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








              MAKING MEDICAID WORK FOR THE MOST VULNERABLE

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JULY 8, 2013

                               __________

                           Serial No. 113-65




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      Printed for the use of the Committee on Energy and Commerce

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
  Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana                  Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
CORY GARDNER, Colorado               BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas                  PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan                LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          JIM MATHESON, Utah
PHIL GINGREY, Georgia                GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            JOHN BARROW, Georgia
BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin 
BRETT GUTHRIE, Kentucky                  Islands
H. MORGAN GRIFFITH, Virginia         KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida            JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina     HENRY A. WAXMAN, California (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)

















                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     2
Hon. John P. Sarbanes, a Representative in Congress from the 
  State of Maryland, opening statement...........................     4
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     6
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    71

                               Witnesses

Nina Owcharenko, Director, Center for Health Policy Studies, 
  Heritage Foundation............................................     8
    Prepared statement...........................................    11
    Answers to submitted questions...............................    92
Alan Weil, Executive Director, National Academy for State Health 
  Policy.........................................................    17
    Prepared statement...........................................    19
    Answers to submitted questions...............................    96
Tarren Bragdon, President & Chief Executive Officer, Foundation 
  for Government Accountability..................................    39
    Prepared statement...........................................    41
    Answers to submitted questions...............................    99

                           Submitted Material

Statement of the American Academy of Pediatrics..................    73

 
              MAKING MEDICAID WORK FOR THE MOST VULNERABLE

                              ----------                              


                          MONDAY, JULY 8, 2013

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 4:00 p.m., in 
room 2123, Rayburn House Office Building, Hon. Joseph R. Pitts 
(chairman of the subcommittee] presiding.
    Present: Representatives Pitts, Burgess, Gingrey, Cassidy, 
Griffith, Bilirakis, Ellmers, Dingell, Barrow, Christensen, 
Castor, Sarbanes, and Waxman (ex officio).
    Staff Present: Clay Alspach, Chief Counsel, Health; Matt 
Bravo, Professional Staff Member; Sydne Harwick, Legislative 
Clerk; Monica Popp, Professional Staff Member, Health; Andrew 
Pawaleny, Deputy Press Secretary; Noelle Clemente, Press 
Secretary; Alli Corr, Minority Policy Analyst; Amy Hall, 
Minority Senior Professional Staff Member; Elizabeth Letter, 
Minority Assistant Press Secretary; and Karen Nelson, Minority 
Deputy Committee Staff Director for Health.

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

    Mr. Pitts. The time of 4:00 having arrived, we will call 
the subcommittee to order. The chair will recognize himself for 
an opening statement.
    Today's hearing is the third in a series examining the 
current Medicaid system and ideas for reform. It builds on the 
subcommittee's March 18 hearing, ``Saving Seniors and Our Most 
Vulnerable Citizens From an Entitlement Crisis,'' and our 
hearing of June 12, ``The Need For Medicaid Reform: A State 
Perspective.'' It also complements the Energy and Commerce 
Committee's ``Medicaid Check Up'' report from March, 
Representative Upton and Senator Hatch's May report, ``Making 
Medicaid Work,'' and the committee's recent Idea Lab on the 
program.
    Medicaid was designed to protect the most vulnerable 
Americans, including pregnant women, dependent children, the 
blind, and the disabled. Nearly one in four Americans was 
enrolled in the Medicaid program at some point in 2012, making 
Medicaid the largest government healthcare program, surpassing 
Medicare. We have an obligation to ensure that the program 
provides quality health care to beneficiaries and has the 
flexibility to innovate to better serve this population.
    As we have seen, we are failing on both counts. Only 70 
percent of physicians are accepting Medicaid patients, leading 
to problems with accessing care and scheduling follow-up visits 
after initially seeing a provider. Medicaid beneficiaries often 
lack access to primary care and preventive services and are 
twice as likely to visit the emergency room. In some cases, 
outcomes for Medicaid patients are worse than the outcomes of 
those who have no insurance at all.
    Regarding flexibility, instead of encouraging States to 
pursue new and innovative models of care, we have locked them 
into a one-size-fits-all program dictated by Washington. When 
States do try to modernize and tailor their programs to the 
individual populations they serve, they often spend years 
waiting for the Centers for Medicare & Medicaid Services, CMS, 
to approve their waivers. Before we implement a Medicaid 
expansion which, if fully adopted, would add another 26 million 
Americans to the program, we must first address these issues in 
the current program.
    I look forward to hearing from our witnesses today about 
ideas to strengthen this vital safety net, and I welcome all of 
them to our subcommittee.
    And I yield the balance of my time to the gentleman from 
Louisiana, Dr. Cassidy.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    The Subcommittee will come to order.
    The Chair will recognize himself for an opening statement.
    Today's hearing is the third in a series examining the 
current Medicaid system and ideas for reform. It builds on the 
Subcommittee's March 18 hearing, "Saving Seniors and Our Most 
Vulnerable Citizens from an Entitlement Crisis," and our 
hearing of June 12, "The Need for Medicaid Reform: A State 
Perspective."
    It also complements the Energy and Commerce Committee's 
"Medicaid Check Up" report from March, Rep. Upton and Sen. 
Hatch's May report, "Making Medicaid Work," and the Committee's 
recent Idea Lab on the program.
    Medicaid was designed to protect the most vulnerable 
Americans, including pregnant women, dependent children, the 
blind, and the disabled. Nearly 1 in 4 Americans was enrolled 
in the Medicaid program at some point in 2012, making Medicaid 
the largest government health care program, surpassing 
Medicare.
    We have an obligation to ensure that the program provides 
quality health care to beneficiaries and has the flexibility to 
innovate to better serve this population.
    As we have seen, we are failing on both counts.
    Only 70% of physicians are accepting Medicaid patients, 
leading to problems with accessing care and scheduling follow-
up visits after initially seeing a provider. Medicaid 
beneficiaries often lack access to primary care and preventive 
services, and are twice as likely to visit the emergency room.
    In some cases, outcomes for Medicaid patients are worse 
than the outcomes of those who have no insurance at all.
    Regarding flexibility, instead of encouraging states to 
pursue new and innovative models of care, we have locked them 
in a one-size-fits-all program dictated by Washington. When 
states do try to modernize and tailor their programs to the 
individual populations they serve, they often spend years 
waiting for the Centers for Medicare and Medicaid Services 
(CMS) to approve their waivers.
    Before we implement a Medicaid expansion, which, if fully 
adopted, would add another 26 million Americans to the program, 
we must first address these issues in the current program.
    I look forward to hearing from our witnesses about ideas to 
strengthen this vital safety net, and I welcome all of them to 
the Subcommittee.
    Thank you.

    Mr. Cassidy. Thank you, Mr. Chairman.
    The current debate over reforming the Medicaid program 
brings to mind--and I am paraphrasing Samuel Johnson--no one 
likes change, even from worse to better.
    Even those who support Obamacare and Medicaid, the Medicaid 
component, said that they never would design Medicaid today as 
it was designed 50 years ago to meet today's needs. Now, there 
are many issues with the current Medicaid program. It serves a 
diverse group of people--children, adults in long-term care, 
the disabled, pregnant women, and now able-bodied adults. If 
the intent of Medicaid is to take care of the most vulnerable, 
I raise issue with the child or individual with traumatic brain 
injury having to compete for limited Medicaid funds with a 
healthy childless adult.
    There is also great variability in how much Federal money 
each State receives per Medicaid beneficiary. As evidence, the 
five wealthiest States receive almost twice as much in Federal 
Medicaid contributions toward the care of their low-income 
residents than those living in the five poorest States. If the 
intent of Medicaid is an implicit Federal guarantee to provide 
a baseline of coverage for the most vulnerable, why should a 
disabled Medicaid recipient living in New York receive twice as 
much Federal Government aid as a disabled person living in 
California?
    Other problems include quality and access to doctors. The 
chairman referenced a recent study that found that Medicaid 
patients have longer hospitalization, higher cost, and worse 
outcomes than even the uninsured. Yet despite being a high-cost 
program for States, Medicaid frequently pays below a 
physician's cost to see a patient, which effectively denies 
them access. Medicaid, as I like to say, is the illusion of 
coverage without the power of access.
    I applaud the chairman and the committee for holding this 
hearing. We can't just simply add or subtract cash from the 
Medicaid system and call it reform. We have to be willing to 
reexamine the effectiveness of our Medicaid structure. I think 
that all the members of this committee can agree Medicaid 
should be structured in a way that provides benefits to 
individuals in the most efficient and effective way. I also 
would like to add that I recently introduced the Medicaid 
Accountability Care Act, which I hope can also be considered.
    I yield the balance of the time to Dr. Gingrey.
    Mr. Gingrey. Mr. Chairman--and I thank the gentleman for 
yielding--our Medicaid program has continually underperformed 
for our most needy population. Instead of focusing Medicaid 
dollars on new, healthier people, as in the President's health 
care law, we should be directing more attention to improving 
the health outcomes of the existing populations. We must allow 
the States the ability to experiment with their programs to 
approve our results. An outdated and overly bureaucratic waiver 
process does not allow the proper freedom to develop new 
methods to deliver care to our poorest and most vulnerable.
    Mr. Chairman, it is past time to repeal the maintenance of 
effort provisions in Obamacare and release the States to 
investigate novel ways to improve on a system that currently 
fails its participants. And thank you for the extra time, and I 
yield back.
    Mr. Pitts. The chair thanks the gentleman.
    Recognize the gentleman from Maryland, Mr. Sarbanes, who is 
filling in for the ranking member today.

OPENING STATEMENT OF HON. JOHN P. SARBANES, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MARYLAND

    Mr. Sarbanes. Thank you, Mr. Chairman. I appreciate your 
convening this hearing on the very important subject of the 
Medicaid program.
    As you, yourself, said, Medicaid is an important program. 
We view it as a critical safety net that provides healthcare 
coverage for those individuals who have been shut out of 
private insurance, either because that is unaffordable to them 
or it is unavailable or it doesn't cover the benefits that they 
need.
    It is important to recognize that when we talk about the 
Medicaid program, we are not just talking about a program that 
covers low-income families. We are talking about a program that 
covers children and adults with disabilities, and pays for 
nearly half of all long-term care services.
    I had the privilege for 18 years of representing a number 
of health care providers as an attorney, in particular those 
who provide services to our elderly, and I understand how 
critical the support from the Medicaid program is for a lot of 
the services that are provided to those most in need among our 
elderly. And so it is important for us to understand the full 
dimensions of the Medicaid program. We are talking about home- 
and community-based services, we are talking about 
rehabilitative therapy, and we are talking about adult daycare 
and caregiver respite.
    In 2011--and you mentioned this yourself--the Medicaid 
program provided healthcare assistance for almost one out of 
every four or five people in the country, including 30 million 
children. That is why it is so critical to make sure that this 
program remains strong and that we build upon the most 
important elements of it.
    I am particularly focused on how we can bring this kind of 
coverage to bear where people are. It is what I call place-
based health care. I have championed efforts, particularly with 
respect to young people, to make sure that those who are 
eligible for Medicaid can get that care wherever they may be 
and where it is easiest for their families to receive it, 
including in their schools and in school-based health clinics.
    The coverage for children under Medicaid is really one of 
the most important aspects of the program. And I would like to 
enter into the record, without objection, testimony from the 
American Academy of Pediatrics on this issue of why it is so 
important both to pediatricians and obviously to children as 
well. This is from Robert Hall with the American Academy.
    Mr. Pitts. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Sarbanes. The Affordable Care Act, as we know, includes 
an expansion of the Medicaid program to include more low-income 
adults, taking it up to 138 percent of the poverty rate. Half 
of today's uninsured have incomes below the new Medicaid limit. 
So they stand to benefit from this adjustment going forward. 
Unfortunately, we do have States across the country who so far 
have declined to become partners in this effort, take advantage 
of the Medicaid expansion. The result of that is that you will 
have many low-income adults who will likely remain uninsured, 
with predictable results both for them and for our society.
    We also have to look at this through an economic lens. And 
as the economy continues to improve, more and more people are 
still finding themselves in need of this very important 
healthcare safety net. If you cut Medicaid, that is essentially 
cutting jobs. Medicaid stimulates the economy. Every dollar 
spent is good economics. According to one study by the Kaiser 
Family Foundation, every dollar cut from Medicaid means up to 
$2.76 cut from the State economy in which that occurs. The loss 
of Federal Medicaid dollars means a loss of healthcare jobs and 
healthcare economic activity across the country, which means 
you are moving States in exactly the wrong direction that we 
want to be pushing them in terms of our economic recovery.
    States and the Federal Government need to focus on creating 
jobs, on incentivizing economic growth, not on cutting the most 
vulnerable programs, such as Medicaid. So I believe the 
expansion of the Medicaid program under the Affordable Care Act 
is not only something that makes tremendous sense for the 
health of vulnerable populations across the country, but for 
State economies as well. And I look forward to hearing from our 
witnesses today as they discuss this critical program and how 
we can all continue to push for quality affordable health care 
for all our citizens.
    With that, I yield back.
    Mr. Pitts. The chair thanks the gentleman.
    And now yields to the vice chair of the subcommittee, Dr. 
Burgess, for 5 minutes for an opening statement.

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

    Mr. Burgess. I thank the chairman for yielding.
    As we meet here today to discuss Medicaid, recognize that 
it was created to protect and care for some of the poorest and 
most needy in our Nation. However, in reality, the program, 
because of weak oversight, chronic underpayment of providers, 
lack of coordination of benefits, ends up being only another 
empty promise made by the Federal Government. The ability of 
Medicaid to provide healthcare coverage for the most vulnerable 
is further threatened by the Affordable Care Act and the 
drastic expansion of the program to nearly 72 million Americans 
in 2014.
    Medicaid currently consumes almost a quarter of States' 
budgets, surpassing expenditures on education, transportation, 
and emergency services. Many States have been forced to cut 
Medicaid reimbursement rates to providers as a way to address 
budget shortfalls.
    Look, as someone who has provided services to Medicaid 
beneficiaries, I understand firsthand that coverage does not 
guarantee access. Medicaid low reimbursement actually creates 
increased barriers to care, limiting beneficiaries' access to 
services because Medicaid pays less for comparable service than 
private insurers or, in some instances, even Medicare itself, 
making finding providers and appointments hard and sometimes 
impossible. Escalating costs and shrinking access are symptoms 
of the greater systemic problems within the Medicaid system.
    And look, we need to move beyond small reforms and instead 
address the underlying system's structural problems. We sat 
here this very room with a Health Subcommittee hearing in 2008 
and talked about this very problem. Many of you will remember, 
it was the day that Lehman Brothers collapsed and the economy 
was headed for a crisis. We heard in that hearing that day that 
if you wanted to do health care reform on the cheap you just 
expand Medicaid. You are not really paying the providers to see 
the patients but, after all, that is not really what is 
critical, it is critical that we provide the coverage.
    Well, anyone who has practiced in the Medicaid system will 
tell you that the ability to meet the cost of providing the 
care is critical for a hospital, for a clinic, for a doctor's 
office. And if you can't meet that, your doors will quickly be 
closed. But as we sat here in that room that day in September, 
we never even asked ourselves, is the best we can do Medicaid? 
And wouldn't we be better to reform the program before we 
expanded it? But unfortunately, those questions were never 
answered.
    So I would submit today, it is time for us to get back to 
the basics. We need to ask ourselves, what was Medicaid created 
to do, and is it doing the best it can do under the 
circumstances? We know the structural and fiscal problems in 
the healthcare system. How long will America tolerate staring 
at these problems without fixing them for future generations?
    It is time not just to reform Medicaid. We actually need to 
reboot the entire system. As we have seen from the events of 
the last week and a half, the problems in the Affordable Care 
Act are beginning to mount. They are reaching critical mass. 
This subcommittee has within its power to take up this issue 
and act.
    I thank the chairman. And I will yield the balance of my 
time to the full committee chair, who is not here, so I will 
yield back my time.
    Mr. Pitts. The chair thanks the gentleman.
    Now recognize the ranking member of the full committee, Mr. 
Waxman, 5 minutes for an opening statement.

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

    Mr. Waxman. Thank you very much Mr. Chairman.
    The hearing today is called ``Making Medicaid Work For the 
Most Vulnerable.'' I think that is a good topic. But I do want 
to talk about what the Republicans have proposed. They have 
proposed making Medicaid a block grant. So the States would be 
told, this is the amount of money you would get, no more, no 
less, you don't have to do anything, no requirements, do the 
best you can. And if you can't afford to do what you have been 
doing, well, you do less. That is up to you.
    What the Republicans, in effect, are proposing is to shift 
the responsibilities to the States, the cost to the patients 
and providers, and avoid continuing a Federal responsibility. 
Block grants, or per capita grants, increases in beneficiary 
premiums and copays do not reduce healthcare costs, but simply 
shift the cost onto the beneficiaries, providers, and States. 
And they make it less likely that people will be able to access 
care when they need it.
    Are there things we can do to improve the program? 
Certainly. One thing we could do is to make it a Federal 
program, not have State differences, have a Federal Medicaid 
program, guarantee that providers will get the same 
reimbursement rates as the Medicare providers get paid. That 
would improve the program. But I don't think that is something 
that we are likely to hear much support for from the majority 
party that is in control.
    I think this is a good hearing to have. I know we have a 
number of witnesses. I am particularly interested in hearing 
from Mr. Weil on what the States have been able to do to make 
the program innovative, effective, and efficient, cover low-
income beneficiaries within the flexibility afforded the State 
Medicaid programs right now. Things the States can do today. I 
believe Mr. Weil will tell us that States continue to advance 
their Medicaid programs by implementing innovations, such as 
the multipayer collaboratives to improve access to primary, 
well-coordinated care; efforts to increase access to higher-
quality, lower-cost developmental and oral health services; and 
others for the prevention of chronic disease.
    Due to efforts like these, multiple studies have shown that 
Medicaid enrollees have comparable access to care as those with 
private coverage and much more reliable access than to those 
who are uninsured. When we hear complaints about Medicaid, the 
Republicans are forgetting that before Medicaid these people 
were uninsured and didn't have access to any care. And under 
the Medicaid program, if beneficiaries can get access with 
lower cost sharing, if we make very poor people--which is the 
bulk of who the Medicaid patients are--have to come up with 
more money out of pocket, they just won't have access to care 
because they can't afford it. Not only does the Medicaid 
program ensure equal access to care, it operates with 
efficiency. Medicaid costs are nearly four times lower than 
average private plans.
    And there are other proposals that I think will streamline 
State payment systems, improve provider reimbursement 
timelines, ultimately increase their participation in State 
programs. One thing that I am very proud of is that at least we 
are going to, for a couple of years, require that preventive 
and primary care providers be paid the same rate as Medicare. 
But we didn't make that a permanent change, which would make a 
lot of sense. We put it in for a couple of years only in hopes 
that after it is in, people will--either at the Federal level 
or the State level--will try to keep it in place because it 
makes a lot of sense. If we can't afford to pay everybody a 
Medicare rate who serves Medicaid patients, at least pay those 
for whom we would like people to have access the most, and 
those are people who will provide primary and preventive care.
    The Affordable Care Act expands the Medicaid program. I 
think this is a good thing to do. And I am proud of the 
Affordable Care Act. I think it is going to mean for millions 
of people they are going to have access to care, access to 
health insurance, whether it is through Medicaid, if they are 
lower income, or through the purchase of a private health 
insurance plan in the marketplace exchanges.
    Let's stop complaining, let's make this law work because 
the Republicans don't have anything to offer but driving costs 
and shifting them over to people who can't afford to pay them 
and thereby denying them the services they need.
    Thank you, Mr. Chairman. Yield back my time.
    Mr. Pitts. Chair thanks the gentleman.
    That completes the opening statements of the members. We 
have one panel today. I will ask them to take their seats at 
the table. And I will introduce them at this time.
    First we have Ms. Nina Owcharenko, director, Center for 
Health Policy Studies of the Heritage Foundation. Secondly we 
have Mr. Alan Weil, executive director of the National Academy 
for State Health Policy. And finally, Mr. Tarren Bragdon, 
president and CEO, Foundation for Government Accountability.
    Welcome. Thank you for coming today. You will each have 5 
minutes to summarize your testimony. Your written testimony 
will be entered into the record. And so at this time, Ms. 
Owcharenko, we will recognize you for 5 minutes for your 
opening statement.

  STATEMENTS OF NINA OWCHARENKO, DIRECTOR, CENTER FOR HEALTH 
POLICY STUDIES, HERITAGE FOUNDATION; TARREN BRAGDON, PRESIDENT 
     & CHIEF EXECUTIVE OFFICER, FOUNDATION FOR GOVERNMENT 
  ACCOUNTABILITY; AND ALAN WEIL, EXECUTIVE DIRECTOR, NATIONAL 
                ACADEMY FOR STATE HEALTH POLICY

                  STATEMENT OF NINA OWCHARENKO

    Ms. Owcharenko. Chairman Pitts, Ranking Member Waxman, and 
members of the committee, thank you for having me today.
    As has already been well noted, the challenges facing the 
Medicaid program are not new. These challenges are unavoidable 
and raise serious concerns about whether Medicaid will be able 
to meet the needs of those who are enrolled in the program 
today, especially the most vulnerable.
    The program serves a very diverse group of low-income 
people: children, pregnant women, disabled, and the elderly. 
The Affordable Care Act adds to this growing government health 
program by expanding eligibility to all individuals with 
incomes below 138 percent of the poverty level. And unlike 
traditional Medicaid, eligibility will be based on income 
alone.
    I see three major challenges facing Medicaid in the future: 
demographic, structural, and fiscal.
    The demographic challenges. With in the addition of the new 
Medicaid expansion, the Centers for Medicare & Medicaid 
Services' 2011 Actuarial Report on Medicaid projects that 
nearly 80 million people--one in four--will be on Medicaid by 
2021. By enrollment alone, children will remain the largest and 
primary category of Medicaid enrollees, although it is worth 
noting that as a result of the Affordable Care Act, the able-
bodied, non-elderly adults will be a very close second. But 
while only 16 percent of total enrollment, 64 percent of 
spending in 2011 was for the aged and disabled. As these 
competing trends continue, Medicaid will be more diverse and 
more complex to administer.
    Structural challenges. Payment rates are one of the key 
indicators for access and physician participation in Medicaid, 
it has already been noted today. In its annual report to 
Congress, MACPAC notes that while varying by State, Medicaid 
fee-for-service payments to physicians are on average two-
thirds those of Medicare and even worse for primary care 
services. A 2006 published survey found that 21 percent of 
physicians reported that they were not accepting new Medicaid 
patients while only 4 reported not taking new privately insured 
patients and 3 percent reported not taking new Medicare 
patients.
    While the Affordable Care Act did provide Federal funding 
to boost Medicaid payments for primary care physicians, that 
funding, as has been noted, is temporary. And also as noted by 
the MACPAC report, several States have already indicated that 
it is unlikely that they will be able to maintain those new 
rates. Therefore, access and quality issues will remain a 
challenge for Medicaid beneficiaries in the future.
    Fiscal challenges. Entitlements, including Social Security, 
Medicare, and Medicaid, are fueling this country's spending 
crisis. These three programs represent 62 percent of the 
Federal budget in 2012 and will absorb all tax revenue by 2048. 
By 2021, total Federal and State spending on Medicaid alone is 
projected to reach $795 billion and 3.2 percent of GDP by 2021.
    For States, which have to operate under a real budget, the 
fiscal situation is no better. When the Federal contributions 
are included, Medicaid is the largest budget item for State 
budgets, representing 24 percent. In its recent fiscal report, 
the GAO warned that absent any intervention or policy changes, 
State and local governments would face an increasing gap 
between receipts and expenditures in the coming years. This is 
due in large part to rising healthcare costs for Medicaid, as 
well as health benefits for government employees and retirees.
    Although these fiscal challenges are well established, the 
lack of action only makes the future outlook worse for Medicaid 
and its beneficiaries. I suggest there are a few basic 
principles that should guide efforts to addressing the key 
challenges facing Medicaid.
    One, meet current obligations. Rather than expanding to new 
populations, attention should be given to ensuring that 
Medicaid is meeting the needs of existing Medicaid 
beneficiaries. Moreover, population should be prioritized based 
on need first.
    Two, return Medicaid to a true safety net. Medicaid should 
not be the first option of coverage but a safety net for those 
who cannot not obtain coverage on their own. Careful attention 
should be given to transitioning those who can into the private 
insurance market.
    Three, integrate patient-centered, market-based reforms. 
Efforts to shift from traditional fee for service to managed 
care have accelerated at the State level, but more should be 
done. Empowering patients with more choices and spurring 
competition among providers, including insurers, will help to 
deliver better quality of care at a lower cost.
    Four, ensure financial sustainability. Similar to other 
entitlement reforms, the open-ended Federal financing model of 
Medicaid means reform. Sound budgeting at the Federal and State 
levels should provide a predictable and sustainable path for 
the program and taxpayers alike.
    In conclusion, I think it is encouraging to see efforts 
both in the House and in the Senate that are aimed at 
addressing these serious challenges facing Medicaid's future. 
With Federal and State policymakers working together, 
meaningful change in Medicaid will ensure that the most 
vulnerable are not left behind.
    Thank you.
    Mr. Pitts. The chair thanks the gentlelady.
    [The prepared statement of Ms. Owcharenko follows:]


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    Mr. Pitts. Now recognizes Mr. Weil for 5 minutes for an 
opening statement.

                     STATEMENT OF ALAN WEIL

    Mr. Weil. Thank you, Mr. Chairman, members of the 
committee. I appreciate the opportunity to appear before you 
today.
    I am the executive director of the National Academy for 
State Health Policy, a nonprofit, nonpartisan organization that 
works with State leaders to promote excellence in State health 
policy and practice. My own experience includes a cabinet 
position in Colorado running the Medicaid agency.
    Ten years ago I wrote that Medicaid is the workhorse of the 
American health care system, and that characterization remains 
true today. Unambiguous evidence demonstrates Medicaid's 
success in providing access to care and relieving the financial 
burdens associated with that care.
    My testimony is a report from the field where I observe a 
Medicaid program that is dynamic, continually evolving to meet 
the changing needs of vulnerable populations, leading how care 
is structured and delivered, and participating in 
transformations of care delivery that are occurring around the 
country.
    For example, Medicaid has led the way in promoting the use 
of developmental screening methods to identify children who 
would benefit from early intervention services. The percentage 
of children receiving such screening has grown from under 20 to 
more than 30 percent. In North Carolina, it is 75 percent. 
Nationwide, children with public health insurance are actually 
more likely to receive critical developmental screenings than 
children with private health insurance.
    In 2000, Surgeon General David Satcher called poor oral 
health America's silent epidemic. Medicaid programs around the 
country are actively pursuing efforts to ameliorate this crisis 
through early interventions in medical practices, not just in 
dental offices. Washington State and Maryland, among others, 
have innovative programs designed to increase access to dental 
care for vulnerable children.
    Medicaid is the Nation's primary payment source for long-
term services and supports, and now States are spending more 
than a third of their long-term service budgets on home- and 
community-based supports that meet people's needs more 
effectively and more humanely.
    In the area of eligibility and enrollment, Louisiana has 
led the way in streamlining processes for Medicaid applicants 
and those seeking to renew their coverage. Oklahoma launched 
the Nation's first online realtime enrollment system for 
Medicaid.
    But some of the most exciting work in Medicaid is how it 
works with other private and public programs. All but three 
States now rely on managed care for delivering care to at least 
some of their Medicaid enrollees. Two-thirds of Medicaid 
enrollees receive most or all of their benefits in managed 
care. And States are increasingly relying on mandatory managed 
care programs in Medicare for more complex populations, such as 
children with special healthcare needs and people of all ages 
with a variety of disabilities.
    Medicaid has been a leader in promoting the development of 
patient-centered medical homes; 29 States have launched one or 
more programs in Medicaid or the Children's Health Insurance 
Program to promote patient-centered medical homes. In 18 of 
those States, public and private payers and purchasers are 
working together to support these medical home projects. And in 
15 of those initiatives, Medicare is also a participant.
    The health home model is an extension of the medical home 
that integrates physical health, behavioral health, long-term 
services and supports to meet the needs of the most complex 
populations. A dozen States are pursuing these integrated 
models with support from the Federal Government under the 
Affordable Care Act.
    Back in 2006, when Massachusetts reformed its healthcare 
system, it took a blended personal health and public health 
approach to smoking cessation services for Medicaid enrollees. 
In Massachusetts, smoking prevalence among Medicaid enrollees 
dropped by 26 percent in just 2 years, with significant health 
cost savings as an added benefit.
    Around the country, Medicaid programs are pursuing new 
models of accountable care that encourage health care providers 
to organize and coordinate care as they accept financial risk 
and accountability for health outcomes. The structure of these 
programs is as varied as the States that are pursuing them: New 
Jersey, Minnesota, Illinois, Colorado, Oregon. The States are 
taking approaches that meet their own needs. Twenty-five States 
have received support to test or further develop comprehensive 
multipayer payment and delivery system reforms through funding 
from the Centers for Medicare & Medicaid Innovation State 
Innovation Model cooperative agreements. These States are 
pursuing the shared aim of better care and improved population 
health at a lower cost, using their Medicaid programs as a 
catalyst for system improvements that embrace not just 
Medicaid, but Medicare and private payers and private providers 
as well.
    Medicaid is surely a complex program, but it is also a very 
dynamic program. It is also surely open to improvement, as is 
anything that we have created. But fundamentally, as I look out 
at the experience of the States and what is going on out in the 
field, I see a program that works for America's most 
vulnerable.
    Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman.
    [The prepared statement of Mr. Weil follows:]


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    Mr. Pitts. And now recognize Mr. Bragdon for 5 minutes for 
an opening statement.

                  STATEMENT OF TARREN BRAGDON

    Mr. Bragdon. Thank you, Mr. Chairman, members of the 
committee. I serve as the CEO of the Foundation for Government 
Accountability. We are a Naples, Florida-based free market 
think tank specializing in State health and welfare policy 
solutions.
    Medicaid in its current form, or Old Medicaid, represents, 
as you have heard, the single largest and fastest growing line 
item in State budgets, consuming about one in four State 
dollars. At the Federal level, Medicaid spending represents 
about a quarter of deficit spending and is projected to double 
over the next decade.
    Given these cost projections, Medicaid is failing the 
American taxpayer. But more importantly, it is failing the 
patients that it is supposed to represent. Poor access to 
specialists, the inability to personalize care, and perverse 
eligibility requirements keep too many Americans poor and sick 
and rob them of the hope of a better life. And for many 
Americans, Old Medicaid is not a safety net, but it is a 
tightrope, and patients are falling off every day.
    Because of the Affordable Care Act, many States are 
debating whether or not they should expand their broken Old 
Medicaid systems. This debate is a misguided priority. The real 
priority for States should be not expansion, but rather to make 
Medicaid work for the most vulnerable. And Congress can help 
State leaders by creating more flexibility at the Federal level 
to do that.
    When States have flexibility to innovate and reform Old 
Medicaid, truly patient-centered care can be a reality. And one 
of the many pro-patient strategies working in the States are 
giving Medicaid patients the power to choose from several 
different competing private plans. Old Medicaid typically 
forces patients into one or two government-run plans, and this 
government-centered approach ignores that Medicaid patients 
have unique needs and individual concerns. But in States where 
Medicaid patients have a robust choice of plans, such as 
Florida, Kansas, and Louisiana, patients are our priority. For 
example, in Florida's Medicaid Reform Pilot, patients can 
choose from 13 different private plans and 31 different 
customized benefit packages. A commonsense funding formula in 
these States features risk-adjusted capitated rates so these 
private plans earn more money to enroll sicker patients and 
have the incentives to improve health and disincentives to 
cherry-pick.
    Because plans compete for patient enrollment, they also are 
constantly striving to improve access to specialists, offer 
more specialized services, and enhance their customer service. 
And patients like this choice, with 70 to 80 percent of 
Medicaid patients proactively choosing a plan rather than being 
automatically assigned to one.
    This choice structure also promotes better health outcomes. 
Again, in Florida's Reform Pilot, the private plans in the 
reform outperformed Old Medicaid on 22 of 33 widely tracked 
health outcomes, and 94 percent of those health outcomes had 
improved since 2008. And when this reform goes statewide in 
Florida, taxpayers will save a billion dollars a year. And 
similar savings are occurring in Kansas--a billion over 5 
years--and Louisiana--$150 million in the first year. My 
written testimony includes details of other strategies that 
States have embraced, including integrating work with health 
outcomes, promoting specialty plans, and unleashing innovation 
to better serve patients.
    But Federal rules and regulations can make it difficult for 
States to innovate, including the slow and inflexible waiver 
process, new taxes on private Medicaid plans, and additional 
cost shifts to the States. Luckily, this committee is exploring 
ways that Congress can make State reform easier and grant 
additional flexibility, and many of these reforms are detailed 
in my testimony, including allowing proven waivers to become 
seamlessly incorporated into State plan amendments, providing 
greater flexibility on mandatory and optional services, and 
creating an off-ramp that lets patients safely transition off 
Medicaid toward self-sufficiency in the hope of a better life.
    To make Medicaid work for the most vulnerable, Congress 
should recognize that proven pro-patient, pro-taxpayer 
solutions are out there. And there are strategies that can make 
it easier for State leaders and for patients to make Medicaid 
work for both patients and taxpayers. And I am happy to discuss 
that more in the questions. Thank you.
    Mr. Pitts. The chair thanks the gentleman and thanks the 
witnesses for their opening statements.
    [The prepared statement of Mr. Bragdon follows:]


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    Mr. Pitts. We will now begin questioning. I will recognize 
myself 5 minutes for that purpose.
    For the Nation's vulnerable citizens, having Medicaid does 
not always result in good health care. Studies have shown that 
while enrollment is growing rapidly, with more than 70 million 
Americans enrolled in Medicaid at some point in 2012, access to 
quality care is still a struggle for most. The new health care 
law proposes the largest expansion of Medicaid in history, an 
expansion that is clearly built on a framework that is already 
failing to meet current obligations in helping our most 
vulnerable citizens.
    Mr. Bragdon, in your testimony you note that States should 
be cautious in opting into Medicaid expansion. At this point, 
the majority of States are either not expanding or are still 
undecided. What are some considerations you would raise with 
States that are still deliberating the decision to expand in 
2014?
    Mr. Bragdon. Thank you for the question.
    When you look at States that have expanded Medicaid in the 
past, the two States that have most closely replicated the 
expansion of the Affordable Care Act are Maine and Arizona. And 
the realities of those States were much higher per-person cost, 
much higher per-enrollee cost, and many more people enrolling 
than originally projected. And what happened was, as that 
safety net was stretched further and further, those States 
proposed and did cut services to the most vulnerable. Arizona 
stopped covering heart and lung transplants. Maine proposed 
cutting services to folks with brain injury and stopped paying 
their hospitals altogether, mounting $400 million in unpaid 
bills dating back over 5 years.
    So what happens as States expand is the most vulnerable, 
who tends to be higher cost, as was mentioned, the services are 
cut back on those individuals first.
    Mr. Pitts. Ms. Owcharenko, would you respond to that 
question as well?
    Ms. Owcharenko. Sure. I think the primary caution I would 
give to the States is you have to take the long view of what 
the future of Medicaid is going to look like versus just the 
short view. I think the temptation of the bump in Federal 
dollars to the States is a tempting offer, but it has a very 
short-term impact. And I think States need to take the longer 
view, not only for their own State taxpayers, but for Federal 
taxpayers who their constituencies are as well. So looking at 
what are the implications at the Federal level, understanding 
that our country cannot survive on the spending path that we 
have today.
    Mr. Pitts. Now, in your testimony you mention some of the 
innovations States are pursuing. From your experience, what are 
some of the barriers that States face in pursuing new 
innovative delivery models, such as those outlined in your 
testimony?
    Ms. Owcharenko. Well, I think one of the things that has 
been mentioned by many of the folks here is the lack of 
flexibility at the Federal level. Too many times the States 
have to figure out which holes to jump through, how to get 
things done. Even if we think that they are making progress 
today under current rules, imagine what States could do if they 
had greater flexibility to do more innovative projects without 
having to have the constraint of all the Federal requirements 
on there. I think that would probably be the best direction for 
the States to take and the Federal Government to enable them 
to.
    Mr. Pitts. Each of you have highlighted the value of 
managed care and increased care coordination in the Medicaid 
program that moves us away from Medicaid's flawed fee-for-
service history, and it improves care and reduces costs. If 
given one opportunity, what would be an important policy reform 
to pursue that would allow for States to more easily pursue 
managed care models for Medicaid? If each of you would respond. 
Start with you, Ms. Owcharenko.
    Ms. Owcharenko. I think expanding without having to do so 
many waivers on the populations that could be included. I would 
argue that the States know best when they are trying to develop 
and deliver care to the most vulnerable, which groups they 
think are best suited for the managed care approach.
    I would also note, though, that it is not just good enough 
to have one managed care plan. What you want is insurers 
competing against each other. And so making sure that there is 
competition and giving the patients the choice to choose I 
think will alleviate concern that there may not be a plan that 
is best suited for the most vulnerable.
    Mr. Pitts. Mr. Weil.
    Mr. Weil. The rapid movement of States in their Medicaid 
population toward managed care makes it hard for me to see that 
there is a major Federal barrier to reliance on managed care. 
The primary area that remains a challenge is integration with 
the Medicare program. We do have some demonstrations going on 
right now designed to enable alignment of managed care plans 
between Medicare and Medicaid. I think we are going to have to 
see how that evolves. But that, to me, is the population that 
faces the largest barriers in that movement.
    Mr. Pitts. Mr. Bragdon.
    Mr. Bragdon. Thank you. I think there are a few different 
things. One, looking at the robust competition among private 
plans. Nobody is suggesting that Medicaid not set the floor of 
benefits that should be available in those private plans. But 
as the plans build on top of that, you can provide much more 
comprehensive care that Old Medicaid does not. For example, 
Kansas added a dental benefit when they moved to a private 
plan. GED services so that individuals could ultimately get the 
best safety net, which is a good-paying job. Florida shows how 
when you give people choice and choice counseling, which I 
think is an important component, so that patients understand 
the differences among those private plans.
    I think lastly, there is this debate over mandatory versus 
voluntary private care. But when you look at how patients vote 
with their feet, patients appreciate having robust choices of 
several different private plans. In Kansas, Native Americans 
are given a choice of whether to choose from one of the three 
different private plans or opting back into Old Medicaid. Out 
of 4,000, only 12 stayed in Old Medicaid. Louisiana, 0.3 
percent of people voluntarily chose Old Medicaid versus five 
different private plans.
    Mr. Pitts. Thank you.
    The chair recognizes the ranking member, Mr. Sarbanes, for 
5 minutes for questions.
    Mr. Sarbanes. Thank you, Mr. Chairman. I want to thank our 
panelists today.
    Mr. Weil, Ms. Owcharenko mentioned challenges to the 
Medicaid program. And I didn't hear that that necessarily 
formed an indictment of the program overall, but it just laid 
out what some of the challenges are. I wanted to get maybe your 
reaction to those challenges, whether you think the Medicaid 
program can handle them.
    So the first one obviously is the demographic challenge 
that is coming at us, particularly the baby boomer generation 
and the implications that has for the Medicaid program, and 
this notion of competition within the diversity of the pool of 
beneficiaries that is covered by the Medicaid program. These 
are realities we are going to have to deal with. My sense is an 
expanded Medicaid program that we are trying to make better 
every day is going to be best equipped to handle that 
challenge.
    She spoke of structural challenges--for example, relating 
to payment rates. Did acknowledge that in 2013 and 2014 there 
is an attempt made to achieve 100 percent parity with Medicare 
rates for primary care. That is a good step in the right 
direction. And then spoke of the fiscal challenges ahead of us, 
with entitlement programs or, as I often refer to them, earned 
benefit programs in some instances.
    But your testimony suggested that in some ways Medicaid is 
on the cutting edge with respect to innovations that not only 
can improve care, particularly care that one might put under 
the heading of sort of public health. When you look at 
children, developmental screening, where what the Medicaid 
program does is really cutting edge, ahead of both the 
commercial arena and potentially even Medicare there. The 
dental care for children and patient-centered medical homes. 
Among many examples you gave, these are things--particularly 
the last one I mentioned--that can improve efficiencies and 
save costs over the long run. And it is really because of ACA 
that we are going to see some opportunities for that.
    So can you address these challenges, the demographic, 
structural, fiscal, and other challenges you see, and why an 
expanded Medicaid program in some ways may be best equipped to 
handle them?
    Mr. Weil. Thank you, Mr. Sarbanes, for the question.
    The demographic challenges are real. They affect Medicare 
as well as Medicaid. We can't ignore the reality that we are 
aging and they will increase the average cost per person.
    But I think against that backdrop it is worth noting that 
despite aging of the population, the Medicaid nursing home 
census has stayed flat despite the aging of the population, 
that our use of home- and community-based services grows, and 
some leading States have really shown us how to not just 
prevent people from going into nursing homes in the first place 
but help them come home even after they have been resident 
there for some time. Washington State is a leader in that 
regard.
    With respect to your question about expansion, I think we 
need to be careful about what I heard the repeated use of the 
term able-bodied adults, as if somehow they don't need health 
insurance. If they are not sick, then the good news is they 
won't cost us any money. So we shouldn't be so worried about 
providing them with coverage. But everyone gets sick, sometimes 
more than others, or they may have chronic conditions that are 
untreated, that getting them early care will actually reduce 
the overall cost. And we know there is growing prevalence of 
chronic conditions, particularly among the target populations 
in the Medicaid expansion.
    The issue here is, are we going to move this population 
into a system where there is someone responsible for managing 
their care, a State and Federal Government responsible for 
paying, and usually a private plan--and I should note, most 
States offer their Medicaid enrollees a choice of plans--a 
private plan that is interested in maintaining health or do we 
just leave them the alternative? The only alternative I am 
aware of is that they are uninsured and no one is accountable 
for improving results.
    And similarly, I will readily admit that Medicaid payment 
rates are below commercial and in some instances below Medicare 
rates. But again, I think we have to ask, compared to what? 
These are people who would otherwise be uninsured. There would 
be no payment source for them. There are mission-driven 
providers and other providers that have a broad cross-section 
of patients that understand that they are going to subsidize 
care for some in order to serve others. And Medicaid helps 
alleviate the burden, although it does not completely eliminate 
it.
    So these are challenges. But my experience is that States 
observe them, look ahead, and are doing what they can to tackle 
them within the design of the current program.
    Mr. Sarbanes. Thank you very much. I yield back.
    Mr. Pitts. The chair thanks the gentleman.
    Now recognize the vice chairman, Dr. Burgess, for 5 minutes 
of questioning.
    Mr. Burgess. Thank the chairman for the recognition.
    Ms. Owcharenko, let me ask you, we have heard it mentioned 
several times in the opening statements and I believe in your 
testimony about low provider rates and how that affects access 
for Medicaid patients. So low provider reimbursement rates. 
Medicaid is a shared Federal and State responsibility. So how 
can the Federal Government ensure provider rates are set at 
levels that will encourage participation?
    Ms. Owcharenko. Well, I think one of the points is that you 
have to contrast it with the fiscal challenges. So if you have 
provider payment issues, you are not paying providers enough, 
then the easy solution is to say, well, just pay them more. 
Well, to pay them more you have to pay for that, and so someone 
is going to have to pay for that. The States have decided in 
many instances they are not willing to spend the money to the 
Medicare levels; otherwise, they wouldn't have had the Federal 
Government come in for the temporary boost.
    The challenge is, what happens when that boost is gone? Can 
the Federal Government continue to provide that type of a level 
of reimbursement? I think that is the whole problem we have 
with Medicaid in the long term, is it sustainable from a fiscal 
standpoint?
    Mr. Burgess. Well, let me just ask you, for that 2-year 
interval, who is responsible for paying those increased rates?
    Ms. Owcharenko. Well, the Federal Government. Well the 
Federal taxpayers are paying that.
    Mr. Burgess. Then past 2015?
    Ms. Owcharenko. It will go back to the States. And as the 
MACPAC study said, many States are already saying that it is 
doubtful that they will be able to keep and sustain that level. 
So the challenge will be, the States will be back here in 
Washington saying, we need more Federal dollars, and we don't 
want them temporary, we want them permanent. Well, then, the 
Federal Government is going to have to find the money, if they 
are going to go down that road. And I just would argue that the 
Federal Government doesn't have the money today to be 
continuing that type of spending.
    Mr. Burgess. We have actually seen that movie before. The 
stimulus, in February of 2009, provided an 18-month bump-up in 
Medicaid reimbursement rates, as it was about to run out in 
August of 2010. As I recall, we had to have an emergency 
meeting of Congress in the middle of the August recess--one of 
the few times that has happened, except for war and 
pestilence--and the purpose of that was to pass a supplementary 
stimulus bill to augment those Medicaid rates. For the record, 
I voted against it both times.
    Let me just ask you a question, because we are looking at 
the--you have States that have agreed with Medicaid expansion 
and some that have not. Now, the Supreme Court in their wisdom 
said that you could not make acceptance of the standard 
Medicaid, regular Medicaid contingent upon the acceptance of 
the expansion. So States actually have some leeway there. The 
deadlines for the exchanges, since this expansion of Medicaid 
was not set in Federal statute but rather by a court directive, 
there are no dates, there are no drop dead dates for the 
States. So actually, wouldn't a State be well advised to see 
what happens in a few other States before they jump into this?
    Ms. Owcharenko. I think with the complexity that we see the 
healthcare law facing, I think it would be wise for States to 
think again for the long term and see how this plays out. I 
think this will be an annual debate I think moving forward as 
well.
    Mr. Burgess. But at this present time, there is no penalty 
for a State that says, not now.
    Ms. Owcharenko. That is correct. That is correct.
    Mr. Burgess. And they can always revisit it in subsequent 
legislative sessions in the future.
    Ms. Owcharenko. That is correct.
    Mr. Burgess. When you get back to getting the providers to 
get back into the system, I can remember in Texas in the early 
1990s, the State said, look, we will cover your first $100,000 
in medical liability claims for Medicaid patients if you agree 
to see a certain number. That program did not last very long. I 
presume it was a cost-related factor. But it seems that 
something along those lines, to encourage providers to come 
back into the system, would make a great deal of sense.
    Is there flexibility built into this Medicaid expansion 
that would allow States to do that?
    Ms. Owcharenko. I am not familiar with any at this time. 
But the other panelists may know more than I do on that.
    Mr. Burgess. Mr. Weil, let me ask you a question, because 
you mentioned something about the Center for Medicare & 
Medicaid Innovation and the use of--what did you describe it 
as, multipayer systems? Could you provide us a reference for 
that? I would be interested in what the data was that CMMI used 
to make that determination, how much money was forwarded in 
those grants. Do you have that information available? If not 
today, could you make it available to us?
    Mr. Weil. Yes, Mr. Burgess. I would be happy to. That is 
public information. We are quite early in these cooperative 
agreements. But the States that were awarded them, what they 
intend to do with the funds, that is all public. It is 
available from CMS, and I am happy to supply it to you.
    Mr. Burgess. All right. I would appreciate you making that 
available. My experience with CMMI has not been that great. It 
seems to be a bureaucracy that not even a bureaucrat could 
love. But I would be interested in what you base those 
statements on.
    Thanks, Mr. Chairman. I will yield back.
    Mr. Pitts. Chair thanks the gentleman.
    Now recognize the distinguished ranking member emeritus, 
Mr. Dingell, 5 minutes of questions.
    Mr. Dingell. Mr. Chairman, I thank you for your courtesy, 
and I commend you for holding this important hearing today.
    Medicaid is a critical program. It provides health 
insurance to the most vulnerable in our society. Many States, 
including my own State of Michigan, are currently deciding 
whether to expand their Medicaid programs under the Affordable 
Care Act. I believe expanding the program was the right thing 
to do because it is going to expand health care to millions of 
Americans who desperately need it.
    These questions are for Mr. Weil of the National Academy 
for State Health Policy.
    Mr. Weil, in your testimony you note that Medicaid is a 
source of insurance coverage for one out of three children. Is 
that correct? Yes or no?
    Mr. Weil. Yes, sir.
    Mr. Dingell. Now, Mr. Weil, children and their parents 
account for 75 percent of Medicaid enrollees. Is that correct? 
Yes or no?
    Mr. Weil. Yes, that is correct.
    Mr. Dingell. And this population accounts for only 34 
percent of the spending in the program. Is that correct? Yes or 
no?
    Mr. Weil. Yes.
    Mr. Dingell. One area where Medicaid has been very 
innovative is the area of developmental screening for children 
which helps promote early detection and prevention of 
healthcare problems? Mr. Weil, how many States require Medicaid 
providers to perform developmental screenings on children as a 
part of routine exams? I believe the number is 14. Is that 
right?
    Mr. Weil. That sounds right.
    Mr. Dingell. They are not, however, required to require 
this kind of work. Is that correct?
    Mr. Weil. That is right.
    Mr. Dingell. Now, Mr. Weil, recently we have seen the 
national percentage of children receiving developmental 
screening rise from 19.5 percent in 2007 to 30.8 percent in 
2012. Is that correct?
    Mr. Weil. Yes, sir.
    Mr. Dingell. This is a great improvement, and I believe 
Medicaid's innovation in this area has helped increase the 
number of children that undergo developmental screening tests. 
Mr. Weil, is it correct that a child with public health 
insurance is now more likely to receive a developmental 
screening than a child with private insurance? Yes or no?
    Mr. Weil. Yes, it is.
    Mr. Dingell. Now, Mr. Weil, oral health is another area 
where State Medicare programs are successfully implementing 
innovative programs and are seeing positive results. Isn't that 
so?
    Mr. Weil. Yes, it is.
    Mr. Dingell. Now, Mr. Weil, do you believe that the reforms 
in North Carolina and Washington, with which I think you are 
familiar, which you described in your testimony, have led to 
positive health outcomes and are models for other States to 
follow. Is that right or wrong?
    Mr. Weil. Yes, it is.
    Mr. Dingell. Now finally, a recent study in the New England 
Journal of Medicine studied the impact that expanding Medicaid 
has on mortality rates. So, Mr. Weil, do you agree with the 
conclusion of this study that expanding Medicaid will lead to 
lower rates within the States that do it? Yes or no?
    Mr. Weil. I believe the strongest evidence says that 
expanding Medicaid will reduce mortality. That is correct.
    Mr. Dingell. I very much thank you for this.
    I believe Medicaid brings real health benefits to our 
vulnerable populations. The States are currently coming up with 
new, innovative strategies to improve access to care.
    As States across the Nation, including my own State of 
Michigan, are debating whether to expand Medicare or not, I 
hope they will look at this evidence as how the program is 
working to improve health outcomes for millions of Americans. 
States should also consider the financial benefits for 
expanding Medicaid as well. Michigan alone could save $1 
billion over the next 10 years if they chose to expand 
Medicaid, which I hope they will do.
    I hope this committee will continue to examine this issue 
in a bipartisan manner.
    Mr. Weil, you have been most helpful to us.
    Thank you, Mr. Chairman. I yield back 1 minute and 15 
seconds.
    Mr. Pitts. The chair thanks the gentleman. I now recognize 
the gentleman from Georgia, Dr. Gingrey, for 5 minutes for 
questions.
    Mr. Gingrey. Mr. Chairman, thank you.
    Let me--I want to address the first question to Ms. 
Owcharenko. Much has been said that the Medicaid waiver program 
offers States all the flexibility that they need to improve and 
reform their programs, the existing waiver program.
    As you know, this administration is a strong supporter of 
the Medicaid population expansion, you said up to 138 percent 
of the Federal poverty level. May there be an opportunity for 
the administration to intentionally withhold waiver 
determinations if the State does not get with the program and 
expand?
    Ms. Owcharenko. I can't speculate, but we do know the 
waiver process is long and cumbersome, and you don't know when, 
there is no time limit on how long a process may take or the 
complexity of the waiver. But we also need to recognize, too, 
that the waiver is dictated by the statute. There are only 
certain things that can be waived and so to the point that you 
want to do something above and beyond what the statute allows 
you to, that still is a limitation, but I can't speculate.
    Mr. Gingrey. Well, Mr. Chairman, we have seen this 
administration continually use almost coercive methods to aid 
implementation of the law. Allowing Medicaid waivers as the 
only process for States to innovate seems to offer the 
administration a situation ripe for abuse. This is why we need 
to repeal the Medicaid and CHIP maintenance of effort 
provisions and give States a chance to truly innovate.
    Continuing along that line, the maintenance of effort 
provisions in Obamacare have not only been costly, but they 
have been a barrier to reforms. That is why I introduced H.R. 
1472, the State Flexibility Act to repeal PPACA Medicaid and 
CHIP provisions in the President's health care law, repeal the 
maintenance of effort.
    In these difficult fiscal times, States often must make 
cuts to other non-mandated programs, such as education, because 
they don't have the flexibility to improve their existing 
Medicaid programs. In other words, get rid of people that are 
on the rolls that shouldn't be there that maybe 2 years ago, 3 
years ago, prior to PPACA, these people were eligible but now 
they are making $75,000 a year, and they are frozen on the 
program.
    Would you please explain to the panel how these provisions 
increase costs to both the States and the Federal Government 
and actually hamper patient outcomes?
    Ms. Owcharenko. I would say that the maintenance of effort 
freeze really does take a tool out of the toolbox that States 
have to work within their budgets within their means and within 
their budgets to provide the care to who they feel are the most 
vulnerable and the most needy. Again, getting back to the 
flexibility for the States, I think the closer the policymakers 
are to what is going on on the ground at the State level, the 
better are suited in deciding who should get the care, where 
the adaptation should be, where we can scale back maybe, or 
where policy should be increased.
    Mr. Gingrey. Well, I'm just thinking that if they didn't 
have that maintenance of effort provision and they were able to 
kind of clean up the rolls, if you will, then maybe some of 
these States would be willing to expand, because they wouldn't 
be throwing money at people that really don't need it. Mr. 
Bragdon, would you care to comment on that as well?
    Mr. Bragdon. Thank you. I think that you are touching on an 
important point that when you look at how States can customize 
their Medicaid programs, that you need different solutions for 
different populations, and you also need a very dynamic 
toolkit, if you will.
    In Florida, for example, the average single mother who is 
on welfare, or on TANF and receiving Medicaid is on the program 
for 5 months. And so for those individuals, it is also about 
creating some sort of off-ramp, because what happens now is you 
are on Medicaid, you may be in a private plan you like, but 
there is no ability to keep that private plan once you go off 
the program, there is no ability to even become aware of what 
is available to people----
    Dr. Gingrey. I'm going to interrupt you because I just have 
30 seconds left. I want to make this comment. And I thought 
about this of course 3 \1/2\ years ago right here when we were 
in the minority on the side when this bill was being developed, 
and this Medicaid expansion, up to 138 percent of the Federal 
poverty level, where would those people get their care if they 
were not eligible for Medicaid? They would get it on the 
exchanges and the provision that goes to them would be all 
Federal dollars. They wouldn't be State dollars. So it is 
really a game of moving the hat around to see where the pea is.
    You clearly, that was a setup so that there would be less 
Federal costs and more burden on the backs of the States. And I 
yield back.
    Mr. Pitts. The chair thanks the gentleman.
    The chair now recognizes the gentlelady from Florida, Ms. 
Castor.
    Ms. Castor. Thank you very much, Mr. Chairman.
    Thank you to the panel.
    This is a very important topic, and as Mr. Weil testified, 
there are so many exciting innovations going on all across the 
country when it comes to Medicaid that is the lifeline for 
families and seniors and children and disabled.
    I have wanted to, I think it is very important that we 
share and understand what is happening in these innovations. We 
do this on a regular basis for those that are interested in the 
children's health care caucus that I co-chair with Republican 
Congressman Dave Reichert from Washington State where we 
educate staffers across Capitol Hill, other policymakers, 
Members, and we have another of our Medicaid matters for kids 
sessions this Friday here in the Rayburn building at 12 
o'clock, and I would like to thank First Focus Campaign For 
Children, all the children's hospitals across the country, the 
pediatricians, the Kaiser Family Foundation for helping to 
organize these very important Medicaid educational sessions. 
The one on Friday is called ``Unlocking Ideas to Improve Care 
For Kids on Medicaid.''
    One of the most exciting innovations I know of in Florida 
in my home town at St. Joseph's Hospital is their complex, 
their chronic complex clinic for children. It has been running 
for 12 years now. It provides continuous comprehensive and 
coordinated care for the most medically needed children in our 
community. The clinic was organized after years and years of 
watching children cycle through the emergency room without a 
real focus on their ongoing health care needs. The hospitals 
desperately wanted someone to provide them with coordinated 
care. So the clinic came together. It now serves over 1,000 
children in the Tampa Bay area with a great team of 
pediatricians, pediatric nutritionists, nurses, social workers 
and many others. The families in my area love this clinic. And 
we also appreciate the fact that it saves $6,000 per patient 
per year in hospital costs alone and some national studies say 
that we are saving closer to 10,000 a year. That is one of the 
innovations that I am excited about.
    Mr. Weil, name another one where you, where things are 
going right under Medicaid, this important Federal/State 
partnership.
    Mr. Weil. Well, I think some of the most exciting work is 
in the area of patients in medical homes and health homes where 
what we are trying to do is take a health care system, not just 
in Medicaid but in the system at large that primarily sends its 
resources to the most expensive settings for care for 
hospitals, for institutional care and build out, as you 
described in the scenario you described, build out an 
infrastructure of the kind of care people need at a better 
touch, it is closer to the community, it is less expensive, it 
is less episodic, it is more continuous, and also, and I think 
some of the best innovations going on now are about bringing in 
mental health into how we think about delivering health care. 
We have traditionally had very strong lines and barriers 
between these systems, different funding streams, different 
programs, and we are understanding that people with untreated 
mental health conditions cost more in physical health, and that 
the relationship between the two requires a different model of 
care. We are seeing it in oral health. I including included a 
few examples in my written testimony.
    And what is great about these kinds of innovations is that 
Medicaid is a part, sometimes it is a leader, sometimes it is a 
follower, but most providers of services within Medicaid also 
provide services to privately covered folks, and if they are, 
if it is not pediatric care, they are usually in Medicare as 
well.
    So the interesting exciting innovation, the most 
interesting exciting, from my perspective, is when Medicaid is 
part of a broader conversation across public and private payers 
and providers, physicians and hospitals and others to 
fundamentally rethink how people get care, and then pays in a 
way that supports that as opposed to just writing checks for 
services that people need.
    Ms. Castor. I think you are right. I think you are right.
    And Mr. Bragdon, I know you did not mean to mislead this 
committee by heralding the great success of Florida's Medicaid 
privatization. The statewide waiver was just approved a couple 
of weeks ago. So be careful when you testifying in front of 
Congress. And then the pilot program of Medicaid privatization 
was known as a real disaster. The State's own study condemned 
the results. We had patients unable to gain access. We had 
providers, private providers leave the State.
    So be careful when you testify before Congress and saying 
this is a great success when the evidence and everyone across 
the board has really condemned what has happened. We are more 
hopeful with the new waiver and privatization, it is like night 
and day. There are broad new conditions for consumer 
protections. Providers, if they back out and leave, are going 
to be penalized, their medical loss ratios.
    So those are some of the innovations that can happen with 
that important Federal/State partnership. But you have got to, 
you really have to do your homework on what has happened in the 
past and what is actually happening moving forward. Thank you.
    Mr. Pitts. The gentlelady's time has expired. The chair 
recognizes gentleman from Louisiana, Dr. Cassidy 5 minutes for 
questions.
    Mr. Cassidy. Thank you, Mr. Chairman. Mr. Weil, I am a 
doctor who takes care of Medicaid patients in a public hospital 
clinic, so I am very familiar that Medicaid can actually have a 
beneficial effect. But I think there are some things kind of in 
the interest of Ms. Castor's kind of fact check sort of thing.
    Let's first talk about the paper that Mr. Dingell 
referenced that showed an all-cause decreased mortality after 
Medicaid expansion. Now, I happened to have read that article 
and I happened to know and I looked it up just to confirm. In 
Maine, actually mortality increased after Medicaid expansion. 
The authors point out only in New York was there a 
statistically significant effect of decreased mortality, and 
that overwhelmed the increased mortality in Maine and the no 
significant effect in Arizona.
    So would you disagree with that table which I am looking 
straight at or would you acknowledge that, indeed, it is only 
one-State specific and indeed, if we were to look at Maine, we 
would actually see an increase in mortality after Medicaid 
expansion?
    Mr. Weil. I will happily defer to you looking at the table 
and say that as you know as a clinician, you never want to take 
your conclusions too far based on one or two studies and I 
think we are right now in an environment where people are 
looking at one or two studies and using it to caricature a 
program. So I appreciate your clarification very much.
    Mr. Cassidy. Secondly I also point out and you were very 
careful in your testimony to say that Medicaid prevents people 
from having financial duress, but you did not make the claim 
that it improves health. And again, as you and I both know the 
National Bureau of Economic Research found in their Oregon 
study that when, and I am quoting from their conclusions, this 
randomized controlled study showed that Medicaid coverage had 
generated no significant improvements in measured physical 
health outcomes in the first 2 years, but it did reduce 
financial strain.
    So it also makes it clear that the best study from NBER has 
shown that Medicaid expansion did not improve health outcomes.
    And lastly I will say that in your--by the way, I enjoyed 
everybody's testimony and I don't mean to challenge, I am just 
trying to point this out, you seem to suggest in your testimony 
that the choice is dichotomous, either somebody is uninsured or 
they are on Medicaid. But then I will quote another National 
Bureau of Economic Research study, again, by Mr. Gruber, who is 
a big backer of Obamacare, who points out that 60 percent of 
the children that go on to a public insurance program actually 
formally had private insurance but the expansion of the public 
insurance crowded out, if you will, the private insurance so it 
is not the employer or the family paying the bill, it is now a 
taxpayer paying the bill. And that is 60 percent.
    Any comments upon that because again, it is not--you know 
where I am going with that.
    Mr. Weil. Well, I do have to begin by commenting on your 
characterization of the first study. First of all, there were, 
as you know, demonstrated positive effects on depression, so 
the physical health word is important. But I don't think it 
shows that it did not improve outcomes. I think it didn't show 
that it improves outcomes. And I think those are actually quite 
different. We don't----
    Mr. Cassidy. But if questions take the no hypothesis we 
really cannot claim a benefit unless the benefit was shown.
    Mr. Weil. I completely agree with you. We cannot claim a 
benefit unless the benefit is shown. That does not equate with 
the absence of benefit, it simply means we were unable to show 
a benefit. And since you are being very careful, I am going to 
ask that we be equally careful in that regard.
    The literature on crowd-out which used to be a very hotly 
debated topic and has faded from view for some time has great 
complexity about what you count as the numerator and the 
denominator. We know that low and moderate income people and 
families, their income fluctuates and they do gain different 
sources of coverage, although the prevalence of private 
coverage----
    Mr. Cassidy. I only have a minute left.
    Mr. Weil. I am sorry. My sense would just be, I don't think 
that we can state on the basis of the Gruber study that 60 
percent of those children would still have private coverage if 
they did not public coverage.
    Mr. Cassidy. Maybe. I will say they had 400,000 
observations, and Gruber obviously is, one, respected and, two, 
a big backer of the Obamacare, so it is not like he is trying 
to find something to trash himself.
    Lastly, is there a philosophical difference if a State is 
going to manage care and they are going to capitate payment to 
the insurance plan, is there any difference in facts that if 
the Federal Government gives only a set amount of money to the 
State, which, in turn, gives a set amount of money to the 
insurance plan? Is there any kind of difference in that?
    Mr. Weil. Well, yes, a plan organizes and finances the 
delivery of care. A State organizes the policy environment for 
that finance and delivery, so they are akin, but I think they 
have different effects.
    Mr. Cassidy. But if you give $100 to the State to care for 
somebody and the State gives $90 to the insurance plan, that 
really is the same mechanism, the capitated payment in each 
case.
    Mr. Weil. If 100 percent of the cost were through 
capitation, and it was just who wrote the bill, then I would 
agree it is the same, but that is not how I see the program.
    Mr. Cassidy. OK, that may be an issue of perception. I 
yield back.
    Mr. Pitts. Mr. Bragdon, did you want to respond to Ms. 
Castor's remarks regarding Florida reforms? I apologize that 
she had to leave, but I wanted to give you an opportunity to 
respond quickly. Please.
    Mr. Bragdon. Thank you, Mr. Chairman, I appreciate the 
opportunity.
    In my testimony, I referred to the Florida reform pilot. 
The facts are very clear: The Florida reform pilot outperformed 
on health outcomes in 64 percent of the cases. It had higher 
levels of patient satisfaction in 82 percent of the cases. But 
perhaps the best validation of how this approach of patient-
centered pro-patient/pro-taxpayer is working is the fact that 
the Obama administration approved the waiver.
    This is a proven bipartisan approach that saves money, 
improves health and produces more satisfied patients. And would 
be happy to provide further information to the Congresswoman so 
she can understand that.
    Mr. Pitts. The chair thanks the gentleman. The chair now 
recognizes the gentlelady from Virgin Islands, Dr. Christensen, 
for 5 minutes for questions.
    Mrs. Christensen. Thank you, Mr. Chairman, and thank you 
for the hearing, and welcome to our panelists.
    And Mr. Weil, my first question was really about Medicaid 
flexibility, but I think your testimony and the answers that 
you have given really have demonstrated that flexibility and 
innovation are not only possible, but they are happening in 
different States across the country and improving access and 
actually in some of the cases you cited, improving outcomes as 
well. Improved outcomes is what we are all looking to achieve 
here.
    I am sure that all of you are familiar with the 2002 IOM 
Report on Unequal Treatment, a report that demonstrated bias 
and discrimination in health care, in the health care of racial 
and ethnic minorities, still in other studies, more recent 
studies since that have demonstrated the same as it relates to 
cardiac care and other medical conditions.
    We know that racial and ethnic minorities make up at least 
58 percent of non-elderly Medicaid enrollees. And in addition 
to that, the prior low reimbursement rates, limited accesses to 
providers, and even when there were providers, some of the 
needed ancillary services were not available in the 
neighborhood because of how Medicaid was paid for before the 
Affordable Care Act.
    So Mr. Weil, don't you think these factors have some impact 
and import on whether, even with Medicaid being available and 
access to health care being available, don't those factors 
parallel? We haven't even talked about the socio and economic 
determinants of health that are not changing in those 
communities.
    Mr. Weil. Well, I appreciate the question and the 
observation. I am struck by how frequently I hear people repeat 
the phrase that Medicaid is a lousy, broken program because 
people on it, and then they fill in the blank. The people on it 
are poorer and sicker and disproportionately nonwhite, and as 
you indicated there is a strong evidence based in all of those 
areas that health outcomes are worse regardless of source of 
coverage, and very rarely do people make an effort to actually 
control for it, because it is impossible to control----
    Mrs. Christensen. Even regardless of income level and 
education level.
    Mr. Weil. So we know, for example, that lower income 
Americans are less likely to use health care services whether 
they have private or public coverage because they are less 
comfortable--on average, they are less comfortable with the 
system, less able to navigate it, and providers seeking payment 
are less likely to locate in the places where they live. To 
indict the Medicaid program for the outcome of that seems to me 
a bit odd.
    Mrs. Christensen. I agree and thank you because when those 
inequities are addressed then the socioeconomic determinants of 
health when they are addressed in poor and racial and ethnic 
minority communities and rural communities, and some of the 
reforms that you have cited in the different States are more 
widely adopted, I think we will see those changes. And we are 
seeing changes where those things are happening. They are 
really making a difference in improved care for vulnerable 
patients for whom Medicaid has been their lifeline.
    The Affordable Care Act recognizes that we needed to begin 
to make Medicaid a stronger safety net. The law, along with 
State changes, is already beginning to make a difference. The 
Republican-recommended reforms really are not designed, as I 
see it, and I am a practice, I was a practicing family 
physician to help the vulnerable. I think they run the risk of 
reducing access to care and leaving some of our most vulnerable 
out of the health care system entirely.
    Let me see if I can fit in one other question.
    The Affordable Care Act includes a provision which will 
provide additional payment to certain Medicaid providers for 
primary care services. What impact on access to primary care do 
you believe that this policy will have? And what other steps 
can we take to improve access to these important services for 
our most vulnerable? Dr. Weil.
    Mr. Weil. Well, higher payment is certainly a positive, 
although its temporary nature I think is going to limit the 
behavioral response on the part of physicians. It is unlikely 
they are going to fundamentally change where they practice or 
how they practice for an incentive that they know will last a 
short period. I think it is important to think of that as a 
step, as an imperfect step in broader efforts to reorient 
health care system spending toward primary care and it, in and 
of itself, is not going to achieve fundamental----
    Mrs. Christensen. It is 2 years probably because we had to 
reduce the cost of the bill, and we had to reduce the cost of 
the bill because we could not score the prevention, the savings 
from prevention which is something we still need to do. Thank 
you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentlelady and now 
recognizes the gentlelady from North Carolina, Mrs. Ellmers for 
5 minutes for questions.
    Mrs. Ellmers. Thank you, Mr. Chairman, and thank you to our 
panelists today. I do want to talk a little bit about the North 
Carolina programs that are moving forward. I am very proud of 
the work that they are doing in North Carolina. Over, it has 
grown 90 percent over the last decade from less than 8 billion 
annually just a decade ago to more than 14 billion annually as 
of 2012. North Carolina spends more per person on Medicaid than 
any of its Southern State neighbors. Recognizing North 
Carolina's Medicaid failures, Governor McCrory has proposed 
reforms outlining the State's partnership for a healthy North 
Carolina. And I commend him for his work, and also, North 
Carolina Health and Human Services chairwoman, Dr. Aldona Wos, 
for the work that she has done, and I echo the words of 
Representative Bert Jones in North Carolina calling it a win-
win-win situation because it benefits the patients, it benefits 
the health care providers, and the taxpayers of our State.
    With that, I do want to expand a little bit on the Florida 
issue, because North Carolina is looking at Florida.
    And I do have a question, Mr. Bragdon, for you in relation 
to some of the discussion that has already gone on. Is it not 
true that Florida's Medicaid reform demonstration was approved 
8 years ago, but only last month did the State receive final 
approval to go forward with the State reforms? Is that part of 
the situation that we are talking about?
    Mr. Bragdon. Thank you for the question, Congresswoman.
    Florida started a reform pilot in five counties, it covered 
300,000 individuals, moms and kids as well as those who are on 
SSI. And then 2 years ago, the legislature voted and the 
Governor submitted a waiver to expand that reform pilot to all 
67 counties.
    Mrs. Ellmers. So it was expansion?
    Mr. Bragdon. Correct.
    Mrs. Ellmers. Great. So basically obviously we are talking 
about tough times here, scarce resources, drastically growing 
enrollment levels. States need to know that they can move 
forward with reforms, and I know that is part of the discussion 
that we have been having today.
    Unfortunately, they are currently forced to live under the 
``maybe'' or wait-and-see approval Federal agency process that 
takes years to find out whether or not their demonstration 
projects can be approved.
    From your perspective, Mr. Bragdon, what can be done to 
improve the Medicaid reform review process by CMS? I am sure 
that is kind of a broad answer, but if you can give a couple of 
pointers.
    Mr. Bragdon. Thank you for the question. I think first and 
foremost, States need predictability. You have in the State 
plan amendment, which is an administrative filing, you have 
predictability, there are set time frames, if the Federal 
Government does not act, it is deemed approved. What happens 
with a waiver is there is no time limit and therefore CMS can 
drag its feet. In the case of Kansas, CMS approved the waiver 2 
days before implementation began.
    So what we are seeing is States are playing a game of 
chicken with the Federal Government moving forward with 
implementation with the hope that CMS will act at the last 
minute, otherwise there will be all this wasted effort.
    Mrs. Ellmers. Ms. Owcharenko, I have been practicing your 
name. Do you want to expand on that at all? Is there anything 
that you would like to add to that?
    Ms. Owcharenko. I think that Tarren made a great point 
about predictability, and I think that this is one of the 
things that does have bipartisan or nonpartisan issue which is, 
how can you improve the innovations that are happening in the 
State faster so that you get more results so that people can 
study the results to say does this work? Does this not work? 
And I think that that is one thing I think that people can come 
together to look at is how do you speed up the process, and 
allow a lot more innovation at the State level without having 
the barriers.
    Mrs. Ellmers. Keeping that in mind, right now with Medicaid 
enrollment at over 70 million, one in four Americans expected 
to become a Medicaid beneficiary as a result of the ACA, do you 
believe there are measures in place to ensure proper eligib--
after a week being back in North Carolina I can't speak today--
eligibility verification?
    Ms. Owcharenko. I think that it is actually even before the 
Affordable Care Act, the trend has been going in the opposite 
direction with presumptive eligibility, express lane 
eligibility, those things kind of move in the opposite 
direction. I think with the massive complexity of this health 
care law, I think it is important that there are some stronger 
eligibility processes in place, not only for Medicaid, but on 
the exchange side as well.
    Mrs. Ellmers. Thank you so much. Mr. Bragdon, I have about 
one second. Is there anything you would like to add?
    Mr. Bragdon. Ditto.
    Mrs. Ellmers. Thank you, and I yield back the remainder of 
my time.
    Mr. Pitts. The chair thanks the gentlelady and now 
recognizes the gentleman from Florida, Mr. Bilirakis.
    Mr. Bilirakis. Mr. Chairman, I thank you for holding this 
hearing, and I thank the panel for the testimony.
    Mr. Bragdon, under the current law the system seems to be 
rigged to maintain the status quo in my opinion. If a State 
tries to reform the system to increase outcomes and reduce 
costs, they typically don't see most of the savings. How can we 
transform the system to incentivize States and allow them a 
greater share of the savings?
    Mr. Bragdon. Thank you for the question, Congressman.
    I think that this is really a key factor that is holding 
States back from innovating. States get to keep only about 40 
cents of every dollar that they save, or in the case of 
expansion, 10 cents out of every dollar that they save. What I 
think would be a better approach to promote innovation would be 
to have shared savings. One of the things that private Medicaid 
plans do is they share the savings that coordinated care 
contributes with providers, so providers have an incentive to 
save money as well as the plan.
    It should be the same with the Federal Government to 
States. Why not allow the States to keep one out of every 
three, or one out of every two Federal dollars that they save 
through innovation?
    Mr. Bilirakis. Very good. For the panel, what reforms are 
needed to help beneficiaries transition off Medicaid and on to 
private insurance? What are the challenges that beneficiaries 
face? For the panel.
    Ms. Owcharenko. I would say, first of all, it is 
prioritizing the population that not everyone on Medicaid is 
treated the same, and I think that is for a benefit for the 
beneficiary. The higher up the income scale, the more access 
you would likely have to private health insurance and that 
should be encouraged. The same rules that apply at the higher 
income should not apply at the lower income and vice versa.
    Mr. Weil. I would agree that Medicaid's reliance on private 
plans makes that transition easier when it occurs, and that 
States are currently making significant efforts to try to 
ensure smooth transitions between Medicaid and the exchange. 
Unfortunately, the biggest barrier to transitioning smoothly 
from Medicaid into private coverage is that the jobs most 
people move into when they move off of Medicaid don't offer 
health insurance. And so in the absence of that, there is 
nothing to transition to.
    Mr. Bragdon. I would agree with both responses. I think 
that you, it is very important to look at for individuals who 
are on Medicaid, many of them are on Medicaid for a short 
amount of time, and yet those private plans are prohibited from 
marketing to them or reaching out to them and just making them 
aware of here are other options that are available.
    And States need to be more creative to create transition 
products that aren't quite Medicaid private plans but aren't 
quite private insurance to give people some protection to not 
only catastrophic coverage, but also preventive services.
    Mr. Bilirakis. Is it a good idea to provide diversity of 
plan options to consumers?
    Mr. Bragdon. Thank you. Yes. And I think that the most 
strong evidence of that is consumers voting with their feet. 
When you give them a diverse group of plans with meaningful 
differences, 70 to 80 percent voluntarily pick a plan different 
than the one they were defaulted into.
    Mr. Bilirakis. Mr. Weil?
    Mr. Weil. I certainly see advantages to plan choice. It 
think there are two constraints I would put in that comment. 
One is that in less populous areas of the country, plan choice 
doesn't really mean anything because the real challenge is 
finding providers and having different administrative 
structures over them doesn't really provide any value.
    And the second constraint is that unfettered choice or 
unstructured choices can be very hostile, actually, to 
consumers. The private industry knows very well how to 
structure choices in ways that help people make choices and not 
bewilder them. But in general, certainly choice is a key 
component of the drive to quality.
    Mr. Bilirakis. Ms. Owcharenko.
    Ms. Owcharenko. I would agree with the panelists and just 
say, though, that a slight difference a choice of the same 
product across without any differentiation is kind of choice 
with no choice, you are not really choosing anything different. 
So I do think there needs to be some sort of diversification or 
ability for insurers to offer different types of plans with 
additional benefits, et cetera, in order to really have what 
choices.
    Mr. Bilirakis. Thank you. One last question if I may, Mr. 
Chairman. Mr. Bragdon and Ms. Owcharenko, the administration 
seems focused on expanding Medicaid as you know.
    How many people are Medicaid eligible and are not enrolled? 
Shouldn't we focus on getting care to those groups before we 
focus on expanding Medicaid?
    Also, this expansion of patients will increase the patient 
load on the Medicaid system. Has there been an influx in 
doctors taking Medicaid? I don't think so. What will this 
patient surge do to the system? And we will start with Mr. 
Bragdon, please.
    Mr. Bragdon. I think there are--absolutely there are real 
challenges to access for individuals. A card is not access. And 
we need to look at can you actually provide access to care?
    Ms. Owcharenko. I would just point out that with the 
question of there are many out there, knowing children, many 
children that are eligible but not enrolled in the program, 
raises the question of what is it that keeps those children 
out? Is it that they--it is obvious they are eligible. They 
would qualify. The question is do their parents see that there 
is value in getting the Medicaid program. As Tarren has pointed 
out having a card may not be the type of care that best suits 
them.
    Mr. Bilirakis. Thank you very much. I yield back.
    Mr. Pitts. The chair thanks the gentleman. The chair now 
recognizes the gentleman from Virginia, Mr. Griffith, for 5 
minutes.
    Mr. Griffith. Thank you, Mr. Chairman. I appreciate it 
greatly. Mr. Bragdon, I was looking at your written testimony, 
and on pages 7 and 8, you go through a process--you may want to 
refer to it, although you probably know it like the back of 
your hand--where some of the Medicaid programs that rely on 
some private programs are going to be hit with the tax inside 
of Obamacare. Could you explain that to us more fully than just 
a one- or two-paragraph response might give to the American 
people?
    Mr. Bragdon. Sure. One of the new funding mechanisms for 
Affordable Care Act is a new tax on private plans which falls 
on those private Medicaid plans as well. And so you have this 
perverse dynamic where the Federal Government is, on one hand, 
taxing itself and then at the same time, taxing States to raise 
revenue.
    And what is going to happen is States either need to come 
up with the money or they have to cut services for individuals 
to pay the tax.
    Mr. Griffith. Explain how that works if you can, because I 
was not here when the bill was passed and I have always been 
under the impression this was on the wealthier people and on 
plans that were private plans. Is this because some States 
have, or work with private-type plans to provide the coverage 
for their citizens?
    Mr. Bragdon. This is not the tax on Cadillac plans. This is 
a different tax that is essentially a premium tax for private 
health plans, but those private plans within Medicaid are 
included within that tax, and that tax over the next decade is 
going to raise costs from 37 to $42 million for those private 
Medicaid plans only.
    Mr. Griffith. And the number in your report said something 
like one-fifth of all the money raised by this new tax included 
in the Obamacare plan is actually a tax that we paid by 
Medicaid?
    Mr. Bragdon. Correct.
    Mr. Griffith. OK. I appreciate that.
    Virginia is looking at a lot of reforms and things before 
they do the expansion. They set up a special committee, et 
cetera. And amongst those, I am going to go to a specific 
question instead of just reciting again the different things 
that Virginia is looking for, although I think those are good, 
but one of them is value-based purchasing, and I kind of like 
that idea that they are looking at. And I think we need to do 
this in an efficient way that it saves money and provides a 
greater flexibility to our States. Now obviously, there has to 
be a balance because you don't want to put a co-pay into that 
value pricing that keeps people from using services that they 
may need. So I would ask all of you, from your experience, 
where have States been able to use that successfully and where 
has it been not successful?
    Mr. Bragdon start with you and then we will just go down 
the table.
    Mr. Bragdon. I think it is key for States to look at value-
based purchasing not only innovative things working directly 
with providers in how do you get better care for individuals, 
and there are great examples of States doing that to promote 
more providers participating in the Medicaid program, where you 
have private plans they pay if the Medicaid patient no-shows, 
or in some States the plan itself coordinates travel to make 
sure the patient can actually get to the doctor, but it also 
add benefits to attract patients. So for example, adding dental 
benefits, all within that same fixed price, but really creating 
taking Medicaid like a floor and building on top of it, which I 
think is really key.
    You have to also look at, are individuals actually getting 
healthier? Because that is what we want the safety net to do, 
is take somebody who is poor and sick and make them healthier 
so they have the hope of a better life. So ultimately, value 
based should look at, is it improving health?
    Mr. Griffith. Absolutely. Mr. Weil.
    Mr. Weil. States use their flexibility to set payment rates 
to promote plans that can demonstrate higher value through 
standard measures of quality and measures of access.
    There is also movement towards what is known as value-based 
insurance design which is a specific form of value purchasing 
design to make it less expensive, for example, for people to 
get maintenance drugs for a chronic condition, maybe even free, 
because it is actually cheaper to give them free medication 
than to have them not take the medicine because of a $3 
copayment. There is a whole center at the University of 
Michigan that is helping States and private payers in that 
area. It is a very active area.
    Mr. Griffith. Obviously not easy answers.
    Mrs. Owcharenko.
    Ms. Owcharenko. Thank you. I think that it actually what 
has been said is great, and what it shows is that Medicaid has 
seen kind of the failure of its past in trying to find ways to 
be more innovative and in doing things in a more efficient way. 
But I would caution like in the State of Virginia that those 
reforms should take place and those results should come through 
before deciding whether to now add a new expansion population 
into that making further the complexity of what reform is 
intended to achieve.
    Mr. Griffith. Particularly in light of the fact that the 
Federal Government is going to reduce the amount of money it 
gives back to the States for the expansion as time goes by. I 
do appreciate that.
    Mr. Weil, I also appreciate the fact that you are concerned 
about rural districts. I have a rural district, and while I 
like the idea of having multiple plans, if folks can't get 
there it doesn't do us any good. So I do appreciate all of your 
testimony this afternoon.
    And with that, Mr. Chairman, I yield back.
    Mr. Pitts. The chair thanks the gentleman. That concludes 
the questions from the members. Thank you very much, very 
informative testimony today. There will be questions that 
members have that will be submitted to you in writing. We ask 
that you please respond promptly to those questions.
    I remind members that they have 10 business days to submit 
questions for the record, and members should submit their 
questions by the close of business on Monday, July 22nd.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 5:40 p.m., the committee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Today's hearing is the third in a series of subcommittee 
hearings on the current challenges facing Medicaid programs 
across the country. I want to thank Chairman Pitts for his 
leadership on this issue and want to welcome today's witnesses.
    Through the Committee process, we can continue to have a 
valuable discussion about the strengths and weaknesses of the 
current Medicaid program. As we move toward reform, I hope we 
will continue to gather the most relevant and timely data and 
state input, and continue these important discussions with 
Medicaid stakeholders and patients.
    The Medicaid program is extremely complex and its operating 
structure and equally complex financing framework are often 
topics for reform. Many have said that if you see one Medicaid 
program, you still only know one Medicaid program--as every 
state is quite different.
    Before we move forward, we must understand not only who 
Medicaid is currently serving, but better appreciate how well 
Medicaid is doing in accomplishing its goals.
    Reform must ensure the path forward for a modern Medicaid 
program that is strong enough to face the challenging realities 
of scare federal and state resources. Reform must empower 
states and Medicaid stakeholders with the necessary flexibility 
to make Medicaid more than just a coverage program or card 
without access.
    Surprising to most, Medicaid today covers more Americans 
than any other government-run health care program, including 
Medicare.
    While Medicaid covered approximately four million people in 
its first year, there were more than 72 million individuals 
enrolled in the program at some point in Fiscal Year 2012--
nearly 1 in 4 Americans.
    Those enrollment figures on their own, and their potential 
drain on the quality of care of the nation's most vulnerable 
folks is cause for alarm. But once the president's health care 
law is fully implemented, another 26 million more Americans 
could be added to this already strained safety net program.
    Medicaid enrollees today already face extensive 
difficulties finding a quality physician because, on average, 
30 percent of the nation's doctors won't see Medicaid patients. 
Studies have shown that Medicaid enrollees are twice as likely 
to spend their day or night in an emergency room than their 
uninsured and insured counterparts.
    Instead of allowing state and local officials the 
flexibility to best administer Medicaid to fit the needs of 
their own populations, improve care, and reduce costs, the 
federal government has created an extensive, ``one-size fits-
all'' maze of federal mandates and administrative requirements.
    With the federal debt at an all-time high, closing in on 
$17 trillion and states being hamstrung by their exploding 
budgets, the Medicaid program will be increasingly scrutinized 
over the next 10 years.
    Its future ability to provide coverage for the neediest 
kids, seniors, and disabled Americans will depend on its 
ability to compete with state spending for other priorities 
including education, transportation, public safety, and 
economic development.As I noted at the opening, Energy and 
Commerce Committee Republicans remain committed to modernizing 
the Medicaid program so that it is protected for our poorest 
and sickest citizens. We will continue to fight for those 
citizens because we believe they are currently subjected to a 
broken system.
    The program needs true reform, and we can no longer tinker 
around the edges with policies that add on to the bureaucratic 
layers that decrease access, prohibit innovation, and fail to 
provide better health care for the poor. In May, Senator Hatch 
and I introduced Making Medicaid Work--a blueprint and menu of 
options for Medicaid reform that incorporated months of input 
from state partners and policy experts from a wide range of 
ideological positions. My hope is that this morning's hearing 
is the next step in discussing the need for reform so that we 
can come together in finalizing policies that improve care for 
our most vulnerable citizens. Washington does not always know 
best--we have a lot to learn from our states and should better 
understand the challenges facing our current programs before we 
consider any expansion of the program.
    Thank you, Mr. Chairman and I yield my remaining time to --
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