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



 
  OBAMACARE IMPLEMENTATION PROBLEMS: MORE THAN JUST A BROKEN WEB SITE 

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           NOVEMBER 14, 2013

                               __________

                           Serial No. 113-95


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

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

                                  (ii)



                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     2
    Prepared statement...........................................     3
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     3
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     6
    Prepared statement...........................................     7
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     7
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    16

                               Witnesses

Michael J. Astrue, Former Commissioner, Social Security 
  Administration.................................................    18
    Prepared statement...........................................    20
    Answers to submitted questions...............................    91
Avik Roy, Senior Fellow, Manhattan Institute for Policy Research.    25
    Prepared statement...........................................    27
Sabrina Corlette, Senior Research Fellow, Center on Health Policy 
  Reforms, Georgetown University Health Policy Institute.........    32
    Prepared statement...........................................    34
Marilyn Dixon Hill, Associate Pastor, Camden Bible Tabernacle....    46
    Prepared statement...........................................    48
Roger Stark, Health Care Policy Analyst, Washington Policy Center    51
    Prepared statement...........................................    53
    Answers to submitted questions...............................    94

                           Submitted Material

H.R. 3362, the Exchange Information Disclosure Act, submitted by 
  Mr. Terry......................................................     9


  OBAMACARE IMPLEMENTATION PROBLEMS: MORE THAN JUST A BROKEN WEB SITE

                              ----------                              


                      THURSDAY, NOVEMBER 14, 2013

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:02 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Joseph R. 
Pitts (chairman of the subcommittee) presiding.
    Members present: Representatives Pitts, Burgess, Shimkus, 
Murphy, Blackburn, Gingrey, McMorris Rodgers, Lance, Cassidy, 
Guthrie, Griffith, Bilirakis, Ellmers, Barton, Upton (ex 
officio), Pallone, Dingell, Capps, Schakowsky, Matheson, Green, 
Butterfield, Barrow, Castor, Sarbanes, and Waxman (ex officio).
    Also present: Representative Terry.
    Staff present: Clay Alspach, Chief Counsel, Health; Matt 
Bravo, Professional Staff Member; Noelle Clemente, Press 
Secretary; Paul Edattel, Professional Staff Member, Health; 
Brad Grantz, Policy Coordinator, Oversight and Investigations; 
Sydne Harwick, Legislative Clerk; Sean Hayes, Counsel, 
Oversight and Investigations; Nick Magallanes, Policy 
Coordinator, Commerce, Manufacturing, and Trade; Katie Novaria, 
Professional Staff Member, Health; Monica Popp, Professional 
Staff Member, Health; Andrew Powaleny, Deputy Press Secretary; 
Chris Sarley, Policy Coordinator, Environment and the Economy; 
Heidi Stirrup, Health Policy Coordinator; Ziky Ababiya, 
Democratic Staff Assistant; Phil Barnett, Democratic Staff 
Director; Amy Hall, Democratic Senior Professional Staff 
Member; Elizabeth Letter, Democratic Assistant Press Secretary; 
Karen Lightfoot, Democratic Communications Director and Senior 
Policy Advisor; Karen Nelson, Democratic Deputy Committee Staff 
Director for Health; and Matt Siegler, Democratic Counsel.
    Mr. Pitts. The subcommittee will come to order.
    Before giving my opening statement, for planning purposes 
we have asked the Secretary to confirm her appearance before 
the subcommittee in the first week of December. As you will 
remember, the Secretary assured the committee that she would 
work with us to find a date in early December to provide an 
update on the implementation, and we look forward to hearing an 
update from Secretary Sebelius directly in a few weeks.
    Also I would like to seek unanimous consent that 
Congressman Lee Terry can sit with us and take part in today's 
hearing.
    Without objection, so ordered.
    The Chair will now recognize himself for an opening 
statement.

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

    Since the disastrous rollout of healthcare.gov on October 
1, Americans have learned even more about the Affordable Care 
Act.
    They have learned that if you like your plan, there is a 
good chance you have or will lose it. Premiums and deductibles 
are going up, not down, as a result of the Affordable Care Act. 
Millions have already received cancellation notices for their 
current insurance policies, and many more will receive similar 
letters before the end of the year.
    The administration keeps telling these people that they 
will get better, more comprehensive care in an exchange plan. 
What they don't point out is that premiums in the individual 
market are going up approximately 40 percent nationwide. 
Numerous people have contacted my office to share their 
premiums and deductibles have gone up, some even more than 
doubling.
    Americans have also learned that if you like your doctor, 
you may not be able to continue seeing him or her. In an effort 
to keep premiums down in the fact of the law's countless 
mandates, many exchange plans have narrowed the number of in-
network providers, so your doctor or hospital may no longer 
participate in your insurance plan. Analyses show that more 
than half of hospitals have still not signed any exchange 
contracts.
    Americans are now learning that when the healthcare.gov Web 
site does work, the personal information they enter may not be 
secure. A September 3 internal CMS memo even said that, ``The 
threat and risk potential to the system is limitless.''
    It is clear that rather than give Americans the peace of 
mind that comes with good healthcare coverage, the law is 
making life worse for Americans across the country.
    And finally, of the people who were able to successfully 
use healthcare.gov, many of them ended up enrolling in 
Medicaid. The program already has serious access problems as 
many providers refuse to take Medicaid patients. Studies show 
that the care Medicaid patients receive is often substandard. 
An influx of newly-eligible patients will further strain the 
system.
    The Affordable Care Act's problems are not limited to a Web 
site. This law was sold to the American people with false 
promises, and real people are being hurt. Despite the clear 
evidence, many supporters of the law still condescendingly 
assert that Americans are too informed to realize the benefits 
of the Affordable Care Act. Perhaps it is time for the 
supporters of the law to look at the front page of any 
newspaper and face reality. This law is hurting, not helping, 
Americans.
    While it may have been convenient to tell Americans that 
they can keep their healthcare plan under the Affordable Care 
Act, it is time for my colleagues to put away that broken 
promise once and for all. Our constituents deserve better.
    Tomorrow the House will have a chance to partially remedy 
one of the false promises of the Affordable Care Act by voting 
on H.R. 3350, the Keep Your Health Plan Act of 2013, and I hope 
all of my colleagues will support this commonsense bill.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    Since the disastrous rollout of healthcare.gov on October 
1, Americans have learned even more about the Affordable Care 
Act.
    They have learned that if you like your plan, there is a 
good chance you have or will lose it. Premiums and deductibles 
are going up, not down, as a result of Obamacare.
    Millions have already received cancellation notices for 
their current insurance policies, and many more will receive 
similar letters before the end of this year.
    The administration keeps telling these people that they 
will get better, more comprehensive care in an Exchange plan. 
What they don't point out is that premiums in the individual 
market are going up approximately 40% nationwide. Numerous 
people have contacted my office to share that their premiums 
and deductibles have gone up, some even more than doubling.
    Americans have also learned that if you like your doctor, 
you may not be able to continue seeing him or her. In an effort 
to keep premiums down in the face of the law's countless 
mandates, many Exchange plans have narrowed the number of in-
network providers, so your doctor or hospital may no longer 
participate in your insurance plan. Analyses show that more 
than half of hospitals have still not signed any Exchange 
contracts.
    Americans are now learning that when the healthcare.gov Web 
site does work, the personal information they enter may not be 
secure. A September 3rd internal CMS memo even said that ``the 
threat and risk potential (to the system) is limitless.''
    It is clear that rather than give Americans the peace of 
mind that comes with good health coverage, the law is making 
life worse for Americans across the country.
    Finally, of the people who were able to successfully use 
healthcare.gov, many ofthem ended up enrolling in Medicaid. The 
program already has serious access problems, as many providers 
refuse to take Medicaid patients. Studies show that the care 
Medicaid patients receive is often substandard. An influx of 
newly eligible patients will further strain the system.
    Obamacare's problems are not limited to a Web site. This 
law was sold to the American people with false promises, and 
real people are being hurt.
    Despite the clear evidence, many supporters of the law 
still condescendingly assert that Americans are too uninformed 
to realize the benefits of the Affordable Care Act. Perhaps it 
is time for supporters of the law to look at the front page of 
any newspaper and face reality: this law is hurting, not 
helping Americans.
    While it may have been convenient to tell Americans that 
they can keep their health care plan under the Affordable Care 
Act, it is time for my Democrat colleagues to put away that 
broken promise once and for all. Our constituents deserve 
better.
    Tomorrow, the House will have a chance to partially remedy 
one of the false promises of Obamacare by voting on H.R. 3350, 
the Keep Your Health Plan Act of 2013. And I hope all of my 
colleagues will support this commonsense bill.

    Mr. Pitts. I would like to welcome all of our witnesses 
here today. I look forward to their testimony and yield the 
balance of my time to Dr. Burgess.

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

    Mr. Burgess. I thank the chairman for yielding.
    At 3 \1/2\ years later it is pretty obvious this thing was 
never ready for prime time, was not supposed to get signed into 
law. It was signed actually by an accident because of the 
failure of the Democratic House and Senate at that time to come 
together in a conference committee and count the problems.
    We are now left with the debris of this failed promise. My 
understanding is the President is going to talk to the country 
in a little over an hour's time. Perhaps he will have some new 
light to shed on things.
    In the meantime, it is the work of our subcommittee to 
continue to try to get answers to the American people and to 
provide them with the relief that they have been so anxiously 
petitioning our offices in the last several weeks.
    We are all worried about the technical problems. I don't 
doubt at some point technical problems will get solved. I have 
got great doubts about what the glitches are, who has been 
appointed, but nevertheless, at some point the technical 
problems get solved, and then you start the access problems. 
They start January 1. You are going to have people showing up 
in doctors' offices and hospitals all over the country in 
January. They will produce a little card saying they are 
covered by an insurance company. They will perhaps have made 
their first payment, but when the bill is submitted, the 
insurance company may well say I have never heard of this 
person because the electronic information was not transferred. 
Would it surprise anyone that that, in fact, could occur given 
the experience that we have all had for the last 6 weeks with 
healthcare.gov?
    The strain that this will put on the provider community is 
enormous. The failure of Health and Human Services and the 
White House to heed the internal warnings about their lack of 
readiness for the Web site demonstrates that the Obama 
administration has failed in overall project management and 
leadership.
    The fact is on this subcommittee I have asked the questions 
that the President said he should have asked before this thing 
came out. Again, it is the job of our subcommittee to provide 
answers to those questions and fortunately, tomorrow on the 
floor of the House we will be able to offer a solution as well.
    I yield back to the chairman.
    Mr. Pitts. The Chair thanks the gentleman.
    I know recognize the ranking member, Mr. Pallone, for 5 
minutes for an opening statement.

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

    Mr. Pallone. Thank you, Mr. Chairman. As usual, I hear all 
these statements from the other side of the aisle which are 
just incredibly wrong and inaccurate and unfair.
    Let me start out by saying Obamacare, and I won't call it 
that, the Affordable Care Act is not an accident. It was 
purposely signed into law because Democrats, unfortunately not 
Republicans, believe that they could make a difference in 
improving the healthcare system for Americans. And the fact of 
the matter is it is not hurting. It is helping.
    For the sake of the record, I reiterate that the law is 
allowing millions of uninsured and underinsured Americans to 
gain access to comprehensive healthcare coverage. It applies 
critical consumer protections to new and existing health plans 
under the law so that no longer can insurers deny someone 
coverage just because they have cancer, for example, and the 
fact of the matter is with its passage we are ensuring that 
healthcare is a right, not a privilege, and that almost every 
American, other than, I guess, the undocumented, will have 
health insurance.
    The thing that really bothers me is that I never hear 
anything from the other side of the aisle talking about what 
the alternative is. I don't hear anything about what they are 
going to put in place to make people who are insured or people 
who are underinsured able to have benefits. The statement by 
the chairman about the Medicaid situation is incredible to me, 
and I respect you a lot, Mr. Chairman, but, look: The reason 
why Medicaid is not being expanded in a lot of States is 
because Republican governors have refused to expand it, but 
they are not coming up with an alternative. They are not 
saying, OK, now you can't get Medicaid, and therefore, you can 
get something else. They have no alternative, even though they 
would get 100 percent funding to expand it.
    And the same thing, I hear the chairman say, well, you are 
going to have Medicaid coverage, which is a good thing because 
you have no coverage right now, but you may not be able to find 
a doctor, or the doctor may not take the reimbursement rate. 
Well, then the purpose of this committee is to fix that. Fix 
the Medicaid problem. Provide more funding. You know, fix the 
reimbursement rate.
    Now, I know we have made some progress with that on the 
Medicare front with Dr. Burgess, and I certainly don't want to 
take away from that with the SGR, but what about Medicaid?
    So I don't believe that there is any interest on the part 
of the Republicans to fix any of the problems that are 
occurring with the rollout of the Affordable Care Act. They 
simply want to demonize the President and his policies. They 
will go to any length to do so, and at the top of the list are 
these efforts to sabotage Obamacare and force its failure. And 
the best example of that is what they are proposing tomorrow 
with the chairman of our committee, Mr. Upton.
    I called a previous hearing of the committee a monkey 
court. I will call this the monkey wrench. The Upton bill is 
the monkey wrench that they are trying to throw in to basically 
destroy Obamacare, because what it essentially does, it says 
that insurance companies that have these lousy policies, 
skeletal policies, they can continue to sell them. Actually, 
they can continue to sell them now, but they want to expand 
that opportunity and allow them to sell policies that are 
skeletal, that only cover catastrophic, that don't cover 
hospital care, for example, and in the Upton bill, the monkey 
wrench, they are even proposing that not only the people that 
have those policies but new people can buy those policies.
    And so what does that do? It means that the healthier 
people, it means that the younger people can buy these skeletal 
catastrophic policies that they may not even be aware of what 
is covered, and then the insurance pool is broken, and prices 
go up for everyone else. And the problem right now 
unfortunately is that we have this Web site that doesn't work, 
and a lot of people, when their policies are canceled by the 
insurance companies, not by the Affordable Care Act, don't 
realize that they have a place to go where they can find a 
better policy for an affordable price--because the Web site is 
not working.
    So, again, we have to fix the Web site. I appreciate the 
fact that Dr. Burgess said that it will be fixed. He has got 
the confidence that it will be fixed, but, again, the problem 
here is that, again, this subcommittee is really not having an 
oversight or implementation hearing. I think it is quite clear 
from what has already been said by my Republican colleagues 
that they just think Obamacare or the Affordable Care Act 
should be repealed, and you know, we cannot go down that road 
because it is providing help for so many Americans, and the 
Republicans have no alternative. They never have, and that is 
my biggest criticism of all of you on the other side. I never 
hear the alternative.
    Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize the chairman of the full committee, Mr. 
Upton, for 5 minutes for an opening statement.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman.
    You know, since 2009, this committee and the Congress has 
vigorously debated the consequences of the President's 
healthcare law and what it would mean for patients and families 
across the country. These past 45 days have provided a 
disturbing glimpse of what reality looks like under the 
President's healthcare bill. Millions of Americans are losing 
their private, affordable coverage, premiums are skyrocketing, 
Medicaid is enduring an untenable expansion to burden it from 
its core mission, and a Web site continues to frustrate 
Americans online and will continue to do so probably long after 
the November 30 date that the Secretary told us just 2 weeks 
ago would work.
    The results correctly described in recent news reports have 
been nothing short of disastrous. Enrollment figures finally 
released just yesterday underscore some of the law's most 
significant issues as well as fundamental broken promises. 
Fifty times as many folks are receiving cancellation notices 
than are even selecting a plan on healthcare.gov, and nearly 80 
percent of this first figures are Medicaid dependents, an 
ominous forecast of what is in store for the program originally 
designed to assist those Americans most in need of the helping 
hand. In other words, the most vulnerable.
    And for those with health plans, premiums are skyrocketing 
across the country. In my State, Michigan, residents face an 
estimated almost 70 percent average increase in the individual 
market under the President's healthcare law. That isn't 
healthcare reform. That is not what the American people were 
promised.
    While the broken Web site continues to define the first 
weeks and months of open enrollment, the law itself has been 
constructed on a series of broken promises. Regardless of 
whether or when the computer glitches are fixed, the law's 
problems run even deeper. The broken promises of, if you like 
your plan, you can keep it, period, and the premiums would go 
down an average of $2,500 are causing unneeded worry, anxiety, 
and hardship for households across the country. Cancellations 
today, sticker shock tomorrow.
    Sadly, the news probably is only going to get worse. 
Cancellations stem far beyond 5 percent of Americans that the 
President claims are affected by his broken promise. Many 
workers with employer-sponsored insurance have learned or will 
soon learn that the President's healthcare law is going to take 
away their coverage as well.
    So beyond these broken promises the law's Medicaid 
Expansion threatens our commitment to the Nation's most 
vulnerable, potentially adding 26 million Americans to its 
roster, further straining the important safety net program.
    So the first days of the healthcare law have caused many 
Americans to lose faith in their government, revealing the ugly 
truth of what Washington-driven, big-government healthcare can 
look like.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    Since 2009, this committee and the Congress has vigorously 
debated the consequences of the president's health care law and 
what it would mean for patients and families across the 
country. These past 45 days have provided a disturbing glimpse 
of what reality looks like under the Affordable Care Act--
millions of Americans are losing their private, affordable 
coverage, premiums are skyrocketing, Medicaid is enduring an 
untenable expansion diverting it from its core mission, and a 
Web site continues to frustrate Americans online, and will 
continue to do so long after November 30. The results, 
correctly described in recent news reports, have been ``nothing 
short of disastrous.''
    Enrollment figures finally released just yesterday 
underscore some of the law's most significant issues as well as 
a fundamental broken promise. Fifty times as many folks are 
receiving cancellation notices than are even selecting a plan 
on HealthCare.gov. And nearly 80 percent of these first figures 
are Medicaid-dependents, an ominous forecast of what's in store 
for the program originally designed to assist those Americans 
most in need of a helping hand.
    And for those with health plans, premiums are skyrocketing 
across the country. In my home State of Michigan, residents 
face an estimated 69% average increase in the individual market 
under the Affordable Care Act.
    This is not health care reform. This is not what the 
American people were promised. While the broken Web site 
continues to define the first weeks and months of open 
enrollment, the law itself has been constructed on a series of 
broken promises.
    Regardless of whether or when the computer glitches are 
fixed, the law's problems run much deeper. The broken promises 
of ``if you like your plan, you can keep it, period,'' and that 
premiums would go down an average of $2,500 are causing 
unneeded worry, anxiety, and hardship for households across the 
country. Cancellations today, sticker shock tomorrow.
    Sadly, the news is only going to get worse. Cancellations 
stem far beyond the 5 percent of Americans that the president 
claims are affected by his broken promise. Many workers with 
employer-sponsored insurance have learned or will soon learn 
the ACA is going to take away their coverage as well.
    Beyond these broken promises, the law's Medicaid expansion 
threatens our commitment to the Nation's most vulnerable, 
potentially adding 26 million Americans to its rosters, further 
straining the important safety net program
    The first days of the health law have caused many Americans 
to lose faith in their government, revealing the ugly truth of 
what Washington-driven, big government health care can look 
like.

    Mr. Upton. I yield the balance of my time to Mr. Terry.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. Thank you, Chairman Upton, and I appreciate you 
yielding, and this is an issue of trust, and basically if we 
can't trust the administration to create and run a Web site, 
how can we trust them with the big issues of running our 
healthcare? We have heard you can have your insurance, keep 
your insurance if you want it. We have heard that this will be 
the most open and transparent administration, but those have 
been violated. Just a week or two ago when Secretary Sebelius 
responded to my question about information about who was 
entering or how many had entered, we were told she could not 
give us that number because the numbers were unreliable. Well, 
they had the numbers. It was just that they didn't have their 
story straight.
    Now, she did release the numbers yesterday. We learned that 
338 Nebraskans signed up. We learned that there were a total of 
106,000 that signed up, most of them for Medicare expansion. We 
are being told it was 700,000, including a press conference or 
a press call right after the hearing last week.
    So my bill restores that trust. We have insurance 
commissioners in every State to which the administration has 
not communicated with. So this bill is simple. It provides 
information to the decision makers, the insurance commissioners 
and governors' office of each State. It requires a State-by-
State breakdown of that data. This is not a partisan bill. It 
will keep insurance commissioners at the State level and the 
American people involved in this Act, and they will be able to 
sort through the details, and that will help regain the trust.
    And I yield back.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pitts. The Chair thanks the gentleman.
    I now recognize the ranking member of the full committee, 
Mr. Waxman, for 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 Affordable Care Act has always aroused strong passions 
among opponents and defenders of the law, and as a supporter of 
the law, I see it as part of one of my core missions in public 
life; to help every American get access to quality healthcare 
regardless of his or her income or background. It is about 
fairness, justice, and compassion.
    The Republican obsession with thwarting the law has always 
puzzled me because the law is premised on three fundamentally 
conservative notions; lowering healthcare costs, individual 
responsibility to have coverage, and the private health 
insurance market. Making sure that every American has health 
coverage was once a favorite policy of the Conservative 
Heritage Foundation. It was meant to insure that people take 
responsibility for their own health costs rather than forcing 
them onto everybody else.
    Because of the Affordable Care Act millions of Americans 
who would have gone uninsured will have coverage. Just 
yesterday we learned that 1.5 million people have already 
applied for coverage, a faster pace than Massachusetts when 
they enacted a very similar law. Even with all the technical 
problems we have had, people are getting access to insurance. 
In my State nearly 400,000 people have begun applications in 
just the first month.
    These are significant signs of progress. They show we are 
on our way to dramatically expanding health insurance coverage 
in this Nation.
    The law is also slowing the growth in healthcare costs. All 
healthcare costs. Due to the law's sensible reforms, hospital 
readmissions are down 10 percent in the Medicare Program since 
2011. Hundreds of providers are now joining Affordable Care 
organizations, putting us on the path to pay for the quality of 
healthcare, not just the quantity of care, and we have seen 
health costs grow at their slowest rate in 50 years.
    Reform is working. However, it is obvious to all that there 
are great challenges when a program like this gets going. Too 
many Americans have gotten worrisome letters from their 
insurers. These letters can give the misleading impression that 
people will be left without any insurance coverage starting 
January 1, and the Federal Web site is not working well. So 
many people don't yet know what options they have.
    But here are the facts. Americans who have insurance 
through their employers or Medicare or Medicaid will keep their 
current coverage, and those who buy new plans on the exchange 
will often get better plans at a lower cost. The 240 million 
people with employer coverage or coverage through a public 
program will not see significant changes next year because of 
the ACA. Within the much-smaller individual insurance market, 
nearly 5 million people will be eligible for a tax credit worth 
an average of $5,000, which will lower their out-of-pocket 
costs. Over one million more people will be eligible for 
Medicaid, which means additional savings.
    Millions more will finally get a good deal on quality 
coverage. No one can be denied coverage because of a pre-
existing condition. No one can see higher rates because they 
have been sick. No one can see their rates go up if they do get 
sick. No one will run up against an annual coverage limit or 
realize too late that their plan doesn't cover key benefits. 
That is the status quo the Republicans want to continue. These 
insurers' abuses.
    Tomorrow the House will vote on a bill that would 
jeopardize all of these reforms. It would send us back to a 
world where insurers can offer plans that provide no real 
protections or exclude people based on pre-existing conditions. 
Under the Republican bill insurers could cherry pick the best 
risks and destabilize the insurance market for everyone else.
    I know that a transition to a more fair and stable 
marketplace may not always be easy, but we cannot go back to 
the discriminatory, inefficient market we have had before.
    I look forward to hearing from Professor Corlette and 
Reverend Dixon Hill about the progress we have made and why we 
cannot turn back now.
    Thank you, Mr. Chairman.
    Mr. Pitts. The chairman thanks the gentleman.
    On our panel today we have five witnesses, and I will 
introduce them at this time.
    First, the Honorable Mike Astrue, former Commissioner, 
Social Security Administration, Mr. Avik Roy, Senior Fellow, 
Manhattan Institute for Policy Research, Ms. Sabrina Corlette, 
Research Professor, Health Policy Institute, Georgetown 
University, Reverend Marilyn Dixon Hill, Registered Nurse and 
Clergyperson, Camden Bible Tabernacle, and I would like to 
yield 30 seconds to Congresswoman McMorris Rodgers to introduce 
our last witness.
    Mrs. McMorris Rodgers. Thank you, Mr. Chairman.
    It is my great pleasure to introduce one of our witnesses 
today, Dr. Roger Stark. He is a surgeon from my home State, 
Washington, and has been seeing firsthand the impact of the 
implementation of Obamacare as it is crowding out private 
insurance, both in Washington State and across our country. He 
is a cornhusker, graduating from the University of Nebraska, 
College of Medicine, completed post-graduate training at the 
University of Utah, Virginia Mason Medical Center and the 
University of Washington. He is a member of Alpha Omega Alpha, 
a national medical honorary society, and in addition, he has 
devoted many years to the study of healthcare policy and 
currently serves as the healthcare policy analyst at the 
Washington Policy Center, which is an independent, non-profit, 
non-partisan healthcare think tank located in Washington State.
    So I thank Dr. Stark for being here today.
    Mr. Pitts. The Chair thanks the gentlelady.
    Thank you all for coming. You will have 5 minutes to 
summarize your testimony. Your written testimony will be 
entered into the record, and at this point I would like to 
recognize the Honorable Astrue for his opening statement.

 STATEMENTS OF MICHAEL J. ASTRUE, FORMER COMMISSIONER, SOCIAL 
  SECURITY ADMINISTRATION; AVIK ROY, SENIOR FELLOW, MANHATTAN 
    INSTITUTE FOR POLICY RESEARCH; SABRINA CORLETTE, SENIOR 
 RESEARCH FELLOW, CENTER ON HEALTH POLICY REFORMS, GEORGETOWN 
    UNIVERSITY HEALTH POLICY INSTITUTE; MARILYN DIXON HILL, 
  ASSOCIATE PASTOR, CAMDEN BIBLE TABERNACLE; AND ROGER STARK, 
      HEALTH CARE POLICY ANALYST, WASHINGTON POLICY CENTER

                 STATEMENT OF MICHAEL J. ASTRUE

    Mr. Astrue. Chairman Pitts, Ranking Member Pallone, members 
of the subcommittee, thank you for this opportunity to testify 
today.
    I am a former HHS General Counsel and Commissioner of 
Social Security. In the latter capacity I also served as a 
Trustee of the Social Security and Medicare Trust Funds. As 
Commissioner I oversaw the replacement and expansion of most 
parts of Social Security's highly-rated suite of electronic 
services. That work included complex projects, including 
electronic services for filing for retirement, disability, and 
Medicare.
    To reduce the hearings backlog, we built a fully-electronic 
system so representatives could access status reports directly 
and conduct video hearings from their own offices. We 
introduced novel services such as online filing in Spanish and 
a NIST Level III service for supplying online earning 
statements. The agency is now rolling out a massive state-of-
the-art IT system for the 54 State and territorial disability 
determination agencies.
    During my watch we worked with HHS on several new programs 
under the Affordable Care Act, most notably the healthcare 
exchanges. I have seen attempts to blame its so-called glitches 
on silly explanations ranging from enthusiasm for the exchanges 
to the policies of Ronald Reagan. The simple truth is that HHS 
mismanaged the process, failure was not inevitable, it was 
achieved.
    Former Administrator Berwick failed to put in place the 
basic assignments, goals, and systems of accountability 
necessary to manage a project of this scope. There was no full-
time senior project manager, there were no bi-weekly or monthly 
team meetings with Berwick, and there were no specifications 
for most major parts of the system at the point where he left 
office. HHS made little progress on Berwick's watch.
    By the time Marilyn Tavenner became Acting Administrator, 
it was common knowledge inside the Executive Branch that HHS 
was compromising quality in order to meet last month's 
deadline. Decisions started to be made but were made in a 
disjointed and siloed fashion. Senior executives began to 
express confidence that support for the Affordable Care Act was 
so strong that they would be able to fix the problems of the 
exchanges after the launch.
    Lack of transparency during this time period helped to doom 
the system. The small doses of accountability that come from 
demonstrating your work to experts, colleagues, and other 
agencies and advocacy groups did not occur with this project.
    It is also important to understand that our statutory 
watchdog, HHS Inspector General Daniel Levinson, undermined 
transparency during this critical period. His auditors, who 
should have been alerting Congress and the public about the 
chaos at HHS, did nothing. His sole contribution was a four and 
a half page analysis on August 2 of this year that can be 
summarized as, HHS tells us that everything will be fine.
    Since that time the Congressional testimony of Levinson's 
representatives has been smug and unhelpful. I challenge you to 
read the list of Inspector General audit reports for this year 
and to identify just one report that you wouldn't trade for a 
thorough audit of the functionality and security of the 
exchanges. In short, good government requires a new Inspector 
General.
    If the Inspector General had done his job properly, 
President Obama and his advisors would know that asking Jeffrey 
Zients, an able public servant, to fix the exchanges in just 1 
month is a recipe for failure. While I believe functionality 
may improve in the coming months, this frantic effort to make 
thousands of adjustments does not leave Mr. Zients with enough 
time to make or test changes, which cannot be done in isolation 
but which must be tested as a whole. Anyone with experience in 
building these kinds of systems knows that even minor changes 
in one part of a system can cause major unexpected problems in 
seemingly unrelated parts of the system. The so-called IT surge 
is a mistake that will compound past mistakes. The work should 
not drive the schedule. The schedule should drive the work.
    These past mistakes are even dragging down State exchanges 
that were working before October 1. In Massachusetts where I 
live we operated a seamless exchange before the passage of the 
Affordable Care Act, however, now according to the Boston 
Herald, once it was linked to the Federal hub, it began 
requiring that some applicants identified themselves as inmates 
or mental patients, people with hyphenated names, 
disproportionately women, are being denied service. Only 549 of 
the 150,000 people being denied insurance coverage through the 
Affordable Care Act have registered for a policy, and none of 
these people in Massachusetts have insurance yet.
    A true fix is impossible in 1 month because the shortcuts 
taken to meet the October 1 deadline abandoned the usual cyber 
security defenses. Extensive unencrypted data flowing from the 
so-called, ``cloud,'' through the exchanges makes it a hacker's 
dream. CNN and others have hired hackers who have easily 
penetrated the system and obtained sensitive, personal 
information, including answers to security questions commonly 
used by banks, brokerages, and medical institutions.
    I believe painful breaches of the HHS Systems are just a 
matter of time, and that a true fix cannot happen quickly or 
cheaply. Primarily for that reason, Americans will increasingly 
hesitate to use the exchanges. We should stop demanding 
shortcuts. Instead, we should insist on greater transparency, 
greater candor, greater respect for the privacy of Americans, 
and greater technical competence.
    Thank you.
    [The prepared statement of Mr. Astrue follows:]

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    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes Mr. Roy, 5 minutes for an opening statement.

                     STATEMENT OF AVIK ROY

    Mr. Roy. Chairman Pitts, Ranking Member Pallone, and 
members of the Health Subcommittee, thanks for inviting me to 
speak with you today about the Affordable Care Act.
    My name is Avik Roy, and I am a Senior Fellow with the 
Manhattan Institute for Policy Research, in which capacity I 
conduct research on healthcare and entitlement reform.
    I am advocate of market-based universal coverage. I believe 
that the wealthiest country in the world can and should strive 
to protect every American from financial ruin due to injury or 
illness. Furthermore, I believe that well-designed, subsidized 
insurance marketplaces are among the most attractive vehicles 
for achieving these goals.
    It is for these reasons that I am deeply concerned about 
the way in which the ACA's insurance exchanges have been 
designed and implemented. Most of all, I am concerned that the 
law will drive up the cost of health insurance, especially for 
people who shop for coverage on their own.
    As you know, the ACA makes substantial changes to the 
individual health insurance market. The law broadly bars 
insurers from charging different rates to the sick and to the 
healthy and requires insurers to raise rates on younger 
individuals in order to partially subsidize coverage for the 
old. It mandates that insurers cover a broad range of services 
that individuals might not otherwise choose to purchase. The 
law taxes premiums, pharmaceuticals, and medical devices in a 
manner that has a net effect of increasing the cost of 
insurance.
    Earlier this month I and two colleagues at the Manhattan 
Institute completed the most comprehensive study to date of 
individual market premiums in 2014, relative to 2013. We 
examined the five least expensive plans available in the 
individual market for every county in the United States, 
averaged their premiums, and adjusted the result to take into 
account those who, due to pre-existing conditions, could not 
purchase insurance at those rates. We examined premiums for 27-
, 40-, and 64-year-old men and women. We then compared those 
rates to the comparable ones on the ACA exchanges.
    Our analysis found that the average State will see a 41 
percent increase in underlying premiums prior to the impact of 
subsidies. Among the States seeing large increases as North 
Carolina at 136 percent, Georgia at 92 percent, Michigan, 66 
percent, Louisiana, 53 percent, and Kentucky at 47 percent, and 
Illinois at 43 percent.
    Our analysis did find that eight States will see average 
premiums decrease under the law, including New York, a decline 
of 40 percent, and New Jersey, a decline of 19 percent.
    Of the six categories we studied, 27-year-old men face the 
steepest increases with an average hike of 77 percent. Forty-
year-old women see the mildest increases with an average of 18 
percent.
    We also studied the impact of the law's premium assistance 
payments on exchange premiums. Our analysis found that for 
individuals of average income taxpayer-funded insurance 
subsidies primarily flow to those nearing retirement. This is 
because the elderly will still pay more for insurance on 
average than younger individuals and because the subsidies are 
designed to fix the percentage of one's income devoted to 
paying for health insurance premiums. Taking subsidies into 
account, 64-year-old men will pay on average 19 percent less 
for insurance under the ACA System, whereas 27-year-old men 
will pay 41 percent more.
    The Manhattan Institute analysis indicates that we are, 
indeed, likely to see a fair amount of adverse selection on the 
exchanges. People who consume an above-average amount of 
healthcare services such as sick or older individuals, have a 
compelling economic incentive to enroll in the ACA 
marketplaces. Healthier and younger individuals have less of an 
incentive, even when one takes the individual mandate into 
account.
    While many in the press are focused on the exchange 
enrollment figures that HHS released yesterday, what is more 
important than the number of people who enroll in the exchanges 
is the composition of the people who enroll in the exchanges. 
This will give us a sense of whether or not marketplace 
premiums are likely to further increase in 2015, and 2016, 
exacerbating the problem of adverse selection.
    Our analysis did not directly examine the degree to which 
exchange-based plans have higher deductibles and narrower 
provider networks relative to plans available in 2013. There 
have been, however, many anecdotal reports of people paying 
higher premiums for plans with higher deductibles and narrower 
physician networks than the plans they previously enjoyed.
    It is not inherently a bad thing for individuals to choose 
plans with higher deductibles and narrower networks, especially 
if those choices allow Americans to reduce their monthly 
premiums. However, in the case of the ACA, many individuals are 
reporting higher premiums for less attractive health coverage.
    It would be one thing if the ACA was forcing Americans off 
their old health insurance policies and offering them more 
attractive plans at a lower price, but millions of Americans 
are likely to see less attractive coverage at a higher price. 
If they do, then the Affordable Care Act will not live up to 
its name, and its goal of near-universal coverage will remain 
unfulfilled.
    I look forward to your questions and to being of further 
assistance to this committee. Thank you.
    [The prepared statement of Mr. Roy follows:]

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    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize Ms. Corlette, 5 minutes for an opening 
statement.

                 STATEMENT OF SABRINA CORLETTE

    Ms. Corlette. Good morning, and thank you. My name is 
Sabrina Corlette, and I am a Senior Research Fellow at 
Georgetown University's Center on Health Insurance Reforms. In 
my testimony today I will focus on two issues; how the 
individual health insurance market works today for consumers 
and the recent spate of so-called policy cancellations.
    The ACA focuses its reforms on the individual market 
because of its well-documented systemic problems, which include 
a lack of access to coverage, unaffordable coverage, and 
inadequate coverage. Today 48 million Americans are uninsured, 
and 11 million have individual coverage. Those who buy 
insurance on their own can be self-employed entrepreneurs, 
farmers, and ranchers, early retirees, and young people aging 
off their parents' plans.
    What does this health insurance market look like for these 
folks, particularly those who are in less than perfect health? 
Prior to the ACA insurers managed costs through aggressive 
underwriting to deny coverage to people with pre-existing 
conditions. People with even minor health issues such as hay 
fever could be turned down, and many individuals, even if they 
are offered a policy, are charged more because of their health 
status, gender, or age. Even those who enter the market in 
perfect health can find that premiums become unaffordable over 
time.
    As for the adequacy of individual market coverage, it is 
generally abysmal. In many States insurers are permitted to 
permanently exclude from coverage any health problems that a 
consumer discloses, and many policies exclude, as a matter of 
course, critical benefits such as maternity, mental health, and 
prescription drugs. Individual policies also come with high 
deductibles. Ten thousand dollars or more is not uncommon. 
Individual policyholders report far more problems paying both 
premiums and out-of-pocket costs compared to people covered 
under group plans today.
    There has been a lot of attention lately on people with 
individual health insurance receiving policy cancellations from 
their insurance companies. First, having an insurance company 
cancel a policy is nothing new. Insurance companies have long 
been able to discontinue individual insurance policies when it 
is no longer in their business interest to maintain them. They 
have also long been able to hike premiums and modify coverage.
    Second, the ACA doesn't require insurers to drop policies. 
Rather, it requires individuals to have insurance that meets 
the basic minimum standards. Individuals who first purchased 
their policy after March 23, 2010, will be required to 
transition to new coverage that meets these standards.
    Anticipating the need for their policyholders to make this 
transition insurers have taken different approaches. Some have 
offered an opportunity to early renew so that policyholders can 
remain in their current coverage for up to one more year, some 
have notified policyholders they will need to transition to new 
coverage, and some have decided to discontinue some of their 
current policies at the end of this year and notified 
policyholders so they can take advantage of open enrollment on 
the exchanges.
    Had the exchange Web sites been operable on October 1, the 
reaction to insurer notices likely would have been much less 
dramatic than it has been. Consumers who received these notices 
have been justifiably alarmed, particularly when the insurer 
notice does not lay out all of their new coverage options or 
provide estimates of the subsidies for which millions will be 
eligible. Hopefully soon all the Web sites will be working so 
that consumers can see these new coverage options that will 
likely be a better value than anything they have been able to 
get on the individual market.
    Unfortunately, some policy proposals such as the bill 
introduced by Chairman Upton would actually make the problem 
worse. First, Mr. Upton's bill doesn't actually address the 
problem it purports to solve. Nothing in it prohibits insurers 
from discontinuing policies they don't want to maintain.
    Second, by segmenting the risk pool between the healthy and 
the less healthy, the bill will set up an insurance debt spiral 
resulting in higher premiums and less choice for millions of 
Americans.
    Mr. Chairman and members of this committee, the current 
health insurance market does not work for the people who need 
it the most. What we have had is a system of haves and have 
nots, and even if you have insurance, you still cannot have 
peace of mind because today's insurance market may offer low 
teaser rates to some, but it can't sustain affordability of 
coverage over time as people inevitably age or get sick.
    Instead, this market is likely to fail people just when 
they need their coverage the most. Congress recognized the 
fundamental injustice of the current system, and it enacted 
important reforms that over time will improve Americans' access 
to adequate and more affordable coverage.
    I look forward to your questions.
    [The prepared statement of Ms. Corlette follows:]

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    Mr. Pitts. The Chair thanks the gentlelady and now 
recognizes Reverend Dixon Hill. Five minutes for an opening 
statement.
    Do you want to turn on the mike, please, or pull it closer?
    Ms. Dixon Hill. Can you hear me?
    Mr. Pitts. That is good.

                STATEMENT OF MARILYN DIXON HILL

    Ms. Dixon Hill. Good morning. Chairman Pitts, Ranking 
Member Pallone, and members of the Health Subcommittee, thank 
you.
    My name is Reverent Marilyn Dixon Hill. I am a registered 
nurse for almost 30 years and currently serve as an associate 
pastor at Camden Bible Tabernacle Church in Camden, New Jersey. 
Camden has been my home for 40 years, and I am very active in 
the community, especially as a clergy leader with Camden 
Churches Organizing for People, CCOP, an affiliate of PICO 
National Network with more than 1,000 member institutions 
representing 1,000,000 families in 17 States and PICO is the 
fastest and growing network of faith-based community 
organizations in the country. Today I am here to share my story 
with you as a representative of PICO and the hundreds of 
thousands of people of faith who belong to our network.
    The value of people being able to access care is very real 
to me. That day, November 10, 2010, will be a day I will 
remember forever. On that day almost exactly 3 years ago I 
received what should have been a routine flu shot, but that 
shot ended up being anything but routine. Due to a very rare 
side effect I became completely paralyzed and nearly died. 
Although I have recovered somewhat, I am disabled and live with 
Guillain-Barre Syndrome.
    Although there are many lessons I learned from this 
challenging time in my life, the one that brings me here today 
was my first-hand experience with how broken our healthcare 
system was. When I was released from rehabilitation, that is, 
finally able to sit up and even stand for short periods of 
time, I discovered that I could not financially afford to 
continue my care. Paying for COBRA was too expensive, and my 
disability benefit was too high to qualify for Medicaid. In 
short, the very health insurance that would have made it 
possible for me to continue to rehabilitate and eventually 
enter back into the workforce was unavailable to me.
    I spent 2 years in this painful gap before finally 
qualifying for coverage through Medicare. Sadly, many going 
through health coverage challenges like this never made it to 
getting the care that they need, and that was the case for one 
of our congressional members, Ronald Butler, 56-year-old 
uninsured man who died from a brain tumor. Despite two trips to 
a hospital, Ronald's tumor went undetected until a week before 
he died, all because he didn't have health insurance.
    Truly, it is tragic for both Ronald and me to have such 
serious problems, but the real tragedy is it didn't have to be 
as painful, as terrifying, and isolating as it was. Our lives 
could have been improved, sustained, and in Ronald's case, even 
saved if he had received the care that he needed and ought to 
have had.
    My experience, echoed in the experiences of so many in 
Camden and throughout the United States, that is what motivated 
me to get involved in reforming our healthcare system, and my 
firm belief that we are all called to love one another and to 
care for one another inspires me every day to ensure that 
everyone has access to the affordable care that they need.
    Now with the Healthcare Act being fully implemented, my 
community and communities like mine across America are 
mobilizing to bring affordable care to the people who need it 
most. We are bringing enrollment opportunities to our 
congregations, to food pantries, schools, and our neighborhood 
because we know there is a hunger and a deep need for health 
insurance. Accessing affordable care strengthens our 
communities. It helps us thrive, and it is good, sound 
economics for our countries.
    The ACA implementation Medicaid enrollment is up. Yes, we 
expected that. It shows that the bill got it right and is 
working to get people living without health insurance the 
coverage that they need.
    October the 24th in Camden alone the Camden County Board of 
Social Services received 609 direct applications, at least 134 
of which would not have been eligible for Medicaid.
    Secondly, we know from our lived experiences and 
substantial research that a healthier society is a more 
productive society. Look no further than my own story. My lack 
of access to affordable care prevented my full rehabilitation 
and return to working as a nurse.
    Mr. Chair, Ranking Member Pallone, and members of the 
Health Subcommittee, access to affordable healthcare saves 
lives, supports communities and families, and helps communities 
thrive. For we are all our brother's keeper.
    Thank you for your time today and the opportunity to speak 
with you.
    [The prepared statement of Ms. Dixon Hill follows:]

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    Mr. Pitts. The Chair thanks the gentlelady.
    I now recognize Dr. Stark, 5 minutes for an opening 
statement.

                    STATEMENT OF ROGER STARK

    Mr. Stark. Good morning. Chairman Pitts, Ranking Member 
Pallone.
    Mr. Pitts. Pull the mike towards you a little bit.
    Mr. Stark. Good morning, Chairman Pitts, Ranking Member 
Pallone, members. I thank you for the opportunity this morning 
to testify before your subcommittee.
    Washington State has been very proactive about establishing 
a State health insurance exchange and about expanding our 
Medicaid Program as allowed by the Affordable Care Act. Our 
State exchange opened for enrollment on October 1. We 
anticipate that ultimately we will see 320,000 to 400,000 
enrollees in the new expanded Medicaid Program.
    As of October 31 our exchange had a total of 105,000 
applicants with 70,000 of these in the new Medicaid Program. 
This represents 67 percent of the total. Of these applicants 
55,000 completed the enrollment process with 48,000 of these 
completions in the new Medicaid. This represents 87 percent of 
the total. In other words almost 90 percent of completed 
applications were done in the new Medicaid Program where no 
upfront premium fee is required.
    Although the ACA is written such that State taxpayers will 
eventually pay only 10 percent of the cost of the new Medicaid, 
it should be noted that State taxpayers are also Federal 
taxpayers. Medicaid is a pay-as-you-go entitlement. Therefore, 
Washington State taxpayers will ultimately pay for essentially 
the entire cost of the new Medicaid in our State, which is 
estimated to be 17 to $22 billion depending on enrollment over 
10 years.
    The ultimate consequence of this broad expansion of 
government into healthcare has been to crowd out private 
insurance. Over 20 percent of adults and 27 percent of children 
in the existing Medicaid already had private insurance at the 
time they enrolled. As Medicaid has expanded, it is now 
estimated that up to one-half of current new enrollees already 
have private coverage.
    As employers, especially in low-wage industries, drop 
employee health benefits, this crowd-out effect will only get 
worse in the expanded Medicaid. There is also the phenomenon of 
the welcome mat or woodwork effect, and this is real because of 
increasing advertising, increasing public relation, patients 
who qualify for the existing Medicaid Program will potentially 
enroll in large numbers.
    The Urban Institute looked at this on a State-by-State 
basis, and for Washington State they estimate that 545,000 new 
enrollees will occur in our existing Medicaid Program. This 
will be at a cost of $14 billion to the State of Washington 
taxpayers over 10 years.
    In 2008, Oregon officials created the perfect test case on 
the effectiveness of Medicaid in providing healthcare. This had 
been a controlled, randomized study of people with and without 
Medicaid. The New England Journal of Medicine recently reported 
the results. It turns out that being put on Medicaid does not 
improve health outcomes, nor does it improve mortality 
statistics compared to having no health insurance coverage at 
all.
    Medicaid is an extremely inefficient program, and 
reimbursement for doctors and other providers is about one half 
of what private insurance pays for the same services. Doctors 
are not able to pay their own overhead with these low payment 
rates, and consequently, our existing Medicaid patients have 
trouble accessing healthcare.
    The Washington State Medical Association recently found 
that 18 percent of primary care providers had dropped all 
Medicaid patients and 24 percent were not taking new Medicaid 
patients because of poor provider reimbursement. Getting access 
to healthcare is a significant problem for people in the 
existing Medicaid Program in our State.
    Like any entitlement program, Medicaid encourages 
overutilization. The tragic irony is that because of low 
provider reimbursements access for patients is severely 
limited. All Medicaid patients by definition have health 
insurance, but just having health insurance does not guarantee 
one will receive healthcare services.
    Another tragedy is that after more than 40 years there is 
no evidence Medicaid has improved health outcomes for the vast 
majority of either children or adults enrolled in the program.
    In conclusion, limited public safety net programs will 
always be needed to provide healthcare for the poorest and most 
vulnerable people in our society, however, the bloated and 
expanding Medicaid Entitlement Program, as it is presently 
structured, is not sustainable. Even though the new program 
will be funded by Federal taxpayers, costs will explode just as 
we have seen since 1965.
    Thank you very much, and I look forward to your questions.
    [The prepared statement of Mr. Stark follows:]

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    Mr. Pitts. The Chair thanks the gentleman. That concludes 
the opening statements. We will now go to questions and 
answers, and I will recognize myself 5 minutes for that 
purpose.
    Mr. Roy, President Obama recently apologized to Americans 
in the individual market losing their current health coverage 
because of the Affordable Care Act. During a statement the 
President asserted that his broken promise would affect only a 
small portion of individuals, specifically stating that, ``We 
are talking about 5 percent of the population.''
    Do you believe the President is being truthful when he 
states only 5 percent of the population will be affected by his 
broken, if you like your health plan, you can keep it, promise?
    Mr. Roy. No, I don't believe that the President was making 
an accurate statement because people in the employer-sponsored 
market in particular will also see rate increases because of 
the ACA's----
    Mr. Pitts. That was my follow-up question. Did the 
Affordable Care Act grandfathering regulation issued in the 
summer of 2010, contain any estimates for the number of 
Americans with employer-sponsored coverage that would lose 
grandfathered status?
    Mr. Roy. In June of 2010 the Executive Branch estimated 
that 51 percent of employer-sponsored plans would lose 
grandfathering coverage. If you add that to the total of people 
who are also losing grandfathering coverage in the individual 
market, the total is 93 million Americans.
    Mr. Pitts. Recently I received an e-mail from a constituent 
in Lancaster County, Nancy Soloff, who is trying to help a 
small business with four employees find affordable health 
coverage. Their small business received a cancelation notice 
stating that, ``Enclosed you will find the January 1, 2014, 
renewal information for your group coverage. Please note that 
due to requirements of the Affordable Care Act your current 
benefit plan will no longer be available.''
    She went on to say, ``In the news reports about the plans 
being eliminated they are only mentioning the individual plans. 
This is not true. Group plans are also being eliminated due to 
requirements of the Affordable Care Act.''
    Would it be fair to say that the President's promise of if 
you like your healthcare plan you can keep your health plan, 
won't be true for the tens of millions of Americans with 
employer-sponsored insurance like the workers in Lancaster 
County that I just mentioned?
    Mr. Roy. I believe that would be a fair statement. Yes.
    Mr. Pitts. Dr. Stark, looking ahead, States will have to 
weigh any decision to expand their Medicaid Programs against 
existing financial pressure to meet other State priorities such 
as education, economic development, public safety.
    In addition, they must balance the pressure to better serve 
their existing Medicaid enrollees before over-expanding. 
Governors and legislators must recognize that every Medicaid 
dollar spent on an able-bodied, childless adult in the 
expansion population is potentially a future dollar diverted 
from the poorest and sickest children and seniors enrolled 
currently.
    My home State of Pennsylvania is grappling with these 
questions now as they negotiate with CMS for greater 
flexibility to manage their program costs before an expansion.
    What advice would you give the States who have waited to 
expand but will certainly be forced with this question again in 
their 2015 budget negotiations?
    Mr. Stark. Well, I think each State has to look at their 
own individual situation, but clearly, expanding Medicaid on a 
State-by-State basis is still going to put a burden on the 
Federal Government. I think that States need to do is look at 
how they budget for their individual Medicaid Program and then 
allocate those dollars as wisely as they possibly can.
    What we have seen over the last 45 years, 47 years in the 
Medicaid Program is it has grown dramatically such that it is 
now one of the top three budget items for every State in the 
country. In the State of Washington it is number two behind K 
through 12 education. So this clearly is a very impacting sort 
of impactful issue.
    Mr. Pitts. Thank you. Commissioner Astrue, in your role as 
commissioner of Social Security Administration, you oversaw the 
replacement and expansion of the Social Security 
Administration's highly-ranked suite of electronic services, 
which included electronic services for retirement disability 
and Medicare.
    Can you give us an overview of these projects, explain the 
process and the collaboration which occurred, how did the 
process and collaboration of the Affordable Care Act differ 
from your past projects?
    Mr. Astrue. Thank you, Mr. Chairman. I think that is a good 
question. I think for a project as important as this one 
responsibility starts at the top. That did not happen at CMS, 
and although it is not glamorous and you don't get credit in 
the Washington Post for it, the leader of the agency has to sit 
down with a strongly-empowered team leader on a regular basis 
and go over what is the progress, what is the goal, what is the 
timeframe, and slog through it every 2 weeks, every 4 weeks 
until it is done, and that is what I did at Social Security, 
and we did a dozen of these major projects on my watch. And 
that way you have flow of information, you have your other team 
members there, you create an environment where people volunteer 
what the problems are, and you support the people who raise the 
problems, you deal with the problems early, and that is how you 
have success down the road.
    Unfortunately, the CMS Plan is kind of like an NFL team 
showed up, and they said, well, you are all professionals, you 
all want to win the game, here is your play book, let's show up 
3 days before the first game, and you can't win that way. And 
at CMS and HHS proper what didn't happen with those basic 
management techniques to get this kind of project done, and I 
think it is unfair to blame the contractors, blame the 
procurement process. Are there problems here? Yes. Did I 
sometimes have frustrations with some of those things? Yes, but 
are they a major part of the problem? No. The buck stops with 
the people who run the agency, and the political appointees do 
a disservice to the civil servants when they put all the blame 
on the civil servants, which isn't fair as well.
    Mr. Pitts. Thank you. My time has expired.
    I now recognize the ranking member for 5 minutes for 
questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    I guess I shouldn't be surprised that the Republicans are 
showing their true colors today and basically attacking 
Medicaid, but I think this whole thing is very ideologically 
driven. They don't like Medicaid, they don't want to expand 
Medicaid. I don't want to put words in their mouth, but some of 
them might even want to abolish Medicaid, and you know, 
Reverend Hill, I just wanted to thank you for your testimony 
about your struggles with the healthcare system and your 
efforts to help others get coverage, but one thing that is so 
frustrating about much of our discussion in this subcommittee 
is that we can't seem to agree on basic facts.
    For example, we don't seem to agree on whether people 
signing up for coverage is a good thing or a bad thing. Now, in 
the first month of enrollment almost 1.5 million people have 
applied for coverage, and of those, 27 percent, or about 
400,000 people, have been determined eligible for Medicaid for 
SCHIP, and this Medicaid enrollment is a good thing, not a bad 
thing. This is despite the fact that half the States haven't 
implemented Medicaid Expansion because of the intransigence of 
Republican governors. Again, ideologically based. Not 
practically based.
    I do have to say, though, that usually I am critical of 
Governor Christie, but I do appreciate the fact that he 
expanded Medicaid in New Jersey, which is what makes it 
possible for you to talk about it in a positive way because we 
do have it in New Jersey.
    But if individuals were eligible for Medicaid all along, it 
is a good thing that they finally enrolled. If they are newly 
eligible, that is a good thing, too. I don't think we should be 
disagreeing about people accessing benefits for which they are 
legally eligible.
    Despite Dr. Stark's testimony, key studies have shown that 
having any type of insurance, including Medicaid, is better 
than having no insurance at all. It increases access to care, 
gives people financial peace of mind. If they are moving into 
Medicaid from private coverage, they are doing it because they 
are getting better value, better quality, or both.
    You know, I bristle, Dr. Stark, when I hear you talk about 
this because taxpayers are paying when people are uninsured. 
They go to the hospital, they don't get care. You talk about 
overutilization. I would rather they go to the doctor, which is 
cheap, then they end up in the hospital which costs thousands 
of dollars. And so, yes, the taxpayers of the State are paying 
for it in some fashion, but they are going to be paying less in 
the long run because people get preventative care because they 
have coverage and they go to the doctor, and that is a good 
thing.
    So Dr. Hill, in your experiences, is getting people 
Medicaid coverage a bad thing, or does it help improve their 
health and financial security?
    Ms. Dixon Hill. Absolutely. When you have a patient that 
has insurance, they have a usual care source. So when they get 
sick, they can go and get care. If you are uninsured, you don't 
have a usual care source, and you are more likely to forego 
care, decide that I can't afford it, and end up in the 
hospital, which costs everybody money.
    Mr. Pallone. And, look, I will tell you again. If the 
Republicans think that--and Dr. Burgess said it that the 
reimbursement rate is too low and that is why doctors don't 
want to take Medicaid, then raise the reimbursement rate. I 
don't hear an alternative here other than abolish it. Nobody 
said abolish Medicaid, thankfully, but that is what it seems to 
be saying.
    Now, Professor Corlette, my Republican colleagues seem to 
think that, before reform, the individual health insurance 
market, the place where people go to buy coverage if they don't 
get it through their job, was a great place to be, but the fact 
is more than 50 percent of people left their coverage in this 
market after 1 year and over 80 percent left after 2 years, 
premiums could skyrocket if a person got sick, and many plans 
didn't cover key benefits like hospitalization. I was shocked 
to find out plans don't cover hospitalization. I mean, that is 
incredible.
    Anyway, would you just tell us about people's ability to 
access coverage next year compared to before reform, and what 
can you tell us about changes in the stability and quality of 
coverage in the individual market post-reform?
    Ms. Corlette. Sure. Thank you, Mr. Pallone, for the 
question.
    The individual market before the Affordable Care reforms go 
into full effect is an extremely inhospitable place. As 
Business Insider magazine said recently, it is a basket case. 
Nobody is in the individual market unless they are forced to be 
there because they are in-between jobs, or they are self-
employed, or they are an early retiree, and they haven't yet 
gained Medicare eligibility.
    It is a place where you can be denied health insurance 
because you have a pre-existing condition. In fact, the GAO has 
said that between 9 and 40 percent of applicants are denied 
because they have some kind of health issue. You can be rated 
up because you have a health condition, and if you are able to 
get coverage, many plans actually impose what is called an 
elimination rider on your coverage, meaning that any health 
condition that you come to the policy with is permanently 
excluded from your coverage.
    What is also common in this market is what are called 
teaser rates. So some healthy person might be offered a really 
low premium rate early on, but as that group of policyholders 
gets older and sicker, every year their health insurance 
premiums ratchet up and ratchet up to unsustainable rates. All 
of that will be prohibited under the Affordable Care Act so 
that you are guaranteed access to coverage, you are guaranteed 
no more discrimination because you have a health condition, and 
insurance companies will not be able to drop you or jack up 
your rates because you get older and sicker.
    Mr. Pitts. The Chair thanks the gentlelady.
    The Chair now recognizes the gentlelady from Tennessee, Ms. 
Blackburn, for 5 minutes for questions.
    Mrs. Blackburn. Thank you, Mr. Chairman. I want to thank 
all of you for being here.
    I just want to go down the line, Dr. Stark, I will start 
with you. Yes or no. Would you consider the healthcare.gov 
rollout to be a success or a failure?
    Mr. Pitts. Could you pull your mike up a little bit, 
Marsha? Thanks.
    Mrs. Blackburn. Sure.
    Mr. Stark. It is a failure.
    Mrs. Blackburn. Failure.
    Ms. Dixon Hill. I think that there are some glitches, but 
people are----
    Mrs. Blackburn. Pass or failure?
    Ms. Dixon Hill. Success.
    Mrs. Blackburn. Success. OK.
    Ms. Corlette. Congresswoman, I am a lawyer and an academic, 
and I am incapable of providing a one-word answer. I would say 
that it is a work in progress.
    Mrs. Blackburn. Get ready. He will ask you for a yes or no. 
So then you don't know whether, Ms. Corlette, it is a success 
or a failure?
    Ms. Corlette. The jury is still out, Congresswoman.
    Mrs. Blackburn. OK. The jury is still out.
    Mr. Roy. Failure.
    Mrs. Blackburn. Failure.
    Mr. Astrue. Failure.
    Mrs. Blackburn. Thank you. I appreciate that. Three are 
able to answer in one word. I will tell you, according to my 
constituents in Tennessee, this is an abysmal failure, and it 
is truly on display a lack of leadership, whether it be from 
this President, from those that were charged with implementing 
this, or those who were to deliver a final product. Whether it 
is the contractors or whatever, and while we don't blame rank 
and file employees, if you will, what we do is hold responsible 
those who were supposed to be in charge of this rollout.
    It is a failure. I think the American people know that this 
is a failure, and if we expect, if we say this is a success, 
then we are saying we don't expect a finished product delivered 
on time, delivered on budget, with exceptional qualities from 
those that are spending taxpayer money. Every penny that was 
spent on this is taxpayer money.
    So, no, it is not a success. In my opinion and that of my 
constituents it is an abysmal failure. It is a disservice to 
the American people, and it is a shame that the administration 
would have rolled this out without underpinning it properly.
    To my colleagues on the other side of the aisle that say we 
have no alternative, may I highlight for you, we have been 
offering alternatives and options for healthcare reform since 
2006, whether it is the SGR fix, across State line purchase of 
health insurance, portability, requiring insurance companies to 
be responsible, allowing individuals to have healthcare expense 
and insurance deductibility just like big businesses do, and 
Ms. Corlette, I have to tell you that you made the statement 
that no one chooses to be in the individual market unless 
forced to be there. I take exception to that.
    As a small business owner as so many of my constituents are 
small business owners, they choose to be able to purchase their 
health insurance, they choose to take control of their 
healthcare responsibilities. They think personal responsibility 
is a good thing, and because of the fact that there are 
millions of Americans who do like to be in the individual 
health insurance and small business health insurance 
marketplace, that is why we have seen health savings accounts 
have such an enormous popularity among the American people. It 
is an absolute shame that this President said if you like what 
you have, you can keep it. And I think the jury is still out as 
to whether or not he was a part of those conversations as 
whether or not to decide between the political and the policy 
ends if that could continue to be said.
    But it is incredibly unfortunate that he continued to say 
that, and I think it is unfortunate that those who were 
involved in this rollout never whispered to him that he might 
not want to be saying that. So whether it was his decision or 
bad staff work, I guess we will find that out later, but we on 
this side of the aisle do have patient-centered, patient-
centered different proposals that we are bringing forward and 
have been for many years.
    And I would be more than happy to submit those for the 
record, Mr. Chairman, if our colleagues would choose to read 
them and like to read them and maybe join us in supporting some 
of these or even supporting the delay of this or support Mr. 
Upton's bill to allow people to keep their plan if they could 
like to.
    I yield back.
    Mr. Pitts. The Chair thanks the gentlelady.
    I now recognize the ranking member of the full committee, 
Mr. Waxman, 5 minutes for questions.
    Mr. Waxman. Thank you, Mr. Chairman.
    I look forward to reading this proposal because we have 
worked on this issue for a very long time, and the Republicans 
wouldn't come forward with anything----
    Mrs. Blackburn. If the gentleman would yield.
    Mr. Waxman. No, the gentleman will not yield. They didn't 
come forward with any proposal at all. They even said they want 
to repeal the Affordable Care Act and replace it. They have 
never given us a replacement.
    Now, I want to ask the panel. If there were a system where 
nearly 50 million Americans could not get health insurance 
because they had pre-existing medical conditions and no one 
wanted to insure them, or they couldn't afford a policy, or 
they didn't have a policy that covered essential services, or 
that the drug costs were higher if they were no Medicare, or 
that an insurance company could increase their premium if they 
got sick, or that they were forced into personal bankruptcy 
because their healthcare bills were not covered and they have 
to pay for it, would you consider that system a success or a 
failure?
    Mr. Astrue?
    Mr. Astrue. I think----
    Mr. Waxman. Success or failure?
    Mr. Astrue. I have never been content with the American 
Healthcare System and----
    Mr. Waxman. OK. Mr. Roy, success or failure?
    Mr. Roy. It is not accurate to say 57 million people are 
denied insurance because of pre-existing conditions. It is only 
about----
    Mr. Waxman. Excuse me. You are incorrect. Nearly 50 million 
Americans do not have insurance----
    Mr. Roy. Not because of pre-existing conditions.
    Mr. Waxman [continuing]. Of what the existing system has 
been. Is that a success or a failure?
    Mr. Roy. The existing system is not a success, but it is 
not because insurance----
    Mr. Waxman. Excuse me. I don't want to hear your 
explanations about it. I want a one-word answer.
    Mr. Roy. It is because it is too expensive.
    Mr. Waxman. Ms. Corlette, Mr. Roy couldn't say whether it 
was a success or failure. He wanted to give me a whole diatribe 
about it. I want a one-word answer. Is the existing system 
where nearly 50 million Americans are uninsured a success or a 
failure?
    Ms. Corlette. Failure.
    Mr. Waxman. Reverend Hill?
    Ms. Dixon Hill. Failure.
    Mr. Waxman. Dr. Stark? One word. Success or failure or no 
opinion?
    Mr. Stark. The present system is broken.
    Mr. Waxman. Thank you very much. The present system is 
broken, and we try to fix this system. Now, the Affordable Care 
Act took a lot of these Republican ideas, private insurance 
companies, personal responsibility be covered, get insurance 
coverage, that insurance companies couldn't just go out and set 
these rules and rates that excluded people from coverage rather 
than spread the costs. That is what we need in an insurance 
system.
    Professor Corlette, tomorrow the House is going to vote on 
a bill that the Republicans are putting forward. It is 
misleadingly called Keep Your Health Plan Act. You are an 
expert in the health insurance market, so I would like to get 
your perspective on how this is going to affect premiums and 
the market generally.
    Here is what the bill would do. The bill would not require 
health insurers to allow individuals to keep their healthcare 
plans. It would not require the health insurers to other those 
plans. It would allow any health insurance plan for sale in 
2013, January, 2013, to be sold all through 2014. Wouldn't 
require that the plan be there, but it would allow people to 
buy it if it were there. These plans could remain in the market 
even if they exclude people based on pre-existing medical 
conditions, which means they are insuring people who are the 
least risky. The insurance company could impose these harsh 
limits on coverage or exclude key benefits like 
hospitalizations or mental health care.
    Just imagine. You buy a policy and then if you need to go 
the hospital, the plan is not going to cover you. And even 
though these plans do not meet the Affordable Care Act's 
consumer protection standards, these plans would not just be 
available to those who own them, but this bill would allow 
people to buy into them who didn't have coverage and now could 
choose that coverage.
    Give us some context. Prior to the reform people were 
always able to keep their insurance from year to year in the 
individual market, but the market or the plan could change 
dramatically from year to year. If this legislation became law, 
what type of impact would this have on the new health insurance 
marketplaces and on the premiums in 2015?
    Ms. Corlette. Thank you, Congressman. There is two issues 
with this bill. First of all, it doesn't solve the problem it 
purports to solve. It doesn't stop insurance companies from 
discontinuing policies if they choose to do so.
    The second issue is just as you point out, it will result 
in risk segmentation. It will mean that healthy people get 
carved out of the regular marketplace into these old 2013, 
plans. That will lead to an increase in premiums for 2015, as 
well as fewer choices for the millions of Americans on the 
exchange as insurance companies leave that market because it 
will result in what is called an insurance death spiral or 
adverse selection against the----
    Mr. Waxman. The Republicans oppose this law, they fought it 
every step of the way, they thought that the Court would throw 
it out, they thought the American people would elect a 
Republican for President, and we have voted over 40 times to 
repeal the law, and now they are carrying on again----
    Mr. Pitts. The gentleman's time has expired.
    Mr. Waxman [continuing]. Trying to attack the opportunity 
to cover Americans in private health insurance plans.
    Mr. Pitts. The gentleman's time has expired.
    The Chair recognizes the chair emeritus of the full 
committee, Mr. Barton, 5 minutes for questions.
    Mr. Barton. Thank you, Mr. Chairman.
    Let's try before I ask some questions set the record 
straight a little bit.
    Most of what we now call the Affordable Care Act came 
through this committee. Chairman Waxman was the full committee 
chairman and Congressman Pallone was the subcommittee chairman. 
So for better or worse, they deserve the lion's share of the 
authorship for this law, and at full committee the Republicans 
did offer an alternative, and I believe on the floor we offered 
an alternative. I know we offered a motion to recommit. So it 
is not correct to say that we didn't have an alternative. We 
did. It wasn't successfully voted on, but it was offered.
    As we sit there today the Republican Study Committee has an 
alternative, and I think in fairly short order Dr. Murphy, Dr. 
Gingrey, Dr. Cassidy, and Dr. Burgess with the help of the 
subcommittee chairman, Mr. Pitts, could put a very good 
alternative together in probably 2 or 3 days.
    So if all the Democrats need to move away from the 
Affordable Care Act is a Republican alternative, I believe we 
can accomplish that in fairly short order.
    Mr. Waxman. Will the gentleman yield? Will this plan 
protect people from being discriminated against because of 
previous medical conditions?
    Mr. Barton. I think the----
    Mr. Waxman. Would it stop insurance companies from setting 
lifetime limits and raising rates? Would it cover people who 
can't afford to pay for their coverage?
    Mr. Barton. I would say yes, yes, and yes.
    Mr. Waxman. I want to see that plan, because it wasn't 
offered when I was chairman.
    Mr. Barton. Well, when you were chairman, you didn't give 
us a chance to work together on a bipartisan basis, Mr. 
Chairman, and that is a fact.
    Mr. Waxman. You know better than that.
    Mr. Barton. No, I don't.
    Mr. Waxman. You know better than that.
    Mr. Barton. True story. The day the Democrats introduced 
their bill we were supposed to have a brown bag lunch hosted by 
myself and Mr. Waxman. About 2 hours before the lunch, Mr. 
Waxman called me and said he was going to have to postpone the 
lunch. When I asked why, he said because we are introducing our 
bill. Now, that is the truth, Henry, and you know that. That is 
the truth.
    Mr. Waxman. That wasn't the end of time for working 
together. That was putting out our proposal. We----
    Mr. Barton. You did tell me we could cosponsor the bill if 
we wanted to.
    Mr. Waxman. I doubt that I said that.
    Mr. Barton. You did. You said you can still cosponsor the 
bill.
    Mr. Waxman. You still can support the legislation because 
it is a good proposal. It is not being implemented well on 
the----
    Mr. Barton. It is so good that 106,000 people are trying 
to----
    Mr. Waxman. And a lot of people are unhappy about losing 
their insurance, and we got to try to deal with that----
    Mr. Pitts. Mr. Barton----
    Mr. Waxman [continuing]. And not undermine the whole law.
    Mr. Barton. In my State of Texas, according to figures 
provided to me by Dr. Burgess, who is a very good researcher, 
less than 3,000 people signed up for the Affordable Care Act. I 
will give Chairman Waxman credit. California is responsible for 
a third of the signups. A third. So that is what, 33,000, 
34,000 people, but in the next two most popular States, Florida 
and Texas combined, fewer than 6,500 people have signed up.
    Mr. Waxman. There will still be time.
    Mr. Barton. Now, if this law is so good, then lots more 
people than that would be signing up. I have a bill that hasn't 
had a hearing yet, and hopefully this subcommittee will have a 
legislative hearing on it, that doesn't repeal, and it doesn't 
delay, but it does make the Affordable Care Act voluntary the 
first year. So if it is that good once the Web site gets fixed, 
and I will stipulate that at some point in time in my lifetime 
it will be fixed, then let the people choose.
    Now, my question in the next 50 seconds, I am going to go 
to Mr. Roy, over time do you expect that employers will drop 
their health employees from their healthcare plans because it 
cost them more to pay the premiums less the tax credit than the 
penalty would be if they put them in the exchanges and paid the 
penalty?
    Mr. Roy. It depends on the sector and the industry. So, for 
example, in industries where you have a lot of low-wage workers 
like restaurants and other franchise businesses, you are likely 
to see a lot of sorting in that regard. High paid like a law 
firm, perhaps, will not because the tax exclusion for employer-
sponsored coverage is more advantageous.
    Mr. Barton. But in many industries they will?
    Mr. Roy. Yes.
    Mr. Barton. At least that is the expectation. And could you 
tell us, Mr. Waxman cut you off, what percent of the population 
right now has a pre-existing condition that has not been able 
to get health insurance because of that condition?
    Mr. Roy. Estimates vary, but the most credible estimates 
put the number at about 1 million people. So the vast majority 
of the people who are uninsured, it is not because insurers are 
mean or because they have pre-existing conditions, it is 
because health insurance is too expensive, and the fundamental 
problem with the Affordable Care Act is it makes individually-
purchased health insurance even more expensive for most people.
    Mr. Barton. And if you had a system that 85 percent of the 
people were satisfied with, would you say that system was a 
success?
    Mr. Roy. Not necessarily. Unfortunately----
    Mr. Barton. Wrong answer.
    Mr. Roy [continuing]. In the United States the health 
insurance system is too expensive, healthcare is too expensive, 
and we could do a lot more to make health insurance more 
affordable.
    Mr. Barton. All right. Thank you, Mr. Chairman.
    Mr. Waxman. Mr. Chair----
    Mr. Pitts. The Chair thanks the gentleman.
    Mr. Waxman [continuing]. Unanimous consent request, if I 
might be recognized. I would like the gentleman----
    Mr. Pitts. Do we have unanimous consent?
    Mr. Waxman. I would like the gentleman from Texas to be 
given an additional minute because I took up some of his time.
    Mr. Barton. No. It was productive.
    Mr. Pitts. It was very entertaining. Thank you.
    The Chair recognizes the distinguished ranking member 
emeritus, Mr. Dingell, for 5 minutes.
    Mr. Dingell. Mr. Chairman, I thank you for a wonderful 
hearing, highly political, and we are talking about what we are 
going to do to repeal or figure out this legislation rather 
than to perfect it.
    I am rather touched that my friends on the other side have 
developed a newfound concern for the uninsured and those who 
have been treated poorly by the insurance company. This outrage 
rings rather hollow to me when for decades we heard nothing 
from the other side of the aisle about the outstanding and 
longstanding abuses in the individual market.
    Let me give you a couple of little stories here. Let's talk 
about Judith Gross of Macomb, Michigan. Comes from a 2012, 
article in Consumer Reports. She received a diagnosis of breast 
cancer, faced a $30,000 hospital bill. Her policy would only 
cover 1,000 for outpatient treatment and $2,000 for 
hospitalizations. Because of this huge expense, she delayed 
treatment until it was almost too late.
    Another story. This is about a family in Colorado. They 
took their daughter to get an ear tube insertion and found that 
the procedure used all of the health benefits for 1 year. The 
individual market was broken before ACA, which is an attempt to 
put together a system of healthcare which will take care of 
people like this, and for the first time now consumers have 
protections against these destructive practices, and we must 
not forget that when discussing the impacts of the law.
    Now, these questions are for you, Professor Corlette, of 
Georgetown. I hope you give me a yes or no. I just told a few 
stories about folks who hit lifetime limits on their care prior 
to passage of ACA. Was this a commonplace prior to the passage 
of the law? Yes or no?
    Ms. Corlette. Yes.
    Mr. Dingell. Now, Professor, in fact, your testimony notes 
that you found that there are 20,000 people who hit these 
limits annually and 18 million people who had plans with such 
limits. Is that correct?
    Ms. Corlette. Yes, sir.
    Mr. Dingell. Now, will these same people benefit from the 
new consumer protections benefiting lifetime limits on ACA? Yes 
or no?
    Ms. Corlette. Yes, sir.
    Mr. Dingell. Now, in your testimony you note that before 
ACA people with very minor health conditions such as hay fever 
were denied coverage by insurance companies. Is that correct?
    Ms. Corlette. It is, sir.
    Mr. Dingell. It also was possible that a woman could be 
denied care because she was a woman. Right?
    Ms. Corlette. She could be charged more. Certainly. Yes, 
sir.
    Mr. Dingell. Now, is it true that some health insurance 
companies maintained underwriting guidelines that listed more 
than 400 medical conditions as reasons to permanently deny 
someone coverage? Yes or no?
    Ms. Corlette. Yes, sir.
    Mr. Dingell. Now, how many non-elderly Americans have at 
least one pre-existing condition?
    Ms. Corlette. It could be as high as 129 million Americans 
have some form of pre-existing condition, sir.
    Mr. Dingell. Now, before ACA this population was in great 
jeopardy of not getting access to care because the insurance 
company couldn't cover them because of their pre-existing 
condition. Is that correct?
    Ms. Corlette. Yes, sir.
    Mr. Dingell. And that could do things to people who, for 
example, had cancer 5 years previously. They could be denied 
because they had a pre-existing condition. Is that right?
    Ms. Corlette. That is right, sir.
    Mr. Dingell. Now, is it prohibited for an insurance company 
to use health status and gender to set premium rates under the 
ACA? Yes or no?
    Ms. Corlette. Yes, sir.
    Mr. Dingell. And under ACA only age, tobacco use, 
geographic location, and family size are used to calculate 
premiums. Is that correct?
    Ms. Corlette. It is, sir.
    Mr. Dingell. Now, we have heard a lot about health plans 
being cancelled in the individual market. Professor, is this a 
new phenomenon? Yes or no?
    Ms. Corlette. It is not.
    Mr. Dingell. Been going on a long time. They cancel it, and 
they can change it every year. Is that right?
    Ms. Corlette. That is right, sir.
    Mr. Dingell. Now, how many of these cancellations that we 
are hearing about are caused by the Affordable Care Act, and 
how much or how many of them are being caused by the whim of 
the insurance company?
    Ms. Corlette. Well, that I don't know. We don't know the 
exact numbers, but certainly in many States insurance companies 
have a choice. They can either discontinue a non-compliant 
policy, or they can bring their policy up to the standard of 
the Affordable Care Act.
    Mr. Dingell. So in point of fact, oftentimes this is done 
by the fact that the policy either doesn't meet the standards 
of Affordable Care Act and is the kind of polices that we 
discussed earlier where people can't get proper coverage, or it 
is done because the insurance company just decides they are 
going to cancel the policy. Is that right?
    Mr. Pitts. The gentleman's time has expired.
    Mr. Dingell. You are kind. Could I just get a yes or a no 
on that, and then I will be delighted to yield the floor.
    Ms. Corlette. Yes, sir.
    Mr. Dingell. Thank you.
    Mr. Pitts. The Chair now recognizes the vice chairman, Dr. 
Burgess, 5 minutes for questions.
    Mr. Burgess. Thank you, Mr. Chairman, and just in the 
spirit of where we have been this morning I want to also offer 
a couple of philosophical observations.
    Ms. Blackburn from Tennessee made note of the fact that 
purchasing insurance across State lines was a Republican idea. 
This is one that has been co-opted by the Obama administration. 
My understanding is that people on my district staff are now 
going to be required under the new tenants of the Affordable 
Care Act to purchase their insurance in the DC Exchange, and 
for those of you unfamiliar with the geography, there is a 
State line between Texas and Washington DC, but my employees in 
district office will be required to purchase across State 
lines.
    Mr. Chairman, I think this would be a very good time for 
our committee to revisit the concept of purchase of insurance 
across State lines since the administration clearly has no 
trouble with that.
    Dr. Stark, I am so grateful to see you here today. I just 
can't tell you, this bill that was signed into law, the 
Affordable Care Act, was a House bill, but it was a House bill 
that was drastically changed by the Senate. It was H.R. 3590. 
When the House worked on it, it was a Housing bill. The House 
did work on a healthcare bill. It was H.R. 3200, but that has 
been lost into the myths of time. No one has seen it for years 
because H.R. 3590 was a product that came over from the Senate, 
which was vastly different from H.R. 3200, but still, through 
all of the hearings that our committee had on H.R. 3200, would 
you care to guess the number of doctors who sat at this witness 
table and testified to us on H.R. 3200? If your answer were 
zero, it would be correct.
    So the fact that we have you here today to me is a breath 
of fresh air, and the fact that you are an AOA member, worthy 
to serve the suffering, a doctor's doctor. I welcome you here 
today, and I think you are certainly deserving of the high 
praise. One of the ironic situations is that in Camden, New 
Jersey, there was a family physician, Jeffrey Brenner, who came 
and talked to us at the Commonwealth Fund several years ago. I 
think it was 2010. Dr. Brenner showed a picture of his 
building, his family practice. It was a stone building that was 
there in Camden, New Jersey. Someone asked him if he still had 
the practice, and he said, no, I had to close it. They asked 
why, and he said because of Medicaid.
    And it is your observations about the difficulties with 
Medicaid that I think Dr. Brenner was also referring to that 
day back in 2010, because herein is the problem. You have 
access to a coverage card but no access to actual care. Did I 
understand your testimony correctly there?
    Mr. Stark. Yes. That is absolutely correct. Yes.
    Mr. Burgess. And I was fortunate enough to get to be at the 
Supreme Court on the day of the second oral argument, the 
second day of the oral arguments. I had some problems with the 
assertions that were there that the reason healthcare costs so 
much in this country is because people don't buy insurance, 
that it is these darn free riders. Man, these free riders are 
just costing us so much money, but Dr. Stark, in your 
experience the people who are covered under the expanded 
Medicaid in your State who don't actually have access to a 
physician because the physician is not taking new Medicaid 
patients into their practice, where are they going to go when 
they have right lower quadrant pain at 3:00 on a Saturday 
morning?
    Mr. Stark. Well, they will still use the emergency room, or 
they will use a clinic. They will not be denied care.
    Mr. Burgess. Well, they probably won't use the clinic at 
3:00 in the morning, and we all know how human behavior is. I 
hope it will get better, so I am not going to do anything about 
it right now. But we really have done nothing to impact or 
lower the utilization of some of the high-cost access points in 
the system by just simply expanding Medicaid. I really wish it 
were that simple, but it is clearly not as you so eloquently 
alluded to.
    You know, the concept of a high-deductible plan, I don't 
have a problem with that. I have had a high-deductible plan 
since 1997, it has been able to be coupled with a health 
savings account. I guess what bothers me now about the 
Affordable Care Act is you are going to have a lot of people 
with high-deductible plans, the actuarial value 60 percent. 
That is a high-deductible plan. That is 6,000 or $6,500 
deductible, and yet there is no possibility of marrying that 
with a health savings account. If we had been serious about 
holding down the cost of coverage in this country, we would 
have brought Governor Mitch Daniels in here to this very 
witness table, chained him to the table leg until he told us 
how he was able to reduce costs in his State for State 
employees about 11 percent over 2 years, and the answer was 
coupling a high-deductible health plan with a health savings 
account.
    Mr. Roy, you look like you wanted to answer very much when 
some of the discussion was going on earlier about the pre-
existing population. I know you have some thoughts about that. 
I mean, let's be honest. In the large employer market pre-
existing condition problems don't exist, do they?
    Mr. Roy. Well, one way we can measure what the true 
population of people who were uninsurable do to pre-existing 
conditions is is the pre-existing conditions program in the 
Affordable Care Act, which only enrolled I believe at the end 
200,000 people, and in order to sign up for that program you 
had to have been uninsured for I believe 6 months, and that 
uninsurance had to have been because of a pre-existing 
condition. Only 200,000 people signed up for that program.
    Mr. Burgess. Well, let me ask this. How many people have 
signed up since February 1 of this year?
    Mr. Roy. I believe it is closed down now. Right?
    Mr. Burgess. That is correct. They are not allowing people 
to show up because they have mismanaged the problem so poorly 
that it is not even there to take care of the number one 
problem they said we had to correct.
    Mr. Roy. Right.
    Mr. Burgess. This is what government management will get 
you. When in your experience has the infusion of vast amounts 
of Federal dollars resulted in a lower price for anything? I am 
thinking banking, housing.
    Mr. Roy. Never in my experience and I would just add that I 
do think the pre-existing conditions problem is an important 
problem, but the idea that there is these tens of millions of 
Americans who can't get insurance because of pre-existing 
conditions is absolutely not true, and it is not a contribution 
to an honest debate about our healthcare system, which does 
have a lot of flaws to say otherwise.
    Mr. Burgess. Thank you. Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize the gentleman, Mr. Butterfield, 5 minutes for 
questions.
    Mr. Butterfield. Thank you very much, Mr. Chairman, and 
thank the witnesses for your testimony today.
    You know, I have heard a lot of complaints today about the 
enrollment data that we received yesterday, and it is all over 
the news today, and the President ought to begin talking about 
it in just a few minutes, but the Republicans are attacking the 
administration for not releasing enough data, for not releasing 
it often enough, and of course, for not getting enough people 
enrolled in coverage.
    The arguments are quite strange to me personally, 
especially given the fact that Republicans really don't want 
people, in my opinion, to sign up for this program. Why do I 
say that? I say it because your behavior and your repeal 
efforts over the last 3 years suggest that you really don't 
want to exert the energy and the political capital to make this 
thing work. The administration is releasing enrollment numbers 
monthly just like they do with Medicare and the CHIP Program 
and other Federal programs, and that is what they have promised 
from the very beginning.
    Let me tell you what else the administration has promised. 
The administration has also promised to do what every leader in 
this country has tried to do over the last 50 years, and that 
is to fix a seriously flawed system. There is a lot of interest 
in this obviously, but I don't believe daily or weekly 
enrollment numbers really make that much of a difference. The 
Republican legislation to require more reporting is not the 
product of some newfound interest in making the law work. It is 
an attempt to place an excessive administrative burden on the 
department while providing no real benefit to the public.
    In terms of the numbers themselves, we knew enrollment 
would be low in the early days. We knew that. We have had past 
experiences just like there were in Massachusetts.
    And so let me start with you, Ms. Corlette or Dr. Corlette. 
You studied these issues. Did you expect the majority of people 
to sign up for coverage at the very beginning of the program, 
or did you expect things to sort of ramp up over a 6-month 
period?
    Ms. Corlette. Absolutely not. In past experience with 
rollout of other programs like in Massachusetts like with 
Medicare Part D, people don't enroll right away, and certainly 
there is no reason to enroll right away when the coverage 
doesn't start until January 1. So I think we will see a big 
uptick in mid-December when people need to sign up for January 
1, and then we will see another uptick in March when people 
need to sign up at the end of the open enrollment. But I 
wouldn't expect to see a lot of enrollment in October 
regardless of the issues with the Web site.
    Mr. Butterfield. And as I understand it, our research seems 
to suggest that Massachusetts, the Commonwealth of 
Massachusetts only signed up .3 percent, three tenths of 1 
percent of overall enrollees for private coverage in the first 
month. Thus far, 1.5 percent of the ACA's target enrollment 
have signed up. Some of those in my district. Not enough but 
they are signing up.
    It is not fast enough, but I am hopeful that we are on the 
right track, and so I want to thank you, all of you, for your 
testimony today.
    I yield back.
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize the gentleman from Illinois, Mr. Shimkus, 5 
minutes for questions.
    Mr. Shimkus. Thank you, Mr. Chairman. I am going to try to 
get back to Medicaid, but before Professor Corlette, you have 
stirred a lot of interest and just because of your opposition 
to the Upton bill and I hope you are as much opposed when the 
President in a few minutes says he is going to do an 
administrative fix to do what you so adamantly claimed is a 
failed policy.
    I would also just to put on record that 200,000 people who 
have coverage and have pre-existing conditions have lost it 
under catastrophic plans that have been dropped throughout 
States because they don't meet the minimum requirements under 
this law.
    And the administration's promise, if you like your 
healthcare plan, you can keep it. That is what he said. And 
that was a lie. It was not correct. It was deceptive to the 
American people, and you know, we are all receiving the letters 
of denied plans, and even from hardened Democrats. I got one 
here from a strong Democratic family from San Francisco. They 
are cradle Democrats, and they say from all the sob stories I 
have heard and read ours is the most extreme. They have lost 
their plan. So this is not Republican, Democrat. This is 
affecting all our constituents, and it is very frustrating.
    The other thing I want to raise, Ms. Corlette, do you know 
that when you go on the Obamacare Web site that, I was 
interested in your comment about teaser rates. Do you know who 
is the biggest abuser of teaser rates right now? 
Healthcare.gov. Did you know that? And you know why? That is a 
question. Professor Corlette, do you know why?
    Ms. Corlette. I wasn't sure if you were being rhetorical or 
not.
    Mr. Shimkus. No. I am asking that question now because it 
is very important, because I have raised this numerous times in 
hearings.
    Ms. Corlette. When I spoke about teaser rates, what I was 
talking about is in the individual market----
    Mr. Shimkus. OK. Let me just reclaim my time.
    Ms. Corlette [continuing]. For healthy individuals who are 
able to get coverage.
    Mr. Shimkus. Let me reclaim my time. If you would define 
teaser rates as offering a lower rate than what at the end 
sold, if you knew that the healthcare Web site will quote a 50-
year-old the price of a 27-year-old, wouldn't you consider that 
a teaser rate?
    Ms. Corlette. No. It is a different situation.
    Mr. Shimkus. OK. OK. A lawyer. You can say yes or no----
    Ms. Corlette. I mean, you are talking about, I think you 
are talking about----
    Mr. Shimkus [continuing]. When you get the questions from 
the Democrat side, but you can't say yes or no when you get the 
questions----
    Ms. Corlette. You are talking about----
    Mr. Shimkus. Likewise if you are----
    Ms. Corlette [continuing]. A glitch.
    Mr. Shimkus [continuing]. A 62-year-old, and you go up on 
the Web site to get the price, and they quote you the price of 
a 50-year-old, wouldn't you consider that a teaser rate?
    Ms. Corlette. I would call that a mistake.
    Mr. Shimkus. And I would call the healthcare law a mistake. 
So we are even on that one.
    Dr. Stark, my big issue is this Medicaid concern. I visited 
hospitals, I have talked to counselors, I have talked to 
navigators. In one hospital that has the contract, just last 
week they signed up 48 people. I asked them, well, how many of 
those Medicaid people are new enrollees based upon the new 
standard, and I was in the Board room so I had a lot of big 
wigs there, and the one said, well, I think all of them, and I 
said, I bet it is not. So the person who was actually 
managering said, 24 percent or as we term out of the woodwork, 
24 were new enrollees.
    So Illinois is a 50/50 State. That is just one small 
section. How is that going to disrupt Medicaid delivery and the 
cost to the State of Illinois and the Medicaid System if this 
50 percent enrollment number is true across the country, which 
I think it is going to be.
    Mr. Stark. Yes. That is a real good question. The answer is 
the burden on State taxpayers is definitely going to go up 
because of the existing Medicaid patients newly enrolled now 
because of the public relations----
    Mr. Shimkus. Which wasn't planned for because when the bill 
was proposed, the promise to States was the new enrollees you 
would get 100 percent for the first 3 years and then it goes 
down to 90 percent, but no one really believed that these out-
of-the-woodwork folks would be so high that they are going to 
cause a huge financial burden on not just our State of Illinois 
but in every State that has Medicaid, which is a reason why 
maybe some of the Republican governors understood the 
additional financial burden. Don't you think?
    Mr. Stark. Yes, absolutely. Plus there is an additional 
build in the law, an additional 10 percent the State taxpayer 
is going to have to pay ultimately. Washington is a 42-58 
percent State, so Washington State taxpayers are going to be on 
the hook for 42 percent in these woodworker, welcome mat 
patients. Yes.
    Mr. Shimkus. Tell Governor Inslee we all said hi. He is a 
good friend of ours.
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize the gentleman from Texas, Mr. Green, for 5 
minutes for questions.
    Mr. Green. Thank you, Mr. Chairman.
    Ms. Corlette, thank you for coming to speak with us today 
about your research on the failures of the individual insurance 
market and the impact of the Affordable Care Act. I represent a 
very urban district in Texas, and we not only have the highest 
number of uninsured in the country percentage wise but in our 
district we have some of the highest in the country per 
Congressional district of uninsured people who work.
    Like many of my colleagues I am frustrated over the 
troubled rollout of the Federal Health Exchanges. I want to see 
every action taken to fix the Web site as soon as possible so 
we can deliver on the promise of providing millions of 
uninsured and underinsured Americans access to the affordable 
quality insurance.
    I think it is important to remember why the ACA came to be 
and to reflect on the systemic problems of the individual 
insurance market that left 48 million Americans uninsured, 
featuring rampant adverse selection and rising premiums and 
families and individuals with coverage that provided low value 
and little security from bankruptcy if they got sick.
    I use the example I had a constituent who worked for a 
retail operation that went to the doctor and discovered she had 
a tumor. Her policy that was issued through her employer had a 
cap of $25,000. That surgery at Memorial Hermann Hospital, a 
great facility in Houston, was over 250,000. That employer was 
ashamed enough to help to pay for that instead of having either 
the taxpayers or the non-profit side of that hospital have to 
pay for it.
    Can you remind me of all the failures of the individual 
health insurance market and the important reforms included in 
the ACA to address to these? Why was the individual market so 
broken prior to the passage of the Affordable Care Act?
    Ms. Corlette. Well, I think one thing that clearly happened 
to your constituent and happened to many, many Americans in 
this market is that this coverage is inadequate to meet 
people's needs when they have healthcare issues just like any 
of us would. So in this situation you have, as you point out, 
health plans that prior to the ACA had really low annual 
limits, high, high deductibles, often excluded things like 
prescription drugs, maternity, mental health services, coverage 
that was like an umbrella full of holes, would not be there 
when the person actually needed to use it.
    Mr. Green. The joke in some of my community is that we pay 
insurance premiums, but when we need it, it is not there, and 
that was the image.
    And I only have 5 minutes, so I am going to ask. In our 
healthcare system people receive emergency medical treatment 
for life-threatening situations in emergency rooms regardless 
of whether they have insurance. What is the overall impact on 
the cost of health insurance premiums and the healthcare system 
in general having these people without coverage using the 
emergency room?
    Ms. Corlette. I believe from the estimates that I have seen 
is we all pay an additional $1,000 on our premiums to make up 
for this free care that people get in emergency rooms, but I am 
not exactly sure of the number, but it is a significant 
surcharge on all of our premiums that we pay to cover this kind 
of uncompensated care.
    Mr. Green. Well, one of the concerns I have is part of the 
Affordable Care Act was the expansion of Medicaid to a lot of 
constituents that I have who are working poor. They work, but 
they don't have enough, they can't afford it, their employer 
doesn't provide it, and yet States like my home State of Texas 
did not expand Medicaid. Hopefully we will get a new governor 
and make that decision differently because that impacts all my 
hospital systems. Every one of them would prefer the expansion 
of Medicare, even my great partnership, our Chamber of Commerce 
lobbied in Austin to have that.
    So we understand the spreading of the risk and having 
people have an instrument of insurance whether it be Medicaid 
or the Affordable Care Act going in.
    The principle insurance, any type of insurance is to 
provide real financial protection to individuals and families 
through risk pooling. There have been reports of people 
currently in the individual market receiving letters about plan 
cancellations. Health insurance touches everyone's lives deeply 
and personally. Can you provide an explanation on why these 
letters are sent and their connection to the Affordable Care 
Act?
    Ms. Corlette. Sure. I think there are three options that 
people are often given if a health insurance company has 
decided to discontinue a policy. Many policyholders are being 
encouraged to early renew their plans, and typically that would 
mean that they would just move up the anniversary date of 
coverage so that it would renew in 2013, so they would get up 
to an extra year on their plans.
    The other option that people are often given is to purchase 
an ACA compliant plan through the same company or to research 
their new coverage options on the exchanges. Close to 50 
percent of this individuals will be eligible for premium tax 
credits on the exchanges, and so millions, millions will get a 
far better deal on the exchanges than they can currently find 
in the individual market.
    Mr. Green. Thank you, Mr. Chairman, for your----
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize the gentleman from Pennsylvania, Dr. Murphy, 
5 minutes for questions.
    Mr. Murphy. Thank you. Abraham Lincoln once was asked how 
many legs does a dog have if you call a tail a leg, and his 
response was four because calling a tail a leg doesn't make it 
a leg. Or said another way, George Orwell once said, ``In a 
time of universal deceit, telling the truth is a revolutionary 
act.'' So I am going to ask you folks to respond to me 
truthfully.
    As we are here, the President is announcing that he is 
allowing the States to make decisions to maintain the health 
insurance plans people currently have. He is going to leave 
that up to the governors. Quickly going down, would each of you 
recommend that the governors from your State go ahead and allow 
people to keep their plan if they like it?
    Mr. Astrue, start with you. That is a yes or no. Should the 
governor say people can keep their plan if they like it?
    Mr. Astrue. Yes.
    Mr. Murphy. Mr. Roy?
    Mr. Roy. Hopefully yes. I would have to know the details of 
what he is planning to----
    Mr. Murphy. Ms. Corlette?
    Ms. Corlette. Similarly I would have to see the details.
    Mr. Murphy. Reverend?
    Ms. Dixon Hill. I agree.
    Mr. Murphy. With what the President is doing? What that the 
President is doing? You agree with what the President is saying 
should happen? The States should decide?
    Dr. Stark?
    Mr. Stark. Yes. I would say yes.
    Mr. Murphy. You agree with the President, allowing the 
States to decide?
    Mr. Stark. That is a step in the right direction.
    Mr. Murphy. All right. OK. There is a couple of other 
things. Just quickly.
    Does this bill make it illegal to deny coverage to people 
based upon pre-existing conditions? The Affordable Care Act.
    Mr. Astrue. The current bill. Yes or no. Does it say you 
can't deny people coverage? You haven't read it. OK.
    Mr. Roy? It is simple. Mr. Roy?
    Mr. Roy. Yes.
    Mr. Murphy. OK. Ms. Corlette, does it say you can't deny 
people coverage based on pre-existing conditions?
    Ms. Corlette. It does.
    Mr. Murphy. OK.
    Reverend?
    Ms. Dixon Hill. It does.
    Mr. Murphy. Dr. Stark?
    Mr. Stark. Yes.
    Mr. Murphy. OK. That is good. That is reality.
    Now, another reality is some parts of this bill helps 
people but other parts of the bill still leaves many people 
with unaffordable insurance. I have got a letter here, a 63-
year-old said the Affordable Care Act plan is 37 percent more 
expensive than what I am paying now. It is $19,200 a year under 
this bill. Another person, a single mom writes me that she is 
being offered a plan that she can't afford anymore. Another 
person says their bill is going up from $200 and some a month 
to $800 some a month from $200 a month.
    So isn't it true that while this bill is helping to make it 
affordable for some people it is also making it unaffordable 
for some people?
    Mr. Astrue, is that true?
    Mr. Astrue. Yes.
    Mr. Murphy. Mr. Roy?
    Mr. Roy. Absolutely.
    Mr. Murphy. Ms. Corlette? You have got to be able to answer 
that one. You must have some compassion to say that this is 
unaffordable for some people. Forget being a lawyer. Be a mom, 
be a person. It is unaffordable for some people now. Yes or no?
    Ms. Corlette. If you will give me the opportunity to answer 
the question, I would say that----
    Mr. Murphy. Yes or no?
    Ms. Corlette [continuing]. Some people will pay more----
    Mr. Murphy. Thank you.
    Ms. Corlette [continuing]. Than they have been paying.
    Mr. Murphy. Is it going to be unaffordable for some people 
based upon those numbers?
    Ms. Corlette. Do I think that the----
    Mr. Murphy. This is a simple question.
    Ms. Corlette [continuing]. Tax credits----
    Mr. Murphy. Please. I have asked you to tell the truth 
here.
    Ms. Corlette. Yes.
    Mr. Murphy. Thank you.
    Reverend Hill, is it going to be unaffordable for some 
people based upon--for some people, not for all, but for some 
people now?
    Ms. Dixon Hill. For some people.
    Mr. Murphy. Thank you.
    Dr. Stark?
    Mr. Stark. Yes.
    Mr. Murphy. All right. Here are some other quick true and 
false things. It has been said that if you like your plan, you 
can keep it. Was that the truth?
    Mr. Astrue?
    Mr. Astrue. No.
    Mr. Murphy. Mr. Roy, was that the truth?
    Mr. Roy. No, and it was never designed to be that way.
    Mr. Murphy. Ms. Corlette?
    Ms. Corlette. In order to fix the health insurance market, 
you have to change the health insurance market.
    Mr. Murphy. I didn't ask you that. I asked you if that 
statement was true or false. When you tell people you like your 
plan, you can keep it. I don't need you to dance around this. I 
don't need a lawyer. I need honest answers. I ask you to do 
that for the sake of the American people. Was that true or 
false when people were told, if you like your healthcare plan, 
you can keep it?
    Voice. Mr. Chairman, what is----
    Mr. Murphy. I am asking a question.
    Mr. Pitts. The gentleman from Pennsylvania controls the 
time.
    Mr. Murphy. Is it true or not?
    Ms. Corlette. And I have to answer you that I cannot speak 
for the President and what he said. I can't----
    Mr. Murphy. I asked----
    Ms. Corlette [continuing]. Tell you that----
    Mr. Murphy. Ms. Hill, Reverend Hill, is it true or not when 
people were told if they like their healthcare, they can keep 
it? Was that a true statement?
    Ms. Corlette. That is what the President said but----
    Mr. Murphy. I didn't--you are done.
    Reverend Hill, is that a true statement or not?
    Ms. Dixon Hill. He made the statement.
    Mr. Murphy. Is it true or not?
    Ms. Dixon Hill. I can only say he made the statement.
    Mr. Murphy. Reverend.
    Ms. Dixon Hill. He made the statement.
    Mr. Murphy. I didn't ask you if he made the statement. I am 
asking you if it is a true statement.
    Voice. Mr. Chairman, they can't tell what the President 
said----
    Mr. Murphy. I control the time. I am asking if it is true. 
I didn't say the President. You said the President. Is it true 
or not if someone is told that they like their plan----
    Voice. Badgering the witness.
    Voice. It is really not fair to ask them----
    Ms. Dixon Hill. He made the statement. That is all I can 
say. I don't know what was in his mind.
    Mr. Murphy. I didn't say the President said that. Lots of 
people said it.
    Dr. Stark, is that a true statement, to say if you like 
your plan, you can keep it?
    Mr. Stark. It was absolutely false, and he either knew it 
was false or he is terribly naive.
    Mr. Murphy. Thank you very much.
    I go back to the statement, ``At a time of universal 
deceit, telling the truth is a revolutionary act.'' For those 
of you who tell the truth, I thank you.
    Yield back.
    Mr. Pitts. The gentleman's time has expired.
    The Chair now recognizes the gentlelady from Illinois, Ms. 
Schakowsky, 5 minutes for questions, please.
    Ms. Schakowsky. Well, it will be interesting to see now 
that the President has made a change that will allow people to 
keep the policies that they have, what the other side will come 
up with as yet another excuse, and let's face it. All of the 
programs that we have rolled out, the big ones, Medicare Part D 
and Medicare and Social Security, have required Congress to 
help work, and I am sure you know that as an actuary that we 
have had to make changes over time in these programs. We don't 
have a partner to do that, so the President is doing his best 
now to comply.
    But I think that there has not been enough conversation 
about some of the worse abuses that have been in the private 
market. We have done some of that today to ensure that everyone 
has access to affordable health insurance. So some people are 
going to be offered, if the insurance companies want to 
continue to offer them the plans they still have. Let's 
remember, one of the big reasons that people can't keep the 
policies they have is because the insurance companies change 
them every year, and so they aren't available.
    But, anyway, I went to ehealthinsurance.com, a Web site 
that allows people to shop for insurance, and I looked at plans 
that were available in Cook County, Illinois. That includes my 
district, and let me just tell you one plan that I found. The 
copay select value 10,000 plan offered by United Health One. It 
has a $10,000 deductible and requires 30 percent coinsurance 
after deductible has been met, and this is the basic plan 
before any underwriting would take place on pre-existing 
conditions. The plan does allow doctors' visits with a $35 
copayment before the deductible is met, but only four visits. 
Afterward the customer has to meet the $10,000 deductible 
before the insurance company will pay anymore for the doctor 
visits. At that point the consumer would pay 30 percent 
coinsurance per visit, and then the plan has an out-of-pocket 
max of $10,000, but this cap doesn't include the $10,000 
deductible the consumer may pay.
    So in addition to the consumers potentially facing $20,000 
in medical bills each year for what is covered in the plan, 
let's look at what is not covered. Brand-name prescription 
drugs, maternity services, mental health services, substance 
abuse services. So I want to ask Ms. Corlette, is this good for 
our country that ultimately maybe after a year it be allowed on 
the market?
    Ms. Corlette. I wouldn't even call that health insurance. 
It doesn't offer the basic things that health insurance should 
provide, which is access to care and financial protection when 
you get sick. So that coverage will no longer be allowable and 
rightfully so.
    Mr. Astrue. If I may just take 10 seconds.
    Ms. Schakowsky. OK.
    Mr. Astrue. And attempt maybe full-heartedly to get some 
consensus on this subcommittee. You have done something 
important, which is you have tried to shop, and that is a 
feature that is not built into healthcare.gov now, and so one 
thing that ought to bring us together as Republicans and 
Democrats is to work with the agency to try to let people--I 
have tried to do it, you know. I haven't worked full time since 
I left the government, I am an interim employment, and I have 
tried to shop----
    Ms. Schakowsky. Very frustrating.
    Mr. Astrue. It is very frustrating.
    Ms. Schakowsky. Totally.
    Mr. Astrue. So if nothing else comes out of this hearing 
maybe all of you can work together on a bipartisan way to 
stress to HHS it is very important to change the design system 
that prevents Americans from doing what you just very 
importantly did on----
    Ms. Schakowsky. You know, you are absolutely right. I mean, 
those of us who are supporters of the legislation would like to 
be able to say to people, look, I just got this letter and to 
say, wait a minute. Calm down. Just go to the Web site and see 
if you can find a better deal for yourself. Of course, that is 
so very, very frustrating. All of us feel that. No one is 
ignoring that as an unacceptable flaw in the rollout. You know, 
for those of us who support it, maybe even more frustrating 
because we want to be able to show people that this is good.
    I want to say one other thing. Medicaid, are you saying 
doggone it, those people who are eligible for Medicaid have 
always been eligible for Medicaid, now it is a big problem 
because they are coming out of the woodwork to sign up? God 
love them for coming out of the woodwork to get the kind of 
healthcare that they are eligible for. This is a good thing, 
and I yield back.
    Mr. Burgess [presiding]. The gentlelady's time has expired.
    The Chair recognizes the gentleman from Georgia, Dr. 
Gingrey, 5 minutes for questions, please.
    Mr. Gingrey. Mr. Chairman, thank you very much.
    Just an hour ago I accompanied one of my staff employees to 
the Member Services Office of Finance to check on what it is 
going to cost her when she goes into this health link, DC 
Health Link Exchange. She currently under the Federal Employee 
Health Benefit Plan pays $90 a month as a single individual. 
Her premium per month is going up to $270. She pays no 
deductible currently under FEHB. Her deductible goes up to 
$1,000. So she is paying about $3,160 a year more.
    This is a 200 percent increase in what she currently is 
paying. Members are having 200, 300 percent increase in what 
they are paying, and this is with the, really the unfair 
subsidy that taxpayer, we the taxpayer subsidy that the 
President convinced the Office of Personnel Management to grant 
to the members and their employees even if their income doesn't 
meet the standards to get a subsidy. If they weren't getting 
that subsidy, my employee, this young lady, would probably be 
paying 500 percent more, and it is even worse in the individual 
market when you talk to individuals in my State of Georgia and 
States of members on both sides of the aisle. They can't deny 
it. There is no question about it. The President has 
consistently said that what is now reality would never happen, 
that if you like your health plan, you can keep it period. That 
is also part of the quote, the period, and this has not proven 
to be true for the millions of Americans who have seen their 
plans canceled due to Obamacare and provider networks that have 
been narrowed to prevent even more sticker shock.
    Look, this was all about, should have been about maybe in 
the individual market in particular reform of the health 
insurance market. I mean, that can be done. That could easily 
have been done to allow young people up to the age of 26 to 
stay on their parent's health insurance policy, to make sure 
that children with pre-existing conditions could get health 
insurance, to have high-risk pools within the States, which 
many States already have.
    But so what we did is spend about $2 trillion creating a 
whole new entitled program which is basically a one-size-fits-
all, even though some 55-year-old bachelor now has infertility 
and maternity coverage he is paying for but I don't think he is 
going to ever need.
    But now I do believe this, and I am going to get to my 
question, and it is going to be for Mr. Roy. I believe that 
there is another population that will soon feel the effects, 
what a misnomer. It should be the Unaffordable Care Act, but 
this population has been underreported. We know that $716 
billion was taken out of the Medicare Program, Mr. Roy. One 
hundred and fifty-six billion from Medicare Advantage and 
really to create this whole new entitled program. In the 
current individual market we have seen individuals switch 
doctors as provider networks have narrowed, reimbursements have 
fallen within exchange plans. With the $415 billion cut in 
Medicare updates to fee-for-service payment rights to 
providers, to hospitals, what is the likelihood that seniors 
may lose access to their doctors and be forced to try to find 
new ones?
    Mr. Roy. This is an emerging problem, and I know this 
committee has had debates about whether or not access to 
physicians among Medicare enrollees is a problem. From what I 
see and from the data I see broadly, not just Med Pack data but 
across the spectrum, it is an increasing problem, particularly 
for seniors who move to a new location. So a grandmother in New 
York moves to North Carolina----
    Mr. Gingrey. Let me switch real quickly to the other follow 
up on that is in regard to Medicare Advantage, $156 billion 
that we are talking about of Medicare Advantage. Of the 47 
million people that have Medicare, 25 percent of them choose 
Medicare Advantage. What is going to happen to them?
    Mr. Roy. Richard Foster, the former Chief Actuary of CMS, 
projected that 50 percent of Medicare Advantage enrollees would 
revert back to the traditional fee-for-service program because 
of the changes to the Medicare Advantage Program.
    Mr. Gingrey. Well, Mr. Chairman, the administration implies 
that the disruptions that Obamacare has caused to individuals 
will stay relegated to those buying the insurance individually. 
Our seniors need to be warned that this disorder will soon come 
to them if it has not already, and this law is not just a 
disaster for individuals, it is a disaster for our Healthcare 
System and will soon, soon be a disaster for our seniors. No 
amount of IT resources will fix the underlying problems. As Dr. 
Burgess said, that will be fixed eventually. This is the end of 
the beginning of the problem, the tip of the iceberg. No amount 
of IT resources will fix the underlying problem. This bill is 
truly a train wreck for Americans and particularly for our 
seniors, and I yield back.
    Mr. Pitts. The gentleman's time has expired.
    The Chair recognizes the gentleman from Louisiana, Dr. 
Cassidy, 5 minutes for questions, please.
    Mr. Cassidy. Thank you, Mr. Chairman.
    Ms. Corlette, I gather that you oppose the preservation of 
the small group market?
    Ms. Corlette. No, sir.
    Mr. Cassidy. So the folks getting cancellations, the rules 
that were written effectively mean what 80 percent of those 
folks would lose--I am sorry. Not small group. I am sorry. The 
individual market. Individual market.
    Ms. Corlette. Individuals whose policies are being 
discontinued at the end of this year, many of them are getting 
three options. The first----
    Mr. Cassidy. But just simply I gather that you would think 
it is a back idea, the Upton bill, for example, which allows 
people to continue in the individual market should they choose.
    Ms. Corlette. I think the Upton bill has two problems. One, 
it doesn't----
    Mr. Cassidy. Wait. I am sorry. I have limited time. I am 
just trying to rephrase and set a context for my next question. 
Would you agree that that----
    Ms. Corlette. I believe there are a lot of inadequate, 
unaffordable policies on the individual market today that need 
to meet basic minimum standards to be considered health 
insurance.
    Mr. Cassidy. So the President reportedly is about to 
announce that he is going to either require whatever, insurance 
companies to continue to sell on the individual market. Now, I 
gather that you think that is probably a bad decision. The 
policies currently being canceled reportedly will no longer 
have to be canceled.
    Ms. Corlette. Honestly, sir, I would have to look at the 
President's proposal to be able to speak----
    Mr. Cassidy. But in concept?
    Ms. Corlette. I would have to look at the details.
    Mr. Cassidy. I find you are willing to conjecture on things 
which support your position but not on things which don't.
    Would you concede that the young people not signing up for 
the exchanges is a potential problem?
    Ms. Corlette. If they don't sign up by March 31, it is a 
big problem, but they do have until March 31 to sign up for 
coverage.
    Mr. Cassidy. And it is arguable whether or not young people 
will pay substantially more than the going rate to purchase 
something which they currently don't purchase. That is my 
perspective, but that said, if they don't, you spoke earlier of 
an actuarial death spiral. Is it fair to say that if the young 
people don't sign up, that the business plan is such that quite 
likely the exchanges will enter somewhat of that actuarial 
death spiral?
    Ms. Corlette. It is critically important for young and 
healthy people to sign up.
    Mr. Cassidy. And if they do not?
    Ms. Corlette. There will be premium increases over time. 
Yes, sir.
    Mr. Cassidy. And if it is assumed, it was once said that 
for every 10 percent increase in premiums you lose roughly 1.4 
percent of subscribers but, of course, that is a compounding 
effect. That increases premiums further and then more people 
unsubscribe.
    Ms. Corlette. That is why it is called the death spiral, 
sir.
    Mr. Cassidy. So, now, Mr. Roy, Dr. Roy.
    Mr. Roy. Yes.
    Mr. Cassidy. You have done stuff looking at apples and 
apples comparison, ehealth versus the exchanges. I think young 
men in San Francisco are going to pay 40 percent more on the 
exchanges. What is your opinion as regards how likely these 
young men are to sign up for these exchanges?
    Mr. Roy. It depends on how much the mandate convinces them 
to sign up versus the rate increases, but experience and our 
experience in Massachusetts and experience broadly suggests 
that the rate increases are far higher relative to the fine 
that people will pay under the individual mandate, particularly 
in the first year, and therefore, we are likely to see adverse 
selection. In fact, we know from anecdotal reports, not from 
HHS by the way, we know from reports from State governments 
that the average age of the enrollee on many of the State 
exchanges is higher than what people were hoping for or 
projecting.
    Mr. Cassidy. So it looks as if we are getting those folks 
basically over 50 or with chronic medical conditions signing 
up, but we are not getting the young people.
    Mr. Roy. That appears to be the case, and the Web site 
problems exacerbate that because the people who are most 
desperate for coverage are the ones who are most willing to put 
up with all the hassles of signing up.
    Mr. Cassidy. So our concern as Americans should be because 
I agree with Mr. Astrue, we need to look at this as Americans, 
not as one party or the other, we have scorched, earthed the 
individual market, but we set up a system where young people 
don't appear to be signing up, only the older, and then we will 
end up with the actuarial death spiral so that even those who 
are older will end up paying higher premiums than they 
otherwise would have paid.
    Mr. Roy. It will depend on whether they are eligible for 
subsidy. So if you are eligible for subsidies, the subsidy 
level will increase to cushion some of that, but if you are not 
eligible for subsidies, you will pay the full freight, the 
underlying----
    Mr. Cassidy. This coverage is only a percent, so even if it 
is a percent, the percent that you are left in pocket will 
continue to rise.
    Mr. Roy. That is correct.
    Mr. Cassidy. And I have found as a doctor who still treats 
the uninsured in a hospital for the uninsured, a clinic for the 
uninsured now, I have found that those who are poor very 
sensitive to price increases. Don't we know that from Indiana 
or Wisconsin that even minor increases in Medicaid copays cause 
a dramatic drop off in people participating?
    Mr. Roy. We also know from the market research that 
insurers have done for the exchange that they have publicly 
disclosed in their earnings calls that the participants in the 
exchange are extremely price sensitive, and that is why these 
plans have narrow networks because insurers, carriers believe 
that narrow networks are preferable to higher premiums in a 
competitive market.
    Mr. Cassidy. Thank you all. I yield back.
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize the gentleman from Kentucky, Mr. Guthrie, 5 
minutes for questions.
    Mr. Guthrie. Thank you, Mr. Chairman.
    My State of Kentucky has been listed as one of the States 
being supposedly successful with the exchange, but I will tell 
you in the 1990s our general assembly completely destroyed our 
individual insurance market. So I understand New York is a 
State that has also been listed as being successful with this, 
and I will tell you their general assembly destroyed their 
individual insurance market. So I think California, which I am 
not that familiar with, but it appears that other States are 
subsidized States that destroyed their individual insurance 
market. That seems to be what is happening.
    But having said that, Ms. Corlette, you said if you are 
going to fix the market, you have to change it. So people are 
going to be disrupted. You acknowledge that people are going to 
be disrupted when the healthcare bill--or now. They are now 
being disrupted because of the impact that they have.
    Now, a lot of people are saying insurance companies cancel 
plans every year. That is true but they usually offer similar 
plans. Plans, we can't be mistaken, plans are being cancelled 
because they don't meet the essential minimum benefits of the 
Healthcare Law, so people are being disrupted that way. 
Correct?
    Ms. Corlette. Yes. There is going to be some disruption as 
we move to a more fair system that lets people who historically 
have been barred from accessing insurance to allow them to 
access insurance.
    Mr. Guthrie. But if you don't disrupt people and put them 
through the exchanges is what the Upton bill, that is your 
criticism of it, and you said it creates a death spiral for the 
exchanges, the Upton bill if passed would create a death spiral 
for the exchanges.
    Ms. Corlette. That is one of the biggest problems with the 
Upton bill, and Mr. Congressman, I would like to show you, this 
is a report on Kentucky's insurance reforms from the 1990s, and 
it is really instructive. I think everybody on the committee 
should read it, but what it says is what happened in Kentucky 
is that they created, they allowed a set of insurance products 
to be sold that operated on a different set of rules than the 
modified community rating----
    Mr. Guthrie. But not in the individual market. That is----
    Ms. Corlette. Right, but what happened was insurers left 
that----
    Mr. Guthrie. They left the market.
    Ms. Corlette [continuing]. Left the reformed market in 
droves, premiums went through the roof. It is Exhibit A of why 
we need a holistic approach.
    Mr. Guthrie. But they weren't offering alternatives like 
letting you keep it if you have it.
    Ms. Corlette. They were offering----
    Mr. Guthrie. They left the market because they couldn't 
compete in all the----
    Ms. Corlette. They all shifted to association product. So--
--
    Mr. Guthrie. People were trying to buy everything they 
could because it didn't affect employers because most of them 
were ARESA, so individual, small business, individual buyers, 
farmers were completely priced out of the insurance market. We 
repeal those, but we destroyed the insurance market, and they 
didn't come back. So this, I mean, this is real serious stuff 
what--not that it is going to be disrupted. We don't know. When 
you destroy an insurance market, we could not get it back in 
Kentucky, and but the thing there was a farmer, and I ran in 
1988, on this issue because that was the issue for everybody. 
Who came to me, I remember, and he said he spent about $1,000 a 
month because he had to buy on the individual insurance market 
with 33 mandates. So you say, I think you quoted, some of these 
plans are not health insurance.
    Well, somebody in Frankfurt decided that this farmer needed 
to have 33 mandates in this policy, paying $1,000 a month. He 
came to me, and he said, if I could just buy catastrophic, so 
if I had my wife or myself and the two kids have to go to the 
hospital, we don't lose the farm, I would love to be able to 
buy that, but I was paying $1,000 a month. I would rather pay a 
few hundred dollars when we have to go to the doctor to get 
tests for whatever out of pocket, and I am money ahead if I do 
that. That is a rational buyer of health insurance, isn't it? 
So you are saying that, you would say that is not health 
insurance, but having a catastrophic policy and paying out of 
pocket, particularly if you could do health savings accounts 
with that first dollar coverage, it is a rational way to buy 
health insurance. His price went up because he was subsidizing 
other people in the market and his family was fairly healthy, 
and so this is what is happening. This appears today, so you 
say the Upton bill would create a death spiral. If there is any 
similar proposal, whether the President's or not, that allows 
people to stay in these current policies that are not health 
insurance, would that also create a death spiral?
    Ms. Corlette. I can't speak to the President's proposal.
    Mr. Guthrie. Well, just any proposal that allows----
    Ms. Corlette. I am really sorry.
    Mr. Guthrie [continuing]. People to stay--well you say the 
Upton----
    Ms. Corlette. I haven't had a chance to look at it.
    Mr. Guthrie [continuing]. Bill would create it. If any----
    Ms. Corlette. Essentially what the Upton bill allows is a 
set of products to be continually--it is not just people being 
able to keep their policies.
    Mr. Guthrie. Right.
    Ms. Corlette. These insurers will be allowed to enroll new 
customers. If you allow a set of products to be sold on the 
marketplace that operate by a different set of rules as 
Kentucky learned in the mid '90s, you will result in adverse 
selection. There will be adverse selection against the 
exchanges, and over time premiums will go up in the exchanges, 
and there will be fewer insurance options for people to choose 
from.
    Mr. Guthrie. But then you have people like my farmer who is 
priced out of the market because they are mandated to make 
coverages that they don't cover. So we are really using him and 
his family to subsidize other families.
    Ms. Corlette. Well, I mean, all of us----
    Mr. Guthrie. Make sure you are using young healthy to 
subsidize.
    Ms. Corlette [continuing]. In employer-based coverage are 
in a risk pool. Healthy employees subsidize sicker employees. 
Younger employees subsidize older employees. What the 
Affordable Care Act attempts to do is bring that same employer-
based risk pool and concept to the individual market. But if 
you allow this segmentation----
    Mr. Guthrie. But most of the individuals aren't getting 
employer subsidies to participate now. They are just being 
priced out of the market.
    Ms. Corlette. Well, they are getting advanced payments of 
premium tax credits up to 400 percent of poverty to help----
    Mr. Guthrie. Yes. It depends on----
    Ms. Corlette. Correct.
    Mr. Guthrie. I yield back.
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize the gentleman from Virginia, Mr. Griffith, 
for 5 minutes for questions.
    Mr. Griffith. Thank you, Mr. Chairman.
    Dr. Stark, let me ask you a question. A problem has come to 
my attention in Virginia, which is all the way across the 
country from you, and it may not be the same in the State of 
Washington, but we have a dilemma because in order to be 
eligible for Medicaid you have to have limited assets. It used 
to be $2,000. That may have gone up in the last year or two, 
but it used to be $2,000 were all you could have in assets in 
order to be eligible for Medicaid.
    So a situation has come to my attention where a lady has 
assets. She generates $9,000 a year from those assets. She is 
not yet old enough, she is a widow, but she is not old enough 
yet apparently to be in Medicare, and when she goes on the Web 
site, she is not offered a supplement in Obamacare because she 
would theoretically based on her income level be eligible for 
Medicaid. But because she has assets, that is where her small 
income comes from, she happens to be caring also for apparently 
a disabled child, she is not eligible for a supplement, and 
with $9,000 a year in income she cannot afford health 
insurance.
    Is that problem nationwide, or is that just a Virginia-
specific problem?
    Mr. Stark. I think potentially that would be a nationwide 
problem. It is the way the system is set up.
    Mr. Griffith. So it is going to apply in any State 
depending on what the number is. If you have assets, you are 
going to have to sell your assets in order to qualify for 
Medicaid, and you won't be able to buy health insurance.
    Mr. Stark. Potentially I would say. Yes.
    Mr. Griffith. It is interesting because this lady in 
speaking to a friend of mine said, I thought Obamacare was 
supposed to help people like me, and apparently it is not 
helping her because she is not going to be able to get any 
assistance whatsoever, and in some cases I understand the asset 
may even be the home that they are living in if it is a single 
person living in that home where you don't have another person 
who may have ownership in the house. Is that also your 
understanding?
    Mr. Stark. Yes. An asset is an asset. Yes.
    Mr. Griffith. So in theory they can either be uninsured, 
which is where they may have been anyway, but in theory they 
could either be uninsured or homeless. Isn't that correct?
    Mr. Stark. That is I guess by your definition, yes. The way 
you are putting this.
    Mr. Griffith. Yes.
    Mr. Stark. Yes.
    Mr. Griffith. It is kind of a tough situation.
    Mr. Roy, would you like to comment on that? Do you have any 
different perspective?
    Mr. Roy. The biggest problem, there are a number of 
problems with the way the mandate is enforced, but I would say 
that in general people can reorganize their income or sometimes 
misreport their income in order to avoid the mandate and 
maximize the subsidies.
    Mr. Griffith. Now, we don't want to encourage anybody to 
misreport their income because that gets awful close to fraud, 
but how would you manage that asset?
    Mr. Roy. Well, if your income is below that required to 
file a tax return, the mandate doesn't apply to you, for 
example.
    Mr. Griffith. Oh, so she wouldn't have to pay the fine for 
being poor and having an asset, but she still wouldn't have 
insurance.
    Mr. Roy. That is correct.
    Mr. Griffith. OK. So that is how she would manage her 
assets.
    Mr. Roy. That could be one, ``option.''
    Mr. Griffith. One option. As long as she didn't have to 
file any tax return with the IRS.
    Mr. Roy. Right, because the IRS otherwise can't verify her 
income, and the law actually explicitly states that if you 
don't file a tax return, if you don't need to file a tax 
return, the mandate doesn't apply to you.
    Mr. Astrue. Mr. Griffith, if I could mention a parallel 
problem----
    Mr. Griffith. Sure.
    Mr. Astrue [continuing]. I would hope that the committee 
would try to ask the GO to look at on a bipartisan basis. This 
country runs its defense these days a lot on young men and 
women who go in and out of the Reserves and National Guard into 
full-time deployment and then come back. The ACA does not fit 
very well people whose income goes up and down. The enrollment 
periods don't fit their employment. We need to be looking at 
some sort of grace period for people coming back from 
deployment. That is another group of young people I think are 
going to be very alienated from this system if we don't figure 
out a way to treat them better.
    Mr. Griffith. And I appreciate that, and obviously, we have 
heard about a lot of problems, not only today but other times, 
and you know, when you have constituents who were supposed to 
be helped by this program who find themselves not being helped 
and actually having equal or greater dilemmas than they had 
before, it just makes you realize, although I was not here at 
the time, that this wasn't a carefully-crafted piece of 
legislation, and as a result, we have a very flawed law.
    I yield back, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman.
    Now recognize the gentlelady from North Carolina, Ms. 
Ellmers, for 5 minutes for questions.
    Mrs. Ellmers. Thank you, Mr. Chairman. I would like to ask 
every panelist here a very simple question. I just want to 
follow up on some of the comments and exchanges that have taken 
place.
    One, do each one of you believe that in this country the 
American people should take care of those who cannot take care 
of themselves with coverage such as Medicaid?
    And I will start with you, Mr. Astrue?
    Mr. Astrue. [No audible response.]
    Mr. Roy. Yes, but not with Medicaid.
    Mrs. Ellmers. But not with Medicaid.
    Ms. Corlette. Yes, generally.
    Ms. Dixon Hill. Generally yes.
    Mr. Stark. Yes.
    Mrs. Ellmers. OK. I agree, too. I agree that we should take 
care of those who cannot help themselves.
    Ms. Corlette, in an exchange with Mr. Green from Texas I 
believe Mr. Green asked you what the cost is today as 
healthcare coverage is, what the average individual pays to 
cover those who are uninsured. So healthcare coverage premium, 
I believe you said $1,000, but what, $1,000 a month, $1,000----
    Ms. Corlette. Yes. I am really sorry, Congresswoman. I am 
not sure of the exact additional amount that those of us with 
coverage pay because of the uninsured. I just know we all pay 
more----
    Mrs. Ellmers. OK.
    Ms. Corlette [continuing]. Because of uncompensated care.
    Mrs. Ellmers. OK. When you responded to Mr. Green and you 
said $1,000----
    Ms. Corlette. That is the number I remember, but I----
    Mrs. Ellmers. One thousand dollars a year?
    Ms. Corlette. I think so.
    Mrs. Ellmers. One thousand dollars a year. OK. The issue, 
and Mr. Roy, I do have some questions for you, but I do, 
Reverend Hill, I want to back up to you and just say how your 
situation, especially with the healthcare issues that you have 
faced, I can only imagine how devastating those were, 
especially with the Guillain-Barre. I have taken care of 
patients, and I know how devastating and how scared you must 
have been in many cases. So I just would like to say that.
    So the $1,000 issue. So we will say a year or whatever. To 
that point, I think, to me that justifies exactly what we are 
talking about, which is I am hearing from--right now we have a 
number of 160,000 North Carolinians who are getting healthcare 
premium cancellations, and my understanding is it is from one 
insurer in North Carolina, and the comparable or what the 
Affordable Care Act would call for is comparable coverage or 
now increased coverage. Personally I say over-coverage or over-
insuring is going up by thousands and thousands of dollars 
depending on the individual, depending on the plan that they 
have had with increased amounts in the thousands of their 
deductible.
    So my question is if we are paying $1,000 more now with 
healthcare premiums and the ACA premiums are going up by 
thousands of dollars, are we fixing the problem, Mr. Roy?
    Mr. Roy. Yes, and I would just start by saying if we look 
at national health expenditures, only about 1.7 percent of 
national health expenditures are uncompensated care in the 
emergency room. Of that 1.7 percent only about a third are 
relevant to the population that would be involved in rolling in 
the exchanges or the Medicaid Expansion. So it is actually a 
tiny fraction of health expenditures that are driven by 
uncompensated care in the emergency room, and yet as I noted in 
my opening remarks, in North Carolina the average person is 
going to see their individual market health insurance rates 
more than double.
    And we saw this in Massachusetts with a much more highly-
regulated market than North Carolina. So in Massachusetts 
uncompensated care was reduced by $200 million a year but 
increased spending on insurance subsidies was $800 million a 
year.
    Mrs. Ellmers. Uh-huh.
    Mr. Roy. So there was a four to one ratio of savings from 
uncompensated care in the emergency room to increased spending.
    Mrs. Ellmers. So the numbers aren't adding up, essentially, 
and Mr. Astrue, you made a very important point earlier that 
you were having about choice and that really the American 
people should be able to have choice, and unfortunately, that 
is not what we are seeing, especially with the basic minimum 
standards or the essential health benefits that the mandate 
from the Affordable Care Act is putting forward. Is that not 
true?
    Mr. Astrue. Yes. No. Thank you, and I would even be more 
specific and say the system right now tracks your location and 
wants to just give your information on that location, but this 
is a complicated country with complicated families. It is very 
typical, for instance, for one family member to be helping out 
another family member in another State----
    Mrs. Ellmers. Very true.
    Mr. Astrue [continuing]. Or something like that. So I would 
say not only should you be able to shop in your own State, 
there is no reason in the world why you shouldn't be able to 
see in North Carolina or Texas or New Jersey if you are helping 
a parent or another family member what the policies are there 
because that is the way the country actually works in practice.
    Mrs. Ellmers. Well, and I will just couple that by saying 
that I do believe that our insurance industry and the way that 
we have pursued that in this country has needed reformed, and 
that is why I am supporting the RSC Plan of the American 
Healthcare Reform Act because I do believe it will provide 
choice and cover many of the solutions that we have seen that 
would work for affordable healthcare in this country.
    So thank you all so much for your testimony today, and I 
truly appreciate it that, again, we are going to all have to 
come together and work on this to fix this problem, and I don't 
know how this is going to pan out. I don't know a timeline, but 
I do believe we can fix these issues, but it is going to need 
some significant work. So thank you.
    Mr. Pitts. The gentlelady's time has expired.
    That concludes the questions. I want to thank the witnesses 
for you excellent testimony, for answering all of our 
questions. Some members may have follow-up questions. We ask 
that you please respond promptly.
    I remind members that they have 10 business days to submit 
questions for the record, and that will be by the close of 
business on Monday, December 2.
    Excellent testimony. Thank you very much. Very important, 
very informative.
    Without objection, the subcommittee is now adjourned.
    [Whereupon, at 12:27 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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