[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]

                          U.S. GOVERNMENT PUBLISHING OFFICE
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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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