    [House Hearing, 113 Congress]
    [From the U.S. Government Publishing Office]

                     THE STATUS OF THE AFFORDABLE CARE ACT
                                 IMPLEMENTATION

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

                                     HEARING

                                   BEFORE THE

                          COMMITTEE ON WAYS AND MEANS
                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 AUGUST 1, 2013

                                   __________

                              Serial No. 113-FC12

                                   __________

             Printed for the use of the Committee on Ways and Means

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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                          COMMITTEE ON WAYS AND MEANS

                         DAVE CAMP, Michigan, Chairman

    SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
    KEVIN BRADY, Texas                   CHARLES B. RANGEL, New York
    PAUL RYAN, Wisconsin                 JIM MCDERMOTT, Washington
    DEVIN NUNES, California              JOHN LEWIS, Georgia
    PATRICK J. TIBERI, Ohio              RICHARD E. NEAL, Massachusetts
    DAVID G. REICHERT, Washington        XAVIER BECERRA, California
    CHARLES W. BOUSTANY, JR., Louisiana  LLOYD DOGGETT, Texas
    PETER J. ROSKAM, Illinois            MIKE THOMPSON, California
    JIM GERLACH, Pennsylvania            JOHN B. LARSON, Connecticut
    TOM PRICE, Georgia                   EARL BLUMENAUER, Oregon
    VERN BUCHANAN, Florida               RON KIND, Wisconsin
    ADRIAN SMITH, Nebraska               BILL PASCRELL, JR., New Jersey
    AARON SCHOCK, Illinois               JOSEPH CROWLEY, New York
    LYNN JENKINS, Kansas                 ALLYSON SCHWARTZ, Pennsylvania
    ERIK PAULSEN, Minnesota              DANNY DAVIS, Illinois
    KENNY MARCHANT, Texas                LINDA SANCHEZ, California
    DIANE BLACK, Tennessee
    TOM REED, New York
    TODD YOUNG, Indiana
    MIKE KELLY, Pennsylvania
    TIM GRIFFIN, Arkansas
    JIM RENACCI, Ohio

            Jennifer M. Safavian, Staff Director and General Counsel

                      Janice Mays, Minority Chief Counsel

                                C O N T E N T S

                                   __________

                                                                       Page

    Advisory of August 1, 2013 announcing the hearing................     2

                                   WITNESSES

    Gary Cohen, J.D., Deputy Administrator and Director, Center for
      Consumer Information and Insurance Oversight, Centers for
      Medicare & Medicaid Services, U.S. Department of Health and
      Human Services.................................................    10
    Daniel Werfel, Principal Deputy Commissioner and Deputy
      Commissioner for Services and Enforcement, Internal Revenue
      Service........................................................    25

                     THE STATUS OF THE AFFORDABLE CARE ACT
                                 IMPLEMENTATION

                                  ----------

                            THURSDAY, AUGUST 1, 2013

                         U.S. House of Representatives,
                                   Committee on Ways and Means,
                                                        Washington, DC.

        The Committee met, pursuant to notice, at 10:01 a.m., in
    Room 1100, Longworth House Office Building, Hon. Dave Camp
    [Chairman of the Committee] presiding.

        [The advisory announcing the hearing follows:]

    ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

    FOR IMMEDIATE RELEASE             CONTACT: (202) 225-3625

    Thursday, July 25, 2013
    No. FC-12

                       Chairman Camp Announces Hearing on

                     the Status of the Affordable Care Act

                                 Implementation

        House Committee on Ways and Means Chairman Dave Camp (R-MI) today
    announced that the Committee will hold a hearing on the current status
    of the Obama Administration's efforts to implement the Affordable Care
    Act (ACA). The Committee will hear testimony from Daniel Werfel,
    Principal Deputy Commissioner and Deputy Commissioner for Services and
    Enforcement at the Internal Revenue Service (IRS) and Gary Cohen,
    Deputy Administrator and Director at the Center for Consumer
    Information and Insurance Oversight within the Centers for Medicare &
    Medicaid Services at the U.S. Department of Health and Human Services
    (HHS). The hearing will take place on Thursday, August 1, 2013, in 1100
    Longworth House Office Building, beginning at 10:00 a.m.

        In view of the limited time available to hear from the witnesses,
    oral testimony at this hearing will be from the invited witnesses only.
    However, any individual or organization not scheduled for an appearance
    may submit a written statement for consideration by the Committee and
    for inclusion in the printed record of the hearing.

    BACKGROUND:

        On October 1, 2013, open enrollment is scheduled to begin in 51 new
    healthcare exchanges. While the majority of Americans will continue to
    obtain qualified coverage through an employer, others will seek
    coverage through the exchange. The ACA requires that the exchanges
    perform multiple functions, including coordinating and sharing
    information across several Federal agencies. The ACA tasks both HHS and
    the IRS with extensive new responsibilities that must be carried out in
    order for the exchanges to properly function and efficiently enroll
    millions of Americans into private healthcare plans offered in
    conjunction with the ACA's requirement that individuals purchase
    government-approved insurance. Alternatively, those that choose to
    remain uninsured will pay a tax.

        The building of the exchanges represents one of the largest
    information technology projects in U.S. history. The success or failure
    of implementation will determine, in part, on whether Americans face
    higher or lower premiums, whether individuals understand how or if they
    need to purchase coverage through the exchange, whether subsidies are
    administered accurately and efficiently, and whether the exchanges are
    prepared to properly handle the personal information of millions of
    Americans.

        While the Administration has testified that implementation is on
    schedule, recent regulatory announcements have raised concerns about
    readiness of a program that is a hallmark of the law. On Tuesday, July
    2, 2013, a posting on a U.S. Treasury tax blog announced that the
    employer reporting requirements and the employer mandate tax penalties
    ``will not apply until 2015.'' On July 5, 2013, HHS regulations
    revealed that for 2014, the Administration would rely extensively on
    self-attestation of an individual's income and offer of employer-
    sponsored insurance when enrolling in an exchange. The announcement
    raises new questions about whether the decision, reached in part
    because the employer reporting requirements have been delayed, could
    expose individuals to new penalties resulting from unintentional
    reporting mistakes. The announcements follow a June 2013 Government
    Accountability Office report about the status of the exchanges which
    warned, ``much remains to be accomplished within a relatively short
    amount of time . . . [and] suggest a potential for implementation
    challenges going forward. . . . Whether CMS's contingency planning will
    assure the timely and smooth implementation of the exchanges by October
    2013 cannot yet be determined.''

        This hearing will examine the status of efforts of both HHS and the
    IRS to implement the provisions of the Affordable Care Act under their
    jurisdiction. The hearing will seek answers to why delays are
    occurring, if any additional delays should be expected, and whether in
    fact the exchanges will be ready to fulfill all of their required
    functions on October 1, 2013.

        In announcing the hearing, Chairman Camp stated, ``Members of
    Congress, from both sides of the aisle, have raised concerns about
    whether Obamacare will be ready and will work on October 1st. The
    Administration's repeated promises that `we'll be ready,' is simply not
    a sufficient response. Amidst growing, independent evidence that the
    Administration is far behind schedule, Congress and the American people
    need specific answers. The American people want to know how much their
    health insurance plans will cost, how and where to accurately comply
    with the new law, and assurance that this massive new data collection
    is safe, secure, and will protect their personal information.''

    FOCUS OF THE HEARING:

        The hearing will focus on the status of the Obama Administration's
    implementation of the Affordable Care Act.

    DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

        Please Note: Any person(s) and/or organization(s) wishing to submit
    for the hearing record must follow the appropriate link on the hearing
    page of the Committee website and complete the informational forms.
    From the Committee homepage, https://waysandmeans.house.gov, select
    ``Hearings.'' Select the hearing for which you would like to submit,
    and click on the link entitled, ``Click here to provide a submission
    for the record.'' Once you have followed the online instructions,
    submit all requested information. ATTACH your submission as a Word
    document, in compliance with the formatting requirements listed below,
    by the close of business on Thursday, August 8, 2013. Finally, please
    note that due to the change in House mail policy, the U.S. Capitol
    Police will refuse sealed-package deliveries to all House Office
    Buildings. For questions, or if you encounter technical problems,
    please call (202) 225-1721 or (202) 225-3625.

    FORMATTING REQUIREMENTS:

        The Committee relies on electronic submissions for printing the
    official hearing record. As always, submissions will be included in the
    record according to the discretion of the Committee. The Committee will
    not alter the content of your submission, but we reserve the right to
    format it according to our guidelines. Any submission provided to the
    Committee by a witness, any supplementary materials submitted for the
    printed record, and any written comments in response to a request for
    written comments must conform to the guidelines listed below. Any
    submission or supplementary item not in compliance with these
    guidelines will not be printed, but will be maintained in the Committee
    files for review and use by the Committee.

        1. All submissions and supplementary materials must be provided in
    Word format and MUST NOT exceed a total of 10 pages, including
    attachments. Witnesses and submitters are advised that the Committee
    relies on electronic submissions for printing the official hearing
    record.

        2. Copies of whole documents submitted as exhibit material will not
    be accepted for printing. Instead, exhibit material should be
    referenced and quoted or paraphrased. All exhibit material not meeting
    these specifications will be maintained in the Committee files for
    review and use by the Committee.

        3. All submissions must include a list of all clients, persons and/
    or organizations on whose behalf the witness appears. A supplemental
    sheet must accompany each submission listing the name, company,
    address, telephone, and fax numbers of each witness.

        The Committee seeks to make its facilities accessible to persons
    with disabilities. If you are in need of special accommodations, please
    call 202-225-1721 or 202-226-3411 TDD/TTY in advance of the event (four
    business days notice is requested). Questions with regard to special
    accommodation needs in general (including availability of Committee
    materials in alternative formats) may be directed to the Committee as
    noted above.

        Note: All Committee advisories and news releases are available on
    the World Wide Web at http://www.waysandmeans.house.gov/.

                                    -------

        Chairman CAMP. Good morning. The hearing will come to
    order.
        Just a few months ago in testimony before this Committee,
    Secretary Sebelius repeatedly told Congress and the American
    people that the Obama Administration was, and I am quoting,
    ``on track to meet the October 1 deadline'' for the new
    healthcare law.
        However, over the past 2 months, the evidence shows just
    the opposite is true. In June, the Government Accountability
    Office released two reports which raised serious questions
    about whether the Center for Medicare and Medicaid Services,
    CMS, would be able to have federally run exchanges up and
    running by October 1, 2013, noting numerous reasons for their
    concerns.
        In late July, the Treasury Inspector General for Tax
    Administration stated that testing for the exchanges would be
    difficult to complete before the October 1 date, and as a
    result, Americans will see significant delays and errors.
        Right before the July 4th holiday, the Administration
    announced by blog post the delay of a major provision of the
    law, the employer mandate, giving employers relief, but doing
    nothing to aid hard-working Americans.
        Three days later, Health and Human Services announced they
    would rely on self-verification when it comes to who gets
    subsidies, and just this week we learned that by delaying the
    mandate another $12 billion will be added to the deficit. It
    will also increase Federal spending by a total of $3 billion in
    new exchange subsidies because the delay will result in fewer
    employers offering coverage.
        With these facts at hand, you will have to forgive me if I
    am skeptical of the claims that everything is ``on track.'' It
    has been over 3 years since the law was passed, and in just 60
    days the exchanges are due to be up and running, but we still
    do not have answers to many crucial questions, and worst yet,
    neither do the American people.
        How is the average, hard-working taxpayer expected to
    navigate the Obamacare exchanges in just a few short months
    when the Administration has provided no information as to what
    the real cost will be or what their health insurance will look
    like?
        To quote one of my Democratic colleagues, when is the White
    House going to actually get up and go?
        As though the concerns and questions about implementation
    were not enough, almost daily we are reminded of the effects
    the law is having on the economy. Businesses are struggling to
    figure out how to comply with the law, how it will affect their
    business, and how and whether they will have to cut hours,
    wages or jobs in order to comply.
        After the Administration announced the employer mandate
    delay, one small business owner testified before this Committee
    that ``as a business owner, I worked on the 4th of July and I
    worried about it and I fielded calls from other franchisees
    asking what this meant on the 4th of July.'' Our job creators
    and their employees deserve better.
        The uncertainty is growing all over the country, and the
    American people need answers to the questions that millions of
    families and individuals are asking: why are my premiums
    skyrocketing? How can I expand my business, hire new workers,
    give employees a raise when I am being hit with all of these
    new mandates, regulations and red tape? Why am I losing the
    insurance I have and like?
        And as if college students were not already struggling with
    dim job prospects upon graduation, the healthcare law is
    placing an even greater burden on the young. Central Michigan
    University, a university in Mount Pleasant, Michigan, just
    announced that they will have to limit college student work
    hours to 25 hours a week. As one student said, ``Students use
    that money to pay for finance and school, and I think it is
    going to become increasingly harder for them to pay for school
    when we can only work 25 hours.''
        And as if Americans did not have reason enough to fear the
    IRS, we now know that it is in no position to implement the 47
    new powers and authority given to it under the healthcare law.
    In fact, it is likely Americans will be at even greater risk of
    having their identity stolen or private taxpayer information
    leaked as a result of the law.
        Even the Treasury's Inspector General less than 2 weeks ago
    stated, ``The IRS will struggle to complete all required
    testing.'' The Inspector General is not confident about the
    IRS' ability to protect confidential taxpayer information or to
    prevent fraud, and neither am I.
        This law is becoming increasingly unfair, unworkable, and
    untenable for Americans. With just 3 months left, patients,
    doctors, and hard-working taxpayers will have more questions
    than answers. I look forward to hearing an honest,
    straightforward assessment of the status of this law from our
    witnesses this morning.
        And with that, I will yield to Mr. Levin for his opening
    statement.
        Mr. LEVIN. Well, welcome to the two of you. We look forward
    to your testimony to dispel so much of what has been said.
        Today the Committee is holding a hearing entitled ``The
    Status of the Affordable Care Act Implementation'' under the
    pretense, the pretense that House Republicans are interested in
    implementation of the landmark law. The truth is just the
    opposite. It is evidenced by what House Republicans plan to do
    in just 24 hours. They are going to push a bill through the
    House entitled ``Keep the IRS off your Health Care Act.'' It
    would prohibit any funding, any funding for the IRS to
    implement the Affordable Care Act. I do not know how more
    negative, more destructive you can be than that.
        House Republicans have made plain over the last 3 years
    that their sole interest, their sole interest is to disrupt the
    law's implementation. Tomorrow is what will be their last
    action, their last action before adjourning for a 5-week
    recess, a fitting signoff for a conference whose singular
    obsession with the health law's repeal over the last 3 years
    has come at the expense of so many other issues that are
    critically important to American families and the overall
    economy.
        By the time they leave here Friday for summer recess,
    Republicans will have voted no fewer than 40 times to repeal
    Obamacare. The Republican mission is clear. Do not implement;
    destroy.
        How else can Republicans explain why they have occupied so
    much time and wasted countless taxpayer dollars on 40 repeal
    votes that stand no chance of being enacted, while refusing to
    go to conference to enact a budget into law?
        How else can they explain why they have leaned on outside
    organizations, including the National Football League, to
    discourage them from helping to educate Americans about current
    law, health insurance opportunities, and assistance that will
    be available through the marketplace?
        And how else can they explain why they have worked so hard
    to discourage States from expanding their Medicaid programs
    even when fully federally funded, which will prevent millions
    of the most vulnerable Americans from gaining access to
    healthcare coverage?
        At every turn, Republicans have chosen the path of
    disruption, and it is so vividly on display this week as they
    have sought to deny the Obama Administration funding needed to
    implement. How can you say you are interested in implementation
    when you try to destroy the funding?
        If Republicans were truly interested in the Affordable Care
    Act's implementation, they would inform their constituents that
    a simple three-page application awaits single Americans
    purchasing insurance on the exchange, and that neither--and I
    emphasize this and I hope the witnesses will speak to this--and
    neither the IRS nor the Department of Health and Human Services
    will have access to medical records or other personal history.
        Instead, what do we see? Scare tactics and other misguided
    efforts to convince constituents that applying for healthcare
    coverage will be time consuming and cumbersome.
        We have known for quite a while the Republicans have no
    interest in ensuring that Americans understand what even
    Speaker Boehner himself has acknowledged, and that is ACA is
    the law of the land. Their only interest is to misinform,
    misconstrue and mislead the American public about ACA.
        Even conservative Republican Senator Ted Cruz chastised the
    Republican effort in the House this week. He said, ``There are
    a lot of politicians in Washington who love empty symbolic
    votes. The House has voted what, 39, 40, 41 times--I cannot
    keep track--to repeal Obamacare? Those votes were by and large
    empty, symbolic votes that had zero chance of passing.''
        The problem is, in a sense, they are not symbolic. They are
    part of a destructive mission.
        So thank you to both of you for coming today, and all of us
    look forward to your testimony. We are sure that you will tell
    the facts and tell them emphatically.
        I also want to ask unanimous consent that the following
    article from the American Enterprise Institute's Norm Ornstein
    be inserted in the record.
        Chairman CAMP. Without objection.
        [The submission of The Honorable Sander Levin follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                      -------
        Chairman CAMP. Thank you, Mr. Levin.
        Now it is my pleasure to welcome our two witnesses, both of
    whom bring a great deal of experience and hopefully a good
    amount of answers from the Administration. First, I would like
    to welcome Gary Cohen, the Deputy Administrator and Director
    for the Center for Consumer Information and Insurance
    Oversight, or CCIIO, at the Centers for Medicare & Medicaid
    Services; and second, we will hear from Daniel Werfel, the
    Principal Deputy Commissioner and Deputy Commissioner for
    Services and Enforcement at the IRS.
        Again, thank you both for being with us today. The
    Committee has received each of your written statements, and
    they will be made part of the formal record. Each of you will
    be recognized for 5 minutes for your oral remarks, and then we
    will go to questions from the Members of the Committee.
        And, Mr. Cohen, we will begin with you. You are recognized
    for 5 minutes.

        STATEMENT OF GARY COHEN, J.D., DEPUTY ADMINISTRATOR AND
        DIRECTOR, CENTER FOR CONSUMER INFORMATION AND INSURANCE
       OVERSIGHT, CENTERS FOR MEDICARE & MEDICAID SERVICES, U.S.
                DEPARTMENT OF HEALTH AND HUMAN SERVICES

        Mr. COHEN. Thank you.
        Good morning, Chairman Camp, Ranking Member Levin, and
    Members of the Committee.
        Since the Affordable Care Act became law, CMS has been hard
    at work implementing the law's strong consumer protections that
    hold insurance companies more accountable, give consumers more
    coverage options, and improve the value of that coverage. And,
    of course, it is not just CMS that is hard at work implementing
    this law. Thousands of people all across the country are hard
    at work to make sure that Americans will receive the benefits
    of a transformed health insurance market.
        They are employees of health plans who are designing new
    products that provide great value and security to consumers.
    They are the staff at State Insurance Departments who are
    reviewing those products to make sure that the rates charged
    are fair and reasonable. They are people and communities in
    every State all across the country who are preparing to help
    people enroll in coverage beginning in October.
        Most Americans receive health insurance in connection with
    their jobs, and for those Americans, particularly those who
    work for larger employers, the system has worked well. But for
    the approximately 15 percent of Americans who do not have
    coverage through their employer or Medicare or Medicaid or CHIP
    or some other government program, the system has been broken.
    Before the Affordable Care Act, many young people and those
    with low incomes could not afford health insurance, leaving
    millions without coverage. Women could be charged 50 percent
    more than men for individual insurance policies.
        Insurance was not affordable for many small employers
    because of the type of work that they do or because they have
    one worker with high medical costs.
        Now Americans are benefitting from some of the Affordable
    Care Act's insurance reforms. More than three million
    additional young adults under the age of 26 are covered under
    their parents' plans. Nearly 18 million children with
    preexisting conditions now cannot be denied coverage.
        New scrutiny of health insurance rate increases has saved
    Americans an estimated $1 billion on their health insurance
    premiums, and in 2014 being a woman will no longer be a
    preexisting condition.
        Two months from today the marketplaces will provide a new
    way to shop for coverage for the uninsured, those with
    preexisting conditions, and individuals who currently buy
    coverage at high costs. On October 1st, Americans will begin
    shopping in the marketplaces, and they will be able to fill out
    one application to purchase private insurance, qualify for
    premium tax credits and reduced cost sharing or obtain Medicaid
    or CHIP coverage.
        Many of the Americans who will shop in the marketplaces
    have never had health insurance. So the process of selecting,
    applying, and enrolling in health coverage will be unfamiliar
    to them. To reach these populations CMS is providing outreach,
    education, and enrollment assistance in a variety of ways.
        In June, we re-launched a new consumer focused
    Healthcare.gov website and a 24-hour-a-day call center to help
    Americans prepare for open enrollment and ultimately to sign up
    for private health insurance. Since then, thousands of
    consumers have contacted us via live Web chat or our toll-free
    number, and Healthcare.gov already has had over 1 million
    visitors.
        Consumers in the marketplaces will also be able to get in-
    person help from navigators, in-person assisters, trusted
    people connected to their community who can help them walk
    through the process of applying for coverage. They can also
    work with insurance agents and brokers, as is true in the
    market today, to select a qualified health plan.
        These insurance plans in the marketplace will be
    affordable. In fact, we are already seeing evidence that the
    marketplaces are encouraging insurers to compete for consumers
    on price. For the thoroughly facilitated marketplaces, CMS has
    received qualified health plan submissions from more than 120
    issuers. In 11 States, preliminary rates are lower than
    expected, 18 percent less than what the CBO estimated. In some
    cases rates are lower than the current premiums consumers are
    paying today.
        Some States have released initial bids only to have
    insurers request to amend those bids to make them lower in
    order to be more competitive. This is good news for consumers,
    many of whom will be able to afford health insurance for the
    first time, and many consumers will be eligible for help with
    premiums and their out-of-pocket costs through advanced payment
    of premium tax credits and cost sharing reductions.
        CMS has already finished developing most of the services
    required to support open enrollment, including the data hub, a
    routing tool that helps verify income, citizenship status, and
    other information consumers provide against existing data
    sources.
        The marketplace will be up and running on October 1 when
    millions more Americans will have access to high quality, more
    affordable health coverage. By making coverage more affordable,
    improving the value of insurance coverage, and protecting
    consumers, CMS is paving the way for fairer, more transparent,
    and more accessible health insurance marketplaces.
        I thank you for the opportunity to discuss CMS' important
    work to improve access to affordable health coverage for all
    Americans and look forward to your questions.
        [The prepared statement of Mr. Cohen follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                     -----
        Chairman CAMP. Thank you, Mr. Cohen.
        Mr. Werfel, you are recognized for 5 minutes.

     STATEMENT OF DANIEL WERFEL, PRINCIPAL DEPUTY COMMISSIONER AND
      DEPUTY COMMISSIONER FOR SERVICES AND ENFORCEMENT, INTERNAL
                            REVENUE SERVICE

        Mr. WERFEL. Chairman Camp, Ranking Member Levin, and
    Members of the Committee, thank you for the opportunity to
    appear before you today to discuss the work the IRS has been
    doing to fulfill our responsibilities under the Affordable Care
    Act.
        The IRS is charged with implementing the tax related
    provisions of the ACA. Our most substantial implementation
    effort in this regard involves the delivery of the premium tax
    credits that will help millions of American families afford
    health insurance starting in 2014 when the new health insurance
    marketplace, also known as Affordable Insurance Exchanges, will
    begin operating.
        The Department of Health and Human Services is the lead
    agency on defining the structure and operations of the
    marketplace. Open enrollment for insurance purchased through
    the marketplace will start October 1, 2013, with coverage
    beginning as soon as January 1, 2014.
        When an individual seeks to purchase insurance through a
    marketplace and seeks financial assistance, the marketplace
    must determine what assistance, if any, the applicant may
    qualify for, such as Medicaid or the premium tax credit. To
    make that determination, the marketplace will request Federal
    taxpayer data from us, and we will provide for each applicant
    some limited tax data from the applicant's most recently filed
    Federal income tax return.
        It is important to understand exactly how this information
    will be transferred from the IRS to the marketplace. The ACA
    designates HHS as the conduit for information being shared with
    the marketplace. The taxpayer data supplied by the IRS will be
    transmitted over secure encrypted channels to the HHS Federal
    Data Services Hub, which was developed to facilitate these data
    transfers.
        This data hub will not be storing taxpayer information, but
    merely routing that information to authorized users. At no time
    is the tax data to be displayed to anyone outside of the
    marketplace itself.
        The IRS also is responsible for providing a computational
    service if the marketplace determines that the applicant is
    eligible for and interested in advanced payments of the premium
    tax credit, which are sent to the individual's insurance
    company. Without identifying the applicant, the marketplace
    will submit a few data elements, including income and family
    size, for the IRS computational service through the HHS data
    hub and receive back a single figure. That figure represents
    the maximum advanced premium tax credit resulting from those
    data inputs. Nothing in this computational process identifies
    individuals or contains tax data.
        While the focus for October 2013 is on preparing for the
    marketplaces to begin operating, the IRS has also been
    preparing for the 2015 filing season. Beginning with 2014 tax
    returns filed in 2015, eligible individuals will be able to
    claim the credit on their returns and will be required to
    reconcile any advances already paid to their insurance company
    on their behalf. In regard to these taxpayers, the IRS must
    balance the need to promptly process accurate returns with the
    need to identify and stop any erroneous claims for the credit.
        To facilitate this process, the marketplaces will be
    sending to the IRS enrollment information for individuals
    purchasing coverage through those marketplaces. This
    transactional information will be transmitted over secure
    encrypted channels. It will include the fact and cost of
    coverage and information on any advance payments of the premium
    tax credit made during the coverage year to the taxpayer's
    insurance company on their behalf.
        While certain identifying information, such as name and
    Social Security number, is required to support the processing
    of returns, no personal health information will ever be
    provided. The IRS will reconcile the information with what the
    individuals report on their tax returns so that the IRS can
    verify whether they received the proper amount of credit, are
    owed more, or must repay any excess advance payments.
        This information will help the IRS speed processing of
    returns and spot erroneous credit claims. It is important to
    note that the IRS already routinely receives third party
    information that helps it verify the accuracy of tax returns,
    and we have longstanding policies in place related to the
    safety and privacy of this information. We will use this
    experience to guide us in making sure that any ACA related
    taxpayer information we receive is properly safeguarded.
        In addition to the data, tools and systems that the IRS
    uses to battle tax fraud of all kinds, we have some particular
    tools for enforcing proper payments of the premium tax credit.
    As mentioned above, the marketplaces will be providing the IRS
    with key 2014 transactional data prior to the beginning of the
    2015 tax filing season. Having this pre-positioned enrollment
    data will allow the IRS to more effectively detect erroneous
    claims for the credit.
        Chairman Camp, Ranking Member Levin, that concludes my
    statement. I would be happy to take your questions.
        [The prepared statement of Mr. Werfel follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                     -----
        Chairman CAMP. Well, thank you both very much.
        Mr. Werfel, as you know, the Committee has long been
    concerned about the integrity of the use of taxpayer dollars
    and the IRS' ability to control abuse of those dollars. In
    fact, one of the Treasury's Inspector Generals, and that is
    obviously the independent, nonpartisan watchdog of the IRS and
    the Treasury, has previously reported massive amounts of
    improper payments, and those are payments under the IRS'
    authority.
        In fact, a report last year by this nonpartisan Inspector
    General estimated the IRS will issue over $21 billion in
    fraudulent tax refunds over a 5-year period, and more recently
    the Inspector General found that the IRS allowed $46 million in
    fraudulent tax refunds to go to a single mailing address in
    Georgia.
        Now, this comes on the heels of a 2010 Inspector General
    report--so this is not a new development--that reported the IRS
    would issue $55 to $65 billion in improper EITC payments before
    it could enact efforts to stop this fraud.
        These are issues I have raised with your predecessor for a
    number of years as well, and obviously these facts are very
    troubling.
        Now, that same nonpartisan Inspector General testified,
    ``The IRS' existing fraud detection systems may not be capable
    of identifying ACA or healthcare refund or fraud schemes prior
    to the issuance of the tax refunds.'' Obviously, this is
    completely unacceptable, and I guess I would ask: How do you
    expect the American people to believe that their hard-earned
    tax dollars are going to be protected, and what are you doing
    about these longstanding, ongoing problems and obviously the
    potential in the future, given the Inspector General's
    testimony?
        Mr. WERFEL. Thank you for the question. I have a few
    responses.
        First, I think we could have a separate discussion about
    fraud and improper payments and other parts of the tax code
    like the earned income tax credit, but let me spend some time
    on the Affordable Care Act.
        There are some differences with the way the Affordable Care
    Act and the IRS footprint works from EITC that I think is
    important to point out because it actually is helpful in
    reducing the incidence of fraud, and there are two key things I
    want to share with you.
        First, when an individual comes in to get premium tax
    credit assistance, so when they're getting their tax credit
    under the ACA, no funds are actually shared directly with the
    taxpayer. That money goes to the insurance company. So that
    individual is never receiving the money. They are getting an
    economic benefit, access to insurance and less expensive
    premiums, but different from EITC where they are actually
    getting the money, here----
        Chairman CAMP. But whether they qualify for the benefit
    will be up to them, right? Because now HHS has said they will
    self-authenticate or self-verify. They will say whether they
    qualify, correct?
        Mr. WERFEL. Well, as I mentioned in my opening remarks, we
    provide HHS and then they provide the marketplace taxpayer
    information about those individuals and their income level. So
    that----
        Chairman CAMP. But at the time----
        Mr. WERFEL [continuing]. Information will help validate
    what their income may be in the future based on having that
    historical information of what their taxpayer data says now.
        Chairman CAMP. But I am correct on the self-authentication
    or self-verify, that taxpayers will determine whether they
    qualify.
        Mr. WERFEL. I will leave that question for Mr. Cohen, but
    let me add one----
        Chairman CAMP. Mr. Cohen, am I correct on that?
        Mr. COHEN. No. We are going to verify the income of every
    person who applies for subsidies through the marketplaces, and
    we are going to do that through----
        Chairman CAMP. But wait. Just stop for a second. HHS
    announced that there is going to be a self-verification system.
    Did they not make that announcement?
        Mr. COHEN. We are actually going to be coming out with some
    additional guidance today, I think, or tomorrow.
        Chairman CAMP. Okay. But they did make that announcement.
        Mr. COHEN. We said that we were going to be doing a
    sampling, and we are now going to be announcing that we are
    going to be sampling 100 percent. We are going to be requesting
    documentation----
        Chairman CAMP. So there is new information that----
        Mr. COHEN. There is new information, correct.
        Chairman CAMP. And can you elaborate on that for us?
        Mr. COHEN. I can. I can. So the way it is going to work is
    people say, ``This is how much my income was or is going to
    be,'' and what the person puts on the application is checked
    against the available data sources from IRS, from Social
    Security in the event that they have disability income, and
    from Equifax, which is a well known private company.
        Chairman CAMP. But you are not going to have their current
    taxpayer information until after they file.
        Mr. COHEN. No, this is so they will be looking at the prior
    year's tax return.
        Chairman CAMP. Yes.
        Mr. COHEN. If we cannot match, if there is not a match, if
    we cannot verify, then we are going to ask for further
    information and documentation, such as pay stubs, from every
    applicant.
        Chairman CAMP. All right. And I want you to continue.
        Mr. WERFEL. There was just one other thing I wanted to add.
    In addition to the fact that the taxpayer itself does not
    receive funds, just receives the economic benefit because the
    money goes directly to the insurance company, the other point
    is that the IRS----
        Chairman CAMP. But they do get the subsidy.
        Mr. WERFEL. They get a subsidy, but they never get cash in
    hand. They get a cheaper----
        Chairman CAMP. No, but in terms of the American taxpayer
    being protected from improper or fraudulent subsidies, that
    still is an outstanding issue. Whether the individual gets a
    cash payment or not, there still is a----
        Mr. WERFEL. I completely agree. If there is a mistake
    there----
        Chairman CAMP. Thank you.
        Mr. WERFEL [continuing]. It is a loss to the Treasury, but
    here is another----
        Chairman CAMP. Which is the American people.
        Mr. WERFEL. Right, absolutely. I agree, but if I can make
    one more point, which is the IRS will have a report from the
    exchange, and that report will have detailed information that
    will let us validate does this individual have a relationship
    with the exchange. We will know whether they have made their
    premium payments. We will have more information to reconcile
    that individual's tax return than we have in EITC and other
    cases. So there are some mitigating elements that will help us
    reduce the incidence of potential erroneous payments in this
    case.
        Chairman CAMP. Will the IRS enforce the mandate that
    businesses offer acceptable coverage next year?
        Mr. WERFEL. So here is how that is going to work. I think
    what you are referring to is that we in future years after the
    2015 filing season will rely on an employer report, and that
    employer report will not be provided in this first year.
        Chairman CAMP. But next year, yes or no?
        Mr. WERFEL. Next year we are working on solutions to look
    at other alternative reports and information to help validate
    the employer offer, and that is under development right now
    with the employer community, with the business community in
    light of the fact that the employer report is not going to
    occur until filing season 2016. We are working with employers
    now to look at alternative ways to validate their offer of
    coverage.
        Chairman CAMP. Well, did I not read the blog post properly
    that the employer mandate was delayed?
        Mr. WERFEL. Yes, there is what we are calling the
    transition relief period, and in that case, the----
        Chairman CAMP. Which means it is delayed for a year.
        Mr. WERFEL. Yes, and the employer----
        Chairman CAMP. So----
        Mr. WERFEL. Right. The employer report that was due in
    filing season 2015 is now going to be due in filing season
    2016, but that does not mean we are not going to continue to
    work with businesses to understand what types of offer of
    health coverage----
        Chairman CAMP. But next year the employer mandate will not
    be enforced.
        Mr. WERFEL. That is correct.
        Chairman CAMP. That is the conclusion. Thank you for that.
        Mr. WERFEL. That is correct.
        Chairman CAMP. But I do believe the IRS will enforce the
    individual mandate that average Americans have acceptable
    coverage next year; is that correct?
        Mr. WERFEL. Yes. The individual mandate is still in place.
        Chairman CAMP. So, I mean, one of the comments from the
    Inspector General for Tax Administration said that the IRS will
    need to ensure that tax returns accurately claim the various
    applicable ACA provisions and, above all, that taxpayers are
    treated fairly.
        And I guess my question for you is: Is it fair that
    businesses, big businesses are off the hook while the average
    taxpayer is going to be required to buy federally defined
    acceptable coverage through an individual mandate? How fair is
    that?
        Mr. WERFEL. You know, my role in the IRS is to implement
    the laws. I rely on the Treasury Department to make certain
    decisions that are of a policy nature. I think the decision
    here and the issue of fairness and equity is a policy call that
    the Treasury Department made.
        I believe there is a balancing that goes on in terms of
    making sure that we are implementing the law as effectively as
    possible. The employers and the business community reached out,
    indicated a need for more time, and there was a balancing
    decision made that we should provide them more time.
        Chairman CAMP. All right. Thank you.
        And, Mr. Cohen, I appreciate your openness about what HHS
    may be doing, and I think it just underscores how important
    this oversight hearing is on implementation as we are seeing
    new developments on a daily basis in this area. So I think any
    concerns that this is an unnecessary hearing are certainly
    waved away by your comments.
        But let me just say that you have seen the rate filings for
    the plans being offered in the 34 Federal exchanges, have you
    not?
        Mr. COHEN. We have had submissions from the issuers that
    will be offering in the Federal----
        Chairman CAMP. And they have come to you because that is
    your responsibility.
        Mr. COHEN. They have come to my office, yes.
        Chairman CAMP. Yes. But we obviously have not seen them and
    the American people have not seen them. So my question to you
    is: Will the average family in mid and northern Michigan see a
    $2,500 reduction in the premiums they pay?
        Mr. COHEN. You know, we have not released any data on the
    rates that have come into the Federally Facilitated
    Marketplace. We are very careful at CMS just as we are with the
    Part D program and the Medicare Advantage program. We only
    release that information once we have an agreement. We do not
    want to affect the market.
        Chairman CAMP. Well, the President promised that we will
    lower premiums ``up to $2,500 for a typical family per year.''
    Is that going to happen?
        And obviously we are a couple of months away from this
    being implemented. People are concerned about the costs, how
    they are going to be able to meet these obligations. Is the
    average family in mid and northern Michigan going to see that
    kind of rate reduction?
        Mr. COHEN. I think that the average family in northern
    Michigan will have in a marketplace more options and far better
    coverage at an affordable price once the Affordable Care Act
    is----
        Chairman CAMP. So they will see a $2,500 reduction.
        Mr. COHEN. I cannot say. We are not releasing any
    information about the----
        Chairman CAMP. Well, certainly you can understand why
    citizens are concerned on what is going to be a very large
    expense for their families that we cannot even have any sort of
    prediction in terms of where this is going to be after several
    years of so-called implementation.
        Mr. COHEN. I actually think that predictions have proven
    not to be very useful. I think it would be more useful to look
    at the rates that States have actually released, which have in
    the 11 States----
        Chairman CAMP. But given the numbers you have seen, have
    you seen on average a $2,500 reduction?
        Mr. COHEN. We have seen a reduction if you compare apples
    to apples coverage in a number of cases, yes. We have seen a
    reduction in rates.
        Chairman CAMP. So for the average family you have seen a
    $2,500 reduction?
        Mr. COHEN. I cannot speak to $2,500 specifically.
        Chairman CAMP. I mean, that is what the President promised.
        Mr. COHEN. Well, I am not sure that is exactly what the
    President said, but----
        Chairman CAMP. I am quoting from him. Are you suggesting I
    am not quoting him accurately?
        Mr. COHEN. I am not suggesting anything.
        Chairman CAMP. I certainly hope not.
        Mr. COHEN. I am not suggesting that at all. I am just
    saying I am not----
        Chairman CAMP. All right.
        Mr. COHEN [continuing]. Sure what the President said.
        Chairman CAMP. All right. With that, I will turn it over to
    Mr. Levin.
        Mr. LEVIN. The President, I think, talked about ``up to.''
        As long as you have raised Michigan, let me just tell you
    what is happening. Fourteen insurance carriers have now
    submitted to be participants in the marketplace in Michigan,
    14. Blue Cross-Blue Shield has had 60, 70 percent, a dominant
    role in the insurance industry in Michigan. That is a fact.
        And for Republicans who say they believe in competition,
    essentially that is what this marketplace is going to bring
    about for the citizens of Michigan, including in central
    Michigan.
        Mr. Werfel, if 2009 is passed tomorrow and becomes law,
    would IRS be able to implement the Affordable Care Act?
        Mr. WERFEL. From my understanding of the law, we would not
    because we would not have the ability to expend any resources
    to do our implementation efforts.
        Mr. LEVIN. It is totally destructive. It will not happen.
        Let me ask each of you, if I might. Will your agency be
    ready to go on October 1st? Mr. Cohen.
        Mr. COHEN. Yes, we will.
        Mr. LEVIN. Mr. Werfel, assuming 2009 does not pass?
        Mr. WERFEL. Yes, we will.
        Mr. LEVIN. Will consumers be able to begin enrolling in the
    exchange or marketplace coverage on October 1st?
        Mr. COHEN. Yes, they will.
        Mr. LEVIN. Will that coverage start on January 1, 2014?
        Mr. COHEN. Yes, it will.
        Mr. LEVIN. Mr. Werfel, there has been a lot of scare
    tactics about taxpayer data, and I just want to read to you
    from your testimony. ``At no time is the tax data to be
    displayed to anyone outside of the marketplace.''
        Is that your assurance?
        Mr. WERFEL. Yes. I mean, there is a set of procedures that
    we have put in place to make sure that there is clarity on when

    and how the taxpayer information is transmitted. It is
    transmitted
    over encrypted channels. There are all types of safeguards and
    procedures that we have put in place when we share taxpayer
    information outside of the IRS, which happens now for programs
    like Medicaid and other programs. We are using those same set
    of procedures, which have historically proven effective. They
    are not perfect, but they have proven historically very
    effective in mitigating the risk of any taxpayer information
    being used or accessed for unauthorized purposes.
        Mr. LEVIN. And thank you. If either of you could comment on
    this, describe how this bill will affect millions of middle-
    class individuals and families who have been waiting for
    premium assistance when the marketplace opens on October 1st.
        Would you like to answer that?
        Mr. COHEN. Thank you.
        So I would say in two ways. I think one very important way
    is that today for anyone who has an illness or has had an
    illness in the past, it can be difficult or impossible to get
    health insurance coverage because they either will be
    ineligible for it or it will be much too expensive because they
    will be rated up because of their existing medical condition.
        That cannot happen with coverage beginning January 1st.
        The second way is that for many people it has simply been
    unaffordable because of their income level, and for those
    people, there will be both, as Mr. Werfel has explained,
    advanced premium tax credits that will go directly to the
    insurance company to offset a portion of the premium, and there
    will also be a reduction in what they have to pay in cost
    sharing in terms of deductible and copays that will be paid
    directly to the insurance company to make the coverage
    affordable.
        Mr. LEVIN. Thank you. I yield back.
        Chairman CAMP. All right. Mr. Johnson is recognized.
        Mr. JOHNSON. Thank you, Mr. Chairman.
        Mr. Cohen, the Supreme Court stated very clearly
    ``Americans have a choice. They can either buy government-
    approved health insurance or they can choose not to and instead
    pay a penalty.''
        That choice is never mentioned in the application, is it?
        Mr. COHEN. No, the application asks people whether they
    want to apply and whether they want to get financial assistance
    purchasing coverage. So----
        Mr. JOHNSON. But it never says they do not have to do it if
    they do not want to.
        Mr. COHEN. Well, it does not say that they have to do it
    either. It just is available to people who choose to come to
    market.
        Mr. JOHNSON. I think you need to look at that.
        The website, www.Healthcare.gov, does not alert Americans
    that the Supreme Court says they have a choice. I do not think
    your website does that either, does it?
        Mr. COHEN. I am not aware, but it does not surprise me if
    it does not. I do not think it tells people that they have to
    either. I think it offers opportunities for people to purchase
    insurance----
        Mr. JOHNSON. Will navigators be required----
        Mr. COHEN [continuing]. In a private market.
        Mr. JOHNSON [continuing]. To inform individuals that they
    do have a choice, that they do not have to take the insurance
    if they do not want it?
        Mr. COHEN. I think our goal is to get as many Americans
    insured in health coverage as we can, Congressman, because I
    think that provides security to their families and help if they
    become ill.
        Mr. JOHNSON. Well, how are Americans going to be told they
    do not have to do this if they do not want to?
        Mr. COHEN. Well, I think there are folks out there who are
    probably telling them that, but I am not sure that is my job.
        Mr. JOHNSON. It is your job.
        Now, Mr. Werfel, last week your employees who are a member
    of the National Treasury Employees Union sent a form letter for
    union members to send in to ask they be exempt from the
    exchanges. Why are your employees trying to exempt themselves
    from the very law that you are tasked to enforce?
        Mr. WERFEL. Well, I do not want to speak for the NTEU, but
    I will offer a perspective as a Federal employee myself and a
    Federal employee at the IRS, and that is we have right now as
    employees of the government, of the IRS, affordable healthcare
    coverage, and I think the ACA was designed to provide an option
    or an alternative for individuals that do not.
        And, all else being equal, I think if you are an individual
    who is satisfied with your healthcare coverage, you are
    probably in a better position to stick with that coverage than
    go through the change of moving into a different environment
    and going through that process.
        So for a Federal employee, I think it is more likely, and I
    can speak for myself, I would prefer to stay with the current
    policy that I am pleased with rather than go through a change
    if I do not need to go through that change.
        But if I am an individual that does not have affordable
    healthcare coverage or I am unhappy with my coverage, then it
    is my understanding the exchanges would offer a competitive
    alternative to look at, and that might be something someone
    might want to pursue.
        But the IRS employees as a whole, I think what the NTEU is
    saying is they are pleased with their healthcare coverage. They
    prefer to stay in their current healthcare coverage.
        Mr. JOHNSON. Well, do they have to pay a penalty then for
    not taking government coverage?
        Mr. WERFEL. No, it is my understanding that the individual
    mandate would only occur if they are not getting coverage at
    all. If they opt for no coverage, then they would pay the
    individual mandate.
        Mr. JOHNSON. Okay. I do not read it that way.
        Mr. Werfel and Mr. Cohen, I have a question about fairness.
    Until July 2nd, the Administration was telling individuals who
    work more than 30 hours a week they were going to make your
    employer provide your health care. If they do not, you can get
    health care and a subsidy in the exchange.
        Now, that is not true any longer for 2014. An employer does
    not have to offer coverage. So the individuals will have to go
    to the exchange in 2014 to get coverage. Many have already seen
    their hours slashed as businesses attempt to comply with the
    30-hour rule, and it is kind of confusing and disrupting.
        The fact is Obamacare is not ready, and it is the American
    people who bear the burden of you not being ready. Is that fair
    for employers and their employees? Either one of you.
        Mr. COHEN. Well, I would just say, first of all, that the
    requirement that employers provide coverage under the
    Affordable Care Act when it goes into effect a year from now
    only applies to larger employers, 96 percent of which provide
    coverage to their workers today. So the impact of that
    provision is actually quite small.
        Smaller employers are not subject to the employer mandate
    under the Affordable Care Act, and they will not be next year.
    So there is a lot of misunderstanding about, you know, what
    this provision is and who it impacts.
        So I think I would stop there.
        Mr. WERFEL. And, as I said earlier, I think on July 17th, a
    Treasury Department official, Marc Ivery, appeared here and
    answered these very questions. I think it is more appropriate
    for me to focus on the administration of these provisions and
    how effective the IRS can be in administrating these issues.
        Chairman CAMP. All right. Thank you.
        Mr. JOHNSON. Thank you.
        Chairman CAMP. Mr. Rangel.
        Mr. RANGEL. Thank you so much, Mr. Chairman.
        And welcome to the battlefield.
        People are talking about States, and I know that I am
    always overconfident about the successes of New York City and
    New York State, but it was my last reading that, as relates to
    the cost of health insurance in New York State, that it was far
    more favorable than what was perceived by our Chairman.
        Could you share with me? Are my observations accurate?
        Mr. COHEN. That is right. New York has published rates that
    have been proposed to be in effect in 2014, and they are lower
    for most people than the rates that were in effect this----
        Mr. RANGEL. And in this great country we do have other
    examples of States that really want to provide services for
    their citizens, that have rates that are just as positive. Is
    that not true?
        Mr. COHEN. That is correct.
        Mr. RANGEL. Now, it is abundantly clear that this hearing
    is being called not to be of any assistance in this program
    being successful. I do not understand that concept. In the
    winter of my legislative years, I have never seen such partisan
    attacks on ideas, especially one that provides for health care
    for Americans. It seems to me that it is not only our moral
    responsibility, but our legal responsibility to enforce the
    law, and that is what you two intend to do.
        However, my Speaker has made it clear that this particular
    Congress should not be judged by our performance in enacting
    law, but rather we should concern ourselves with the number of
    laws that have been repealed.
        So while I do believe in the good intent of my Republican
    friends, I want you to answer the question: How can this
    Committee help you to effectively do your job which you by law
    have to do if they tell you at this hearing that their position
    is not to help you but to de-fund the resources that you need
    to do the job?
        What is your answer? Is there inconsistency in any question
    that asks how you are performing if what they are going to
    produce is taking the money away?
        Will this Committee in good faith be improving the law or
    trying to make certain that the law does not work?
        Mr. COHEN. I would just say that the President's 2014
    budget requests $1.5 billion for implementation of the
    Affordable Care Act, and this Committee certainly could help us
    and we would welcome its support with respect to that request.
        Mr. RANGEL. That is very nice, but if, indeed, this
    ridiculous plan that is borne dead except for political
    purposes was to succeed, then there would be no need for your
    appearance before this Committee; is that not correct?
        If they repeal the funding of it----
        Mr. COHEN. Oh, right.
        Mr. RANGEL [continuing]. You have no program.
        Mr. COHEN. That is true.
        Mr. RANGEL. And that is the publicly stated goal of the
    majority of the Republicans here, to not give you the
    resources. So you coming here is just establishing a blueprint
    of a destructive plan that not only concerns health care, but
    concerns the integrity of the United States' ability to keep
    government running, and the first step that was supposed to do
    this is to defend the health care for the citizens that we have
    pledged to protect.
        And so I hope that soon, Mr. Chairman, we will have the
    Treasury here and other agencies that have obligations to see
    how it can be better understood how the Majority intends to
    deplete the funding for health care and to stop the government
    from producing and unfortunately not to have any plan to
    replace it.
        So if this is the beginning shot of the war, once we hear
    from the religious community, the health providers, the
    business community that we will succeed, I do hope that some of
    my Republican friends will see that passing and improving law
    is a heck of a lot better than destroying and repealing laws.
        Let me thank you for at least your attempt to show that you
    are going to do the best you can, and this Congress is going to
    do the best it can under President Obama, to provide health
    care for all American citizens.
        Thank you for your service.
        Chairman CAMP. Thank you.
        Mr. Brady.
        Mr. BRADY. You know, my family is worried that if Obamacare
    is not ready for business, is it ready for their family, for
    their children, for their loved ones, and there are a lot of
    lives at stake in health care. You have to be able to depend
    upon it, and I think they see that, you know, Warren Buffett
    gets a break from the White House on the employer mandate, but
    a single mom working in Texas does not. On January 1st, they
    are forced to buy government approved health care or pay a tax,
    and they are worried about it.
        And they have not seen it. I will tell you, regrettably,
    that the $2,500 reduction in healthcare cost the President
    promised my constituents is nowhere to be found.
        Mr. Cohen, we heard from the head of Medicare and Medicaid
    Services just a few weeks ago. The testing is nearly done with
    the data hub. It is almost ready to go. So I wanted to ask
    about that.
        Have you successfully sent a pilot application to the
    Social Security Administration, and have they successfully
    verified it back to you?
        Mr. COHEN. We began testing with the Social Security
    Administration in May. The testing is continuing, and it will
    be completed this month.
        Mr. BRADY. But you are saying you have not yet successfully
    sent a pilot?
        Mr. COHEN. I am going to have to get back to you on the
    details of exactly what has happened.
        Mr. BRADY. How about with the Department of Homeland
    Security? Have you sent an application there and have they
    checked prisoner status and lawful presence?
        Mr. COHEN. My answer is the same for all those agencies. We
    are engaged in testing now. It began a few months ago. It is
    continuing, and it will be completed this month.
        Mr. BRADY. So I'm just asking a really simple question.
    Have you sent a pilot trial application out, and received it
    back successfully and accurately?
        Mr. COHEN. I understand your question, and I do not want to
    get into deep water on the technical aspect that----
        Mr. BRADY. Well, that is not very technical. It is like a
    person sends to the exchanges. They put in their application,
    pretty easy, and you have said, ``We have it checked out. It is
    already working.''
        Mr. COHEN. And I am sure we can get that answer for you to
    your specific question.
        Mr. BRADY. Isn't that your key job? I mean, are you not in
    charge of having this data hub and the exchanges ready to go?
        Mr. COHEN. I am one of the people who is working on
    implementation of the Affordable Care Act, along with a number
    of people at CMS.
        Mr. BRADY. Sure.
        Mr. COHEN. And I just do not want to give you an answer
    that is not correct.
        Mr. BRADY. I appreciate that. Have you sent an application,
    a trial application to the States that have exchanges? Because
    that is a really basic process. We are on the eve of the
    exchanges. So you have sent it to the States to verify the
    accuracy?
        Mr. COHEN. We are testing. My answer is the same. We have
    begun testing with the States. That testing is ongoing, and it
    is going to be completed this month, and the same is true with
    the issuers that are going to be participating in this as well.
        Mr. BRADY. Is it safe to say at this point a pilot
    application has not been sent successfully throughout the data
    hub system and returned accurately?
        Mr. COHEN. I just want to be careful to give you accurate
    information. So I would rather make sure that I am giving you
    the right answer and supply that to you.
        Mr. BRADY. Is it more yes or more no?
        Mr. COHEN. I am afraid I just cannot say any more than I
    have.
        Mr. BRADY. That is just not very reassuring for families on
    the eve of this that----
        Mr. COHEN. I am not saying there is not an answer. I am
    just saying I will get it for you.
        Mr. BRADY. There does not appear to be an answer I think
    our constituents are hoping for.
        Mr. Werfel, let me ask this. This data hub, you know, is a
    hacker's dream, but I do not know who I most fear, someone from
    the outside hacking information or the way our government
    handles it. You have assured us that the IRS, despite the
    significant abuses of power we are already investigating, that
    the IRS has never shared private taxpayer information with
    other Federal agencies, but I am looking at an email from 2008
    where Lois Lerner did exactly that. She shared private taxpayer
    information with the Federal Election Commission.
        So, one, how is she still on the payroll?
        Two, why did you tell us this did not happen?
        And, three, why should we trust the IRS to protect our
    taxpayer information under Obamacare?
        Mr. WERFEL. Sir, let me respond to each of those. First,
    let me clarify. I never assured that there are not incidences
    that occur. We share information roughly with 300 different
    Federal and State agencies as a matter of routine business, and
    we have procedures and safeguards in place to protect that
    information, but no procedure or safeguard is perfect.
        There are and have been historically incidences where
    unauthorized information has been----
        Mr. BRADY. Sir, that is not what you told us in your last
    appearance before the Committee. My time has expired, but I
    hope we can----
        Mr. WERFEL. If you want, I can answer that question on the
    record.
        Chairman CAMP. If you want to respond in writing for the
    record, we will make sure that is part of it.
        Mr. WERFEL. I can absolutely do that, yes.
        Chairman CAMP. Mr. McDermott is recognized.
        Mr. MCDERMOTT. Thank you, Mr. Chairman.
        Welcome, gentlemen. As Mr. Rangel has said, you are in war.
    This is not a hearing. This is a battle, and it is a typical
    political battle where one side is throwing up dust and trying
    to confuse everybody all over the country about what is
    happening.
        This hearing is really the culmination of months of a
    careful build-up. The Majority has been crafting a scandal
    narrative to support their truly relentless agenda to repeal
    the Affordable Care Act. For 2 months we have heard nonstop
    complaints against the IRS being corrupt and incompetent.
    Despite that, the only politically motivated act was the
    Republicans' request that the IG focus only on the treatment of
    conservative groups. They did not ask for a full study. They
    only asked how it affected their friends in the Tea Party.
        So today we are going to discuss whether or not the IRS and
    CMS are capable and competent enough to see the law through,
    and my colleagues already have thrown dust and mud at the wall
    to see if it sticks. None of it does, and what we are going to
    do tomorrow is the 40th fig leaf vote.
        Senator Cruz from Texas calls these ``fig leaf votes'' to
    give people some cover when they go home so that people will
    not see they are absolutely naked. The truth about this
    Congress is that for 18 years this Committee has been
    functioning. Sixteen of those years were under the Republicans.
    We have never taken a vote in this Committee under Republicans
    on comprehensive reform.
        For all their talk, nothing has ever been tabled in this
    Committee. Now we tabled a bill here, and we passed it out
    under Speaker Pelosi, and they have been trying desperately for
    5 years to destroy it, and the question before us is whether
    the IRS is ready and able to collect your name, your family
    size, and income data to be used in a Federal exchange hub.
    They will not collect your health status. They will not have
    anything about anybody's ingrown toenails in this report. There
    is no prescription drug history that the IRS is going to have
    or the healthcare provider's name; just the data they collect
    from their average database of information for the tax system
    in this country: name, how much you make, how many people are
    in your family.
        As far as CMS goes, they are ready. Exchanges, Medicare
    expansions will be ready to go. My State of Washington, we are
    going to have 80 percent registered by the first of March. We
    are already ready to go, and we have done an aggressive
    awareness campaign all along the West Coast, California, Oregon
    and Washington. You watch. The rest of this dais is going to be
    looking and saying, ``Why can we not have that in'' wherever
    they are from.
        My constituents are already seeing an average of $500 a
    family in insurer rebates from parts of the ACA that are
    already working to hold insurers accountable for how they spend
    the premium dollar they take in. This is not an investigation
    in pursuit of better government. It is a desperate, 11th hour
    attempt to stop a law that will help Americans.
        It is hard for me to believe that people who have made no
    proposals are saying to their people back home, ``Don't you
    dare sign up for this Obamacare. It is going to be awful for
    you.'' I do not know how you run for office telling people that
    you do not want to.
        And the proposal that is on the table here today is
    straight out of the Republican Party. Mitt Romney created it in
    Massachusetts, and at least one Member on this dais campaigned
    nationally on this issue, saying that they are now against
    Romneycare as it is put nationwide.
        So I would like to hear what happens to the 50-year-old,
    the person who has a $50,000 a year income when they go to the
    exchange. What will happen to them? Explain the process for
    people.
        Chairman CAMP. You just have a few seconds remaining.
        [Laughter].
        Mr. COHEN. Well, I think a person with a $50,000 income,
    that is going to be too much income to be eligible for
    subsidies. So they can buy insurance through the marketplace.
    They can buy insurance through the existing healthcare
    marketplace outside the exchange. They will have all the
    choices that are available.
        This is a private market solution to a pressing social
    problem.
        Chairman CAMP. All right. Thank you.
        Mr. Ryan.
        Mr. RYAN. I enjoy following Mr. McDermott.
        I guess the new line here is that the Majority is peddling
    a scandal narrative, that they are throwing something at the
    wall to see if it sticks.
        We had a gentleman from the National Organization of
    Marriage come here and testify how the IRS leaked their
    sensitive taxpayer information to their political opponents.
        We had a lady from a pro-life group in Iowa who told us how
    the IRS said if you surrender your First Amendment rights to
    speak your views, then maybe we will approve your application.
        That is not a phony scandal. That is a real scandal. No
    matter what our colleagues try to say to whisk this issue away,
    the government was intimidating people and targeting them based
    upon their political views. That is not phony. That is real.
        Now here I want to actually ask you a question instead of
    giving a speech for 5 minutes and then asking a question, you
    know, with 10 seconds to go.
        Mr. Cohen, is an adult child, meaning someone under the age
    of 26, who has a parent with affordable employer sponsored
    insurance eligible to receive a tax credit in the exchange?
        Mr. COHEN. No.
        Mr. RYAN. Okay. So let's walk through a scenario here. Take
    a young woman 25 years old, living in Milwaukee, and her mom
    and dad live in Chicago, and they have employer sponsored
    health insurance. She goes to the exchange because her job in
    Milwaukee does not offer her health insurance.
        Mr. COHEN. Right.
        Mr. RYAN. And she gets the three-page application for
    single people without employer coverage. The application says
    specifically ``single adults who are not offered health
    coverage from their employer.'' There are no further questions
    about employer coverage. So she signs up. She gets a subsidy.
    It could be thousands of dollars of subsidy that she is not
    eligible for because her parents----
        Mr. COHEN. I may be wrong then. I may be incorrect in my
    previous answer.
        Mr. RYAN. My understanding of the law is that she is not
    eligible for a subsidy----
        Mr. COHEN. Okay, okay.
        Mr. RYAN [continuing]. If her parents' insurance covers
    this. But since you delayed the employer mandate, your data hub
    has no way of reconciling that record. So she is going to get a
    subsidy she is not entitled to or eligible for.
        Take a husband and wife living in Madison. The husband has
    been the person with the insurance for the family, but he is
    losing it because the company is not offering it anymore. He
    got his hours knocked down to 30 or something like that.
        The wife works at a job, and her employer does offer
    credible insurance, but she did not take it because she never
    has before, and it is just another year, and she is not doing
    it.
        He goes and signs up for the exchange. He gets the subsidy.
    He gets Obamacare, but they are not eligible for the subsidy,
    but you have no way of verifying that.
        So what are you going to do? Are you going to make this
    person pay it back, Mr. Werfel? Because if I am not mistaken,
    the law requires you to do so.
        And if we are not going to reconcile this record until
    maybe 2016, as you just said, is that going to be 2 years of
    subsidies going to people that they are not eligible for? They
    did not get it fraudulently. They just got it through
    confusion.
        Then does the law not require you to put a huge tax on
    their tax bill at the end of the day, when you finally
    reconcile this data, and so then they will get thousands of
    dollars of taxes clawing back the subsidy that they were not
    eligible for?
        Is that not what you will have to do?
        Mr. WERFEL. A couple of responses. First, the employer
    report that is going to be very helpful in validating the state
    of cover, you are right. We are not going to get it in filing
    season 2015, but there are other ways that we can work with the
    employer community to get that information.
        Mr. RYAN. Are you going to have that up and running when
    the people start filling this out next year?
        Mr. WERFEL. We are working very closely, and I think HHS
    and the exchanges and IRS are working together with the
    business community to figure out alternative solutions.
        Mr. RYAN. Okay. So----
        Mr. WERFEL. It is a partnership with the business
    community.
        Mr. RYAN. So this fall when a 25-year-old Milwaukeean signs
    up because she does not get health insurance at her job, but
    she is ineligible legally for the subsidy, when she actually
    applies for the subsidy because she does not know any better
    because the application does not say she is ineligible----
        Mr. WERFEL. If she is----
        Mr. RYAN [continuing]. You are going to catch that?
        Mr. WERFEL. If she is in the right income, if she is
    between 100 and 400 percent of the poverty level, it is my
    understanding----
        Mr. RYAN. Most 25-year-olds are.
        Mr. WERFEL [continuing]. It is my understanding that the
    exchange will reach out to employers at that time. It will not
    be the official report that we will be getting in filing season
    2016.
        Mr. RYAN. Okay.
        Mr. WERFEL. But, again, it is not----
        Mr. RYAN. Let's say her parents live in Texas and she is
    living in Milwaukee. This exchange is going to see all of this?
    It is going to figure all of this out? You have delayed the
    employer mandate and you are going to reconcile this record?
    You are going to make sure she does not get a subsidy she is
    not entitled to?
        Mr. WERFEL. I am saying that we are working on solutions.
    The IRS is working on solutions at the back end.
        Mr. RYAN. Okay.
        Mr. WERFEL. The exchanges are working on solutions at the--
    --
        Mr. RYAN. Let me get at it this way. Let's say you do not
    catch it. Do you not have to hit her with a tax liability to
    claw back that subsidy that she was not supposed to get?
        Let's just say you do not catch it, and she gets the
    subsidy she is not supposed to get. You have to hit her with a
    tax to claw it back at the end of the day, correct?
        Mr. WERFEL. Well, if we find that there is a problem, that
    she got a credit that she should not have gotten, if we do
    that, and we might be able to do that by working with the
    employer community----
        Mr. RYAN. I am just saying assume----
        Mr. WERFEL [continuing]. Then we will, but there will be a
    cap. Depending on her income level, and I can walk through that
    with you, there is protections for those individuals in those
    cases where we would cap the amount that we would claw back.
        Mr. COHEN. I would just say I do not know why anyone who
    could get free insurance, free to them, insurance through their
    parents' policy, would choose instead to go on the marketplace
    and pay for insurance, even if they get a subsidy.
        Mr. RYAN. I guess we will just have to hope, will we not?
        Mr. COHEN. No, it is not a question of hope.
        Mr. RYAN. Thank you.
        Mr. COHEN. It is a question of logic.
        Chairman CAMP. All right. Mr. Neal.
        Mr. NEAL. Thank you, Mr. Chairman.
        Mr. Chairman, has the Majority devised a way that we will
    be able to vote on this during the August break?
        Chairman CAMP. If the gentleman would like us to, I am
    sure.
        Mr. NEAL. I mean, we could do perhaps proxy voting or
    Internet voting or early voting in anticipation of September. I
    think that the game plan here is to get to the 40th and the
    100th time before implementation. Is that the strategy?
        Chairman CAMP. I think Mr. Rostenkowski was the last
    Chairman that allowed proxy voting.
        Mr. NEAL. It seemed to work better, by the way, than what
    we are experiencing here. I must tell you that, Mr. Chairman.
        Mr. Cohen, a followup to Mr. Rangel's questions about what
    we are witnessing in New York and in some of the other States.
    Would you care to expound? And I will give you some time to
    talk about the trend line that you are witnessing.
        Mr. COHEN. Yes, thank you.
        HHS put out a report recently that captured the ten States
    and the District of Columbia, and since then we have seen
    Maryland, that have made public the rates, and that is a matter
    of State law and procedure that they make those rates public
    when they are filed.
        On average, they were 18 percent below what the
    Congressional Budget Office estimated premiums would be in the
    marketplace beginning in 2014. In all cases, they were what our
    analysis shows are affordable, particularly when you then take
    into consideration the subsidies that people will be eligible
    for that will help pay for a portion of those premiums.
        So what we are saying is in States where there is a
    relatively competitive market with a number of carriers that
    are offering coverage in the market, the marketplaces are
    offering new opportunity, new transparency, new competition
    that is having a very positive effect on rates.
        In addition, we have seen overall health insurance costs
    and premiums going up at a much lower rate today than they have
    been in decades.
        Mr. NEAL. That certainly has been the case in
    Massachusetts, despite some of the acrimony that has developed
    in terms of the overall argument. There has been a stability
    that has settled in, and you read stories from time to time
    indicating that this has changed or that has changed, but by
    and large, the satisfaction rate in the State of Massachusetts
    based upon Governor Romney's plan, working incidentally with a
    Democratic legislature, that came to the conclusion that you
    could, on a State-by-State experiment, stabilize healthcare
    costs.
        And I cannot emphasize enough that when you have almost
    three-quarters of the people in the State who regularly suggest
    that they are satisfied with the plan, I think you have a good
    model there to build upon.
        Mr. COHEN. I agree. Thank you.
        Mr. NEAL. Thank you, Mr. Chairman.
        Chairman CAMP. Thank you.
        Mr. Nunes.
        Mr. NUNES. Thank you, Mr. Chairman.
        I am a little concerned at Mr. Werfel's inability to answer
    Mr. Ryan's question. I want to yield to Mr. Ryan to follow up
    on his question that Mr. Werfel could not answer.
        Mr. RYAN. I will try to be brief.
        I do not think you understand the law you are in charge of
    executing and enforcing. The claw-back as you describe where
    you limit how much a person pays back, that is only a person
    who is eligible for a subsidy if their income changes in the
    year in which the subsidy takes place.
        But if a person--this is your law--if a person gets a
    subsidy they are not eligible for, which clearly will be the
    case if your major enforcement tool, the employer mandate, is
    not in place, the law requires you claw back 100 percent of
    that subsidy to which they were not entitled to.
        Mr. WERFEL. Yes, I apologize. I mean, the hypothetical that
    you gave had a lot of moving pieces, but you are correct. We--
    --
        Mr. RYAN. Okay. Somebody gets a subsidy they are not
    eligible for.
        Mr. WERFEL. The one question I have is we have discovered
    that this individual got an inappropriate subsidy. So we have
    made some connection with their employer to learn that
    information.
        Mr. RYAN. Which will be 2015 at the earliest.
        Mr. WERFEL. We could learn it in 2015. We will get the
    official employer report in 2016. Either way, we are going to
    make the efforts----
        Mr. RYAN. All right. So 2 years.
        Mr. WERFEL [continuing]. To validate the fact of coverage
    for each individual that is receiving a subsidy.
        Mr. RYAN. So somebody will get 2 years of a subsidy that
    they signed up for unknowingly, which they got, which the law
    does not make them eligible for. You will have to tax that back
    in 2 years' time to get all of it. That is the law, correct?
        Mr. WERFEL. We are going to help the individual at the
    front end when they are filling out their taxes and they are
    navigating through the exchange to understand whether they have
    an employer plan----
        Mr. RYAN. I think you have already answered the question.
        Mr. WERFEL [continuing]. That would have brought them----
        Mr. RYAN. If you do not have an employer mandate and you do
    not have the tool in the data hub which you claim you need to
    have to verify this, you are going to have a lot of people
    getting subsidies they are not supposed to get, and then you
    are going to hit them with a big tax bill in about 2 years to
    claw it back because the law requires you to do that.
        I yield back to Mr. Nunes.
        Mr. NUNES. That's free money.
        Mr. Cohen, do you foresee any additional Obamacare
    provisions that may not be ready for implementation?
        Mr. COHEN. No.
        Mr. NUNES. Do you see any more grants, granting any more
    waivers to employers or companies that come and petition for
    additional time or a waiver?
        Mr. COHEN. No.
        Mr. NUNES. None.
        Mr. COHEN. No.
        Mr. NUNES. You are not going to give any waivers to any
    companies, any unions?
        Mr. COHEN. Well, if what you mean by ``waiver'' is telling
    someone that they are not required to follow the law that I am
    charged with implementing, the answer is no.
        Mr. NUNES. Okay. Thank you.
        Mr. Werfel, will the IRS need to access Americans'
    healthcare records in order to enforce the Obamacare tax?
        Mr. WERFEL. No.
        Mr. NUNES. What records will they have to go after to
    enforce the Obamacare tax?
        Mr. WERFEL. There are two key things. In order to comply
    with the law, we are providing taxpayer information through the
    hub to the exchanges, that is, income, filing status, household
    size, and the other factor that we need to know is we need to
    know fact of coverage. So we will get information about the
    policy itself, like the policy number and the insurer.
        Other than that, there is no other information. We do a
    computation for what the premium tax credit, the advanced
    premium tax credit is. We get information where we are blind to
    what the individual is. We get it through the exchange
    information like the plan that they have chosen, the cost and
    some of the other----
        Mr. NUNES. Okay. So that information that you are going to
    have----
        Mr. WERFEL. Yes.
        Mr. NUNES [continuing]. How many other government agencies
    at this time will you be sharing that information with, the tax
    records?
        Mr. WERFEL. I do not know. I will answer the question this
    way. We currently share taxpayer information with roughly 300
    Federal and State agencies under existing laws and regulations
    without the ACA. The ACA will add additional entities that will
    receive this information, in particular, the exchanges, both
    the State and the federally run exchanges.
        Mr. NUNES. Three hundred different----
        Mr. WERFEL. No, no. Right now, the baseline is 300
    different Federal and State agencies under existing laws and
    regulations, before the ACA ever came about, received taxpayer
    information from IRS, and as I mentioned, there are a lot of
    safeguards in place to protect that information.
        Now, that number of entities will be expanded. I do not
    have the exact number at my fingertips, but it has expanded
    because the information is flowing through to both the Federal
    exchange and the State-based exchanges.
        Mr. NUNES. How many new IRS agents have been hired to date
    to implement Obamacare?
        Mr. WERFEL. I can get you that information. I do not have
    it at my fingertips.
        Mr. NUNES. A hundred, thousands?
        Mr. WERFEL. You know, if you give me a moment, I will get
    that information and I can get it to you before the end of the
    hearing.
        Mr. NUNES. Okay. And can you get not only how many have
    been hired to date, but also how many you plan to hire to
    enforce the Obamacare?
        Mr. WERFEL. I mean, we will have estimates on that for the
    2014 budget. I will say, right now, we are in a hiring freeze
    due to sequester and other budget cuts. So there has been a lot
    of challenge there, but the 2014 budget----
        Mr. NUNES. Thank God for that. I yield back.
        Chairman CAMP. Thank you.
        Mr. Becerra, and then we will go two to one after that.
        Mr. BECERRA. Thank you, Mr. Chairman.
        Gentlemen, thank you for your testimony.
        Let me assure you of something. At some point we will start
    to ask you questions more and more bipartisanly on how to
    implement this, but for now you are witnessing and experiencing
    part of a strategy to undermine the ability for the health
    security law to actually take effect.
        Last week in the article that Mr. Levin introduced into the
    record by Mr. Norm Ornstein with the American Enterprise
    Institute, which is a conservative think tank, in that article
    titled ``The Unprecedented and Contemptible Attempts to
    Sabotage Obamacare,'' Mr. Ornstein--and let me just quote a
    couple of passages so we know what we are getting into. This
    was last week's article.
        ``What is going on now to sabotage Obamacare is not
    treasonous--just sharply beneath any reasonable standards of
    elected officials with the fiduciary responsibility of
    governing.''
        He goes on to say, ``To do everything possible to undercut
    and destroy its implementation of the healthcare law, which in
    this case means finding ways to deny coverage to many who lack
    any health insurance, to keep myriads who might be able to get
    better and cheaper coverage in the dark about their new
    options, to create disruption for the health providers who are
    trying to implement the law, to threaten the even greater
    disruption via a government shutdown in order to blackmail the
    President into abandoning the law, and to hope to benefit
    politically from all the resulting turmoil is simply
    unacceptable, even contemptible.''
        And that was written just last week. If people did not
    believe Mr. Ornstein and what he was writing, then recently it
    was just leaked out that this week our Republican colleagues
    had a meeting where a strategy was introduced by the Speaker
    where the strategy was a series of targeted strikes that will
    fracture the President's Obamacare coalition and topple this
    law.
        And so they go through the strategy of how to do this, and
    one of those is this hearing and this proposal, legislative
    proposal that is before us. I think at some point we will get
    to the nuts and bolts of administering the law because it is
    important.
        I had a gentleman write to me from my district back in 2009
    when we were trying to pass this health security law. He wrote
    me. His name was Eric. I will not give you his last name. ``I
    am a self-employed architect and pay monthly for a very
    expensive bottom line, high deductible policy. My wife and I
    are covered, but our son had a stroke when he was 8 years old.
    He is not insurable. Our coverage costs $750 per month. This is
    very expensive, beyond what we can afford, and there only as an
    emergency coverage. If we use the insurance, it immediately
    jumps in price. The last time it was a $250 per month increase
    in cost. If we incur another increase, we will have to drop the
    policy.''
        Mr. Cohen, the law passed. Eric and his wife are now under
    the new law. Is Eric's son now able to get insurance coverage?
        Mr. COHEN. That is right. The law today prohibits insurance
    companies from denying Eric's son coverage because of his
    previous stroke.
        Mr. BECERRA. So that little boy, who could not get coverage
    before the health security law today, has coverage the way
    every other child with that same kind of preexisting condition
    would be able to get coverage.
        Mr. COHEN. That is right.
        Mr. BECERRA. Let me ask about another gentleman from my
    district, Benjamin. He says, ``Our insurance company
    retroactively canceled my wife's coverage after they had
    approved her to get an MRI. She was stuck with a bill that has
    taken 3 years to pay off. They scoured her record to find any
    mistake they could call her on rather than foot a bill for a
    procedure that they had approved for her to undergo. I do not
    consider this insurance. It is more akin to gambling.''
        Today, because of the rescissions provisions that we put
    into the law, is the insurance company able to deny Benjamin
    and his wife payment for an MRI that the insurance company had
    approved?
        Mr. COHEN. They cannot. That is a practice that some
    insurance companies engaged in called post claims underwriting.
    When someone came in with a claim, they would go back to see if
    they could find a reason to take the policy away just because
    the person got sick and made a claim. They cannot do that
    anymore.
        Mr. BECERRA. And we have also heard that this health
    security law that passed was a job killer. I remember that was
    one of the big arguments against doing this law. My
    understanding is, and you may not be aware of this, but that
    close to a million jobs have been created in the healthcare
    industry since April 2010 when we passed the law. Rather than
    kill jobs, it has helped create more jobs because people are
    gearing up in the healthcare industry to help some 30 million
    Americans actually have health insurance for the first time,
    like Eric and Benjamin will have for their families.
        I hope at some point we will be able to actually get to the
    nuts and bolts of how we make this law work better because
    there clearly are kinks. No one denies that there are flaws in
    the law. The implementation has to go much better than the
    policy and the written word in the law, but at some point the
    fever will break in Washington. We will get back to work here
    the way Americans expect us to, and we will make this law work
    for everyone.
        Thank you for being here.
        Mr. COHEN. I look forward to that, Congressman. Thank you.
        Chairman CAMP. Mr. Tiberi.
        Mr. TIBERI. Thank you, Mr. Chairman.
        Let me assure my colleagues on the other side that the
    reason why we have concerns is because we do not believe there
    are kinks. There are major problems.
        And let me read you a letter from a constituent whom I have
    never met before, or part of a letter. ``I am a student
    employee at Miami University in Oxford working this summer in a
    university research lab. Last week''--this was dated earlier
    this week--``last week I received a notice from the university
    staff informing me that due to recently changed policy, I no
    longer would be able to work full time. I would have to stop
    working after reaching a 28-hour limit per week. Of course, I
    was startled and upset, and it was not long before I knew the
    culprit behind this change in policy was the Affordable Care
    Act.''
        That is one of many letters, phone calls, and meetings that
    I have had concerning, not kinks, real life problems with the
    Affordable Care Act.
        The Chairman mentioned, Mr. Cohen, at the beginning, that
    the President stated that the average family would see a $2,500
    reduction. I remember that because I heard a lot about that in
    my district in central Ohio after he mentioned that. Have you
    seen the rate filings for the plans being offered in the State
    of Ohio, Mr. Cohen?
        Mr. COHEN. I have not.
        Mr. TIBERI. You have not, yet? I have not, either. The
    people of my State have not. However, our Insurance Department
    is warning that individuals in our State could face an 88
    percent premium increase from current plans in our State. Would
    that be a $2,500 reduction?
        Mr. COHEN. It would not, but most of those projections have
    really proven to be completely erroneous. So I do not know what
    they are looking at there.
        Mr. TIBERI. Erroneous based on what?
        Mr. COHEN. Erroneous based on whether you are making a real
    fair comparison between the type of coverage that people will
    have, you know, beginning in 2014 and whatever coverage that
    they have today.
        Mr. TIBERI. So what the Insurance Department has said
    apples to apples. Basically, if you have a plan today offered
    by Blue Cross-Blue Shield that is a standard plan, you will in
    the exchange see a standard plan that will go up about 88
    percent.
        Would that not be a way to judge it?
        Mr. COHEN. Well, I have not seen those rates. So I cannot
    comment on that prediction.
        Mr. TIBERI. Well, I would hope you would come back after
    October 1st when that information is public so constituents who
    ask us why these plans are going up, then we can ask you.
        On CMS' marketplace training slideshow from this month
    entitled ``Understanding the Health Insurance Marketplace,'' it
    specifically notes that there are 10 population centers around
    the country, including Ohio where there are three, including
    Columbus where I am from, that will have special enrollment
    assisters contracted to help uninsured young and healthy
    people. That is their quote.
        Can you tell me about what the special enrollment assisters
    will do and how they will be contracted and who will pay for
    them?
        Mr. COHEN. We have put out for bid a contract for people to
    help with enrollment. What you are referring to is the fact
    that we want to focus our efforts on areas where there are
    large numbers of uninsured, and those folks will be available
    to provide assistance to people.
        Mr. TIBERI. How are they different than navigators?
        Mr. COHEN. The Navigator program is a grant program, and we
    have solicited grants from community-based organizations that
    will also be helping people in getting enrolled. This is a
    Federal contract.
        Mr. TIBERI. So they will be doing this job, but their
    titles are different?
        Mr. COHEN. They will be doing essentially the same work,
    but one is a grant program through, you know, locally based
    communities. The other is a Federal contract.
        Mr. TIBERI. Also on the website, and try to clear up this
    confusion for me, I found references to navigators, non-
    navigator assistance personnel, in-person assisters, special
    enrollment assisters, a Consumer Assistance program, and
    certified application counselors.
        Do they have different roles?
        Mr. COHEN. The roles are similar. Some of those, the
    navigators, for example, will be doing, I think, more outreach
    and education as well as actually helping people get enrolled,
    but the enrollment assisters, their job will really be to help
    people go through the process of filling out an application,
    and the funding is different.
        So, as I said, a grant program versus a contract.
        Mr. TIBERI. I know the folks on the other side of the aisle
    believe that we have just a contempt for this, but there is a
    ton of confusion that comes from this website from our
    constituents who do not understand, who are not--I do not
    understand--who do not understand the difference between those
    different types of programs, how they are funded. Are they
    agents? Are they not agents? How familiar are they with
    healthcare law, healthcare services?
        And so I would hope that--and I am going to send you a
    letter to get some other clarifications on your website
    confusion that has already come to our office.
        Mr. COHEN. Yes. My assumption is that people do not care
    very much, you know, what name or what funding source is used.
    They are going to be looking for help to get health insurance
    coverage, and they will take that help, and they will be very
    happy for it.
        Chairman CAMP. All right. Thank you.
        Mr. Reichert.
        Mr. REICHERT. Well, I want to just sort of repeat what my
    colleague here, Mr. Tiberi, said. There is a lot of confusion,
    and I think that this hearing is a forum where we can get some
    of those answers hopefully, and so we appreciate your
    attendance here, and we do have some legitimate questions.
        I was just sitting here and listening to some of the
    testimony and some of the exchanges. It is obvious to me that
    even you are confused about what the law says or does not say,
    what you have accomplished or have not accomplished or may
    accomplish, or what some of your deadlines are. Your answers
    are not clear, and I think everybody in the audience and people
    on the panel and people at home watching can see that.
        So, Mr. Werfel, I want to start out with just some
    questions that are yes or no questions. Have you been able to
    implement Section 9003, which increases taxes by limiting
    health savings account expenditures?
        Mr. WERFEL. I will have to get back to you on that
    question.
        Mr. REICHERT. I think you have been.
        Have you been able to implement Section 9004, increasing
    taxes on distributions from HAS and MASAs not used for
    qualified medical expenses?
        Mr. WERFEL. Again, I will have to get back to you on the
    answer to that.
        Mr. REICHERT. And I think that is a yes.
        Have you been able to implement Section 9005, increasing
    taxes by limiting health flexible spending arrangements under
    cafeteria plans?
        Mr. WERFEL. Again, I will get you that information.
        Mr. REICHERT. I think that is a yes.
        Have you implemented 9007, putting additional requirements
    on charitable hospitals?
        Mr. WERFEL. Again, I will get you that answer.
        Mr. REICHERT. And that is a yes.
        Have you implemented Section 9008, increasing the taxes on
    branded prescription pharmaceutical manufacturers and
    importers?
        Mr. WERFEL. I believe we have implemented that, yes.
        Mr. REICHERT. Yes.
        Have you implemented Section 9009, which increases the
    medical device tax?
        Mr. WERFEL. Yes.
        Mr. REICHERT. Yes. Are you on track to implement Section
    9010, which imposes a tax on health insurance providers?
        Mr. WERFEL. I will get back to you on that question.
        Mr. REICHERT. That is a yes.
        Mr. WERFEL. We are generally on track with all of our major
    deliverables.
        Mr. REICHERT. Have you implemented Section 9013, raising
    taxes on those who have to take an itemized deduction on
    medical expenses?
        Mr. WERFEL. Again, I believe we are on track with all of--
    --
        Mr. REICHERT. Probably a yes. So you are on track with all
    of these. Some of these you could not answer, but I have
    information that these are all yeses, that you have completed
    implementing these tax laws. I am disappointed that the
    supposed benefits of this law have not been seen by my
    constituents, and I think that is a frustrating part, not only
    frustrating, but confusing.
        I am not sure if they will ever be seen by my constituents,
    and so I find it sort of odd, too, that the employees at the
    IRS, including yourself because you just made the statement,
    you feel like you have good health insurance. You would like to
    keep that health insurance. So would the IRS employees. So
    would a lot of other Americans across this country, but one of
    the benefits in this health law was supposedly that we could
    keep our healthcare plan if we liked it or could keep our
    doctor if we liked our doctor. But according to the President,
    and I will paraphrase a quote that we heard him say at a
    conference he attended and spoke at, was that, you know, there
    seems to be some language snuck into the healthcare law that
    runs contrary to that premise, runs contrary to the premise
    that you can keep your doctor if you like your doctor, and it
    runs contrary to the premise that you can keep your healthcare
    plan if you like it, but IRS agents supposedly now have filed a
    waiver because they cannot keep their healthcare plan if they
    like it. They have to ask for a waiver.
        Well, you know, I know of a lot of Americans who want to
    ask for a waiver. So it is deeply disappointing that the only
    part of this bill that you have been able to implement are the
    provisions that have cost Americans and will cost Americans in
    their pocketbook.
        Mr. Cohen, I am really confused by your testimony about
    testing of data. You will get back to us on an answer? Is that
    what I heard you say?
        You are testing, right?
        Mr. COHEN. Yes, we are testing.
        Mr. REICHERT. What is the testing? I want to know what the
    testing is.
        Mr. COHEN. The testing is all aspects of the system that
    are going to be needed to----
        Mr. REICHERT. Well, what are you----
        Mr. COHEN [continuing]. Be operational on October 1----
        Mr. REICHERT. What have you done, though? What have you
    done?
        Mr. COHEN [continuing]. Are being tested.
        Mr. REICHERT. What have you done? When you say ``testing,''
    what do you mean? What have you done? What is the test?
        Mr. COHEN. I am a layperson. I am not an IT person. So I am
    going to give you the layperson's answer. They test the systems
    to make sure they are functioning as they are meant to. They
    run different scenarios to see whether----
        Mr. REICHERT. And you think you are on track?
        Mr. COHEN. We absolutely are.
        Mr. REICHERT. Well, in fact, less than 2 weeks ago insurers
    warned that both they and your department ``face significant
    operational and logistical challenges in the first 2 years at a
    minimum which are dependent in large part on a variety of
    technical interfaces, data exchanges, and program
    infrastructure.''
        I think you are in trouble. I do not think you are going to
    meet your deadline, and I yield back.
        Chairman CAMP. All right. Mr. Doggett.
        Mr. DOGGETT. Thank you, Mr. Chairman.
        It has come as quite a surprise this morning to learn that
    the focus and purpose of this hearing is to determine whether
    the Affordable Care Act is on track because the people that are
    conducting the hearing when it comes to health care have been
    very zealous on the derailment program for health care. They
    have offered no constructive suggestions. It is never how can
    we make health care work better for the American people. It is
    always how can we derail it.
        I am surprised, in fact, that they even have time to have a
    hearing between the repeal votes because we have had so many of
    them.
        Two and a half years ago in this very room, we had our
    first hearing at the beginning of the last Congress on the
    repeal of Obamacare, and the House proceeded to repeat it, vote
    number one. The next day it passed a two-page bill that
    contained 12 platitudes about health care, and that is the last
    time we have heard about those platitudes in terms of any
    legislative action except for one bill last year that provided
    tax breaks for Tylenol.
        The alternatives being offered to the American people to
    Obamacare is really Nothingcare when it comes to legislative
    action in this Committee and on the floor of the House. Now,
    there are many problems with the Affordable Care Act. I wish
    your efforts to try to see it effectively implemented were not
    day after day being undermined and underfunded and interfered
    with. But tell us, if you would, Mr. Cohen, on October 1st,
    because I never thought that their attacks were about denying
    the IRS power or denying you power; they are about denying
    rights to the American people that they are now entitled to
    under the Affordable Health Care Act.
        On October 1st, if you are among the millions of uninsured
    people in Texas that do not have any way to get insurance right
    now, what rights do you have then as an American citizen under
    this Act?
        Mr. COHEN. You will be able to submit an application either
    online or in person or over the phone or on paper. You will be
    able to determine whether you are eligible for Medicaid or
    CHIP, on the one hand, or a subsidy in the form of an advanced
    payment of the tax credit, on the other. You will be able to
    shop and choose a private health insurance plan that you want
    to enroll in, and beginning in January you will have to make a
    premium payment, but in addition, the amount of that advanced
    premium tax credit will go directly to the insurance company
    and help pay for that coverage.
        Mr. DOGGETT. And if you are working at a lower wage job,
    you are entitled to a premium tax credit to assist you in
    getting health insurance that you have not been able to get
    until now.
        Mr. COHEN. That is right.
        Mr. DOGGETT. I had a woman a while back at a Relay for Life
    gathering come up to me in tears because her sister had breast
    cancer, and when she went to get treatment she learned she only
    had $25,000 of treatment to get radiation and chemotherapy to
    treat that condition, and they would not let her begin the
    treatment because it was going to cost so much more than that.
        Mr. COHEN. Right.
        Mr. DOGGETT. What happens to a woman like that who was left
    as a victim to the fine print put in there by her insurance
    company that she knew nothing about as a typical insurance
    purchaser? What happens to her under the Affordable Care Act
    that they want to derail?
        Mr. COHEN. Those provisions are in effect even today and
    have been since September 2010. Lifetime limits are no longer
    permitted. So you cannot put a cap on the amount of money that
    an insurance will pay over the course of the person's lifetime,
    and annual limits have been phased out, and now beginning in
    2014 will also be completely eliminated. So an insurance
    company cannot say, ``We will only pay a certain amount of
    money in a year for your claims.''
        Mr. DOGGETT. As far as rights that exist right now under
    this Affordable Health Care Act, the same Affordable Health
    Care Act that the latest thing in the last few days has been
    whether they are willing to shut down the entire government,
    threaten the full faith and credit of the United States just
    because they are so zealous about derailing the Affordable Care
    Act and denying rights to Americans; right now if you are a
    senior do you get any rights that if we repeal the Affordable
    Health Care Act you would be denied what you get under the
    Affordable Health Care Act already?
        Mr. COHEN. There are a number of rights under the
    Affordable Care Act. For example, preventive services are
    provided free of any copay or any deductible. That is just an
    example. So people can actually get the kind of preventive care
    that they need to keep themselves healthy.
        Mr. DOGGETT. And prescription drugs, are there any benefits
    that if we repealed the Affordable Health Care Act seniors
    would be denied what they have today?
        Mr. COHEN. The so-called donut hole was closed by the
    Affordable Care Act. So millions of seniors have saved money as
    a result of----
        Mr. DOGGETT. And the solvency of Medicare----
        Chairman CAMP. The time has expired.
        Mr. DOGGETT [continuing]. Would be reduced also by----
        Chairman CAMP. That answer will have to be the end of it.
    Thank you.
        Dr. Boustany.
        Mr. BOUSTANY. Thank you, Mr. Chairman.
        I am glad to see that my colleague from Texas recognizes
    that there are many, many problems with this healthcare law. I
    am certainly aware of it with 30 years of it with 30 years of
    clinical experience in medicine. I am certainly aware of the
    problems attendant with this law.
        Mr. Werfel, Mr. Ryan pointed out a number of problems that
    are going to occur because of the delay in the employer mandate
    or the employer reporting requirements and, you know, the
    propensity for overpayment of subsidies, possible fraud, abuse,
    and so forth. And yet Treasury had 3 years to come up with the
    regulations on how this would work on these reporting
    requirements, and obviously the department has failed to date
    to come up with an adequate approach to this, hence the delay.
        So is there a problem with the statute? I know you are in
    charge of implementing. The burden is on your shoulders to
    implement this, but I know you have had some discussion with
    Treasury on this. Is there a problem with the statute?
        Mr. WERFEL. I do not think there is. I am not aware of a
    particular problem with the statute. We are working with the
    insurer and employer community to understand how best to
    implement the legislation through regulation of the reporting
    requirements.
        Mr. BOUSTANY. But 3 years. It has been 3 years of some very
    smart lawyers working on this, and you reference, I believe you
    said earlier alternative methods to validate. Can you give us
    any indication of what those alternative methods will be or is
    there any hope that you can implement this?
        Mr. WERFEL. Well, there is a communication that we can set
    up with--there are a lot of issues here, but the one that I
    think you are focusing on is whether we can determine whether
    an employer provided plan would block an individual from
    getting a premium tax credit. That is one issue, and I think
    the transition relief period, or the delay, does create
    additional challenges for the IRS in doing that, but it is not
    something that we cannot mitigate.
        Mr. BOUSTANY. But 3 years, 3 years is a long time. When did
    those discussions begin?
        I mean, I know you are relatively new in the position. Were
    you brought into these discussions from day one?
        Mr. WERFEL. Not from day one. The first I learned about it
    was in late June, that this issue was under consideration, but
    my staff had been consulted before then because they were
    constantly consulting IRS staff to understand what the
    administrative impacts were.
        And in this case we looked at the administrative impacts,
    and we determined that we can work with the employer community
    to get other sources of information from them to do the job of
    determining whether there was a sufficient employer offer.
        Mr. BOUSTANY. Did the IRS recommend the delay?
        Mr. WERFEL. No, not that I am aware of.
        Mr. BOUSTANY. Okay. Were other agencies or departments
    involved in those discussions or did they recommend the delay?
        Mr. WERFEL. I think it is my understanding that HHS and
    Treasury discussed the issue. I am not sure who in the
    government recommended the delay. I do understand that the
    employer community came in and we received comments that they
    preferred we take more time, delay the provision, and work
    through some----
        Mr. BOUSTANY. I think the employer community would like to
    see that employer mandate go away, but when were you informed
    of the delay? I think it was announced in a blog post on July
    2nd.
        Mr. WERFEL. Yes.
        Mr. BOUSTANY. Were you notified earlier?
        Mr. WERFEL. It was late June. I think it was around June
    21st that I learned of it.
        Mr. BOUSTANY. Okay. Who told you?
        Mr. WERFEL. My recollection is I was in a meeting with the
    Treasury Department on a bunch of issues, and this was on the
    agenda, and it came up, and I understood that this decision was
    in the works and was being made.
        Mr. BOUSTANY. Okay. Well, obviously we need to do more
    oversight, and I take issue with our colleagues on the other
    side of the aisle who think this is all a charade and a joke.
    We are trying to do oversight, and we are trying to understand
    what the problems are, and obviously there are plenty of
    problems and this is just one of them.
        One other question on a different subject. Over a year ago
    I asked then Acting Commissioner Steve Miller to provide all
    documents with regard to the application or the decision about
    premium subsidies and whether or not they would apply to
    federally created exchanges. We have not gotten those documents
    yet. I would like you to commit to me to get those documents to
    us surrounding that IRS decision because it seems to run
    counter to the statute.
        Could you get that to us before September?
        Mr. WERFEL. I was not aware of that document request. I
    commit to you that I will look into the issue and get back to
    you as soon as possible with the time frame.
        Mr. BOUSTANY. Well, it has been a year. So hopefully----
        Mr. WERFEL. Yes. I just have to look into it.
        Mr. BOUSTANY. I know staff have done work. I hope staff
    have done work on that. I would like that information before we
    get back in September.
        Mr. WERFEL. Understood.
        Mr. RANGEL. Would the gentleman yield?
        Mr. BOUSTANY. I will yield with what little time I have.
        Chairman CAMP. Dr. Boustany has the time.
        Mr. BOUSTANY. Yes, I will yield.
        Mr. RANGEL. Thank you so much for your comment.
        You indicated that this was an oversight hearing in which
    you had a response. I ask the gentleman: Is it your intention
    to improve the law as it relates to so-called Obamacare or the
    Affordable Care Act? Is that the purpose?
        Mr. BOUSTANY. Reclaiming my time, I believe the law is so
    deeply flawed, I favor repeal and replacing it.
        Chairman CAMP. All right. The time has expired.
        Mr. Roskam is recognized.
        Mr. ROSKAM. Thank you, Mr. Chairman.
        You know, this reminds me of the scene at the end of the
    first ``Indiana Jones'' movie where Indiana Jones goes in and
    he is talking to the guy from the government, and Indiana says,
    ``Where is the Arc?''
        And the guy from the government at the end of the movie
    says, ``We have top people working on it.''
        And then the next scene is the Arc of the Covenant going
    into a giant government warehouse somewhere. This exchange a
    little bit today, what I have heard from you is basically
    saying, ``We have top people working on this.''
        So, Mr. Cohen, when you were asked by Mr. Brady a couple of
    minutes ago about the nature of the test, when you distill down
    what you actually said, you actually said to him and to Mr.
    McDermott, ``We have top people working on it.''
        Mr. Werfel----
        Mr. COHEN. That is not what I said. That is not what I
    said.
        Mr. ROSKAM. I paraphrased it and it is my----
        Mr. COHEN. It is not what I said.
        Mr. ROSKAM. Mr. Werfel, when you were asked a couple of
    minutes ago by Mr. Ryan about the claw-back, you basically
    said, ``Do not worry. We have top people working on it.''
        And we have had an expectation in this Committee that has
    actually been driven fairly low by previous witnesses. Previous
    Administration witnesses have come in with clear-eyed
    assurances that everything was fine, top people meeting
    deadlines. Everything is A.J. Squared Away, no problems at all.
        And yet today we hear in the exchange that you had with Mr.
    Levin, and it is your prerogative to have an exchange with Mr.
    Levin. He asks you questions. You say, ``Yes, we will.'' He
    asks you questions. ``Yes, they will.''
        All right. So my expectations are fairly low, but the best
    predictor of future conduct is what has happened in the past.
    So, Mr. Cohen, here is my question.
        You are at CMS. It is a universally accepted fact that the
    payment rate, the fraudulent and erroneous payment rate, at CMS
    on Medicare is about $40 billion. It is known as ``pay and
    chase.'' GAO says that. The Attorney General of the United
    States, Eric Holder, in a 2012 article in Forbes Magazine
    actually upped the number. He said it was much higher than
    that.
        How can you, with a straight face, come in and give
    assurances to this Committee that CMS has it all down when you
    are not even able to give a straight answer about the nature of
    the test?
        What is it that animates the hope in you that you are not
    going to have the same problems in implementing the Affordable
    Care Act when clearly CMS has demonstrated it has all kinds of
    difficulty on Medicare?
        Mr. COHEN. Congressman, I see absolutely no connection
    between the fraudulent payment rate in Medicare and the work I
    am doing, none.
        Mr. ROSKAM. Is that it?
        Mr. COHEN. I suspect that you could have any executive of
    any company come in here and ask him questions about how the IT
    testing is done on his computer systems and what he would tell
    you is----
        Mr. ROSKAM. He has top people working on it.
        Mr. COHEN [continuing]. ``I need to refer you to the people
    who really are expert.''
        Rather than give you an answer that is wrong--I know you do
    not want me to do that--I will give you the best answer I can,
    which is I know that we have testing going on, and I will get
    back to you with a response to the specific question that Mr.
    Brady asked, and I am happy to do that.
        Mr. ROSKAM. Thank you for doing that.
        So the question is: What is it that animates your hope that
    the activity of your agency that everybody says has this type
    of fraud rate--you agree with that, do you not?
        Mr. COHEN. I do not work on the Medicare program. So I am
    not involved with----
        Mr. ROSKAM. You are not aware of the GAO report? You are
    not aware of the Attorney General's assertions about fraud in
    Medicare?
        Mr. COHEN. That is not my job.
        Mr. ROSKAM. Okay.
        Mr. COHEN. I am focused on my job and doing what I----
        Mr. ROSKAM. There is some news.
        Mr. COHEN [continuing]. Need to do.
        Mr. ROSKAM. Are you ready for some news? Here is the news.
    Your agency has all kinds of trouble as it relates to Medicare
    fraud, Medicaid fraud, error in payment rates, and what you
    have basically said is, ``We are good.''
        Mr. COHEN. No. What I said is I see no connection between
    those issues and the issues that I am dealing with, none.
        Mr. ROSKAM. All right. Let me ask you a different question.
    You said earlier, and I jotted it down; you said earlier that
    the impact on the employer mandate delay is quite small.
        If it is so small, why has it not been fixed in 3 years?
        Mr. COHEN. I said that it was small because of the number
    of employers. Ninety-six percent of the larger employers who
    would be subject to the employer mandate already offer
    coverage. So the number of employers who do not offer coverage
    who will be subject to the mandate is relatively small.
        Mr. ROSKAM. But it is a fairly complicated problem that you
    have not been able to fix yet, right?
        Mr. COHEN. That is not my responsibility. It is----
        Mr. ROSKAM. What is your responsibility, Mr. Cohen?
        Mr. COHEN. My responsibility is to implement the provisions
    of the Affordable Care Act as it relates to the private
    insurance market that are under the law given to the Department
    of Health and Human Services. That is my responsibility. It is
    not the employer mandate.
        Mr. ROSKAM. You have top people working on it. I yield
    back.
        Chairman CAMP. Okay. Mr. Pascrell is recognized.
        Mr. PASCRELL. Welcome to guerrilla warfare. Mr. Cohen, Mr.
    Werfel, thank you for being here today. I know you are
    answering to the best of your ability.
        I would imagine, Mr. Cohen, and correct me if I am wrong,
    since we are all here to help implement affordable health care
    for all American citizens, certainly not to undermine the
    program that is law, has been vilified by the Supreme Court in
    terms of mandates; we are certainly not here to undermine it.
    We are here to help implement it, much like we had the problems
    when Medicare was first passed in the mid-1960s or Social
    Security. Both sides came together to try to help to implement
    the program.
        So if healthcare costs grew slower than the rest of the
    economy for the first time in more than a decade, and the
    proportion of requests from insurers to State regulators
    seeking approval of double digit premium increases and private
    health insurance plummeted from 75 percent--correct me if I am
    wrong--in 2010 to 14 percent so far in 2013----
        Mr. COHEN. That is correct.
        Mr. PASCRELL. Now, my question is the following. Is this
    because of the good feeling of insurance companies?
        Number two, is it simply by chance?
        Number three, or is somebody manipulating the numbers and
    all of these things are not right, or what is the reason?
        Mr. COHEN. I would say there are a number of reasons, but
    among them are the increased scrutiny that insurance company
    rates have been getting as a result of the Affordable Care Act;
    in particular the medical loss ratio provision over the so-
    called 80-20 rule which requires that insurance companies spend
    80 cents of every premium dollar on actual healthcare costs
    rather than on administrative costs or profit, which means that
    if their premiums are too high, they are going to have to pay a
    rebate back to their enrollees.
        Mr. PASCRELL. Let me ask you this question, Mr. Werfel. One
    of the cornerstones of the Affordable Care Act was the
    availability of tax credits to make premiums affordable. Can
    you explain very briefly what tax credits are available for
    individuals and families, and who would qualify for those tax
    credits? Just give me a quick synopsis.
        Mr. WERFEL. Yes. If there is an individual who does not
    have affordable healthcare coverage and they come to the
    exchange, depending on their income level, if they are within
    100 to 400 percent of the poverty line, then they would be
    eligible for support, income support.
        Mr. PASCRELL. That is like a sliding scale.
        Mr. WERFEL. Yes, yes.
        Mr. PASCRELL. Go ahead.
        Mr. WERFEL. And, again, I think this is important because
    it goes to the question of erroneous payments. The premium
    subsidy that they get goes directly to the insurance company.
    They never see the money, but they get less expensive premiums.
        Now, they can do it one of two ways. They can get it in
    advance.
        Mr. PASCRELL. Right.
        Mr. WERFEL. So they can start their enrollment with the
    exchange and this new insurance company that they are now a
    part of by getting money up front, money support up front paid
    to the insurance company, or they can pay their premiums out
    throughout the year and at the end of the year on their tax
    form file for a credit to cover the payments they have made.
    Either one is available to them.
        Mr. PASCRELL. Mr. Werfel, that means in New Jersey 990,000,
    a little above that, 990,000 uninsured individuals with family
    incomes under 400 percent. What is the 400 percent, Mr. Werfel?
    Four hundred percent of what?
        Mr. WERFEL. Four hundred percent of the poverty line.
        Mr. PASCRELL. Okay. In New Jersey they are going to be
    eligible for either Medicaid or subsidized coverage through the
    exchange. That is the difference it is going to make in the
    State of New Jersey.
        So my good friend from Washington State and my good friend
    from Louisiana, with all good intentions, good men, good people
    who have brought a lot to this Committee and a lot to the
    Congress of the United States, they are not here to help us
    implement this legislation because we know there is going to be
    kinks. There are always problems with every piece of
    legislation. We have never passed the perfect piece of
    legislation in the Congress. Only God is perfect, not the
    Congress.
        So we try our best to get the best in front of us that we
    can pass. That is where we are. Why are we not helping each
    other try to get this done?
        I cannot answer that question. It is a mystery to me
    because they have never denied any of the positive data that we
    have put before, that anybody has put before with the results
    of what has happened with ACA already; they have never denied
    any of those facts.
        Mr. BRADY [presiding]. The gentleman's time has expired.
        Mr. PASCRELL. Not one fact. Well, you have given people
    more time on the other side. I only took 30 seconds.
        Mr. BRADY. Thank you, sir.
        Mr. Gerlach.
        Mr. GERLACH. Thank you, Mr. Chairman.
        Mr. Chairman, first of all I would like to ask for
    unanimous consent to offer into the record an August 1, 2013,
    letter from the National Treasury Employees Union.
        Mr. BRADY. Without objection.
        [The submission of The Honorable Jim Gerlach follows:]
        [GRAPHIC] [TIFF OMITTED] T1120A.021

        [GRAPHIC] [TIFF OMITTED] T1120A.022

        Mr. GERLACH. Thank you.
        Mr. Werfel, the information that the IRS will start
    gathering related to the Affordable Care Act and taxpayer
    information related to the Affordable Care Act, will the IRS
    consider any disclosure of that information to be a violation
    of Section 6103?
        Mr. WERFEL. Yes, if----
        Mr. GERLACH. To any outside individual or entity or
    organization?
        Mr. WERFEL. If it is done outside of the appropriate rules
    and regulations, yes.
        Mr. GERLACH. Okay. Thank you.
        Both Mr. Cohen and Mr. Werfel, this follows up on the
    question that Mr. Pascrell just asked relative to who is
    eligible for tax credits that will be available through these
    exchanges. It was my understanding it was just going to be
    those that are citizens of the United States or here as
    permanent legal residents. Are there folks beyond that that are
    eligible for tax credits, taxpayer subsidies under this
    program?
        Mr. COHEN. You have to be a citizen or lawfully present.
        Mr. GERLACH. You have to be lawfully present. What does
    that mean?
        Mr. COHEN. Well, you could be here on a student visa and be
    eligible.
        Mr. GERLACH. Okay. So a student from Germany comes to the
    United States to do 4 years of college. That student is going
    to be subsidized by taxpayers for health insurance?
        Mr. COHEN. They are eligible for subsidies depending on
    their income, yes.
        Mr. GERLACH. Okay. Somebody comes to the United States on a
    travel visa, has a visa for a certain period of time, a number
    of months and perhaps wants to stay longer. Will that person be
    able to apply for tax subsidized insurance coverage while here?
        Mr. COHEN. Well, if they overstay the visa, then no.
        Mr. GERLACH. But they are able to apply while they are here
    legally, lawfully.
        Mr. COHEN. I believe so, yes.
        Mr. GERLACH. Okay. Are there any other individuals, a
    battered spouse, child or parent, that might be from another
    country; is that person eligible for the subsidy?
        Mr. COHEN. I am not sure I understand the question.
        Mr. GERLACH. Well, I am looking at the eligible immigration
    status list on page 20 of Appendix B that is on your website as
    to those who are eligible for this program, and one of the
    categories is battered spouse, child or parent.
        Mr. COHEN. I am just not familiar with that particular
    status.
        Mr. GERLACH. The reason I am asking is because I wonder who
    makes that determination that the person was, in fact, battered
    and, therefore, becomes eligible for the program?
        And how are you setting up the regulations in this program
    to have the kind of verification that the people that are
    applying for the subsidies are actually eligible based upon the
    structure of the program? How are you going to verify that?
        Mr. COHEN. The verification of immigration status is done
    through data from the Department of Homeland Security.
        Mr. GERLACH. Okay. All right. And I know a few other of my
    colleagues have asked about their particular State. I am from
    Pennsylvania, from the southeastern part of the State, and it
    will be a Federal exchange established in Pennsylvania. Do you
    know the status of that exchange? And will it, in fact, be up
    and running October 1st in Pennsylvania?
        Mr. COHEN. Yes, it will.
        Mr. GERLACH. Okay.
        Mr. COHEN. And we work very closely, by the way, with the
    Pennsylvania Insurance Department.
        Mr. GERLACH. Have the rate filings been offered and
    submitted to CMS as part of the establishment of that exchange?
        Mr. COHEN. Issuers have submitted qualified health plans to
    be certified to be offered on the exchange of Pennsylvania,
    yes, and that----
        Mr. GERLACH. So will the average family in my district see
    the $2,500 reduction in their premium?
        Mr. COHEN. I cannot speak to what the rates are going to
    be. That information will be made public in September.
        Mr. GERLACH. You indicate in your testimony that come
    August 15th, I guess in about 2 weeks, grants will be issued
    for the Navigator program. Will anybody in Pennsylvania receive
    any navigator grant monies? Do you know?
        Mr. COHEN. I am not involved in the grant award process for
    reasons that I am sure you can appreciate, but my understanding
    is there will be navigators in Pennsylvania.
        Mr. GERLACH. Do you know how many navigators in
    Pennsylvania?
        Mr. COHEN. The law says that we should have at least two,
    and I expect that there will be at least two.
        Mr. GERLACH. Okay. Thank you. I yield back.
        Mr. BRADY. Thank you.
        Mr. Price is recognized.
        Mr. PRICE. Thank you, Mr. Chairman. I want to thank you for
    holding this hearing. This is really an important issue, and it
    is our intention to make certain that the American people have
    the highest quality of health care available to them.
        And our concern is that this law is making it more
    difficult for them to have access to the highest quality of
    care.
        As a physician before I got to Congress, I can tell you
    that my former colleagues have an increasing concern about
    their ability to care for their patients in the way that they
    deem most appropriate. We heard from our friends on the other
    side that there are not any alternatives. I just keep reminding
    them about H.R. 2300, which is a comprehensive piece of
    legislation, patient-centered health care, that puts patients
    and families and doctors in charge of health care, not
    Washington, D.C.
        Senator Baucus described or said he was worried about the
    rollout of this being a train wreck, and what we are seeing
    today is a documentation of this train wreck. I think there is
    no doubt about it, as my colleagues have alluded to in so many
    areas.
        Mr. Cohen, you said that your job is to administrate the
    private insurance market as it interfaces with the ACA. Now, I
    know that you have not seen the--is that fair?
        Mr. COHEN. That is not exactly what I said, but that is
    okay.
        Mr. PRICE. What is your job?
        Mr. COHEN. My job is to implement the provisions of the
    Affordable Care Act as they pertain to the private insurance
    market.
        Mr. PRICE. The private insurance market. Very good. I know
    you have not seen the Atlanta Journal Constitution today. Not
    many people have. This is the headline in the Atlanta Journal
    Constitution today. ``Insurance Options Shrink,'' sub-headline,
    ``Georgia Online Marketplace to Offer Fewer Choices for Some
    Consumers.''
        Parts of the State are going to have one insurance company,
    one. Aetna and Coventry have announced that they are pulling
    out of the individual market for the exchanges. That is not the
    way this was supposed to work. Clearly, access to care, access
    to coverage is being limited in the State of Georgia, and I
    suspect it is true in other States across----
        Mr. COHEN. No, that does not follow though because the----
        Mr. PRICE. Mr. Cohen, there are areas of our State that
    will have one insurer offering coverage in the exchange. That
    is not an option. That is a demand. That is a dictate. That is
    forcing individuals into one program.
        Let us get to cost. We had a stakeholder call yesterday
    with CMS and HHS highlighting that the exchange in the State of
    Georgia is on track, their words, on track. The State Insurance
    Commissioner, Mr. Hudgens, has sent a letter to Health and
    Human Services Secretary, Kathleen Sebelius, stating that some
    rates in our State are increasing up to 198 percent higher than
    those plans currently available in the State.
        So if the State exchange is on track, is this how it was
    supposed to work? Are we supposed to have 198 percent increases
    for individuals in our State for the purchase of health
    coverage? Is that the plan, Mr. Cohen?
        Mr. COHEN. It is not, but I do not know what Commissioner
    Hudgens is referring to. So I cannot comment as to----
        Mr. PRICE. You have seen the rate filings for our State,
    have you not?
        Mr. COHEN. I have not seen the rate filings for Georgia.
        Mr. PRICE. Your office has seen the rate filings.
        Mr. COHEN. The rate filings have been filed with us, yes.
        Mr. PRICE. So I would urge you to please check the rate
    filings for the State of Georgia, and the fact of the matter is
    that costs are going up for individuals, not decreasing $2,500
    for families as the President promised the American people.
        Mr. Werfel, many of my constituents are really concerned
    about the IRS and the activity that has gone on so far, and you
    were here earlier documenting the concerns that you had about
    targeting organizations that were applying for tax exempt
    status, about the potential leaking of donor information to
    other groups, and we have huge concerns, and we will continue
    this conversation about donors that were providing resources to
    those organizations then being targeted for audits.
        You said, ``No personal health information will ever be
    disclosed.'' That is what you said today.
        Mr. WERFEL. We do not have any access to personal health
    information.
        Mr. PRICE. I suspect if you were here a couple of years ago
    you would have said that no targeting of tax exempt groups or
    donors will ever occur. So you understand the concern that we
    have.
        I want to ask a question about this whole issue of
    marketplace. You said that the IRS shares information with 300
    different agencies, and you said it only will share this
    information with the marketplace. What is the marketplace?
        Mr. WERFEL. That is the exchange.
        Mr. PRICE. So anybody that has access to information
    through the exchange will have access to----
        Mr. WERFEL. No.
        Mr. PRICE [continuing]. Taxpayer information.
        Mr. WERFEL. No. There are procedures and controls in place
    to make sure, for example, if someone is on a screen in the
    exchange working with this information, they will not have
    access to the raw taxpayer data. The only way the raw taxpayer
    data can surface is if the individual taxpayer gives consent.
        Mr. PRICE. Just like there were procedures in place to make
    certain that tax exempt organizations were not targeted.
        Chairman CAMP [presiding]. All right. Thank you.
        Mr. Crowley.
        Mr. CROWLEY. Thank you, Mr. Chairman.
        Mr. Cohen, Mr. Werfel, are you both familiar with the word
    ``irony''?
        Mr. COHEN. Yes, sir.
        Mr. WERFEL. Yes.
        Chairman CAMP. Alright.
        Mr. CROWLEY. Can I enter into the record a definition I got
    off the Internet? Irony is the use of words ``to convey a
    meaning that is the opposite of its literal meaning; an
    expression or utterance marked by a deliberate contrast between
    apparent and intended meaning.''
        The hearing notice we received, a hearing on the status of
    the Affordable Care Act implementation--I would actually think
    my colleagues on the other side of the aisle are interested in
    how the Affordable Care Act will be implemented. Yet tomorrow,
    we will have the 40th attempt to undo the Affordable Care Act,
    to derail it. And, in fact, they will go after, Mr. Werfel,
    your agency and deny funding to your agency, for the purposes
    of carrying out what is your responsibility under the law,
    under the Affordable Care Act. Is that not true?
        Mr. WERFEL. That is my understanding.
        Mr. CROWLEY. Do you think it is ironic that we are having
    this hearing today?
        Mr. WERFEL. I am not sure how to answer that question. I
    will answer it in this way. The--in the nature of the questions
    that I have been taking--like, for example, how do we address
    issues related to potential fraud--my goal has always been to
    partner with Congress to----
        Mr. CROWLEY. You would think they would actually care about
    the implementation of this bill.
        Mr. WERFEL. I would like to partner with this entire
    Committee on solutions the IRS can deploy and----
        Mr. CROWLEY. Mr. Werfel, Mr. Cohen, do you know what I
    think? I think they realize that maybe they won't be successful
    tomorrow in actually undermining the Affordable Care Act, that
    they may have a one-House bill that, once again, would do away
    with the Affordable Care Act, but it will not become law.
        And somehow they must know that the implementation of this
    law maybe is important to the American people. But they, once
    again tomorrow, will fail the American people and themselves
    when they are not successful in actually undoing this law. But
    they have a responsibility, I guess, to ask the proper
    questions about the implementation.
        What I find really ironic in one respect is that my
    colleague, Illinois, was concerned about the true-up. Yet their
    side of the aisle has attacked the ability of the middle-class
    and the working people of this country to access the tax
    credits to the Affordable Care Act on a number of occasions.
    Never once have I heard them stand up and defend the interests
    of the working people of this country, who, for the first time,
    many of them, have the ability to afford health insurance in
    this country.
        Mr. Cohen, in terms of what would be helpful from Congress
    to aid with smooth implementation, are 40 repeal votes what you
    would consider being productive?
        Mr. COHEN. I don't think they move the ball forward, in
    terms of my job, no.
        Mr. CROWLEY. And I will ask this question of both you, Mr.
    Cohen, and Mr. Werfel. Will tomorrow's 40th repeal vote to
    block tax credits from going to working families help with the
    implementation of the Affordable Care Act in any way?
        Mr. COHEN. No.
        Mr. WERFEL. I don't think it will have any impact.
        Mr. CROWLEY. Mr. Cohen, I would like to clarify one of the
    issues brought up earlier. There was talk of the hub that will
    verify transactions in the marketplace. Can you clarify, will
    any personal data be stored on the hub?
        Mr. COHEN. No. The hub just routes information from the
    secure data sources: IRS, Social Security, et cetera, so that
    we can verify information that people put on their
    applications.
        Mr. CROWLEY. Mr. Cohen, would you say that Members of
    Congress can be of assistance to their constituents as
    enrollment in the marketplace gets underway?
        Mr. COHEN. Absolutely. It would be wonderful if all Members
    of Congress would put out helpful, accurate information for
    their constituents so that they can understand the benefits of
    the law and how to----
        Mr. CROWLEY. And Members of Congress would be a good
    resource for their constituents with questions or to help
    direct them to resources. Wouldn't you agree?
        Mr. COHEN. Definitely.
        Mr. CROWLEY. When the Medicare Part D bill was passed, and
    I voted against it, and we went through a political charade of
    almost 4 hours on the floor to pass the bill, a lot of
    political arm-twisting took place. I didn't agree with that
    bill, I fought against the bill's passage. But when it came to
    implementation, I never once didn't help a constituent access
    the benefits--although I thought they were limited--to that
    particular bill.
        Do you think it would be wrong if Members of Congress were
    not to help their constituents with the implementation of a
    law, when enacted, if asked?
        Mr. COHEN. I would hope and expect that all Members of
    Congress would help their constituents get the benefits of the
    Affordable Care----
        Mr. CROWLEY. Mr. Werfel, do you agree, as well?
        Mr. WERFEL. I am not going to comment on how the Member
    deals with their constituents.
        Mr. CROWLEY. Okay, I appreciate that. Mr. Chairman--oh, my
    time is up, I will yield back.
        Chairman CAMP. All right. Mr. Smith is recognized.
        Mr. SMITH. Thank you, Mr. Chairman and Mr. Cohen, Mr.
    Werfel, thank you for being here today. In the context of my
    questions is my concern that the healthcare law will actually
    hurt the very individuals it was intending to help.
        But, Mr. Cohen, can you briefly explain the training for
    these navigators? How long do you anticipate this training to
    take?
        Mr. COHEN. Sure. It is an online course, a series of
    courses. It is expected to take about 20 hours. That is
    comparable to what many States require insurance agents and
    brokers to do before they are licensed to be able to be
    insurance agents and brokers, and it will cover----
        Mr. SMITH. Now, the licensees in the private sector are
    required to take exams and maintain continuing education. And I
    would argue that it is a little more burdensome than just a 20-
    hour training course.
        Mr. COHEN. Well, the training course includes a series of
    tests as you go through the material, so you do have to answer
    questions and, you know, be successful in passing those tests
    in order to get to the end and----
        Mr. SMITH. Okay, thank you. Mr. Werfel, I think it is fair
    to say that the protection of private information remains an
    unresolved issue at your agency. Are you confident that these
    data hubs can truly protect private information? I mean, I
    would expect you to say yes, but do--are there not unresolved
    issues relating to private information?
        Mr. WERFEL. Let me answer it this way. We have a--I
    mentioned earlier we have a strong track record here. Let me
    put some numbers to that of--I said earlier that we provide,
    under normal operating business, and under the law, the
    taxpayer information to 300 Federal and State agencies. That is
    8 million records a year, okay? Last year, we know of 24
    incidents of this type of breach, where the information got
    into the wrong hands. So that is 24 out of 8 million.
        Now, every single one of those 24 incidents is concerning.
    And every time one of them happens, we make an assessment in
    terms of whether it was advertent or inadvertent, and we have a
    lot of reaction to try to churn and make improvements. The
    point I am making is that we have a historical track record of
    success in establishing safeguards to protect this information.
    It is imperfect. But where there is a breach we take our
    responsibilities very seriously to correct them, going forward.
        Mr. SMITH. But some of those--many of those situations
    remain an unresolved issue. Is that accurate?
        Mr. WERFEL. In some cases, where they are still being
    investigated, we may be still evaluating what changes we need
    to make to prevent them from happening again.
        Mr. SMITH. Okay. Now, we heard earlier that perhaps there
    would be some subsidies offered individuals through their
    insurance plan. But certainly an undue subsidy would exist. And
    the necessity to recapture that undue subsidy, can you tell us
    briefly how that would be recaptured?
        Mr. WERFEL. Well, I think there were two things. First, you
    apply for a subsidy and you provide certain income information,
    and you are essentially predicting what your income information
    is going to be if you are applying for an advanced credit. You
    are saying, ``When I get to file my taxes in 2015 for the 2014
    tax year''----
        Mr. SMITH. It is based on prospective income, correct?
        Mr. WERFEL. Yes, you need to----
        Mr. SMITH. And that could change.
        Mr. WERFEL. That could change.
        Mr. SMITH. It could increase.
        Mr. WERFEL. So you are relying on recent data to try to
    make a projection of what your income is going to be when you
    are applying for an advanced credit. So after we go through the
    whole year, now we know, at the end of that year, as the
    taxpayer is sitting down to file, what their actual income was.
        And so, we do a true-up or a reconciliation to see maybe if
    they should have been given more premium support, maybe they
    were given too much, and then we will do that true-up and work
    it out with the taxpayer.
        Mr. SMITH. Would you characterize that recapture as a tax
    increase?
        Mr. WERFEL. It could be that the taxpayer could owe more.
    It could mean that they could be due a higher refund. It
    depends on----
        Mr. SMITH. Would you characterize that as a tax increase?
        Mr. WERFEL. I don't think I would call it a tax increase,
    no, because the individual is coming in for a benefit. It might
    be a smaller benefit than they anticipated, but it is a
    benefit.
        Mr. SMITH. Okay. I mean, we heard last year, I think it
    was, that in the repeal of the 1099 mandate, the pay-for was a
    recapture of the subsidies, undue subsidies, in the exchange.
    And we were told in a pretty loud tone that would be a tax
    increase. I certainly would dispute that.
        Mr. WERFEL. And there might be--and we might be just
    talking past each other in terms of characterization. It is
    real money----
        Mr. CROWLEY. Will the gentleman yield?
        Mr. SMITH. My time is limited, thank you. But my concern is
    that this creates confusion, it adds to the complexity. And
    certainly, as the exchange of information is out there, an
    increase to that, an increasing exchange of information, the
    more errors will occur.
        So, thank you. I yield back.
        Chairman CAMP. All right. Thank you. Mr. Paulsen.
        Mr. PAULSEN. Thank you, Mr. Chairman. Obviously, the law is
    complex and confusing in many respects. Mr. Cohen, until July
    2nd, which is just earlier this month, the Administration was
    telling all individuals who worked more than 30 hours a week,
    ``We are going to make your employer provide healthcare
    coverage. And if they don't, you will get health care and a
    subsidy on the exchange.''
        Mr. COHEN. No, that is not true. Large employers were
    subject to that.
        Mr. PAULSEN. Large employers. Okay. Now, that----
        Mr. COHEN. Small employers are never subject.
        Mr. PAULSEN. Okay, and that--but that is no longer true for
    2014, right? An employer does not have to offer coverage any
    more.
        Mr. COHEN. That is true. But as I have said, 96 percent of
    them already do.
        Mr. PAULSEN. But many individuals--so these individuals are
    now going to have to go into the exchange in 2014, all next
    year, in order to get coverage. And a lot of these folks have
    already seen their hours slashed, they are cut back, businesses
    are attempting to comply with the 30-hour rule.
        I even heard from, in my district, cities that are
    concerned about volunteer fire departments that are now--it is
    affecting their ability to employ volunteer firefighters
    because they are on call, and there are concerns that if they
    are on call for over 30 hours a week, or their work hours are
    over 30 hours a week, the city may have to provide health
    insurance, and that could cost hundreds of thousands of
    dollars.
        Mr. COHEN. That seems unlikely.
        Mr. PAULSEN. Well, these are all the concerns that are
    being raised now as a part of the complexities of the law.
    Clearly, that is out there. So----
        Mr. COHEN. That seems like an unlikely scenario.
        Mr. PAULSEN. And I will follow up with you on that to make
    sure that we can clarify----
        Mr. COHEN. You are talking about a volunteer.
        Mr. PAULSEN [continuing]. For that city. Now, again, this
    is confusing, it is disruptive to people's lives. I mean, is
    this fair for employers, or their employees, that are trying to
    comply with this 30-hour rule? People have had their hours cut
    back.
        Mr. COHEN. We are going to make it possible for millions of
    people who have been unable to have insurance previously to get
    health insurance. That is what we are doing.
        Mr. PAULSEN. Mr. Werfel, let me ask you this, because you
    acknowledged earlier that there have not been delays in some of
    the implementations of the various tax and revenue raisers that
    have gone forward that the IRS administers. And the IRS has not
    delayed the medical device tax, of course, which the Joint
    Committee on Taxation says the costs from which are going to be
    passed on to consumers and passed on to businesses in the form
    of higher premiums.
        Has the IRS done any analysis at all as to the financial or
    the administrative impact that is being placed on firms due to
    the tax?
        Mr. WERFEL. We would certainly look at administrative
    impacts, because part of our goal is to help work with
    taxpayers to reduce burden and give them electronic services,
    and all the kinds of things we do with taxpayers to improve
    their taxpayer service with the IRS.
        Mr. PAULSEN. Does the IRS have any sense of the problems
    that have been faced by some of the companies in trying to
    comply with the tax so far?
        Mr. WERFEL. The taxes like medical device----
        Mr. PAULSEN. The medical device tax, specifically.
        Mr. WERFEL. I would want to get back to you. I can talk to
    my team about anything they are hearing in terms of specific
    problems. I don't have them at my fingertips.
        Mr. PAULSEN. Okay. In addition to the cost of the tax,
    would you agree that the cost of compliance, as the Joint
    Committee on Taxation says, would also have a negative impact
    on patient care?
        Mr. WERFEL. That is a policy call. I really can't make a
    judgement on that.
        Mr. PAULSEN. I know that recent surveys among the companies
    that have had to comply with the tax have indicated that the
    cost for just the compliance side, not on the revenue aspect of
    it, because we passed the $1 billion mark earlier this month,
    but the compliance costs have been estimated to be somewhere
    around $667 million, actually, $667 million so far. That is in
    addition to the billions of dollars that are being diverted
    from maintaining and creating good quality jobs and high-tech
    innovation, et cetera, and research and development.
        And, Mr. Cohen, let me just do one followup, too, because
    you mentioned you have seen the rate filings in the different
    States. Now, is Minnesota set to comply on October 1st for
    having their exchange ready?
        Mr. COHEN. Yes. Minnesota is operating a State-based
    exchange, and they are doing well, and it will be operating in
    Minnesota.
        Mr. PAULSEN. Okay. Have you seen the rate filings, or has
    your office seen the rate filings for the plans being offered
    in Minnesota?
        Mr. COHEN. We wouldn't have, since the State--it is a
    State-based exchange. That is--the State is running the
    exchange. They will make them public whenever they make them
    public.
        Mr. PAULSEN. Okay. Can you say whether the average typical
    family would see a reduction in their premium of, again, the
    $2,500, which is the typical family?
        Mr. COHEN. I don't know what the rates are going to be in
    Minnesota, no.
        Mr. PAULSEN. Okay. Thank you, Mr. Chairman. I yield back.
        Chairman CAMP. All right. Mr. Davis.
        Mr. DAVIS. Thank you very much, Mr. Chairman. I also want
    to thank the witnesses for being here.
        You know, I have listened to the discussion all morning.
    And it came to my mind that I have never seen the
    implementation of a new system, a new program, or a new law
    that covers the entire country, without there being some glitch
    or some glitches. It also occurred to me that the only
    perfection that I have ever seen were Egyptian mummies. And, of
    course, they didn't move. They remained as they were.
        I would imagine that if we were to ask one of the more than
    30 million individuals who, until now, had no access to health
    insurance if any of the reasons that we have heard this morning
    would be a reason to do what I call throw out the baby with the
    bath water because it is not as clear as we would like for it
    to be, I think the debate--and, of course, tomorrow we will
    vote on something, and we will not necessarily vote on what we
    are hearing today, because that is not exactly the purpose.
    Today, we are looking for perfecting ideas. I mean, how do we
    make the Affordable Care Act more effective? How do we improve
    it? How do we make sure that there are fewer glitches, as the
    implementation occurs?
        Let me ask you, Mr. Cohen, if we look at what has already
    taken place--I mean, not what we are talking about will happen
    in the future, but we have already seen a slowdown in
    healthcare cost growth in both national health spending and in
    Medicare. This week, the Council on Economic Advisors announced
    the slowest growth in health spending in 49 years.
        The only thing that I have heard year after year after year
    after year has been the increasing costs of health care, that
    we are spending more money and getting less. I am told that
    insurance companies now must spend at least 80 percent of their
    premiums on medical care, not other kinds of things. In 2012,
    Americans have saved $3.4 billion. That is a lot of money, even
    in Chicago, Illinois, where I live. That is a lot of money,
    $3.4 billion saved, and another $500 million in rebates.
        Could you share some additional benefits that we have
    already seen from the Affordable Care Act?
        Mr. COHEN. Certainly, I would be happy to. There have been
    3.1 million young people age 26 and below who have been able to
    get insurance through their parents' employer coverage; 71
    million Americans who have gotten expanded access to
    preventative services at no cost to them; 27 million women
    included in that who have gotten guaranteed access to
    additional preventative services without cost sharing; and 17.6
    million children who have pre-existing conditions and now can't
    be denied insurance coverage as a result of the Affordable Care
    Act.
        Mr. DAVIS. Let me tell you, those kind of benefits--I mean,
    we can nitpick about verification. We can nitpick about
    anything that we come up with. But the reality is the American
    people want to see implementation of the Affordable Care Act.
    And that is what we are going to get. I yield back.
        Chairman CAMP. Thank you. Mr. Marchant.
        Mr. MARCHANT. Thank you, Mr. Chairman. For 3 years now, we
    have been monitoring, in our office, the phone calls, the
    emails, and the letters about the Affordable Health Care Act.
    Ninety-five percent of the correspondence that I get from my
    constituents is against Obamacare. It is against the
    implementation. So, as a representative of my district, some of
    the questions I will ask are going to reflect that.
        When I look at this application, when I have looked through
    the entire application, and have listened to the testimony that
    we have had today--and I want to thank the Chairman for having
    this implementation hearing--I am finding out that not only
    after my constituents are told that they are going to be
    breaking the law if they don't have health insurance, and if
    they don't fill out this application they are going to owe a
    penalty, and they get to the middle of this application and
    they find that this application asks them for some very, very
    personal information, and asks them about, actually, almost
    every bit of their financial life, now my constituents are very
    alarmed with all of the headlines about information being
    shared about their phone records, information being shared
    about their emails. They are alarmed. They are concerned that
    the government is learning way too much about their private
    lives, and that the government is sharing way too much of that
    information.
        You can't be anything but alarmed after going through this
    application and then hearing today in this hearing that this
    information is going to be shared with State insurance
    agencies, it is going to be shared--it is going to be gathered
    by navigators who may be making $10 or $12 an hour, it is going
    to be shared with private insurance carriers, and that these
    private insurance carriers are going to be able to access
    information from the IRS. And they are alarmed.
        And nowhere in this document does it say that, by law, the
    Supreme Court has said that you do not have to take this
    insurance, that you can, in fact, pay a penalty.
        Mr. COHEN. Congressman, I would like to work with you to
    ease your constituents' concerns, because no one has to provide
    any information about themselves unless they want a benefit,
    unless they want a subsidy. They don't have to provide any
    information whatsoever.
        What the law says is your individual, personal
    responsibility is to have health insurance coverage.
        Mr. MARCHANT. In order to follow the law, they must fill
    out this application, or be----
        Mr. COHEN. Well, I hope you will explain to them that is
    not true.
        Mr. MARCHANT [continuing]. Or be in violation of the law
    and pay a penalty.
        Mr. COHEN. Well, I hope you will explain to them that is
    not true, because it is not true.
        Mr. MARCHANT. Americans want to follow the law, they want
    to do the right thing. And they are going--and I believe they
    will go to this application because they feel like they must,
    to follow the law.
        Mr. COHEN. The application asks whether you want to receive
    a subsidy. And then, if you say yes, you go on to provide
    income information. If you don't want to receive a subsidy from
    the government to help pay for your health insurance, you don't
    have to tell us anything. Go out and buy health insurance.
        Mr. MARCHANT. If a responsible family fills this
    application out, how can it be assured that this information
    will not be shared with some clerk at Aetna Insurance Company,
    and that then the clerk will have access to go to the IRS and
    find out whether the information you gave in that is correct,
    or----
        Mr. COHEN. You can----
        Mr. MARCHANT [continuing]. Some navigator sitting out at a
    tax-exempt organization that has a contract----
        Mr. COHEN. You can assure them that Aetna Insurance Company
    will never see their personal information with respect to what
    their income is, never, based on filling out this application.
        Mr. MARCHANT. But we have had testimony today that says
    that the number of people that are going to receive personal
    IRS information is going to be significantly expanded. And you
    are saying that only if you desire this benefit will you then,
    de facto, be giving permission for this information to be
    shared.
        I am reflecting the concern of the people that live in my
    district about the----
        Mr. COHEN. And I would like to help you alleviate that
    concern, because it is based on a misunderstanding of how this
    works.
        Mr. MARCHANT. Why does, at the very end of this
    application----
        Mr. COHEN. The insurance company doesn't get this
    application.
        Mr. MARCHANT. Why, at the very end of this application,
    does it give instructions on how a person can go register to
    vote?
        Mr. COHEN. Because Congress passed a law that says that
    whenever the Federal Government provides a benefit to people,
    it needs to provide an opportunity to let people know how to
    register to vote. It is called the motor voter law.
        Mr. MARCHANT. We also need to----
        Mr. COHEN. That is a law that Congress passed, and we
    follow it.
        Mr. MARCHANT [continuing]. Let people know that a person
    does not have to fill this application out by law.
        Chairman CAMP. All right, thank you. Time has expired. Ms.
    Black.
        Ms. BLACK. Thank you, Mr. Chairman. I want to thank you for
    having this very important hearing.
        Mr. Cohen, I want to just get right into the questions,
    because just 3 weeks ago, we had, by rule, a statement that
    said you were not ready to fully verify income. What has
    changed in those 3 weeks?
        Mr. COHEN. What has changed is that we have looked at our
    process, and we have confirmed that we are able to verify
    income for 100 percent of the applicants who will be submitting
    applications to the marketplaces.
        Ms. BLACK. You can verify for one to two percent?
        Mr. COHEN. One hundred percent.
        Ms. BLACK. One hundred percent.
        Mr. COHEN. Yes. We will be verifying----
        Ms. BLACK. So, if that is the case, I am really curious
    how, in just 3 weeks, with a rule being put out just 3 weeks
    ago to say we do not have the technology to be able to do that,
    and yet 3 weeks later we are now seeing, oh, all of a sudden we
    have the technology to do that.
        Mr. COHEN. No.
        Ms. BLACK. How did that happen?
        Mr. COHEN. That is not right. We said we were going to
    sample, and now we have concluded that the sample size is going
    to be 100 percent.
        Ms. BLACK. Okay.
        Mr. COHEN. We always said we were going to do it, we just
    said we were going to do some. Now we are saying we can do all.
        Ms. BLACK. I don't have the rule right in front of me, Mr.
    Cohen, but it did say that you did not have the technology to
    implement. And I don't have it right in front of me. But let me
    go to my next point.
        On April 12th, here in this Committee, in a Ways and Means
    Committee, Secretary Sebelius claimed 15 times there would be
    no further delay in this law. And yet, the first of July we got
    a rule that said there would be a delay of the employer
    mandate, and that there would be a delay in the income
    verifications. And I just find that really interesting, that it
    was stated 15 times in our Committee that we are not going to
    have a delay.
        And now, Mr. Werfel, you claim that you are making efforts
    to verify the employer-sponsored coverage. You are making
    efforts?
        And, Mr. Cohen, you now tell us that tomorrow we are going
    to receive a new rule on the income verification. We are 60
    days out. I don't think you all are ready. I really don't
    believe you are ready by what you are telling us here, that you
    are making efforts. This is 3 years worth of work. And we were
    told by the Secretary there would be no more delay. So, I think
    that you can't have it one way and then something else comes
    up.
        But let me go to Mr. Cohen on this one. Can you tell me
    what the role of Equifax and other contractors will be on these
    recently signed contracts that you have with them on verifying
    and providing 100 percent?
        Mr. COHEN. Sure. Equifax is a source of data from employers
    that we will be checking the information that people put on an
    application against in circumstances where we can't verify the
    information that has been provided from IRS data. We will check
    it against Equifax data, because that is a current source of
    how much people are getting--earning that exists, not for all
    employers, but for many employers. So it is another source of
    data that we can use to verify employment.
        Ms. BLACK. So you are saying in this Committee today that
    100 percent of the applications that are filed will have a
    verification of their income through whatever source, whether
    it is Equifax--do you have another contract besides Equifax
    that you use----
        Mr. COHEN. And then, if we can't verify against the sources
    that we have available, then we request documentation from the
    individual. They will have to provide us, for example, with pay
    stubs.
        Ms. BLACK. Okay. So, quickly, I want to go--because I know
    my time is going to run out here--I want to go to the whole
    claw-back issue. Because, Mr. Cohen, you mentioned earlier the
    IRS is supposedly going to be clawing back any fraudulent
    payments when people file their tax returns, and somehow the
    Administration thinks this is going to deter fraud.
        But, Mr. Werfel, this question is for you. Can you please
    explain to the Committee to what degree the IRS has been able
    to recover fraudulent payments that have been made through
    similar advanced tax credits in the earned income tax program
    and also the educational tax credit?
        Mr. WERFEL. Well, a couple of things in terms of the
    clawback, to clarify, because there is a difference between the
    earned income tax credit and here. And again, I made the point
    earlier. The taxpayer doesn't actually receive funds. The funds
    go to the insurance provider.
        Ms. BLACK. I understand that.
        Mr. WERFEL. And that is important, because----
        Ms. BLACK. But that is still money that goes out the door.
        Mr. WERFEL. I agree.
        Ms. BLACK. Those are Federal dollars----
        Mr. WERFEL. I agree.
        Ms. BLACK [continuing]. That the hard-working taxpayer is
    paying. And that is--and I know my time is going to run out
    here, but $11 billion were fraudulently doled out--by the
    Inspector General's report--in the earned income tax credit,
    $11 billion a year, and $3 billion in the education tax credit.
    And he testified in this very Committee that they have been--
    and these are his words--``incredibly unsuccessful in clawing
    back that money.''
        Mr. WERFEL. I know we are running out of time. Let me
    commit to work with your staff, if you will allow it, to
    explain the procedures that we have in place to get money
    returned to the IRS in the earned income tax credit, and how it
    is going to work in the ACA.
        Ms. BLACK. Would you please do that?
        Mr. WERFEL. I will.
        Ms. BLACK. Because, as I said, this is absurd. We are 60
    days out from full implementation, 3 years later, we are still
    rewriting this train wreck.
        Chairman CAMP. All right.
        Ms. BLACK. And it is time that this Administration admits
    it is not ready and we need to delay this train wreck.
        Chairman CAMP. All right.
        Ms. BLACK. I yield back.
        Chairman CAMP. And, Mr. Werfel, I realize you are
    relatively new to the position, but I want you to know, with
    these improper payments, I have been raising that issue with
    the previous commissioners of the IRS for several years, and
    not gotten concrete proposals on how this Committee might be
    able to address the problem of improper payments. And that is
    why there is a concern here. But----
        Mr. WERFEL. My commitment would extend to you and your
    staff, as well, to roll up sleeves and talk about the issue,
    absolutely.
        Chairman CAMP. All right. Mr. Larson.
        Mr. LARSON. I thank the Chairman. And I thank our witnesses
    for being here this morning. And I want to commend our
    Chairman. As this Committee has conducted business over the
    last several--this past year, in fact, and before that, our
    Chairman is to be commended for the bipartisan nature of which
    we have done things together.
        This hearing, however, today does not take on that same
    feeling. In fact, I will bet at one point or another Mr. Cohen
    and Mr. Werfel might have felt like this was part of an
    inquisition rather than a hearing. But I assure you there are
    no Torquemadas on the other side; they are indeed good people.
    And it is unfortunate that, like the way in which we are
    working on tax reform, we couldn't be working on constructing
    the Affordable Health Care Act in a way that serves people.
        Just quickly, without the Affordable Health Care Act, all
    of the provisions that you talked about that people are
    currently enjoying, what would happen to them? They would not
    be there or available to the 3.1 million people who receive
    specific benefits, the 17.6 million children, or the 71 million
    elderly in preventative care. That would all be gone, correct?
        Mr. COHEN. If the law were to be repealed, yes.
        Mr. LARSON. If it were to be repealed. The goal here is to
    repeal. There is no substitute, there is no replacement.
        What would insurance costs be without this Act? What was
    the trend with respect to insurance costs?
        Mr. COHEN. Insurance costs, health insurance costs, were
    going up at a much higher rate before than they are now.
        Mr. LARSON. That is, in fact, true. And so, now, with the
    exchange coming on, the truth of the matter here is that what
    we have is not something that CMS oversees, like Medicare,
    which is single payer--and many on our side would have
    preferred either a single payer system or Medicare-for-all-
    system--what we have is an amalgamation of different systems.
    But it is primarily the seed of an idea that was put forward by
    the Heritage Foundation, an idea that was then implemented by a
    Republican Governor in a Democratic State. And, as you heard
    Mr. Neal say, done very successfully because Democrats and
    Republicans worked together to put this through.
        And now we have an opportunity to take the very best of
    public health, the very best of science, technology, and
    innovation, and the very best of entrepreneurialism, and drive
    down the most inefficient business in this country, which is
    healthcare delivery. I repeat. The most inefficient business.
        And so, we have the tools and the techniques that the other
    side should be joining with us to use that, by the way, would
    drive down the national debt, would make health care more
    accessible, affordable, and create a new paradigm where patient
    outcome and wellness is the goal, not so much the delivery in a
    hodge-podge manner. And it is because the private sector now is
    coordinating care under the Affordable Health Care Act that we
    see the tremendous opportunity for great gain.
        But instead, here in Congress, we persist on playing tastes
    great, less filling. We see yet the 40th time that a bill is
    going to be repealed, dragging before us again people from the
    various agencies, instead of saying, ``How can we work
    together,'' trying to play gotcha and what is going to go wrong
    within the agency. The American people are fed up with this. We
    are going to go through this charade one more time before we
    exit, because it is a political point that has to be made.
        But what the American people want to see is affordable
    health care, is the deficit paid off. We have the framework,
    the context to do it. My God, Mr. Chairman, let's work together
    to get this done. Let's use these agencies. Let's not go after
    these people who are trying as hard as they can to get an Act
    in front of the American people that will allow them and assist
    them to get the healthcare coverage that they need. This is a
    good thing for the American people, and it is something that we
    should be working on together, not fighting with one another
    over. Thank you, Mr. Chairman. I yield back my time.
        Chairman CAMP. Thank you. Mr. Young is recognized.
        Mr. YOUNG. Thank you, Mr. Chairman. Thank you, gentlemen,
    for being with us today. I am concerned about the adverse
    impact that the Affordable Care Act is going to have on our
    hourly employees. There has been a discernable and dramatic
    shift from full-time to part-time work in recent months.
    Schools, colleges, cities, and restaurants throughout my
    district in Indiana have reported this on the ground to me. But
    this is not just anecdotal evidence that I have.
        You look at the national trends. According to the Labor
    Department, since January roughly 100,000 fewer Americans are
    working full-time. The June Jobs Report indicates that 322,000
    people have seen an increase--there has been an increase by
    322,000 people--in the number of Americans who want to work
    full-time but can only find part-time work.
        So, what is driving this trend? It is the Affordable Care
    Act, in large measure. You have employers that are chopping up
    their full-time positions into part-time positions, so that
    they can stay under that 30-hour threshold, which is mandated
    under the so-called employer mandate. An employer mandate is
    driving up costs on businesses, estimated--according to our
    Federal Government--at $106 billion.
        And, you know, there are a number of people who are living
    from paycheck to paycheck that I talk to on a regular basis who
    are not just hurting, they are angry. They are angry at those
    who put this law into place and those who are implementing it.
    And they want reforms.
        And so, I do come here in the spirit of partnership to try
    to identify those reforms. I would note that President Obama
    has already signed seven of the so-called partisan and
    meaningless bills, which he, on a regular basis, despises in
    his speeches. He has responded to the employer community by
    delaying the employer mandate. These are both actions that the
    President has taken. I wish he would also extend mandate relief
    to individual rank-and-file Americans and their families by
    also delaying the individual mandate.
        But I am going to ask you a few pointed questions here. Do
    you think that the Administration could support, as another
    possible measure, repealing the new definition of full-time of
    30 hours, which it has never been popularly understood to be,
    and restoring the traditional 40-hour definition, as it applies
    to this Act?
        Mr. WERFEL. I will start by saying I am just not the right
    government official to answer that question. I think I would
    defer to Treasury on those types of policy calls.
        Mr. COHEN. Right, that is not mine, either, I am afraid.
        Mr. YOUNG. Okay. Well, the Tax Code, of course, is your
    forte, so I will ask you this. Can you point to any other
    places within the Internal Revenue Code where full-time is
    defined as being 30 hours a week?
        Mr. WERFEL. I will look into that and get that answer for
    you. I don't have it at my fingertips.
        Mr. YOUNG. I believe I know the answer.
        Mr. WERFEL. Okay.
        Mr. YOUNG. I am not the Commissioner of the IRS, I am not
    the guy in charge, but I think the answer is no, it has never
    been defined as 30 hours, and that is why the American people
    understand it to be something much higher than that.
        Do you believe a 1-year delay of the employer mandate, as
    you consult with your bosses--do you believe that is going to
    stop this trend of reducing the number of hours that our hourly
    employees are receiving, from 34 hours down to, say, 29 hours,
    the so-called 29er effect?
        Mr. WERFEL. I am not sure. I mean, what we are hearing from
    employers is they wanted an opportunity for two things; to
    talk, have more time to work with the Treasury Department and
    the IRS around how these regulations are constructed and how
    the reporting provisions will exist; and they also wanted more
    time to develop and ramp up their technology and process
    solutions to meet the new requirement.
        Now, whether that then, in turn, has other impacts on their
    business, I would imagine it would. I don't know what impacts
    it might have on their business, but a directive we had from
    them is more time to both work with us on the requirements
    themselves and give them time to develop the systems needed to
    meet those requirements.
        Mr. YOUNG. Well, we have another Jobs Report coming out on
    Friday and others to follow. So we will see whether or not this
    1-year delay has any impact on the reduction of number of
    hours, and thus wages, of these workers who are on the margins
    of our economy. Thank you, and I yield back.
        Chairman CAMP. All right. Mr. Renacci.
        Mr. RENACCI. Thank you, Mr. Chairman. I thank the gentlemen
    for being here. I know it has been a long day so far.
        But, Mr. Cohen, help me out with my constituents. You know,
    I represent a district where I was a businessman there for
    almost 28 years before coming here. You made a statement that I
    wrote down. It said health insurance rates were going up at a
    much higher rate than they were----
        Mr. COHEN. They have since, yes.
        Mr. RENACCI [continuing]. Since the Affordable Care Act.
    But when I go back home, and I go back to those same
    businesses, and I remember when I operated them, health
    insurance costs were going up, they were going up 7, 8, 9
    percent, sometimes 11. Today 32, 52--63 is one of the
    percentages I have gotten from some of those businesses that I
    dealt with.
        Explain to me--tell me what I should be telling them,
    because you just said healthcare costs are going down. But that
    is not what is happening in Ohio, by the way----
        Mr. COHEN. Well----
        Mr. RENACCI [continuing]. Which, as you know, is expected--
    premiums are expected to increase 88 percent.
        Mr. COHEN. So, obviously, I am talking about, you know,
    averages across the country. I am not talking about a specific
    business in Ohio, so I can't necessarily speak to----
        Mr. RENACCI. I am talking about a district, too. I am
    talking about an area----
        Mr. COHEN. I am not talking about a specific district in
    Ohio. But one thing you can tell them that is a real benefit to
    small businesses under the Affordable Care Act, once it is
    fully implemented in 2014, actually there are two things.
        Traditionally, businesses with high--in higher-risk types
    of employment, say construction workers, the cost of healthcare
    coverage for them was extremely high, because they could be up-
    rated based on an industry factor. They can't do that anymore,
    beginning in 2014.
        The second thing is that, for smaller employers, if you had
    one employee with high health costs, you could be up-rated
    because of the health condition of that one employee. They
    can't do that anymore after 2014.
        So, there are some benefits that are going to come into
    effect starting next year that are going to have a real
    significant impact on the cost of coverage for small business.
        Mr. RENACCI. So you would--you are saying hold on, it is
    coming, even though they are experiencing all these high rates.
        Mr. COHEN. Well, not all the provisions have gone into
    effect. But beginning in 2014, these will.
        Mr. RENACCI. Well, again, just so we know, I mean, that is
    kind of the comments you have been making today, that, in
    general, costs are coming down. I am afraid my district is not
    experiencing that.
        Mr. Werfel, regarding the data hub, you know, my
    constituents, my colleagues--I am even somewhat concerned. We
    talk about sensitive taxpayer information being prepared for
    October 1st, you know, having this all ready. You said you are
    going to have everything ready October 1st. Correct?
        Mr. WERFEL. With respect to the transmission of tax data
    through the hub to the exchanges, yes.
        Mr. RENACCI. Would you be willing to demo that system for
    Members of this Committee in September, before it is--before
    you implement it?
        Mr. WERFEL. I will consult with my staff to make sure that
    something like that can be done. But anything we can do to
    provide you more information on how the process will work, and
    to give you assurances about what we are doing, I am committed
    to that.
        Mr. RENACCI. Well, if it is ready to go October 1st--you
    are saying it is going to be ready to go October 1st?
        Mr. WERFEL. It is absolutely ready to go October 1st. Yes,
    I think----
        Mr. RENACCI. Unless there is----
        Mr. WERFEL [continuing]. We just have to work out what you
    mean by ``demo.'' But, yes, we will get you what you need in
    order to understand exactly how the process works, and we will
    work, in terms of what the demo looks like. But, yes, I am
    committed to do that.
        Mr. RENACCI. So sometime in September we could expect that?
        Mr. WERFEL. Yes. We will work with--I will have my staff
    work with yours.
        Mr. RENACCI. Can you tell me how much the Department has
    spent to date to implement this new system?
        Mr. WERFEL. I do have statistics for the various costs of
    the systems. There are a variety of different systems involved.
    But as an example, you know, in terms of the transactional
    portal, the gateway for data passing to and from IRS, $3.1
    million spent to date. I mean, I can go through all the
    numbers, but I think what might be helpful is for me to just
    give you a rack-up, a detailed rack-up, of costs to date or by
    fiscal year. And I can provide that information to you.
        Mr. RENACCI. All right. I would appreciate that.
        Mr. Cohen, can you explain? I know you have said a number
    of times that the exchanges will be ready to go on October 1st.
    What is the back-up plan if they are not? Do you have a back-up
    plan, or is there--I mean----
        Mr. COHEN. Well, there is no ``if not.'' I mean, people
    will be able to go online and submit their data and enroll in
    coverage. There are--you know, we will be sure that the
    opportunity to get enrolled in the coverage will be available.
    I mean----
        Mr. RENACCI. There is no back-up plan?
        Mr. COHEN. Well, we have a lot of different procedures in
    place to make sure that is possible, but there is no ``it's not
    going to work.'' It is going to work.
        Mr. RENACCI. All right. And, Mr. Cohen, you have said a
    number of times today, too, that you are going to do 100
    percent verification of income.
        Mr. COHEN. Right.
        Mr. RENACCI. One hundred percent. That is a--I just want to
    make sure. Now, when you say that----
        Mr. COHEN. Yes.
        Mr. RENACCI [continuing]. Are you talking about, in
    verification--and I am a CPA, so sometimes----
        Mr. COHEN. Okay.
        Mr. RENACCI [continuing]. You verify by looking at this
    document, that document. You know, someone--if you go to
    Equifax, and they give you an incorrect number, but it is the
    number they gave you, are you going to call that verification?
    I am just trying to get----
        Mr. COHEN. We are going to compare the information that the
    applicant gives us against available data sources: IRS, SSA,
    Equifax. And then we are going to see if we can verify that
    way. If we can't, we are going to get additional information
    from the applicant, such as pay stubs.
        Mr. RENACCI. So a year-and-a-half from now, if you come
    back, you will be able to testify you have verified 100
    percent?
        Mr. COHEN. Well, that is the system we are designing, so--
    --
        Chairman CAMP. Time has expired. Mr. Blumenauer.
        Mr. BLUMENAUER. Thank you, Mr. Chairman. I am intrigued by
    my friend from Ohio talking about 88 percent premium increases,
    because we are seeing States that are working to try to
    implement the legislation, and are doing so in aggressive and
    thoughtful action, and are actually seeing the opposite. We are
    seeing reductions in New York, reductions in California,
    reductions in the State of Washington.
        Mr. Chairman, I would like unanimous consent to enter into
    the record what is happening in Oregon in terms of lower costs,
    better care. One of the problems in some of these States coming
    up with the scare tactics is people are actually not comparing
    apples to apples. They are not comparing health care that no
    longer has pre-existing conditions, no longer can cherry-pick
    in terms of inadequate coverage that previously people had.
        And I am--I find this unfortunate. But I find it entirely
    consistent with what has happened in this Committee. When we
    had the Prescription Medicare Drug program jammed through in
    the middle of the night after unprecedented arm-twisting, some
    Republicans claimed borderline bribery, leaving the machine
    open for 2\1/2\, 3 hours, whatever it was. And these were not
    our approaches in a program that wasn't paid for, unlike this.
    We could have sabotaged it. We could have picked away at it.
    But, to the best of my knowledge, all of us kind of rolled up
    our sleeves. That was the law. There is an opportunity to give
    benefit to people. And we were moving forward to try to improve
    it.
        I heard some concern from my friend, Mr. Ryan, about what
    is going to happen with some of the people who may run athwart
    the penalty provisions. There may be--I find that ironic,
    because this Committee Majority actually took action to make
    the cliff worse, to magnify the effect of the claw-back, to put
    more people at risk of having to pay back more money. There was
    one provision that would have eliminated it altogether. And I
    just--I find that emblematic of what is really sad, that for
    the first time we have a party committed to undermining a law,
    not fixing it, not refining it, not trying to truly clarify
    where the problems are, and working together to solve them, but
    to throw sand in the gears. I mean, the IRS is having furlough
    days, for heaven's sake. I don't know any business that lays
    off its accounts receivable.
        Undercutting the information, having interminable
    hearings--dragging thoughtful men and women who would like to
    be out doing their job, implementing the law--on pointless
    exercises to repeal a law that is not going to be repealed, and
    thus making it harder to have a smooth implementation, harder
    to give people the information, harder to work out the
    glitches. Nobody would have designed the bill the way it is. It
    is a B-minus. But, because of a complete collapse of the
    legislative process in the Senate, we had to do it through
    reconciliation. And then, ever since, there has been this
    assault on its implementation. And I think that is sad. I think
    it is unfortunate. It short-changes men and women around the
    country who would like to take advantage of the provisions.
        And, as I will illustrate from the information I am
    submitting for the record from Oregon, there are some real
    advantages here. It is going to be fascinating watching in a
    year States that have rejected money for Medicare, States that
    have rejected setting up their own exchanges and trying to
    work, compared with States that have, is going to be a positive
    benefit. I hope that this is the last time we see a concerted
    effort to sabotage a government program and benefits for our
    citizens, as opposed to refining, fixing, debating, and moving
    forward.
        But, Mr. Chairman, I appreciate your having the hearing. I
    would appreciate, Mr. Cohen, if you could provide in writing
    the answer to Mr. Ryan, where the hypothetical that he came up
    with, the young woman would be eligible to apply if she is not
    a dependent. If that could be made a part of the record I would
    appreciate it. I see my time is up, but if you could provide
    that for the Committee, I would deeply appreciate it.
        Mr. COHEN. I would be happy to.
        Chairman CAMP. And, without objection, the gentleman's
    information that he will submit for the record will be allowed.
        And I do want to note to the gentleman that this is the
    first oversight hearing on implementation of the healthcare law
    this Congress that the Committee has had, the first and only so
    far.
        So, with that, we will go to Mr. Griffin and then to Mr.
    Schock.
        Mr. GRIFFIN. Thank you all for being here. I appreciate it.
    I take this hearing seriously. And everybody up here represents
    about 700,000 people. And people I represent don't agree
    necessarily by the same margins with some of the other folks
    that sit up here. I represent a district where people oppose,
    in large part, this law. And that is just a fact. So when I
    speak, it is not Tim Griffin giving you my opinion only. I am
    speaking for Americans who have grave concerns. So I think it
    is important to have this discussion.
        And, you know, I have heard today talk about passing bills
    that have zero chance of becoming law, that we don't want to
    improve the law. Well, last time I checked, seven of those we
    have passed have become law. I am holding the list right here.
    So if you doubt that we want to improve it, as well as get rid
    of it, they are not--these are not inconsistent. You have a
    long-term goal and a short-term goal. And we have passed
    numerous bills here that the President has signed into law, at
    least seven. And the biggest change, the gutting--at least for
    1 year--of the employer mandate, that is what my bill was
    introduced to do. The worst the White House could say about it
    was that it was redundant. I wanted to comply with the law, I
    thought it would be better if Congress spoke on that issue.
        So, I take issue with the idea that somehow these bills
    can't become law. I think there are a lot of laws that people
    on both sides of the aisle oppose, and they will work their
    time in Congress to appeal them. This is one of them that I am
    focused on.
        But I want to mention a number of things here. Sometimes I
    feel like the discussion is not rooted in the reality that I
    hear. Okay? So, I am going to get away from my opinions, get
    away from the opinion writers, and I just want to read some of
    these headlines from news stories, so that we can all agree
    that this is out there around the country. I think this is
    important, so I am going to just read some of these.
        These are headlines from the Associated Press: ``Florida
    Insurance Officials Say Rates Will Rise Under the ACA'';
    ``Georgia Insurance Rates Spike Under Obamacare'';
    ``Chattanooga Business Owner Says Obamacare Costing Workers Pay
    Raises and Benefits''; ``Maryland Consumers Could See 25
    Percent Premium Increases Under Obamacare''; ``UNA Asks Student
    Employees to Work Fewer Hours''; ``Half of Affordable Care Act
    Cost Center Jobs Will Be Part-Time''; ``Obamacare to Impact
    Franklin County Workers''; ``Wisconsin Grocery Store Forced to
    Cut Hours, Due to Obamacare''; ``White Castle on Obamacare: `We
    May Only Hire Part-Time Workers' ''; ``Wellpoint Sees Small
    Employers Dropping Health Coverage''; ``Growing Worries About
    Obamacare Forcing Insurers Out of State Markets''; ``Full-Time
    Versus Part-Time Workers: Restaurants Weigh Obamacare'';
    ``Obamacare Forces Work Hour Limits for Students''; ``Brevard
    Cuts Some Workers' Part-Time Hours to Avoid Obamacare Rules'';
    ``Obamacare Delays the Relief for a Family Business''; ``Texas
    Business Owner Facing $1 Million in Annual Obamacare Costs.''
    And I have pages and pages and pages and pages. And I will be
    reading these on the floor of the House tonight.
        But the point is these aren't manufactured concerns. These
    aren't opinions. These are The Hill and the Missourian, the
    Huffington Post, and others. These are real news articles. So
    in a serious way, I am trying to convey that a lot of our
    objections and concerns reflect the concerns of our
    constituents.
        I hear it every day. I received a text on the way--I was
    over 1 minute--on the way over here I received a text from a
    constituent who has my cell phone number--most do--telling me
    her objections to Obamacare and the Affordable Care Act. So
    this is real, and it is real for our constituents. And I just
    want to make sure that you hear that side of it. It is not all
    Washingtonspeak. We are communicating what our constituents are
    telling us. And they are scared, and they are concerned.
        Thank you all for coming, I appreciate your time.
        Chairman CAMP. Okay. Mr. Schock.
        Mr. SCHOCK. Thank you, Mr. Chairman. Thank you, gentlemen,
    for your patience and cooperation with our questions.
        Let me just start at the 30,000-foot level. Mr. Cohen, your
    responsibility is to carry out and implement the Affordable
    Care Act. And, obviously, this is a law that was hotly debated,
    passed the Senate, passed the House, signed into law by the
    President, is the law of the land. Your responsibility, as a
    Federal employee, is to carry out and implement that law.
        The President has decided--the Administration, I guess I
    should say--the President vocalized his unilateral decision to
    withhold implementation of a portion of that law, specifically
    the employer mandate. I am just wondering, from your
    perspective as that Federal employee, did you seek any legal
    counsel or legal opinion on whether or not you could go ahead
    and not implement a portion of the law passed by Congress and
    instead move forward on a dictate from the President
    inconsistent with U.S. law?
        Mr. COHEN. I haven't, but I would point out that portion of
    the law is not one of the ones that I am tasked with
    implementing. That portion of the law is the Treasury
    Department, the IRS's, not mine.
        Mr. WERFEL. And I will answer that----
        Mr. SCHOCK. Mr. Werfel.
        Mr. WERFEL [continuing]. There was a--I was not in these
    meetings, but there was a team of lawyers, as I understand it,
    who evaluated the legal issues surrounding this decision on the
    employer provisions. So I think there was significant legal
    review of the issue.
        Mr. SCHOCK. Can you get to us the names, specifically, of
    who gave that legal opinion, whether it was Treasury Department
    attorneys, or whether it was legal staff at the White House,
    who specifically weighed in on the legal interpretation to
    determine the executive branch could unilaterally make a
    decision of not upholding a U.S. law passed by Congress and
    signed into law by the President?
        Mr. WERFEL. I will consult with Treasury on the best way to
    respond to your question.
        Mr. SCHOCK. Okay, thank you. I think that would be helpful.
    Because I think it is confusing to Americans to watch us debate
    laws, watch them be enacted, and then see, maybe for legitimate
    reasons, the President say, ``Look, this isn't ready for
    implementation,'' and rather than go back to Congress and say,
    ``Look, we need permission to not do X, Y, or Z, the executive
    branch simply says, ``We are just not going to do it.'' I think
    it speaks not only to the credibility of this law, but I think
    it also undermines the credibility as we work on other
    important challenges and issues facing our country, whether it
    be immigration, our national debt, and the like. That trust is
    so important between the executive and the judicial branch--or
    executive and the legislative branch, as well as with the
    American people.
        Mr. Werfel, you mentioned in your comments earlier in
    reference to the IRS and Treasury union employees who wish to
    opt out of the exchanges, that you thought it was appropriate
    that those employees be able to stay with their current policy
    because they are happy with it, happy with their policy. I am
    wondering whether or not, given the fact that there have been
    several thousand exemptions given out to different businesses
    and labor groups not to have to comply with the law, whether or
    not the Treasury union employees would be able to apply for a
    similar exemption?
        Mr. WERFEL. I think, if I understand the issue correctly,
    the Federal employees and the IRS employees would not need to
    do that. The NTEU statement was in response to a proposed piece
    of legislation that would have required Federal employees to
    move into the exchange framework. And so they were saying, ``We
    prefer for that legislation to not pass, because, again, we
    already have affordable healthcare coverage, and we are happy
    with our current program.''
        So, there is no need for a waiver for the IRS employees, as
    far as I understand the law today.
        Mr. SCHOCK. So how would they be exempted, or how----
        Mr. WERFEL. Well, they--the reality is that you only go to
    the exchange if you are unhappy with your health care--it is an
    option. You go to the--you have to have health insurance,
    right, under the law. But as a Federal employee you have health
    insurance, so you are covered. You wouldn't need to go to the
    exchange, unless you were unhappy.
        Mr. SCHOCK. But the law requires them to go to the
    exchange. That is the problem.
        Mr. WERFEL. No, it does not.
        Mr. SCHOCK. Well then, why are they----
        Mr. WERFEL. Because the proposed bill that was being
    considered and introduced would have had this requirement in
    place. It would have basically taken away the normal Federal
    employee health benefit plan, and required them to move to a
    different health benefit plan, which would have been through
    the exchanges. And they were basically saying, ``I don't want
    that law to be passed, because I am''----
        Mr. SCHOCK. So they don't want to have happen to them what
    is happening to Congress.
        Mr. WERFEL. Well, but--because they were saying--because
    that--well, yes. That is right.
        Mr. SCHOCK. That just makes it much clearer.
        Mr. WERFEL. That is correct, yes.
        Mr. SCHOCK. Thank you. Finally, I just want to hit on the
    self-attesting--it sounds as though you have a plan in place,
    Mr. Cohen, to speed up the process of being able to verify
    income. I just want to very quickly throw out a few figures.
        In Illinois they did the self-attesting and verification
    later, just on the Medicaid portion. And they found, just in
    their initial investigation, 20,000 Medicaid cases, 13,000 of
    which should not have gone on to Medicaid, they did not meet
    the income verifications. So these people self-attested, ``Yes,
    I qualify.'' Two-thirds of them, after the agency followed up,
    actually were thrown off. So I think that is a problem, if we
    are going to say yes now and verify later. And I would suggest
    that maybe there ought to be a way that we verify their income
    first, before they start getting a benefit. I yield back.
        Chairman CAMP. All right. Time has expired. I want to thank
    both Mr. Cohen and Mr. Werfel for being here and being willing
    to answer all the questions that Members of the Committee put
    forward to you.
        And, with that, this hearing is adjourned.
        [Whereupon, at 1:02 p.m., the Committee was adjourned.]

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