[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:]

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    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:]

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    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:]

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    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.
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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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