it is the law of the land. It means that people
    have already experienced positive changes from the Affordable
    Care Act, whether it is through the elimination of lifetime
    limits, the ability to stay on their parents' health insurance
    plan, coverage of preventative benefits with no cost sharing.
    Lower prescription drugs costs are another provision of this
    law. In any case, the Affordable Care Act is improving the
    lives of Americans already, and over the next decade, 30
    million Americans who otherwise would be uninsured could have
    access to health care. Millions more will be put in charge of
    their health care as opposed to being at the mercy of insurance
    companies and the arbitrary limits and fine print denying
    coverage for critical services or overly burdensome cost
    sharing. And States have the options of flexibility to help
    make this a reality for their residents, and CMS has been
    working with those States that have been ready and wanting to
    move forward and make this work.
        My questions are to Mr. Cohen and Ms. Mann. Critics have
    cited a dearth of information, lack of answers, an inability to
    move forward. You have heard that from some of the other
    panelists. Can you talk about your outreach efforts to States,
    the engagement with them, the types of assistance you have
    provided over the past 2 years?
        Mr. Cohen. Thank you, Ranking Member Pallone. I am happy to
    do that.
        Just in 2012 alone, CCIIO has hosted 119 different events
    of different kinds for States that total approximately 215
    hours of technical assistance. We have done 69 webinars that
    over 3,000 State people have participated in. We had 48
    teleconferences. Over 2,500 State workers have participated in
    those. And we have held two in-person conferences where people
    have come in, over 1,000 attendees have come to those, so we
    have been--in addition to that, we are on the phone literally
    every day with people from the States helping them, answering
    their questions, and enabling them to move forward.
        Mr. Pallone. I appreciate that.
        Ms. Mann, and then I want to ask Dr. Sharfstein.
        Ms. Mann. Sure. Thank you, Mr. Pallone. You know, I think
    it has been a very different experience than past experiences
    in CMS where you usually put out guidance, put out regulations
    and hope for the best. We have been very aggressive with our
    partners at CCIIO to reach out to States and to bring them in
    partly for our decision-making and certainly for their
    decision-making as they are going forward by topic, by groups
    of States as well as very much individually. We do gate reviews
    on their systems developments individually with States. We do
    that together with CCIIO so that we are providing some
    coordinated technical assistance and support. We have pulled
    together work groups and learning collaboratives of groups of
    similar interest so that we can help them think about how to
    problem-solve with respect to the issues that are utmost in
    their minds, and we have provided and increasingly are
    providing different tools for them so that as they are moving
    forward looking at our regulations, looking at our guidance and
    thinking about how to implement, they have easier ways of doing
    it than if they just reinvented the wheel and did it on their
    own.
        Mr. Pallone. All right. Thank you.
        Dr. Sharfstein, can you talk about the interactions you
    have had with the Centers for Consumer Information and
    Insurance Oversight in preparing your State-based exchange for
    Maryland?
        Mr. Sharfstein. Sure. We have had a terrific interaction.
    There are regular opportunities for all States that we have
    taken advantage of, and we have regular consultation, and what
    we have been really impressed with is that both CCIIO and CMS
    have really met us where we are on a particular issue.
    Sometimes it is general help. Sometimes it is very, very
    specific. And they have been really willing to move at the
    speed that we are moving on a particular issue and work
    together across organizations. So from Maryland's perspective,
    the assistance we have gotten from HHS and the spirit of
    cooperation and support has allowed us to really customize
    implementation in a way we think works for our State.
        Mr. Pallone. Thank you.
        I am going to try to get a question in to Mr. Allison.
    Despite claims to the contrary, the ACA was fully paid for when
    passed, and if repealed would actually increase this country's
    budget deficit by more than $100 billion, and the ACA contains
    strong cost-containment measures aimed at reducing health care
    costs the right way by improving care. I was interested in
    Arkansas's payment reform efforts. It seems aligned with the
    activities of the Center for Medicare and Medicaid Innovation.
    Could you tell us a little more about these payment reforms and
    how that would bring down costs, not just slash benefits or
    cost-shift?
        Mr. Allison. Yes, absolutely. We believe in Arkansas that
    the incentives that we face and the activities that we are
    engaged in and our payment improvement initiative are wholly
    aligned with the objectives of the Center for Medicare and
    Medicaid Innovation, CMMI. We are engaged in moving away from
    fee-for-service in order to pay for outcomes in health care
    instead of the process that we currently pay for. We are paying
    for team-based outcomes. We are engaged in population-based
    reforms. We are looking for patient-centered care, and if we
    look for that, that means we are going to have to pay for it.
    We haven't done that in the past, and we are engaged in
    dramatic and sweeping changes working also with our private
    health insurance partners in Arkansas. We have worked very
    closely with CMS to make the first of these changes
    implementing in October through our State plan, not through
    waiver, an incentive-based episodic treatment payment reform
    that incentivizes for ADHD, for perinatal care and for upper
    respiratory infection, concentrated accountability and
    incentives for team-based care, and that happened very quickly
    and we appreciate CMS's support in that.
        Mr. Pallone. Thank you.
        Mr. Burgess. The gentleman's time is expired. I recognize
    the gentleman from Illinois, Mr. Shimkus, for 5 minutes for
    your questions, sir.
        Mr. Shimkus. Thank you, Mr. Chairman. Thanks for being
    here. When you hear both sides, it is kind of like a Jekyll and
    Hyde. Will this turn out to be the Jekyll or will this turn out
    to be the Hyde, and I don't think we really know yet,
    unfortunately.
        The Patient Protection and Affordable Care Act implies that
    health insurance will be affordable in the exchanges. The claim
    put forth was that if you like your insurance, you can keep it,
    and that health care costs would go down. That is how it was
    sold to us, most of us, some of us reading the bill but most of
    us passing the bill before we could read it. The CMS recently
    proposed a 3.5 percent fee on all plans offering plans in a
    Federal exchange. Are you afraid this fee will get passed on
    directly to individuals and families purchasing coverage in
    your State? And this is a question for Mr. Smith and Mr.
    Greenstein and Mr. Alexander, and if you could be short,
    because there is a couple more questions I want to ask.
        Mr. Smith. Well, they will be passed not only on to the
    purchaser in the exchange but these also apply to Medicaid
    managed care plans as well, so there is a direct impact on the
    State budget for these new fees.
        Mr. Shimkus. So more costs?
        Mr. Smith. Yes, sir.
        Mr. Greenstein. Yes, it puts these plans at a competitive
    disadvantage as well, and we fully expect that those costs get
    passed on rather than absorbed with already small margins for
    the plans that participate, at least in Medicaid managed care.
        Mr. Shimkus. Great. Mr. Alexander?
        Mr. Alexander. The short answer is yes. I think I would
    concur with my colleagues.
        Mr. Shimkus. Great. I appreciate the shortness of those
    answers.
        Mr. Cohen and Ms. Mann, do you know what our national debt
    is right now? Just the national debt. It is on every debt Web
    site in the world. Sixteen trillion dollars. Do you know what
    our deficit spending of this country has been the last 4 years?
    In essence, how much we have spent more than we have taken in?
    You don't know. Do you know?
        Ms. Mann. I don't have that information right here.
        Mr. Shimkus. OK. Mr. Cohen, do you know?
        Mr. Cohen. I don't know the exact number.
        Mr. Shimkus. Well, in 2009, it was $1.4 trillion. In 2010,
    it was $1.2 trillion. In 2011, $1.3 trillion. That is more
    spending than we have taken in. In 2012, I don't know, $1
    trillion. Already this year, first quarter, first two months,
    $292 billion more in spending than we have taken in, which if
    you push that through to the full year, it is probably $1.7
    trillion additional deficit added to the $16 trillion debt.
    That is part of this debate because Medicare and Medicaid are
    entitlement programs, and that is part of the reason why we are
    going to be here until Christmas and New Year's and have all
    the battles.
        Let me go to just--again, for Mr. Smith, Mr. Alexander and
    Mr. Greenstein, and this is really about the State of Illinois
    now. Estimates from earlier this year have the State of
    Illinois unpaid bills growing to $34 billion in 5 years. That
    will be $2 billion more than Illinois's total projected revenue
    that year. The biggest problem? Can you guess what the biggest
    problem is, Mr. Smith?
        Mr. Smith. Medicaid.
        Mr. Shimkus. Mr. Greenstein?
        Mr. Greenstein. Medicaid.
        Mr. Shimkus. Mr. Alexander?
        Mr. Alexander. Medicaid.
        Mr. Shimkus. Illinois's Medicaid has been on an
    unsustainable path for years and expected to increase more than
    40 percent over the next 5 years to about $12 billion by 2017.
    Overall, this will create an estimated $21 billion in Medicaid
    payment backlogs, and this figure doesn't even factor in the
    unknown additional costs from new Medicaid requirements from--
    what would you guess, Mr. Smith?
        Mr. Smith. Medicaid.
        Mr. Shimkus. From the new health care law and the
    Affordable Care Act. Mr. Alexander?
        Mr. Alexander. I concur.
        Mr. Shimkus. What do you believe will be the result for
    Medicaid providers and patients if these backlogs remain? What
    do you think, Mr. Smith?
        Mr. Smith. Well, again, I think we have been looking at
    what happens to the Medicaid rates themselves. We are expecting
    to have to--again, I know there is a lot of discussion about
    the FMAP for the newly eligibles, but this affects the entire
    program. Otherwise we will not have providers who will see
    Medicaid payments unless the rates go up.
        Mr. Shimkus. Mr. Greenstein?
        Mr. Greenstein. Yes, I worry about the participation in
    Medicaid from the provider perspective, but I also worry about
    programs like education that get crowded out within the context
    of the State's budget because we continue to consume a greater
    proportion of the overall budget in our health care costs.
        Mr. Shimkus. Mr. Alexander?
        Mr. Alexander. I concurred with the last one, so I was
    going to say I concur, but I would like to just add to Mr.
    Greenstein's that the crowding out of other priorities is
    extremely important for Pennsylvania infrastructure. It's
    extremely important in transportation. So the growth of these
    programs growing to 10 percent while revenues are growing at 2
    percent keep crowding out education, transportation and thus
    have a direct impact on jobs.
        Mr. Shimkus. Thank you very much. Yield back my time, Mr.
    Chairman.
        Mr. Burgess. I thank the gentleman for yielding. The Chair
    now recognizes the gentlelady from California, Ms. Capps, for 5
    minutes for the purposes of questioning.
        Mr. Waxman. Mr. Chairman.
        Mr. Burgess. The Chair recognizes the ranking member of the
    full committee, Mr. Waxman. I am sorry. I didn't see you
    sitting there.
        Mr. Waxman. Thank you, Mr. Chairman. I thought I was next.
        Medicaid is an expensive program but we have a lot of
    people who are very poor in this country, and we can save a lot
    of money if we didn't give them health care. Now, I suppose,
    Mr. Smith, Mr. Greenstein and Mr. Alexander, you think the way
    to solve the Medicaid problem is to put it in a block grant. Is
    that correct? Mr. Smith, do you like a block grant? Yes or no.
        Mr. Smith. Yes.
        Mr. Waxman. Mr. Greenstein?
        Mr. Greenstein. If given the choice, I would take it,
    gladly.
        Mr. Waxman. Mr. Alexander?
        Mr. Alexander. Absolutely.
        Mr. Waxman. OK. You three would like a block grant on
    Medicaid. That simply shifts the costs. So the States can cut
    back on services for these people and the disabled and poor
    will go without health care. Your idea is not going to succeed.
    That was one of the issues in the presidential campaign, and
    you lost.
        So we have Medicaid, and let us accept that fact. You are
    running the programs. You ought to be supporting the program
    you are running in your States. The Medicaid expansion in the
    Affordable Care Act is a tremendous step forward for our health
    care system, and it is going to improve the lives of tens of
    millions of Americans. The expansion will dramatically reduce
    uncompensated-care costs in States around the country. It will
    provide States with extremely generous enhanced match rate from
    the Federal Government. We crafted this piece of Affordable
    Care Act to ensure that Medicaid expansion would not only be
    good for Americans' health but for the health of State budgets.
        And a new report from the Kaiser Family Foundation shows
    just how beneficial this expansion will be to States around the
    country. The report found that over the next decade, with the
    Federal Government paying for well over 90 percent of the cost,
    Arkansas will reduce its uninsured population by nearly
    150,000, Louisiana by 270,000, Maryland by 140,000,
    Pennsylvania by over 310,000, and Wisconsin by nearly 125,000.
    I doubt that a block grant would accomplish those goals. The
    report also found that these States could dramatically reduce
    uncompensated-care costs through the Medicaid expansion, over
    $25 million in savings in Arkansas, over $260 million savings
    in Louisiana, nearly $180 million in savings in Maryland, over
    $875 million in Pennsylvania that would be saved, nearly $250
    million in Wisconsin. These are big, staggering, impressive
    numbers.
        But even more impressive is the fact that in two of the
    States here today, the report found that given the generous
    Federal match rate expanding Medicaid and dramatically reducing
    the number of uninsured would actually decrease the State's
    overall Medicaid budget, saving an additional $250 million in
    Wisconsin and $1.75 billion in Maryland.
        Mr. Allison, I assume you can talk about the importance of
    engaging in a detail that factual comprehensive analysis of the
    Medicaid expansion in Arkansas and the conclusions it led you
    to. You think it is going to be a good deal for your State,
    don't you?
        Mr. Allison. I believe it is going to be a very good
    financial deal for the State of Arkansas.
        Mr. Waxman. Well, these expansions are going to be a good
    deal but it seems to me that the three witnesses in the center
    of the table have an ideological view that they would like the
    world redone.
        Now, the Affordable Care Act is a pretty important piece of
    legislation, and Dr. Sharfstein, since your exchange planning
    is well underway, I understand that insurance companies are
    sending in a great number of letters saying they want to sell
    insurance in the exchange. And I am curious to know, are you
    concerned that insurers won't show up or do you think they are
    going to show up? What are you seeing so far?
        Mr. Sharfstein. We asked insurers in Maryland to send
    letters of intent to participate in the exchange, and we have
    gotten more insurers interested than actually serve the
    Maryland market now. So we think that under the Affordable Care
    Act in 2014, it is going to be drawing new insurers in Maryland
    including, you know, plans that are very focused on better
    health, improved value, and it is going to be a real positive
    for the market in the State.
        Mr. Waxman. Well, it just shows, if we have more insurance
    companies willing to offer insurance policies, the competitive
    model for the consumer choice is going to be more successful
    under those circumstances. I submit that the competitive model
    that Mr. Greenstein indicated he would like to see, which is
    called a consumer market-driven health care reform, is not
    going to work for Medicaid patients. Nobody is going to be
    vying for those Medicaid patients and all the range of services
    that Medicaid provides.
        The ACA has been law for nearly 3 years now. It has an
    impressive list of accomplishments, and the basic reforms are
    still ahead of us. After full implementation, over 30 million
    American uninsured will get quality, affordable care, etc. But
    the point I want to make is that many of us fear that the
    purpose of this hearing is simply to say that we can't move
    forward, we can't implement the law, that somehow we don't have
    the information needed to do it. That is flat-out wrong. It
    seems to me this is just the latest approach to try to undo the
    Affordable Care Act. Republicans have failed to repeal the law.
    They didn't want to pass it in the first place. Then they
    wanted to repeal it. They didn't win the presidential election.
    They didn't find that the law was declared unconstitutional.
    Let us not buy into this next line of attack that the law must
    be delayed. Let us recognize that we have got a law. Whether
    you wanted it or not, it is the law of the land. Many of us
    think it is going to do a lot of good. We are seeing a great
    deal of success already, and I think this hearing is just
    fitting for this Congress. It is a Groundhog Day Congress over
    and over and over again--``It can't work. We can't do it. We
    can't afford to cover people. Our debt is too great.'' Well,
    let us make this thing work.
        Mr. Burgess. The gentleman's time is expired.
        Mr. Smith. May I respond, Mr. Chairman?
        Mr. Burgess. Please.
        Mr. Waxman. Wait a second, Mr. Chairman. If we are going to
    have the witnesses start responding, then I am going to be able
    to respond to them, I presume. My time is expired. I had the
    opportunity to use my time as I saw fit, and I don't think this
    is an open-ended question to have witnesses respond, unless you
    guarantee that I can come back and respond to them. If you want
    to open the hearing up to a two-way exchange, I am willing to
    do that, but you do have other members waiting to be
    recognized.
        Mr. Burgess. I do think as a matter of courtesy that we
    ought to allow our witnesses to respond. That has long been the
    practice in this committee. But as the ranking member sees
    difficulty with that, we will recognize Mr. Murphy and perhaps
    Mr. Smith, if you will hold that thought, we will get a chance
    for you to visit with us.
        Mr. Murphy, you are recognized for 5 minutes for questions,
    sir.
        Mr. Murphy. Thank you, Mr. Chairman.
        Mr. Alexander, you are from Pennsylvania and so am I, and
    you recognize that this is the law of the land, the Affordable
    Care Act? Am I correct on that?
        Mr. Alexander. Yes.
        Mr. Murphy. Are you trying to stop or undo its
    implementation?
        Mr. Alexander. I don't think anyone is trying to stop
    anything. I think we are trying to make sense of it.
        Mr. Murphy. So let me ask you a number of things you said
    in your testimony, I want to ask you about that. You identified
    a number of problems that Pennsylvania is having, and certainly
    the other witnesses are welcome to respond to these too, but a
    number of those key ones, I wanted to ask about. You had
    mentioned that we have the CHIP program, the Children's Health
    Insurance Program, in Pennsylvania. I know when I was a State
    senator, I worked on that as well. And you feel that actually
    works in a less costly manner and has good quality in the
    program. Is this something that you are able to ask--according
    to the law, are you able to ask for a waiver to use that
    instead of the other program right now as the law stands? Do
    you know?
        Mr. Alexander. I don't know of any waiver to be able to
    make that change.
        Mr. Murphy. Is that something you would recommend that
    Congress address in terms of allowing for waivers?
        Mr. Alexander. I think so. I think if things are working in
    the State, they should be kept that way, and especially if
    recipients are happy.
        Mr. Murphy. Ms. Mann, are you aware, are States allowed any
    waivers for programs like that if they have a problem they
    think is working well?
        Ms. Mann. There is a wide range of waivers that are
    available for States. One of the things about the changes in
    the law that brings the CHIP kids over into the Medicaid
    program is right now their younger siblings are already
    eligible for Medicaid, so one of the reasons for the changes is
    to put families together. Right now we have children in the
    same family, same income----
        Mr. Murphy. I appreciate that. I am not opposed to bringing
    people together.
        Ms. Mann [continuing]. They are in different programs,
    depending upon their age.
        Mr. Murphy. I know when we did the prescription drugs bill
    for Medicare, Pennsylvania already had a program for that and
    we were able to work in legislation to make sure that they did
    work smoothly, so that might be something we might want to work
    on in the future, and I would certainly hope that you can get
    together with Mr. Alexander.
        Mr. Alexander, you also said you can't use an asset test.
    What do you think is the benefit of having an asset test and
    what do you see in the law that restricts that?
        Mr. Alexander. Well, an asset test is a program integrity
    tool to be able to ferret out if families or individuals have
    high incomes or assets that would--not incomes but assets that
    would--that they shouldn't be on the program. So for example--
    --
        Mr. Murphy. Such as?
        Mr. Alexander. So for example, if somebody, you know, owned
    a large home and cars and they had these assets or specific
    accounts, we would be able to utilize them, the same way we do
    with the food stamp program.
        Mr. Murphy. So you would like those same rules to be able
    to be applied?
        Mr. Alexander. It should be an option. It was an option
    prior and it should be an option.
        Mr. Murphy. Would you see similar things with regard to
    presumptive eligibility as another way of making sure that
    people who need these programs are eligible?
        Mr. Alexander. It is another program integrity measure to
    be able to--presumptive eligibility would presume that people
    are eligible. We still don't have guidance from CMS as to who
    would be on the hook for that money if these individuals later
    on are found not eligible. Would the State be paying that bill?
    Would the Federal Government be paying that bill? I don't think
    anybody should be paying that bill.
        Mr. Murphy. And I'm assuming you would ask for the same
    sort of assistance with what you referred to as adoption of
    passive Medicaid renewals, duplication of efforts, one-size-
    fits-all? Are you asking, Congress, Mr. Secretary, that one of
    the things we should do is either find out if we are missing
    something in the law to clarify that and in absence of that to
    look to this committee to pass some laws or rules that would
    help you do that so you are not adding to your costs if you are
    able to do things better?
        Mr. Alexander. I think that would be very helpful. The more
    you engage the States, the better. We are on the ground. We
    know how to run these programs, and I think that the more
    information you have from all of the States be very important.
    The purpose in these programs is to provide quality care to
    low-income individuals, and we at the State level have to be
    vigilant in terms of being able to prevent people that have the
    ways and means to provide for themselves.
        Mr. Murphy. Thank you.
        Mr. Smith, do you have any comments on those questions?
        Mr. Smith. I would agree with Secretary Alexander. I think
    he summarized them very well.
        Mr. Murphy. Thank you.
        The other witness, Mr. Greenstein?
        Mr. Greenstein. Sure. I would echo that sentiment in that
    every day with a finite budget, at least in our State, we don't
    have the option to run large deficits so we have to balance our
    budget every year, and that if there are resource decisions to
    make on how we allocate those resources, we would like to see
    those resources focused on the people that need them the most
    rather than those that have the means to pay for part of the
    care themselves.
        Mr. Murphy. Thank you. I see I am out of time.
        Mr. Chairman, I would hope you would ask the witnesses who
    have some specific recommendations that we might do some
    legislative actions that they would submit to you in writing
    some of those recommendations. And with that, I yield back,
    sir.
        Mr. Burgess. The record will remain open for 5 legislative
    days for witnesses to submit.
        The Chair recognizes the chairman emeritus of the full
    committee, Mr. Dingell.
        Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
        Mr. Cohen, we appreciate you being here this morning, and I
    have the following questions to be answered yes or no. Recently
    we have heard a lot of talk about a $63 ACA fee that will go
    into the Reinsurance Fund. In your opinion, is this a tax? Yes
    or no.
        Mr. Cohen. No.
        Mr. Dingell. It is not in the U.S. Internal Revenue Code.
    Is that right?
        Mr. Cohen. Correct.
        Mr. Dingell. So we can call this a fee as opposed to a tax.
    Is that right?
        Mr. Cohen. Yes.
        Mr. Dingell. Now, CMS had the authority to set this free
    through Section 1341 of ACA. Is that true?
        Mr. Cohen. Yes.
        Mr. Dingell. Now, Mr. Cohen, this section does not set the
    per-insured fee, instead, it sets out a total amount to be
    raised. Is that right?
        Mr. Cohen. Yes.
        Mr. Dingell. This fee will be $63 in 2014, lower for 2015
    and 2016. Is it true that this fee is short term and will end
    after the total amount is realized in 3 years?
        Mr. Cohen. Yes.
        Mr. Dingell. Now, Mr. Cohen, I happen to be just a poor
    Polish lawyer from Detroit so I want to make sure I understand
    this correctly. The fee goes into a Reinsurance Fund that will
    stabilize premium costs in individual insurance markets. Is
    that correct?
        Mr. Cohen. Yes.
        Mr. Dingell. Now, Mr. Cohen, this will help ACA to provide
    funds to insurance companies who deal with a large amount and a
    large number of vulnerable populations, those with serious
    preexisting conditions and high health care costs. Is that
    right?
        Mr. Cohen. Yes.
        Mr. Dingell. So essentially it is a reinsurance fund. Is
    that right?
        Mr. Cohen. It is.
        Mr. Dingell. Now, Mr. Cohen, this fee will lower insurance
    premiums in the individual market because insurers will not
    have to factor in the costs of disproportionate high costs of
    enrollment of high-risk patients. Is that correct?
        Mr. Cohen. Yes.
        Mr. Dingell. And isn't it true that this in turn will
    benefit employer plans and employees with stable prices because
    they will no longer have to pay for the cost shift that occurs
    when there are people out there without the insurance or the
    means to pay for health care? Yes or no.
        Mr. Cohen. Yes, it will.
        Mr. Dingell. Now, at the end of the day, this fee
    guarantees those in dire need of insurance or constituents with
    preexisting conditions are covered and by so doing we actually
    lower and stabilize the cost of health care for all of our
    citizens. Is this correct?
        Mr. Cohen. Yes.
        Mr. Dingell. Thank you, Mr. Cohen.
        Now I want to say a few things, Mr. Chairman. We have the
    law of the land, the Affordable Care Act, and I am hearing no
    end of carping and complaining about it, but the hard and
    simple fact of the matter is that the health care costs in this
    country are running away from us and will destitute the Nation.
    We have to do something to get it dealt with. We have to get
    all the people covered and we have to see to it that we deal
    with the problems of inadequate health care for our people in
    the future. This is a very serious matter. It is going to
    attack almost every single program including Medicare and
    Medicaid, and the costs that the State are being compelled to
    meet with regard to Medicaid.
        I find myself very distressed because I feel that I am kind
    of in the company of a bunch of people who are looking at the
    donut and seeing only the hole. You know, we confront a
    situation where we have to address these problems by making
    intelligent investments, and one of the things that I find that
    terrifies me is, we have got a lot of people in this country
    who can look and who can see the cost of everything but they
    can't see the value of anything, and the value of what we are
    trying to do here is to see to it that everybody has health
    care, to see to it that the health care of this country is
    affordable and available to all of our people and to see to it
    that the people of this country have a system which makes
    available to the ordinary citizen the right of health care, and
    it is, in my view, a right. It is not a privilege. There are a
    lot of people around here who seem to look at it as a privilege
    and they will do everything they can to save money on seeing to
    it that some other poor bastard doesn't have health care. So I
    am hopeful that we will look at this as an investment in the
    future of the country and that we will try and do something to
    see to it that the health care in this country, which
    potentially is the greatest and the best in the world, is
    shared amongst the people and that they are not denied this and
    they are not dying because they don't have health care.
        So I hope that this hearing will lead us to an
    understanding of these points, and I yield back the balance of
    my time.
        Mr. Burgess. The gentleman yields back. At this time I
    recognize the gentleman from Louisiana, Dr. Cassidy, for 5
    minutes for questions.
        Mr. Cassidy. Just so folks now, we have had some
    effectively implied allegations that some of us don't care
    about access to affordable care. I actually am a doctor who
    Tuesday and Monday will be in a safety-net hospital for the
    uninsured or the poorly insured, which includes Medicaid. And
    so just let us get that on the record.
        I have got lots of questions so hopefully I can run over.
    Mr. Cohen, I am not clear. Will CMS propose something about
    allowing premiums to go into health savings accounts? Will that
    money of the premium which goes into the health saving account,
    will that be considered as regards the MLR? You follow what I
    am saying? So Medical Loss Ratio, will that--please.
        Mr. Cohen. Yes, it will be considered first-dollar coverage
    for purposes of the MLR to the extent that it is spent.
        Mr. Cassidy. So if someone does not spend their money in
    their health savings account, the insurance company does not
    get credit for an expenditure as regards the MLR?
        Mr. Cohen. That is right.
        Mr. Cassidy. So if somebody is frugal and doesn't go and
    buy overpriced goods, does preventive medicine on their own,
    takes care of themselves, keeps their weight down, etc., the
    insurance company will be penalized?
        Mr. Cohen. No, they are not penalized.
        Mr. Cassidy. But it won't count against the MLR, and you
    are going to come back and take a portion of that and you are
    going to come back and make them rebate that cost. Is that
    correct?
        Mr. Cohen. Well, the Medical Loss Ratio provision of the
    80/20 rule requires that insurance companies spend 80 cents of
    every premium dollar on actual health care. If the money isn't
    spent----
        Mr. Cassidy. Deposited in the HSA does not count as an
    expenditure, it is only if the patient spends the money.
        Mr. Cohen. Right.
        Mr. Cassidy. So we are trying to hold down cost but we are
    basically putting in incentives to spend the money. By the way,
    it is hard to keep a straight face when Mr. Waxman speaks about
    access to affordable care. The only thing I have heard about
    this bill is that premiums have gone by $2,500 since it was
    passed. It is kind of curious, isn't it?
        Dr. Sharfstein, only 65 percent of doctors in Maryland
    accept Medicaid patients. That is a statistic I can give you
    the source from, Health Affairs. How many of those Medicaid
    patients unable to find a primary care doctor seek their care
    in an emergency room? Do we know those statistics? Some States
    do know that statistic.
        Mr. Sharfstein. I don't know if I have a specific answer to
    that.
        Mr. Cassidy. Then let me go on because I have limited time.
    I don't mean to be rude to any of you. I apologize.
        Now, the issue is, in Maryland Medicaid, I presume there is
    no deductible.
        Mr. Sharfstein. Correct.
        Mr. Cassidy. Now, you all guys make out like a bandit. If I
    was a big blue State, I would be all for this expansion,
    because according to Kaiser Family Foundation, you are going to
    save $500 million over 10 years. Why wouldn't you be for it?
    But let me put myself in the role of someone that I might be
    seeing Tuesday morning in a hospital if I were in Maryland
    instead of Louisiana. You are making 140 percent of Federal
    poverty level. The State grabs the money. Man, we are glad. It
    helps our budget. But now I am on the exchange. I have a $2,000
    deductible. As Mr. Smith points out, I am paying $600 a year in
    a premium. Do we really think that family at 140 percent of
    Federal poverty can afford that $2,000 deductible?
        Mr. Sharfstein. Well, from my perspective, this has a lot
    to do with compared to what. Someone at----
        Mr. Cassidy. Compared to your current Medicaid plan.
        Mr. Sharfstein. A hundred and forty percent, there is no
    access to Medicaid, so they have no----
        Mr. Cassidy. Well, I thought you said in your testimony
    that you have up to 200 percent of poverty level in your
    Medicaid plan.
        Mr. Sharfstein. No, we do not.
        Mr. Cassidy. Oh, then I misunderstood.
        Mr. Sharfstein. For an adult. So they had no access. So we
    are able to give them affordable access through a subsidy.
        Mr. Cassidy. Now, OK, let us just take that person at 140
    percent. Do we really think they are going to be able to afford
    that $2,000 deductible? By the way, if I was an insurance plan,
    I would be moving to your State too. Now we have the Federal
    Government telling you you have to buy insurance. It isn't
    competition; it is a forced market. Do we really think that
    family at 140 percent of Federal poverty can afford that $2,000
    deductible?
        Mr. Sharfstein. Well, we certainly think that there is a
    lot of value for them, and part of what we are going to be
    doing and what we are working with, so many people in Maryland,
    is to figure out how to develop an outreach plan that engages--
    --
        Mr. Cassidy. Even though it is going to cost them $2,000? I
    tell you, I like Mr. Smith's line. It is not a percentage, it
    is the dollar amount, and when you are at 140 percent of
    Federal poverty, $2,000 might as well be $50,000.
        Mr. Sharfstein. It is not every family that has to pay
    $2,000.
        Mr. Cassidy. Only if they access the insurance portion.
        Let me go to Mr. Allison--Dr. Allison. I am sorry. Dr.
    Allison, in your testimony, you mentioned that the State of
    Arkansas will have to come up with $500 million between January
    and June 14 to implement this plan. Is that correct?
        Mr. Allison. That is not correct, sir. What will----
        Mr. Cassidy. That is your testimony.
        Mr. Allison. That is not what the testimony says. The
    testimony says that the legislature will have to appropriate
    $500 million for the second half of State fiscal year 2014.
    That would include, in this case, almost all Federal funding.
        Mr. Cassidy. So that is going to be all Federal dollars? It
    won't be State dollars?
        Mr. Allison. Almost all Federal funding.
        Mr. Cassidy. OK. So they have to appropriate Federal
    dollars?
        Mr. Allison. Correct.
        Mr. Cassidy. OK. That is interesting. And the economic
    aspect of this--by the way, let me just point out, the Kaiser
    Family Foundation study that Mr. Waxman had proposed is going
    to cost Louisiana $1.8 billion over 10 years, Arkansas $1.2
    billion, and that is assuming that we don't have to raise taxes
    on the Federal or State taxpayer to pay for this extra money,
    which is an assumption which seems a little silly.
        I am over time. I yield back. Thank you.
        Mr. Burgess. I thank the gentleman for yielding back. The
    Chair now recognizes the gentlelady from California, Ms. Capps,
    5 minutes for the purposes of questions.
        Mrs. Capps. Thank you, Mr. Chairman, and to all of our
    witnesses, thank you for your testimony today and for your
    availability.
        I want to give you, Mr. Cohen, just a minute to respond to
    the previous question Mr. Cassidy asked about the Medical Loss
    Ratio and the HSA contributions, but if you could be very
    brief?
        Mr. Cohen. So what we have said is that the 80/20 rule says
    insurance companies have to spend 80 cents of every premium
    dollar on care, so to the extent that the HSA dollars are
    actually expanded, they will be counted towards that 80 cents
    that the insurance company has to spend.
        Mrs. Capps. Thank you very much.
        I want to address some questions to you, Ms. Mann. The
    Affordable Care Act includes a provision that will bump up the
    payment for primary care providers in Medicaid to the rates we
    currently pay through Medicare. On average, this will improve
    primary care reimbursement by 67 percent on average nationally.
    In my State of California, the increase will be even more
    important, 113 percent increase for current reimbursement.
    Could you explain why raising primary care reimbursement for
    Medicaid providers is so important and how this will benefit
    patients but also the health care system as a whole, the role
    it plays?
        Ms. Mann. Of course. In the Medicaid program and in changes
    going on in the health care marketplace more generally, there
    is real appreciation of the value of primary care, and to avoid
    unnecessary high utilization of specialty care, to avoid
    catastrophic care, people need regular primary care preventive
    care, and what this primary care boost does is encourage more
    primary care practitioners to enroll in the Medicaid program,
    participate in the Medicaid program and to provide a greater
    share potentially of their hours of service to Medicaid
    beneficiaries. So we are very excited about the opportunity to
    expand and deepen access, particularly around primary care, and
    to reduce costs overall as a result.
        Mrs. Capps. Absolutely. I share your belief in that. As I
    understand it, the research on provider rates shows that States
    with higher rates have greater numbers of providers accepting
    new patients and States that have increased their rates have
    seen more providers willing to increase their participation.
    Given that, do you think that increasing rates to Medicare
    levels for primary care physicians with both increase the
    number of physicians participating in the program and allow
    some who are already participating to increase the number of
    Medicaid patients they see? That's a big problem right now.
        Ms. Mann. I do think it will boost participation. I think
    there is a general agreement that it will boost participation.
    I do want to say that I think that rates are one of many
    factors that help us make sure we have good provider
    participation in the program but this will go a long way to
    assure greater participation, particularly in the needed area
    of primary care.
        Mrs. Capps. Thank you. And as you may know, there is a lot
    of talk from some in Congress that the Medicaid primary care
    payment bump should be used to pay for SGR. I have consistently
    voted to get rid of the SGR, and we even did so in the House
    version of health care reform. But this pay-for idea is
    frankly, in my opinion, foolish. This would literally
    incentivize providers to take care of our seniors at the
    expense of the poor and the health care community, providers
    and patients alike, agree. You may have a comment on this, or I
    can move on and ask another question.
        Ms. Mann. I appreciate your support for assuring good
    primary care in the Medicaid program. Thank you.
        Mrs. Capps. Now, when States expand Medicaid under the
    Affordable Care Act, they pull in Federal dollars to provide
    health insurance to millions of people who don't have it now.
    Right now these uninsured people are relying on health care
    safety-net providers and programs that are paid for by State
    dollars. Many of our States can't afford to do this. Won't
    States be able to actually save some significant dollars in
    their State health budgets on programs that pay for
    uncompensated care, on mental health savings, etc.? In fact,
    the net cost to State budgets of expanding Medicaid could be
    quite negligible, or even a net gain. Is that correct?
        Ms. Mann. I think that is absolutely correct. Different
    States have done their studies and different organizations have
    done studies, and it obviously varies by State but the amount
    of the increase overall under the Kaiser study that people have
    been citing today of the Medicaid expansion, just looking at
    the expansion, it is less than one-half of 1 percent in terms
    of the impact on States' budgets, notwithstanding the big
    change in the number of people who would gain coverage, but
    then as you say, there's offsetting savings. Uncompensated care
    will be reduced. And Governor Sandoval came out this week and
    supported the Medicaid expansion. One of the things he cited in
    Nevada is the reduction in State funding for mental health
    services that will no longer be necessary. Those were funded by
    the State to fill in the gap, and that gap will be filled
    through the Medicaid expansion.
        Mrs. Capps. Thank you very much for answering.
        And Mr. Chairman, as I close, I ask unanimous consent to
    enter the following letters into the record opposing this pay-
    for idea: a letter from the Family and Children's Health Groups
    and Providers, a letter from the majority of our Nation's
    physicians and a letter from the California Children's
    Hospital. I request that these be submitted.
        Mr. Burgess. Without objection, so ordered.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Burgess. I would also likewise like to insert into the
    record a letter from the Governor of my State. We have had
    several good States testify here today. Governor Perry also
    wrote a letter on this subject, and I would like to have that
    made part of the record as well, so without objection, so
    ordered.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Burgess. And the Chair now recognizes the gentleman
    from Georgia, Dr. Gingrey, 5 minutes for questions, sir.
        Mr. Gingrey. Mr. Chairman, thank you very much, and I want
    to thank all seven witnesses for bearing with us through the
    break and the vote series.
        My question is over a concern that I have in regard to the
    exchanges and the authority of the Secretary in regard to
    rulemaking, and I am going to direct my questioning to the
    Secretary of the Department of Health Services in Wisconsin,
    Mr. Dennis Smith, and hopefully we will be able to get all this
    done within 5 minutes.
        The recently released request for information regarding
    health care quality for exchanges on November 27th specifically
    mentions a Section 1311 of PPACA which directs quality health
    plan issuers to, among other things, implement quality
    improvement strategies as directed by the Secretary.
    Specifically, subsection H of 1311 would allow the Secretary to
    prevent physicians from treating patients in the exchange
    unless they implement such mechanisms to improve health care
    quality the Secretary may by regulation require.
        Let me restate that. Physicians must follow quality
    directives as defined by the Secretary or lose their business.
    Mr. Smith, are you aware of this provision in the law?
        Mr. Smith. I am not familiar with that section, no, sir.
        Mr. Gingrey. OK. Well, let me ask you this then. In this
    provision, you may not know this either, but the word
    ``quality'' is not defined in the statute. So it is safe to
    assume that the Secretary, not just Secretary Sebelius but
    every Secretary to follow, Republican or Democratic
    administration, will be able to define through regulation what
    that word ``quality'' means. Yes or no?
        Mr. Smith. I believe that is the correct interpretation. I
    think quality--again, we have tried to introduce quality
    performances into a variety of parts of our programs, both in
    managed care and the fee-for-service world. Again, this is
    another one of our concerns that we are going to have State
    standards, then we are going to have Federal standards.
        Mr. Gingrey. Well, it is a huge concern of mine as a
    physician member, and I know very well what ``quality'' means
    in regard to the specialty of obstetrics and gynecology as
    defined by the American College, the same thing for the
    American College of Surgeons, you know, the specialty societies
    define quality. If the Secretary decided to use this provision
    in the law under 1311(h) and it is there very clearly, and she
    or any Secretary uses this provision to determine, let us say,
    for example, mammographies for women under 50, did not improve
    their health care because of false positives, like her, U.S.
    Preventive Services Task Force did back in 2009. You all
    remember that. Would a physician be able to treat patients in
    the exchange if they prescribed a mammogram for a 49-year-old
    woman? Can you answer that for me?
        Mr. Smith. I don't think I can.
        Mr. Gingrey. Well, I can answer it for you. The answer is
    no. If the Secretary decided that physicians who performed
    abortions were not practicing quality medicine because they
    endangered the life of a child, could the Secretary run
    providers who performed abortions out of business? And I will
    answer that one for you too. The answer is yes.
        Mr. Chairman, I believe that this language in 1311 would
    allow the Secretary to control what physicians prescribe, what
    health care patients can access. Is there a single person in
    this room who thinks that the Secretary should have that kind
    of authority whether it is a Republican or a Democrat?
        Mr. Chairman, I have a bill, 6320, which repeals this
    clearly dangerous provision, and I plan to reintroduce this
    bill in the 113th Congress, and I hope that this committee in a
    bipartisan fashion can work together in this effort because
    look, I don't know whether this Section 1311 or subsection H
    was an intentional provision or unintended consequences. I
    would rather like to think unintended consequences. But this is
    a thing you get in a 2,700-page bill that you have to pass and
    then finally find out what is in it, and maybe you will like it
    and maybe you won't, but this clearly is a provision where any
    Secretary of Health and Human Services can pretty much
    determine what the quality of care is for physician providers
    in one of these exchanges in the 50 States and the territories
    and the District of Columbia and any specialty when each
    specialty society has clearly defined what is quality care but
    yet the Secretary now can just say well, you know, you are not
    providing quality care as determined by me under Section 1311
    and therefore you are basically out of business, you can't be
    part of a provider panel in the exchanges. This is clearly
    wrong and has to be repealed, and Mr. Chairman, I have probably
    gone a little beyond, but I will yield back now and just remind
    my colleagues H.R. 6320 just repeals that section and hopefully
    in a bipartisan way we can get that done in the 113th, and I
    yield back.
        Mr. Burgess. The gentleman yields back. The Chair now
    recognizes the gentlelady from Wisconsin, Ms. Baldwin, for 5
    minutes for your questions, please.
        Ms. Baldwin. Thank you, Mr. Chairman.
        I am very proud of the work we did in this committee to
    pass the Affordable Care Act because access to affordable
    health care is an essential pillar of middle-class economic
    security. Many States are making very impressive progress in
    moving health care reform forward. We have heard Maryland and
    Arkansas as two great examples of two States that have, it
    seems, put politics aside and are doing the very hard work
    involved in implementation because they know it is the right
    thing to do for families and small businesses and others in
    their States.
        While these States have moved forward and certainly others
    have across the Nation, I have really been concerned about my
    home State of Wisconsin and the way it has been holding back.
    Earlier, Wisconsin returned an Early Innovator Federal grant
    that would have enabled our State to build a Wisconsin-run
    health insurance exchange. Building a State-based exchange, in
    my opinion, would have provided families and businesses with
    more choices for the quality coverage that our State has been
    known for providing to our citizens for years. I am committed
    to bringing people together and working collaborative to make
    our Nation's new health law work for my home State of Wisconsin
    and other States. Our State has a strong tradition and history.
    Secretary Smith, you talked about that history and tradition of
    being a national leader in advancing health care reforms, and
    it is my hope that we can continue in that proud tradition by
    extending our Medicaid eligibility so that those who need
    health coverage the most have access to it.
        Secretary Smith, you mentioned in your testimony, and I
    read Governor Walker's comments, I believe, yesterday that he
    has not made a decision as of this moment of whether our State
    will participate in the Medicaid expansion. Is that correct?
        Mr. Smith. That is correct.
        Ms. Baldwin. I want to delve a little bit deeper in terms
    of a timeline in mind for making that final decision. I know
    you held some press availability yesterday in the State of
    Wisconsin in anticipation of this visit to Washington, DC. You
    made some comments that concern me about this impending
    decision. You said the math is just not going to work out, and
    yet the State has not yet completed its financial projections.
    There were comments you made about still continuing to build
    modeling, and yet you say it is a straightforward calculation.
    Based on those quotes, what is the timeline that you
    contemplate for doing that math and having the decision move
    forward with the administration?
        Mr. Smith. Thank you so much, and again, if I can clarify,
    my comments about the math were a very specific part of that in
    terms of whether or not the Federal Government would buy out
    our existing childless adults population so, again, my comment
    was, we have about 21,700 childless adults. Even if we get 100
    percent FMAP for them, that is not going to entirely offset the
    cost of all the new people who would come in to the program.
    That is what my comments were in reference to.
        Ms. Baldwin. So in terms of just a timeline for the overall
    calculations that you need to do, how soon can we expect to
    hear?
        Mr. Smith. The Governor's budget, he will include in the
    Governor's budget that decision whether or nor to expand.
        Ms. Baldwin. OK. So when the Governor's budget is released,
    we will know about--that is when he will announce his decision?
        Mr. Smith. Yes.
        Ms. Baldwin. OK. Thank you.
        Well, I just want to repeat that I believe it is crucially
    important that our State expand the coverage. According to the
    Kaiser Commission on Medicaid and the Uninsured, over 200,000
    Wisconsinites could gain Medicaid coverage through the
    Affordable Care Act Medicaid expansion, and if it is
    uncertainty that we are concerned about, surely those 200,000
    people in Wisconsin deserve the certainty of knowing that
    quality and affordable care will be there for them.
        You know, we know the impacts for those 200,000 people.
    Accessing preventive care can forestall more expensive and
    costly and sometimes deadly illnesses, and 200,000 people who
    we hope would be living healthier and more productive lives,
    are better able to manage chronic illnesses that they might
    experience. With 100 percent Federal funding for the new
    Medicaid population through 2016, then phasing down to 90
    percent funding after that point, our State could actually save
    a quarter of a billion dollars in Medicaid costs and another
    quarter of a billion, $250 million in uncompensated-care costs,
    factors that we heard testimony from the Secretaries of Health
    in other States, and on that topic, although I see I am running
    out of my time, I was going to ask Director Allison to talk a
    little bit more about some of the other savings that you have
    realized that your State, Arkansas, can recognize. Given that I
    have run out of time, we will follow up in writing afterwards.
    Thank you.
        Mr. Burgess. The Chair thanks the gentlelady. We would
    recognize the gentlelady from Illinois, Ms. Schakowsky, 5
    minutes for your questions, please.
        Ms. Schakowsky. Thank you, Mr. Chairman.
        First, I want to thank Director Mann for working with Cook
    County, Illinois, my county, on the waiver that will allow Cook
    County to early enroll more than 115,000 individuals who will
    be eligible for Medicaid in 2014. You have given us the
    opportunity to get a head start on providing the many people
    who need the health care who are eligible for the care to be
    enrolled, so thank you very much.
        I wanted to set the record straight on a couple of things
    too. There was some talk about the expenses for Illinois that
    were made earlier. The Federal Government is going to provide
    almost $157 million to Illinois to support insurance coverage
    for 898,000 Illinoisans with Medicaid, reducing our uninsured
    population by about half. How fantastic is that. And Illinois
    will save $953 million in uncompensated expenditures, and
    actually there will be increase in the cost for Illinois, about
    1 percent, and look at what we are getting. I mean, it is just
    a miracle to me.
        I also wanted to point out that in terms of the overall
    increase in insurance cost that actually yes, costs for
    insurance have increased less than before the Affordable Care
    Act was passed, and the ACA saved an estimated $2.1 billion on
    health insurance premiums through the Medical Loss Ratio and
    Rate Review. Almost 13 million consumers received a check
    because their insurance company spent too much money, over a
    billion dollars, and Rate Review saved consumers about a
    billion dollars. That is individual and small group markets. So
    these are victories, I think.
        A number of people on the panel have talked about the
    problem that somehow the Affordable Care Act messes up your
    opportunity to get rid of fraud and eligibility requirements,
    etc., and I wanted to talk for a minute about Pennsylvania. My
    understanding is that in the late summer, the Pennsylvania
    Department of Welfare began notifying hundreds of thousands of
    families by mail that they had 10 days to provide necessary
    documentation in order to keep their children enrolled in
    Medicaid, and if the family missed the deadline or even if they
    met the deadline, if the Department of Public Welfare failed to
    process the paperwork within 10 days, they were dropped from
    Medicaid, and in fact, 89,000 children were dropped from
    Medicaid. Here is my point. Are some of these so-called
    problems an excuse and the opportunity to set up barriers to
    actually bump people from the rolls? I think it is completely
    unfair, and Mr. Alexander, you certainly do have an opportunity
    to answer. To say that not only do you only have 10 days to
    keep your children in Medicaid, but if we can't process your
    papers, then we are going to bump you off of Medicaid and that
    happened to 89,000 children. That is included in your fraud
    prevention numbers, and I think that it is a fraud to do that
    to children. So what do you think?
        Mr. Alexander. Well, thank you very much for your comments.
    When we arrived, Governor Corbett arrived and I arrived at the
    department, we had hundreds of thousands of cases that had not
    been processed in years and left piling up in county assistance
    offices, and it is our duty as a State where mandated by
    Federal law to follow the laws that you pass.
        Ms. Schakowsky. Ten days?
        Mr. Alexander. And indeed we do that. We went through
    meticulously to make sure that whichever family was eligible
    was eligible and whichever family was not eligible was not
    eligible. Now, this was not about children because we
    determined this as a family, so we are talking about families
    and individuals, not just children.
        Ms. Schakowsky. My understanding is that the records show
    that the 89,000 figure represents only children.
        Mr. Alexander. There were much more than 89,000. Now let us
    get to what we did do. We meticulously went through after we
    sent them notices per Federal law. We followed the law and
    followed the regulations.
        Ms. Schakowsky. Is 10 days the regulation?
        Mr. Alexander. It was more than 10 days. We followed the
    regulation. We followed the law. We sent them notices. If they
    did not reply, then they were terminated. So if they did not
    reply within the accounted time, then they were--so we gave
    them every chance possible to----
        Ms. Schakowsky. And what if you couldn't----
        Mr. Alexander. And even after that, we had done outreach.
        Ms. Schakowsky. And what if you couldn't process? My
    understanding is if the Department of Public Welfare failed to
    process the paperwork within 10 days, they were dropped.
        Mr. Alexander. That is incorrect. By law, it is a 30-day
    time period, so we gave them ample time, and in fact, it was
    extended past the 30 days for them to be able to contact us,
    and we told all of the families that if you come in and contact
    us and come in and have your paperwork, we will get you right
    back on the program. The point of the matter is, Congresswoman,
    is that when you come into a department like this and you have
    hundreds of thousands of cases that are piled up and hadn't
    been gone through in years, there is a problem. We have a
    process that is given to us by Congress. We follow those laws.
    We have State rules and regulations that we need to follow.
    Now, if somebody tells us not to follow rules and regulations
    and they pass laws to that effect, then we will do that
    accordingly but we followed all of the rules and regulations.
    We have reached out to the families. We want everyone that is
    eligible for Medicaid to be on Medicaid, but if you are not
    eligible, then we don't want you on the program. There is a
    difference. We are here to serve the truly needy eligible
    families and children.
        Mr. Burgess. The gentlelady's time is expired. The Chair
    recognizes the gentleman from New York.
        Ms. Schakowsky. Can I just say, with due respect, I have
    different numbers and I would like to submit them for the
    record.
        Mr. Burgess. The Chair would entertain a glance at those
    records. I recognize Mr. Engel for 5 minutes for questions,
    please.
        Mr. Engel. Thank you. Thank you very much, Mr. Chairman.
        I want to talk about two issues and try to do it fast
    because I want to get it all in involving DSH payments and the
    ``do gooder'' States. I made sure when we were crafting the
    Affordable Care Act that my State, New York, which is a so-
    called do-gooder State was not penalized for it, and also DSH,
    because we have a lot of indigent people in the New York City
    metropolitan area, I wanted to make sure that we were not
    penalized.
        So the New York Medicaid program already covers most
    categories of individuals beyond the Affordable Care Act
    expansion threshold and plans to extend additional coverage to
    non-pregnant childless adults, thereby fully meeting the ACA
    parameters by 2014. However, it is projected that after the ACA
    is fully implemented in New York, 10 percent of our residents
    will still remain uninsured, which means DSH funding will still
    be important.
        Ms. Mann, I know you and I spoke about the importance of
    DSH funding to New York a few months ago. I just want to
    reiterate how important this funding is to those States which
    already have broad eligibility for their Medicaid programs or
    do plan to expand their Medicaid programs. I hope the upcoming
    regulations will not punish these States, these States who did
    the right thing by expanding Medicaid eligibility with
    disproportionately deep DSH cuts. I don't know that you have to
    answer, but as you know, that is a very big concern of mine.
        Let me ask Dr. Allison and Dr. Sharfstein, can you briefly
    talk about how declining funding for uncompensated care and DSH
    influenced your decision to push for Medicaid expansion in your
    States?
        Mr. Sharfstein. Sure. Maryland, just to give one very
    specific example from Maryland because we have a unique way of
    funding uncompensated care, about a billion dollars a year in
    uncompensated care goes into a pool on the hospital side and
    there is about a 7 percent assessment that goes on every single
    person's hospital bill in the State for every service to pay
    for that uncompensated care. So when that goes down because
    more people get covered, everybody benefits--small businesses,
    individuals, the State through the Medicaid program and so it
    is one of the factors that we use to see, and in Maryland it is
    very explicit because of this system, you can really see the
    specific savings that will accrue across the State. It is sort
    of eliminating a hidden tax.
        Mr. Engel. Dr. Allison?
        Mr. Allison. Congressman, we estimate so far we have found
    about $90 million per year that the State spends on non-
    Medicaid programs for uncompensated care. The legislature, the
    Governor will have to make decisions about how to use that
    funding going forward. We have assumed in our estimates that at
    least half of that would be diverted to the State general fund,
    really as an offset to the Medicaid expansion, which is not
    very different, by the way, from the Urban Institute's
    assumptions.
        Mr. Engel. Thank you. Let me talk about the do-gooder State
    issue. As I mentioned before, New York has worked hard to
    ensure that low-income and vulnerable New Yorkers have access
    to health care services by expanding eligibility for Medicaid
    beyond the Federal requirements even prior to the expansion
    included in the Affordable Care Act. Though the Federal support
    for newly eligible populations is incredibly generous, and the
    law includes provisions to benefit these do-gooder States, the
    reality is that New York will not see the same Federal support
    as States which have historically been less generous with their
    eligibility thresholds.
        So regardless of that, I am proud of the fact that New York
    intends to further expand its Medicaid program to meet the ACA
    threshold of 138 percent of the Federal poverty level. It is
    estimated that the State of New York will save $2.3 billion a
    year as a result of this enhanced Federal Medicaid support.
    With the Federal Government providing 100 percent of the
    funding for newly eligible populations for the first 3 years
    and providing at least 90 percent of the funding beyond, I
    simply cannot understand why a State would choose not to
    provide health care coverage to its neediest citizens.
        So let me quickly ask both Dr. Sharfstein and Dr. Allison.
    Dr. Sharfstein, in your written testimony, you stated, and I
    quote, ``Expanding Medicaid is the best decision for Maryland's
    providers, the State economy and the uninsured.'' Can you
    elaborate on the input you received from health care
    stakeholders regarding the Medicaid expansion?
        Mr. Sharfstein. Sure. After the Affordable Care Act was
    passed, there was a process that involved hundreds of
    Marylanders, many of whom have submitted comments, the business
    community, the provider community, advocates, uninsured
    individuals, and there was a real consensus across the State
    that it made sense to expand coverage, that it not only has
    been proven to reduce mortality and improve health outcomes but
    it would have great benefits to Maryland's health care system
    and economy, and so Maryland has moved forward from that point
    based on, you know, input that we received from across the
    State.
        Mr. Engel. Dr. Allison, same question to you. What input
    did you receive from health care stakeholders regarding a
    possible Medicaid expansion in Arkansas?
        Mr. Allison. Virtually all of the health care stakeholder
    associations in Arkansas have come you in favor of the Medicaid
    expansion. They understand the good that it would do for their
    patients. They understand the harm that it would do to them as
    the safety net if Medicaid were not expanded.
        Mr. Engel. Thank you. And Ms. Mann, did you want to make a
    comment on what I mentioned before about States do not get
    punished if they expanded their Medicaid eligibility? Am I
    done, Mr. Chairman?
        Mr. Burgess. Yes, we have got other members who have been
    waiting a long time, Mr. Engel.
        Mr. Engel. OK.
        Mr. Burgess. The gentleman's time has expired. At this
    point the Chair would like to recognize the gentleman from
    Utah, Mr. Matheson, 5 minutes for your questions, please.
        Mr. Matheson. Thank you, Mr. Chairman. I appreciate you
    holding this hearing. With tomorrow being the deadline for
    States to declare their intentions with regard to the
    Affordable Care Act exchanges, I would like to focus my time on
    some outstanding questions that remain with regard to the
    function of the exchanges. There are other issues about the law
    I would like to address such as how the health insurance tax
    would be assessed and what effect it will ultimately have on
    consumers, but my time is limited as if the jurisdiction of our
    committee.
        Now, the Affordable Care Act envisions a seamless process
    for consumers to access health insurance coverage through the
    exchanges or expanded Medicaid or CHIP coverage, depending on
    eligibility. One of the potential unknowns in this process is
    the issue of how to provide for uninterrupted coverage for
    those whose eligibility changes during the course of the year
    due to fluctuations in income. The statute is not clear as to
    whether these consumers would be able to maintain their
    existing coverage or if they will be required to move between
    private coverage and Medicaid as their income shifts through
    the year. This potential for churning could not only place
    significant administrative burdens on consumers and on plans
    but could also threaten continuity of care as consumers move
    between plans with different provider networks. In the end, it
    is going to lead to adverse health outcomes for the
    beneficiary.
        So I guess I will direct the question, maybe Ms. Mann would
    be the one to answer this. Can you provide some clarity on this
    issue about how these individuals will be assessed and how best
    the system can maintain continuity of coverage for people who
    may fall into this situation?
        Ms. Mann. Absolutely. It is a very important question. The
    Affordable Care Act and the regulations ensure that there will
    be continuity of eligibility if income changes so the rules and
    the law are pretty explicit about ways in which there should be
    no gap in coverage if somebody's eligibility changes from
    Medicaid to the exchange or from the exchange to Medicaid, but
    there is the issue of continuity of plan and provider, and in
    our recent questions and answers that we released on December
    10th, we gave three options for States to consider to try and
    minimize this disruption of care. One of the first things
    States can do if they are running a State-based exchange is,
    they are encouraged to have the same plans doing business on
    the exchange as they are doing business in the Medicaid and the
    CHIP program and then families have an ability, even if their
    eligibility changes, to stay in the same plan.
        Beyond that, we have noted some premium assistance options
    that States can use inside their State, options in the Medicaid
    program. It is a way of assuring continuity of coverage. They
    can purchase the coverage for a Medicaid- or CHIP-eligible
    person by contracting with a qualified health provider that
    happens to be doing business on the exchange. That way, if that
    individual's eligibility changes from Medicaid and CHIP to
    eligibility on the exchange for a premium tax credit, they
    would switch to a tax credit for Medicaid but they wouldn't
    have to switch plans.
        Mr. Matheson. Thank you. My home State of Utah is one of
    several States deciding on which health exchange approach is
    most appropriate for our residents, and our Governor has raised
    some very relevant questions recently with regard to how the
    different approaches may operate, some of which I would like to
    explore with you, if I could. If several States band together
    to form a multi-State exchange, what role would State
    regulators play in enforcing State law? Have we thought about
    that?
        Mr. Cohen. State regulators will have the same role that
    they do today in terms of reviewing policy forms, making sure
    they are consistent with any State law, State mandates, for
    example, as well as with the Federal law so there shouldn't be
    a change in the role of State regulators in a multi-State
    exchange.
        Mr. Matheson. Is that also the same if they are under the
    Federal exchange?
        Mr. Cohen. Yes.
        Mr. Matheson. Do State policymakers relinquish any ability
    to provide counsel, advice or influence on the operation of a
    Federal exchange should the State opt out of operating their
    own State-based exchange?
        Mr. Cohen. I think that we are always interested and will
    continue to be interested in working with States to make the
    exchanges work best for their State, whether it is a federally
    facilitated exchange or not. I think that there are some
    important decisions that States get to make themselves if they
    are in a State exchange or a State partnership exchange. For
    example, one example is just how the thing will be funded. We
    have proposed one funding mechanism which will work in the
    Federal exchange, but States could use a different funding
    mechanism if it is a State exchange.
        Mr. Matheson. Thank you, Mr. Chairman. I will yield back.
        Mr. Burgess. The gentleman yields back. The Chair
    recognizes the gentleman from Virginia, Mr. Griffith, for 5
    minutes for your questions, sir.
        Mr. Griffith. Thank you, Mr. Chairman, and I appreciate all
    of you all being here. I know it has been a long day, and I
    look forward to working with each of you and the members of
    this committee as we move forward.
        Mr. Chairman, I will yield my time to you for questions
    that I believe you may have.
        Mr. Burgess. I thank the gentleman for yielding.
        Mr. Smith, and again, to everyone on the panel, thank you
    for your indulgence today. I believe it is the policy of this
    committee, we invite smart people to come and tell us what they
    think about things. If there is an opinion that needs to be
    offered, I think it should be offered.
        So Mr. Smith, a long time ago, Mr. Waxman offered some
    comments to which you wanted to respond. I know we have kind of
    removed the immediacy of your response to those questions, but
    if you had comments you would like to make, we would love to
    hear them now.
        Mr. Smith. Thank you, Mr. Chairman. I appreciate that
    greatly, and it is nice to be with a bunch of smart people.
        The question about block grants, and I wanted to respond in
    a couple of different ways. First, the State Children's Health
    Insurance Program is a block grant. That was one of the most
    successful programs that everyone has claimed great credit for.
    There are different forms of block grants. There was a per
    capita cap approach that during the Clinton administration,
    Clinton administration officials supported that type of
    approach. The block grants themselves, again for States, we do
    believe we can run these programs more efficiently and more
    effectively than under Federal rules. First of all, more than
    half of Medicaid dollars are spent because States have expanded
    beyond Federal requirements. We have added eligibility, we have
    added benefits well beyond what the Federal law expands. So
    again, sort of the perspective that if the Federal Government
    doesn't require it, the States aren't going to do it, the
    history is actually the opposite. States have expanded beyond
    what the Federal requirements are, so we believe very strongly
    States can indeed be trusted.
        Most of the money is in people who are either senior
    citizens needing long-term care or individuals with
    disabilities. In Wisconsin, we have in fact lowered the cost of
    care because we have been able through waivers put people into
    private sector managed care situations. Again, regular Medicaid
    fee-for-service is the most expensive type of care, and in many
    respects least appropriate because the care is not being
    provided for.
        So from my perspective, when I look at all of these
    Medicaid dollars that are being spent under the different
    formulas that have been offered, which guarantee Federal
    dollars growing by population at least medical CPI or CPI plus
    one, I say absolutely, I can make that deal work. If my Federal
    dollars are guaranteed, I become more efficient. The State
    therefore actually increases the Federal match rate because the
    State match goes down because the Federal dollars are
    guaranteed to be there. So absolutely, we can make that
    situation work. Again, I go back to the very beginning before
    legislation was even put out. In December of 2008, Chairman
    Baucus at the Finance Committee put out a paper saying there is
    $700 billion in excess spending in the health care system.
    Through Medicare and Medicaid, the government spends almost
    half of those dollars. Medicaid and Medicare therefore do
    indeed have to be brought to the table, and there is a great
    deal of overutilization in the system. From our perspective,
    again, it is not the cost of health care, it is the excess cost
    of health care. The excess cost of health care is what we are
    going after. We have done it successfully in Wisconsin. We
    think we can go even further.
        Mr. Burgess. Well, along that line, I am terribly
    disappointed to hear Mr. Cohen's response to the Medical Loss
    Ratio question and health savings accounts. You know, Mr.
    Pallone, I sat on this committee with you down at the kids'
    table while we heard all the comments about how to bring down
    cost of health care. That is what the Affordable Care Act was
    supposed to do. Remember the word ``affordable'' is in the
    title. If we wanted to bring the cost of health care down, we
    would have invited Governor Mitch Daniels to this committee and
    asked him how he did that in his State, 11 reduction over 2
    years. He did it with a health savings account for his State
    employees. It was voluntary, but he found out something
    important: people when they spend their own money for health
    care, something magic happens, even if it wasn't their own
    money in the first place. It sounds like from your
    interpretation of the Medical Loss Ratio, that effect is going
    to be lost. That is yet more one failing of this very large law
    that came into being under very difficult circumstances.
        I will yield back my time and recognize Dr. Christensen 5
    minutes for questions.
        Mrs. Christensen. Thank you, Mr. Chairman, and thank you to
    all the witnesses for your patience and being here with us
    today. I too am very proud of the work that we in this
    committee did on the Affordable Care Act and I don't want to
    see any of the gains lost. I want to see every one of the over
    30 million people who are going to receive coverage receive
    coverage including the 20 or so million who will receive
    coverage through Medicaid expansion, and a large percentage of
    those are people of color for whom the Tri-Caucus worked very
    hard as we put together this law to ensure that African
    Americans, Hispanics, Native American and Asian Americans had
    access to health care. I wanted to go to our one of our poorer
    States that is not about to accept the Medicaid expansion, I
    don't think. No Medicaid expansion, no State exchange.
        Mr. Greenstein, you mentioned in your testimony that
    Louisiana has some of the worst health statistics and your
    State has some of the most persistent health disparities in the
    Nation. Numerous studies have shown that expanding access to
    health care through programs like Medicaid help to reduce
    health disparities. The National Urban League released a report
    last week about the economic cost of health disparities and
    found that the health disparities cost this Nation more than
    $82 billion in direct health care spending in just one year,
    and the highest burden, of course, is in the South where health
    disparities cost about $35 billion in just one year. So aren't
    you concerned that not expanding Medicaid would exacerbate the
    disparities in your State, leaving more people as the sickest
    in our Nation and also increase the financial costs in the end
    because they are going to come to you at some point without
    having preventive care, without having health care maintenance,
    when they are very sick and cost the State more?
        Mr. Greenstein. Thank you very, very much to focus the
    attention on what all the coverage is supposed to address,
    which is people's health status and the health outcomes.
    Indeed, in my State and many other States nearby, we see great
    disparities in diabetes, in obesity, and they are dramatic. We
    have looked at the outcomes for people on Medicaid and those
    without insurance, and we don't see a great deal of difference.
    This is distressing. We have a system that is not turning out
    the kind of health outcomes that we would expect for the amount
    of money that we put in.
        We have looked very deeply at expanding Medicaid, and let
    me share with you some of the numbers around it. I believe
    Chairman Waxman went through the numbers in Louisiana that we
    would expand Medicaid, how many people that don't have
    insurance would get it, and he cited about 265,000. When we
    looked at our numbers in the first year alone, 467,000 people
    would join the Medicaid rolls. Of that, 187,000 people already
    have private health insurance today. We would see a
    cannibalization of the private health insurance market taking
    generally healthy risk from a system where people pay some
    portion of their care and move that into Medicaid. Hospitals,
    doctors would see reimbursement levels reduced. So this it not
    an easy way to think through that expansion equals better
    health outcomes for everyone. It doesn't.
        Mrs. Christensen. Nothing, as I understand it, precludes
    you from making changes within the Medicaid system to address
    some of the areas that, you know, may not be working so that
    where you now see that Medicaid-covered patients don't do any
    better than patients how are insured.
        Ms. Mann, is there anything that--I have heard several of
    the panelists say that, you know, the law dictates to the
    States, does not allow them the flexibility? Is that the case,
    or can't they also fix whatever is wrong with their Medicaid
    system?
        Ms. Mann. They can, and we would hope that they do, and we
    will be prepared to work closely with Louisiana to do just
    that. There is a study in Oregon that recently came out that
    looked at people on Medicaid and people not on Medicaid had a
    control group. It was considered a gold standard study. It
    showed definitively that the care and the well-being and the
    health outcomes for the people receiving the Medicaid coverage
    were far superior to those who weren't having health care
    coverage and who were uninsured. There are lots of issues in
    Louisiana that are difficult, are challenging for anyone to
    tackle, but the evidence around the country is that you can
    make Medicaid work well for beneficiaries and improve health
    outcomes. The discretion around designing the program,
    determining the delivery system, contracting with the
    providers, those are all decisions that are fundamentally State
    decisions in the Medicaid program.
        Mr. Smith. May I offer an idea on eligibility? You
    mentioned Native Americans as a specific population. When we
    are switched to Modified Adjusted Gross Income, in Medicaid
    currently where Native Americans are exempt from cost-sharing
    entirely in the program, in Wisconsin, we disregard certain
    income that is available to them as members of the tribe. That
    gets changed under MAGI. Those people will become tax-credit
    eligible where they will be paying cost-sharing rather than
    Medicaid eligible.
        Mrs. Christensen. I don't think that is the case, but my
    time is up and, you know, I hope that Ms. Mann and Mr. Cohen
    will have a chance to respond to that because I don't think
    that is the case.
        Mr. Burgess. The gentlelady's time is expired. I recognize
    a member of the full committee, Mr. Sarbanes, 5 minutes for
    your questions, please.
        Mr. Sarbanes. Thank you, Mr. Chairman, and thank you for
    letting me participate today in the hearing. I appreciate it
    very much.
        I just want to say to Mr. Cohen and Ms. Mann, thank you for
    your tremendous work on this. It is incredibly exciting
    actually what you are doing because you are helping to build an
    expanded infrastructure that is going to provide more access to
    millions of Americans and over time I think also begin to reign
    in health care costs in a very effective way for individuals
    and for the system as a whole.
        I wanted to ask you, Ms. Mann, real quickly, what do you
    anticipate when we get to the end of this process in terms of
    the number of States that will actually have done a State-based
    exchanged versus those that will have done a partnership
    exchange versus those who will be federally facilitated? Any
    kind of sense of where----
        Mr. Cohen. I think that is actually for me. We don't know
    yet. There is a deadline on the State-based exchange that is
    coming up this Friday. So far we have heard from 14 States and
    the District of Columbia have said they want to be State-based
    exchanges. There may be more by Friday but we don't know that.
    The second deadline that comes along is February 15th of next
    year, which is when we have asked States to tell us that they
    want to be in a partnership exchange, so we will know more in
    February as far as how many are going to work with us.
        Mr. Sarbanes. All right. Well, let me ask you, Dr.
    Sharfstein. First of all, thanks for being here.
    Congratulations on the work in Maryland. I know you and
    Governor O'Malley and others that are a part of this effort
    have really been part of the vanguard in demonstrating that
    these State-based exchanges can work and can get in place, and
    we are very proud of that in Maryland.
        I wanted to ask you, in view of the fact that States soon
    will be making a judgment about whether they think they can
    stand up a State-based exchange and in other instances will be
    look at the partnership model, you talked to your colleagues
    around the country who are making these decisions. What are the
    kinds of anxieties they express to you that you are able based
    on Maryland's experience to say look, there is a way to do this
    and, you know, whether it is certain technical things that you
    would comment on or just the process of sort of how you get
    consensus behind it and get people comfortable moving forward,
    what are you saying to your colleagues who maybe want to get
    there but are worried a little bit about it based on the
    Maryland experience that can give them some comfort and
    confidence that they can do this?
        Mr. Sharfstein. Sure. Thanks for your question, and thanks
    for your leadership in Maryland. We really appreciate it.
        There is a lot of engagement with the States that are
    moving forward on the State-based exchanges. There are a number
    of calls that happened. There is exchange of documents.
    Sometimes it is very explicit like a document or analysis that
    we will do other States will use directly or we will use
    something that they have done, and sometimes it is more just
    talking over, you know, different situations. A couple days ago
    up in west Baltimore, we had a meeting of the exchange board,
    probably 75 people in the public watching. We worked our way
    through a bunch of issues that we have been talking to our
    peers around the country, how billing would be done. We
    resolved that the exchange would take the first payment but the
    carriers would do the payments after that, and that is an issue
    where there is, you know, different ways to go. We have figured
    out a way to partner effectively with insurance brokers and we
    adopted some policies related to that. We decided to offer
    adult dental and vision plans if possible in the exchange.
        So for each of these things, there is a discussion, and I
    understand there are a lot of details involved but, you know,
    we have gotten energy from talking to people about those
    details both within our State and with other States, and
    systematically step by step, you know, moving forward with each
    part.
        Mr. Sarbanes. I just want to emphasize that from the
    beginning of this process, obviously a State looking at it
    without any peers having undertaken the process, without CMS
    and others having, you know, fully gotten into it yet, you
    could look at it and it would appear very daunting, and States
    like Maryland decided, you know, we want to get out in front of
    this thing and other States did as well. But we are now at a
    point as a result of this where the expertise that results in
    CMS, practical expertise about how implementation of this can
    happen, plus the expertise that resides in a peer group of
    States that have started to build these exchanges, have created
    the models, have looked at the computer systems and how all
    that is going to work. It means that States that, you know,
    maybe didn't get started as fast as they could are now if they
    make the judgment to go forward are going to come to the table
    with a, let us call it a support group or a network of people
    that hammer through a lot of these issues and they will be able
    to get where they need to go maybe faster than you had to do it
    starting from scratch, but that is important, I think, in
    making people understand that this is very feasible, and if
    people get into this and start working on it, we are going to
    get this framework in place. Thank you very much.
        Mr. Burgess. The gentleman's time is expired. That
    concludes the questions from the members of the subcommittee
    and members of the full committee who wished to ask questions.
    We have time, I think, for two follow-up questions, one from
    each side.
        The Chair will recognize Dr. Cassidy for our side.
        Mr. Cassidy. First, let us just give some reality to some
    of the quotes regarding Medicaid expansion improving health
    care. That Oregon study you quote, Ms. Mann, was a study
    limited to Oregon on an outpatient basis, and there is some
    evidence that people felt better just because they won the
    lottery. Secondly, as regards the New England Journal of
    Medicine article you quote, Dr. Sharfstein, it was by driven by
    New York solely, and in fact, in Maine, although it was not
    statistically significant, the Medicaid expansion resulted in
    poorer outcomes among those who were on Medicaid. Now, it was
    not statistically significant but that was entirely driven by
    the State of New York.
        And as regards Mr. Engel speaking of the do-gooder States,
    I will point out that New York pays physicians less well than
    does Louisiana and Texas, and only 60 percent of physicians in
    New York accept Medicaid. That is not access.
        Now, that said, just to clear up the record a little bit,
    now that we know, Mr. Smith, that the one thing that has been
    shown to lower costs, which is health savings accounts, will
    not be allowed in the MLR unless it is actually spent, i.e., we
    are no longer lowering costs, we are now encouraging insurance
    companies either not to sell them or perhaps insurance company
    to encourage a person to sell it, what data do you have in your
    State on the effect of the increased premium cost on someone
    who is, say, 200 percent of Federal poverty level who is
    currently employed with employer-sponsored insurance, dumped
    into the expansion as McKinsey Quarterly says about 30 percent
    of these employers will do, now has an actuarial value of 60
    percent, what do you project is going to happen to that person?
        Mr. Smith. Thank you, Mr. Cassidy. Again, we have been
    modeling the PPACA premiums in Wisconsin Medicaid since the
    first of July.
        Mr. Cassidy. So you actually are seeing--this is not a
    computer model, you have actually got real-life data?
        Mr. Smith. Yes, sir. This is the actual experience.
    Wisconsin has already expanded Medicaid coverage. We have
    parents, caretakers, relatives up to 200 percent of poverty.
    Some of our eligibility groups have transitioned to medical
    assistance, individuals with income above 300 percent of
    poverty. We have started applying only the premiums, not any of
    the additional cost-sharing.
        Mr. Cassidy. Not the $2,000 deductible?
        Mr. Smith. No, sir, this is only premiums, not any
    additional cost-sharing that would be in effect. So in the
    results to date, people at the lower income level, again,
    because they are looking at a dollar amount, they are not
    thinking of a percentage----
        Mr. Cassidy. Yes, in Washington, we speak about percentages
    but we are actually talking about a dollar amount.
        Mr. Smith. Yes, sir, so at 133 to 150 percent of poverty,
    again, because the poverty level includes not only someone's
    income but also the size of the family, and so a percentage of
    your gross income. So----
        Mr. Cassidy. Please hurry.
        Mr. Smith. I apologize. For people making over 200 percent
    of poverty, the average now of $200 premium, participation was
    cut in half. So people are saying we are not paying $200.
        Mr. Cassidy. So 50 percent more people are without
    insurance?
        Mr. Smith. Fifty percent of people who had been enrolled
    dropped their Medicaid coverage when premiums----
        Mr. Cassidy. So when that working family's employer puts
    them on the exchange and they have an actual value of 80
    percent with the employer but it may be 60 percent on the
    bronze level, they are facing premiums and deductibles they
    never faced before, they are dropping their coverage
    potentially?
        Mr. Smith. Exactly, because you have, again, the employer--
    --
        Mr. Cassidy. This is good for the American worker?
        Mr. Smith. I think the results are going to be quite
    different.
        Mr. Cassidy. And this is not theoretical, this your actual
    experience, correct?
        Mr. Smith. Yes.
        Mr. Cassidy. Now, Mr. Greenstein, we speak of percentages
    in DC, isn't it interesting, and that Kaiser Family Foundation
    based on the Urban League speaks about how much Louisiana is
    going to get, but actually it is going to cost our State,
    according to that study, $1.8 billion over 10 years.
        Mr. Greenstein. We suspect that those figures actually are
    understated and don't capture the full administrative costs.
        Mr. Cassidy. And they also, I might say, probably
    understate the amount of taxes that will have to be raised for
    those costs, a macro effect that it has ignored. Continue.
        Mr. Greenstein. Likely. When we looked at the study, we
    recognized that there were very large shifts in winners and
    losers. Some States end up reducing their overall burden, some
    States increase. But when we talk--and a good part of the
    discussion today has been about how States are going to save so
    much money by Medicaid expansion. It is just shifting cost from
    one place to another. At the same time, this is all net new
    spending.
        Mr. Cassidy. I agree with that. So one more question for
    Ms. Mann or Mr. Cohen.
        Mr. Burgess. We better cut it off.
        Mr. Cassidy. Oh, my gosh.
        Mr. Burgess. You can submit it in writing. You have until
    December 27, sir.
        Mr. Cassidy. Thank you all.
        Mr. Burgess. I recognize the ranking member of the
    subcommittee 5 minutes for your questions, please.
        Mr. Pallone. Thank you, Mr. Chairman.
        Ms. Mann, I just wanted to give you an opportunity to
    respond to the comments made by Mr. Smith, if you would.
        Ms. Mann. On the issue of the block grant, I think, is
    where I was trying to jump in.
        Mr. Pallone. Whatever you like.
        Ms. Mann. Yes. A couple things to say. Thank you for the
    opportunity. One, Mr. Smith harkened back to noting that the
    Children's Health Insurance Program is essentially a capped
    allotment, it functions as a block grant. That is true, and
    what we need to recall, I know it is hard to remember back that
    far, is that in the early years of the CHIP program, States ran
    out of money. States were desperate because the dollars
    allotted was what Congress thought they needed and of course it
    was a set amount of dollars, and it turned out that the
    enrollment was higher and the needs were higher, and States
    were on the verge of shutting down their programs or putting
    their State dollars on the table to cover children. That is the
    nature of a block grant. It is a capped amount of money and it
    shifts risks onto States and ultimately onto vulnerable
    Americans who are covered by those programs. Mr. Smith talks
    about who can do a better job, can the States do a better job,
    can the feds to a better job. It is really not about trust. It
    is really about having a financial partnership that works. I
    would submit that without that financial partnership, we would
    be moving into 2014 with States operating 20-year-old legacy
    systems if we didn't provide some additional Federal funding to
    help States finance their eligibility. I would submit probably
    without that flexible financing, we would not have had the
    situation where over the years people with HIV and AIDS were
    able to get the care that they needed, expensive care, and then
    were able to live healthy and productive lives, or poor
    children with leukemia or with autism were able to get
    effective care to help them. When you have a capped amount of
    money where the Federal Government says that it is all I am
    going to do and I am going to do no more, we risk those kinds
    of results.
        What we need and what is good about that partnership, while
    it is fraught with some tensions, is that it keeps us all at
    the table to make sure the program is as strong as possible. We
    all have incentives to get better care and to do that at lower
    cost, and that partnership helps us get there.
        Mr. Pallone. Thanks. And I just wanted to give Dr.
    Sharfstein and Mr. Allison an opportunity to talk briefly in
    closing. Why is Medicaid expansion the right answer for your
    States, and if you had to convince the three other States here,
    what would you say to them about it?
        Mr. Sharfstein. I would ask them to spend some time with
    individuals who would get coverage and who need coverage or who
    benefit from Medicaid coverage. I think we all agree that there
    needs to be more value in health care. I think we all agree
    that we need to get excess cost out, but I think basic services
    and basic health care for people shouldn't be consider excess.
        A couple nights ago, I was at a church in Howard County
    with about 300 people in the developmentally disabled
    community, and a mom got up and talked about what Medicaid
    meant for her daughter born with a heart defect, and it was
    just a harrowing story, and then the little girl ran across and
    basically gave me a hug, and it was a moment where we could
    just stop and say this is what Medicaid stands for.
        We want to get Medicaid to work. We need health care to
    work, but it shouldn't be don't expand, keep people out first.
    It should be, let us get people in and move forward with the
    health care system.
        Mr. Pallone. OK. Thanks.
        Mr. Allison?
        Mr. Allison. Congressman, thank you for the opportunity. I
    would just say that Congress passed and the Supreme Court
    upheld a law that provides significant incentives to States to
    save the lives of its own citizens, to improve their health, to
    provide to them financial protection. I represent a poor State
    with many who are uninsured and who without this support never
    be able to afford care. We know that care makes a difference.
    It may be that we face challenges in the future to assure that
    this remains financially sustainable, the new commitment that
    we are making, but I would just encourage my fellow States to
    consider the opportunity which has presented itself now.
        Mr. Pallone. OK. Thank you very much. Thank you, Mr.
    Chairman.
        Mr. Burgess. The gentleman yields back his time, all time
    having expired on the committee.
        Mr. Pallone, there was a unanimous-consent request from
    your side about providing some data about Pennsylvania, and
    without objection, I am going to make that part of the record.
        [The information follows:]

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        Mr. Burgess. But Mr. Alexander, I think in fairness to you,
    I am going to submit a question to you about this data and I
    would be very grateful for your reply to that. The same
    courtesy will be afforded to Ms. Schakowsky as well, and I want
    to remind all members, I said earlier 5 business days, it is
    actually 10 business days to submit questions for the record,
    and we will ask the witnesses to respond to those questions
    promptly. Members should submit their questions by the close of
    business on Thursday, December 27th, and by happy occurrence,
    we will be here on Thursday, the 27th.
        So without objection, the subcommittee is adjourned.
        [Whereupon, at 1:29 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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