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




 
          EXAMINING OBAMACARE'S PROBLEM-FILLED STATE EXCHANGES

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

                             JOINT HEARING

                               before the

                    SUBCOMMITTEE ON ECONOMIC GROWTH,
                  JOB CREATION AND REGULATORY AFFAIRS

                                and the

                     SUBCOMMITTEE ON ENERGY POLICY,
                      HEALTH CARE AND ENTITLEMENTS

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 3, 2014

                               __________

                           Serial No. 113-115

                               __________

Printed for the use of the Committee on Oversight and Government Reform


         Available via the World Wide Web: http://www.fdsys.gov
                      http://www.house.gov/reform


                                 ______

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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT, 
TREY GOWDY, South Carolina               Pennsylvania
BLAKE FARENTHOLD, Texas              TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington             ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming           DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia                 PETER WELCH, Vermont
THOMAS MASSIE, Kentucky              TONY CARDENAS, California
DOUG COLLINS, Georgia                STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina         MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan        Vacancy
RON DeSANTIS, Florida

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                    Stephen Castor, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

  Subcommittee on Economic Growth, Job Creation and Regulatory Affairs

                       JIM JORDAN, Ohio, Chairman
JOHN J. DUNCAN Jr., Tennessee        MATTHEW A. CARTWRIGHT, 
PATRICK T. McHENRY, North Carolina       Pennsylvania, Ranking Minority 
PAUL GOSAR, Arizona                      Member
PATRICK MEEHAN, Pennsylvania         TAMMY DUCKWORTH, Illinois
SCOTT DesJARLAIS, Tennessee          GERALD E. CONNOLLY, Virginia
DOC HASTINGS, Washington             MARK POCAN, Wisconsin
CYNTHIA LUMMIS, Wyoming              DANNY K. DAVIS, Illinois
DOUG COLLINS, Georgia                STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina
KERRY BENTIVOLIO, Michigan
RON DeSANTIS Florida
      Subcommittee on Energy Policy, Health Care and Entitlements

                   JAMES LANKFORD, Oklahoma, Chairman
PATRICK T. McHENRY, North Carolina   JACKIE SPEIER, California, Ranking 
PAUL GOSAR, Arizona                      Minority Member
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
JASON CHAFFETZ, Utah                     Columbia
TIM WALBERG, Michigan                JIM COOPER, Tennessee
PATRICK MEEHAN, Pennsylvania         MATTHEW CARTWRIGHT, Pennsylvania
SCOTT DesJARLAIS, Tennessee          TAMMY DUCKWORTH, Illinois
BLAKE FARENTHOLD, Texas              DANNY K. DAVIS, Illinois
DOC HASTINGS, Washington             TONY CARDENAS, California
ROB WOODALL, Georgia                 STEVEN A. HORSFORD, Nevada
THOMAS MASSIE, Kentucky              MICHELLE LUJAN GRISHAM, New Mexico


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 3, 2014....................................     1

                               WITNESSES

Mr. Tom Matsuda, Interim Executive Director, Hawaii Health 
  Insurance Exchange
    Oral Statement...............................................    12
    Written Statement............................................    15
Joshua Sharfstein, M.D. Chairman, Maryland Health Benefit 
  Exchange Board, Maryland Health Insurance Exchange
    Oral Statement...............................................   107
    Written Statement............................................   109
Ms. Jean Yang, Executive Director, Massachusetts Health Insurance 
  Exchange
    Oral Statement...............................................   119
    Written Statement............................................   121
Mr. Peter Lee, Executive Director, Covered California, California 
  Health Insurance Exchange
    Oral Statement...............................................   125
    Written Statement............................................   127
Mr. Scott Leitz, Interim Chief Executive Officer, Minnesota 
  Health Insurance Exchange
    Oral Statement...............................................   143
    Written Statement............................................   145
Mr. Greg Van Pelt, Advisor to the Governor, Oregon Health 
  Insurance Exchange
    Oral Statement...............................................   147
    Written Statement............................................   148

                                APPENDIX

Letter from Rep. John Delaney to Dr. Sharfstein, submitted by 
  Chairman Jordan................................................   200
Feb. 23, 2014 Sun Sentinel article by Rep. Deutch, submitted by 
  Rep. Cummings..................................................   202
Feb. 21, 2014 Letter to Ms. Carolyn Quattrocki from S. Hamid 
  Fakhraei, The Hilltop Institute, Director of Economic Analysis.   203
Letter from Gov. John Kitzhaber dated May 15, 2014, answers to 
  questions for the record, submitted by Chairman Issa, Chairman 
  Jordan and Chairman Lankford...................................   205
Responses from the Hawaii Health Connector in response to 
  questions for the record from Chairman Jordan and Chairman 
  Lankford.......................................................   220
Response from Dr. Sharfstein to questions for the record, 
  submitted by Chairman Jordan and Chairman Lankford.............   232
Response from Ms. Yang, to questions for the record from Chairman 
  Jordan and Chairman Lankford...................................   243
Response from Mr. Lee to questions for the from Chairman Jordan 
  and Chairman Lankford..........................................   257
Response from Mr. Leitz to questions for the from Chairman Jordan 
  and Chairman Lankford..........................................   266


          EXAMINING OBAMACARE'S PROBLEM-FILLED STATE EXCHANGES

                              ----------                              


                        Thursday, April 3, 2014

                   House of Representatives
 Subcommittee on Economic Growth, Job Creation and 
Regulatory Affairs, joint with the Subcommittee on 
       Energy Policy, Health Care and Entitlements,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2154, Rayburn House Office Building, Hon. James Lankford 
[chairman of the House Subcommittee on Energy Policy, Health 
Care and Entitlements] presiding.
    Present from Subcommittee on Economic Growth, Job Creation 
and Regulatory Affairs: Representatives Jordan, DeSantis, 
McHenry, Gosar, Meadows, Bentivolio, Cartwright, and Connolly.
    Present from Subcommittee on Energy Policy, Health Care and 
Entitlements: Representatives Lankford, Gosar, McHenry, Jordan, 
Walberg, Massie, Speier, Norton, Cartwright, and Lujan Grisham.
    Also Present: Representatives Issa, Cummings, Maloney, and 
Hanabusa.
    Staff Present: Brian Blase, Majority Professional Staff 
Member; Molly Boyl, Majority Deputy General Counsel and 
Parliamentarian; Caitlin Carroll, Majority Press Secretary; 
John Cuaderes, Majority Deputy Staff Director; Adam P. Fromm, 
Majority Director of Member Services and Committee Operations; 
Linda Good, Majority Chief Clerk; Meinan Goto, Majority 
Professional Staff Member; Christopher Hixon, Majority Chief 
Counsel of Oversight; Michael R. Kiko, Majority Legislative 
Assistant; Mark D. Marin, Majority Deputy Staff Director for 
Oversight; Emily Martin, Majority Counsel; Laura L. Rush, 
Majority Deputy Chief Clerk; Jessica Seale, Majority Digital 
Director; Matthew Tallmer, Majority Investigator; Sarah Vance, 
Majority Assistant Clerk; Tamara Alexander, Minority Counsel; 
Jedd Bellman, Minority Counsel; Aryele Bradford, Minority Press 
Secretary; Susanne Sachsman Grooms, Minority Deputy Staff 
Director/Chief Counsel; Jennifer Hoffman, Minority 
Communications Director; Elisa LaNier, Minority Director of 
Operations; Una Lee, Minority Counsel; Juan McCullum, Minority 
Clerk; Suzanne Owen, Minority Senior Policy Advisor; Mark 
Stephenson, Minority Director of Legislation; and Cecelia 
Thomas, Minority Counsel.
    Mr. Lankford. The committee will come to order.
    I would like to begin this hearing by stating the Oversight 
Committee's mission statement.
    We exist to secure two fundamental principles: first, 
Americans have the right to know the money Washington takes 
from them is well spent and, second, Americans deserve an 
efficient, effective Government that works for them. Our duty 
on the Oversight and Government Reform Committee is to protect 
these rights.
    Our solemn responsibility is to hold Government accountable 
to taxpayers, because taxpayers have the right to know what 
they will get from their Government. We will work tirelessly in 
partnership with citizen watchdogs to deliver the facts to the 
American people and bring genuine reform to the Federal 
bureaucracy. This is the mission of the Oversight and 
Government Reform Committee.
    Good morning, everyone. This is a conversation today about 
the Affordable Health Care Act and about, specifically, the 
State exchanges. Four years ago the President's health care law 
was passed. In selling his law to the American people, the 
President made several promises. He promised the people they 
would be able to keep the coverage and doctors they liked; he 
promised the premiums for the average family would go to about 
$2,500.
    Four years later reality is setting in. Over 5 million 
Americans have received cancellation notices from their 
insurance companies and millions more have found out the 
doctors they liked were no longer covered by that plan. Rather 
than premiums going down, premiums for family has increased in 
many areas of the Country since passage of the law.
    Just this week, the Bureau of Economic Analysis reported 
that health care spending growth hit a 10-year high. We were 
also told that ObamaCare would be good for the Nation's 
economy. The truth is that in order to minimize the negative 
exposure to ObamaCare's costly mandates and taxes, employers 
were forced to lay off some workers and reduce some full-time 
workers to part-time.
    The Congressional Budget Office estimated that within a few 
years ObamaCare would reduce employment and activities in 
employment by 2.5 million full-time job equivalents. ObamaCare 
dramatically increases Federal Government spending at a time 
when the Federal Government continues to run a massive deficit. 
According to the CBO, ObamaCare spends nearly $2 trillion over 
th next decade. To pay for all this, there are 20 new taxes and 
significant cuts to the Medicare Advantage program.
    Despite the Federal Government spending all this money, 
more than 80 percent of the people who were uninsured before 
ObamaCare took effect are still uninsured today.
    In addition to the negative economic effects of the law, 
the Administration has implemented extra legal fashion 21 
different parts of the law changes. For example, in response to 
public anger over the President's broken promise about health 
insurance, the Administration unilaterally allowed insurers to 
renew non-grandfathered policies for an additional year. Last 
month, the Administration extended this policy until after the 
2016 election. This change by the Administration is just part 
of a pattern of extra legal actions aimed at insulating the 
law's supporters from unpopular and inconvenient parts of the 
law at the expense of taxpayers.
    While I welcome policy changes that reduce the burden of 
ObamaCare's costly mandates and give consumers greater choice, 
the Administration set a dangerous precedent by going around 
Congress to rewrite parts of the law that are politically 
troubling.
    The Obama Administration's rewriting of the law has 
introduced even greater uncertainty in the health insurance 
market and may lead to higher premiums in 2015 and beyond. 
Recently, WellPoint, one of the largest insurers participating 
in ObamaCare's exchanges, predicted double-digit premium 
increases in 2015. Just this week, analysis at Moody's 
predicted that premiums will continue to increase because of 
the way the Administration has carried out the law.
    While there are many issues we can and will explore about 
ObamaCare in the days ahead, the topics of today's hearing are 
State exchanges. Representatives from the States of Hawaii, 
Maryland, Massachusetts, Minnesota, Oregon, and California are 
here today. Residents in these States were forced to use an 
error-ridden Website. Many people who thought they had 
successfully enrolled found out that the insurance plan they 
had chosen had not received any enrollment information from the 
exchange.
    State residents were also working through the same issues 
that are on the Federal side. And while States have worked 
incredibly hard, and we are grateful to your service to the 
people of the States that you represent, you are also 
struggling with some of the Federal regulations and some of the 
delays that are coming down as well.
    Multiple problems with the ObamaCare Websites built by 
different States and by the different exchanges raise several 
questions: How is it possible, after three and a half years and 
spending hundreds of millions of dollars of taxpayer funds, 
that so many different exchanges had an incredibly difficult 
time putting together a Website? Second, what was the effective 
delay in changing guidance from the Obama Administration on the 
construction of the State exchanges? Third, where was Federal 
oversight of the projects? How could so many State exchanges 
have such a difficulty all at the same time? And, finally, how 
many more taxpayer dollars will be requested to bail out any 
troubled State exchanges in the years ahead?
    Congress has an important oversight role: to ensure that 
taxpayer funds are spent wisely and effectively. I welcome the 
witnesses here and I really do appreciate you coming, being a 
part of this conversation. You have things to be able to 
contribute to this conversation that we cannot know until we 
get a chance to be able to hear from you, so glad to be able to 
have that conversation with you.
    I now recognize the distinguished ranking member, the 
gentlelady from California, Ms. Speier, for her opening 
statement.
    Ms. Speier. Thank you, Mr. Chairman and to all the 
witnesses who have traveled long distances to be with us today.
    Now that we have surpassed the goal established two and a 
half years ago for enrollment, with more than 7 million 
Americans enrolled in the ACA, Republicans are as determined 
today as ever to try and rip it apart. Seven million Americans 
must be wrong.
    The reality is that the latest enrollment numbers prove 
that there is a genuine demand amongst the American people for 
affordable health care. This 7 million doesn't even include 
enrollment surges that took place in the 15 States, including 
California, running their own exchanges.
    Republicans today won't be focusing on these successes, or 
even conceding that their predictions thus far have been as 
reliable as a fortune-teller at a carnival. Many Republicans 
have voiced their certainty that the ACA would fail. They said 
that the 7 million goal was impossible. Several months ago, 
Chairman Issa said, ``It is time for the President to finally 
acknowledge ObamaCare isn't working and to delay the law in 
fairness to families and individuals.''
    Today is the committee's twenty-sixth hearing on the ACA, 
and this week, on the floor, we voted for the fifty-second time 
to repeal it.
    Like all historic and transformative pieces of legislation, 
the rollout of the ACA has been challenging and far from 
smooth. But Republicans have contended from the beginning that 
there is no meaningful role for the Federal Government in 
health care.
    Let's remember, though, how the market has handled health 
care in the past. The market allowed insurers to rescind your 
coverage if you got sick and deny you coverage if you had a 
preexisting condition. The unregulated market also allowed 
insurers to charge women more just for being women.
    Let's all remember how the market determined premiums. 
Before the ACA, with the exception of the recession, premiums 
grew by double digits year after year. Since the law has gone 
into effect, we have seen dramatic declines in the rise of 
premiums. This is the real story of the impact of the ACA, and 
I ask you to look at this chart. This is profound. And if 
anything speaks to the importance of the ACA, it is that 
premiums have declined dramatically as a result of this effort.
    I agree with my colleagues on the other side that the ACA 
should be the subject of scrutiny by Congress and the oversight 
of this committee, but the consistently partisan and one-sided 
approach has been all about tearing the program down, not 
fixing it. The preparation for this hearing only provided the 
latest example of how this committee seeks to undermine the 
efforts of States and the Administration to implement the law.
    Today we will hear testimony from Ms. Jean Yang, Executive 
Director of the Massachusetts Health Insurance Exchange. 
Massachusetts has experienced its own set of Website issues and 
requested to send Ms. Yang's highly qualified colleague to this 
hearing instead of Ms. Yang so that she could stay in 
Massachusetts and continue her work in fixing the Website. 
However, upon hearing about the change in witnesses, the 
chairman of the full committee threatened to issue a subpoena.
    I would like to apologize on behalf of this committee to 
you, Ms. Yang, and to the people of Massachusetts for the 
actions to bully you into testifying today.
    What this committee should be focusing on is what we have 
to do in the future to contain costs and how we can share the 
best practices by successful States like California, 
Connecticut, Kentucky, and New York with the States that are 
still struggling. A truly balanced hearing would have looked at 
more than just one story of State-based exchange success. If 
someone from Kentucky's exchange had been invited to testify, I 
am sure they would have wanted to tell the committee that a 
preliminary analysis found that approximately 75 percent of 
their enrollees were previously uninsured before signing up 
through the exchange, and that 49 percent of their enrollees 
are under the age of 35, or that by the end of the enrollment 
period over 370,000 Kentucky citizens now have health insurance 
that didn't have it before.
    To that end, I am so glad to have Peter Lee, the Executive 
Director of the California Exchange, Covered California, here 
to testify as Minority witness and to bring some good news and 
balance to this discussion.
    At the end of March 31st, over 1.2 million Californians 
have signed up for private health insurance through the 
exchange. This number greatly surpassed California's baseline 
projection of 580,000 and the enhanced projection of 830,000 
for the entire open enrollment period. California's Medicaid 
Program, Medi-Cal, enrolled approximately 1.93 million, and an 
additional 800,000 were found likely eligible. This brings the 
total of all Californians enrolled through Medi-Cal and the 
exchange to almost 4 million people, and insurance companies in 
California are reporting that 85 percent of the enrollees have 
paid their first month's premium.
    California has refused to accept the exchange's current 
success as the now continually updating policies such as 
efforts to increase enrollment in the Latino community.
    Mr. Lee, I look forward to hearing more from you today 
about the improvements that California plans to make and how 
you can help other States.
    Mr. Chairman, as you know, I value our relationship. We 
have common interests that we have discussed many times, and I 
know we can put our heads together and come up with new hearing 
topics that conduct real oversight. For example, I sent a 
letter to Chairman Issa yesterday requesting that the committee 
investigate and hold a hearing on the alleged Medicare, 
Medicaid, and Tricare fraud perpetrated by Health Management 
Associates, a for-profit hospital chain that allegedly ripped 
off taxpayers for more than $600 million. That should be the 
work of this committee.
    I look forward to hearing the testimony of all the 
witnesses present today, and thank you for being here.
    Mr. Lankford. I ask unanimous consent that our colleague 
from Hawaii, Ms. Hanabusa be allowed to participate in today's 
hearing. Without objection, so ordered.
    I would like to recognize the chairman on the Subcommittee 
on Economic Growth, Mr. Jordan, for his opening statement.
    Mr. Jordan. Thank you, Mr. Chairman. I would, if I could, 
just ask unanimous consent my opening statement be put in the 
record.
    Mr. Lankford. Without objection.
    Mr. Jordan. We have several witnesses. I want to thank you 
for having this hearing.
    Let's just remember all the false claims that have been 
made about the Affordable Health Care Act. I think sometimes it 
is good just to go back and put some context on this.
    If you like your plan, you can keep it. False.
    If you like your doctors, you can keep them. False.
    Premiums will go down. False.
    Premiums will go down an average of $2,500, the 
Administration said. False.
    The Website will work. False.
    The Website is secure. False.
    We have had countless hearings to dispel all these claims 
made by the Administration and now, today, Mr. Chairman, we are 
going to hear about the dismal performance of the State 
exchanges, again underscoring how poorly this law has operated, 
how bad it is, and why we need to change it.
    I just want to thank you for putting this hearing together. 
I look forward to hearing from our witnesses. More importantly, 
I look forward to asking questions of our witnesses about these 
six State exchanges and the overall impact this law has had on 
the American people.
    With that, I would yield back.
    Mr. Lankford. Thank you.
    I recognize the ranking member of the Subcommittee on 
Economic Growth, Mr. Cartwright, for an opening statement.
    Mr. Cartwright. Thank you, Chairman Lankford, and Chairman 
Jordan as well.
    This marks the twenty-sixth hearing this committee has held 
on the ACA. Over the course of 25 hearings you would think that 
every member on this committee on both sides of the aisle would 
have been working tirelessly to guarantee that each and every 
one of their constituents had access to affordable health care. 
You would also think that these hearings would have consisted 
of a bipartisan effort to find ways to fix Healthcare.gov and 
that actual oversight would eventually take place. This is the 
Oversight Committee.
    It saddens me to say that in 25 hearings none of these 
things actually happened, and I am afraid that today isn't 
going to be any different. In this committee, and throughout 
this Congress, health care has become a divisive, partisan 
issue. Instead of offering solutions to ensure that 
constituents have access to universal health care, this House 
has, instead, held 54 votes to repeal the Affordable Health 
Care Act. Some of my colleagues have also run misleading and 
oftentimes outright false advertisements designed to frighten 
their constituents from signing up on the exchanges, as opposed 
to educating them on the realities of the ACA.
    I am very proud that congressional Democrats have held more 
than 400 events in their districts at home in an effort to 
educate constituencies on the ACA. I have had five of them 
myself in my district. I would also like to commend my fellow 
Democrats for all their efforts in ensuring that their 
constituents are afforded this same kind of information.
    This hearing has been called in order to examine the State 
health insurance exchanges under the ACA. California has one of 
the most successful State exchanges, with more than a million 
individuals having signed up for private health insurance plans 
through its exchange. Other States such as New York, Rhode 
Island, and Connecticut have also experienced success with 
implementing their State exchanges. I am very grateful that Mr. 
Peter Lee is here with us today to speak regarding California's 
State exchange and provide much needed balance to this hearing 
today.
    I do wish that New York, Rhode Island, and Connecticut were 
also included today so we could hear about their best 
practices. I also wish that Pennsylvania had its own State 
exchange so that my constituents could have had the same 
tailored access that these States have. While I wish the 
governor of Pennsylvania had originally accepted the 
Administration's generous offer for Medicaid expansion, it is 
my hope that the two sides can still agree on a plan and expand 
Medicaid for the more than 520,000 Pennsylvanians that would 
benefit from that kind of expansion.
    The high demand for the quality affordable health care 
available under the Affordable Health Care Act is real; it is 
evident by the recently released enrollment figures showing 7.1 
million people have signed up for the private health insurance 
plans using both the Federal and State exchanges, beating both 
the Administration's own goal and popular expectations. If the 
market demand isn't enough evidence the health care bill is 
more popular than ever, about half of all Americans now support 
the law, despite the misinformation being disseminated over the 
last four years.
    And I want to say I am glad that many, many more people in 
places like Oregon, Maryland, California, Massachusetts, 
Hawaii, and Minnesota have health insurance than they did prior 
to October 1, 2013, and I am interested in hearing about how 
these States did this despite glitches with the rollout in each 
of those States. And I look forward to hearing about the best 
practices from the State of California, from which I think we 
can all learn a lot.
    I welcome our witnesses and thank them for taking the time 
to be with us today.
    I yield back, Mr. Chairman.
    Mr. Lankford. I would like to recognize the chairman of the 
full committee, Mr. Issa, for his opening statement or any 
statement that he would like to make.
    Mr. Issa. Thank you, Mr. Chairman. Congressman Lankford, I 
want to thank you for the work you have done on the details of 
the flaws in Healthcare.gov and in the overall legislation.
    I ask unanimous consent that my entire opening statement be 
placed in the record.
    Mr. Lankford. Without objection.
    Mr. Issa. Mr. Lee, I welcome you here. It is particularly 
important, as a Californian, to have California represented 
here because both the best and the worst, perhaps, will be seen 
in looking at the largest State in the Union.
    We often turn divisive, partisan legislation into divisive, 
partisan oversight. Mr. Cartwright, Ms. Speier have made that 
clear by talking about Republicans this, Republicans that. I 
have called or authorized every one of those many hearings they 
alluded to, and I am proud we did it and I am only sorry we 
didn't do more and sooner. Ultimately, about half of America's 
Federal spending will be related to health care, Medicare, 
Medicaid, Medicaid do eligibles for our seniors, and obviously 
the growth related to subsidizing the Affordable Health Care 
Act represent the largest single bulk of the budget today, and 
that over a trillion dollars is the area in which we have no 
real control over the rise in those costs unless we implement 
changes that drive the cost of delivery down.
    Long before President Obama became a Senator we had 
problems with health care. I think Republicans and Democrats 
need to recognize that Medicare and Medicaid have been part of 
the problem, not just part of the solution.
    Just a few days ago, by voice vote, almost a cowardly act 
in many ways, we did what was called the doc fix. The doc fix 
is based on a decade, well, 1997, I guess, old mandate that 
somehow we were going to lower costs through some congressional 
magic and fiat. Every year we recognize that it doesn't work 
and that if we don't suddenly come up with billions of dollars 
of new money, our doctors will be underpaid by, now, about 25 
percent of what apparently we believe is fair.
    And I use that as an example of a Clinton era Republican 
House and Senate attempt to fix health care, and I do it 
because this committee has a solemn responsibility to deal in 
real facts, in real costs, and in real savings. That has not 
been the case for people on both sides of the aisle for 
decades.
    The Affordable Health Care Act is well-intended, I believe, 
but it has had many flaws. One of them that we will see today 
is fairly straightforward: instead of doing a single Website in 
which everyone fed in, spending $700 million, $800 million, $1 
billion, $1.5 billion, $2 billion, some enormous amount of 
money to create a network, what we did is we issued out large 
grants. In the case of California, the number I have in front 
of me is $1,065,212,950 in grants. In the case of Hawaii I am 
told it is about $200 million just to establish the Website.
    Let's understand something here today. Whether you voted 
for the Affordable Health Care Act or you didn't, redundant 
programs throughout most of 50 States that issued hundreds of 
millions of dollars per State to do the same thing again and 
again, sometimes with success or, in the case of Maryland, I 
believe, today some would say failure, in the Website. That 
alone was billions of dollars of unreasonable, unnecessary, 
redundant in the planning. For the States to all come together 
and use a common platform and common software was common sense. 
To divide it into contracts in which each State may or may not 
have chosen the same good vendor or, in some cases, the same 
bad vendor that the Affordable Health Care Act federally used 
is self-evident today.
    Let's get passed the petty arguing about who voted for it 
or against it, whether we voted to repeal it or change it. 
Republicans and Democratic members are in fact, today, 
regularly talking about necessary change. I know the 7 million 
figure is big as of yesterday, and I know, as a Republican, I 
am told to say that very clearly that figure represents a great 
many people who lost their plans and, in fact, simply picked up 
and got the 7 million. Mr. Lee will undoubtedly, quite frankly, 
have to tell us that because California mandated to get onto 
the exchange, that you get off of programs that was necessary 
and deliberate cancellation of all kinds of programs in 
California because vendors had to choose whether to keep their 
old program or participate in the exchange. I am not holding 
anyone accountable; it probably seemed like a good idea at the 
time. But the fact is we have not driven down the cost of 
health care to the individual except when the taxpayer picks up 
the tab.
    So all of us today should begin looking not just at 
mistakes like thirty-some different Websites all paid for with 
Federal dollars, all essentially asking many of the same 
vendors to simply duplicate the software, but bill us twice, 
three times, four times for reinventing it. But we also should 
look at the question of, since we have not succeeded in the 
past in driving down the cost of health care through CMS's 
efforts, but, rather, repeatedly have simply said we will pay 
less and cost-shift as the Affordable Health Care Act is 
implemented and more and more people are under a federally 
subsidized program, where do we cost-shift to? We are running 
out of people we can cost-shift to, which means, by definition, 
everything we do will be something we have to pay for.
    Mr. Chairman, this was long and I apologize for going over, 
but I, like you, are passionate about efficiency; and not just 
the Affordable Health Care Act, but all the Federal spending 
has to really be looked at.
    Ms. Speier, I received your letter. I have taken note of 
the fact that corruption by vendors using Federal dollars is 
rampant and I believe that we do need to go after it, and I 
look forward to holding a hearing in which we look at both 
sides, vendors who sought to enrich themselves by getting more 
than they deserved and Government oversight agencies that let 
it happen until it piled up to hundreds of millions of dollars.
    Mr. Cartwright, I want to thank you for something you did 
that you may have forgotten. You voted for FITARA. You voted on 
a bipartisan basis for a major change in how we procure IT. And 
the Senate, Senator Udall has a companion bill. When that 
becomes passed, we will become more efficient as a result of 
our oversight and legislation created on a bipartisan basis in 
this committee.
    So I know we started off on a partisan basis. Hopefully, we 
can switch the tone to realizing that we are all living with 
increasing health care costs, and whether we voted for 
affordable care or not, we have a major role to try to drive 
down the future increases in health care if we are going to, in 
fact, be competitive around the world in commerce.
    So I thank you.
    Mr. Chairman, I thank you for your indulgence. Yield back.
    Mr. Lankford. Thank you
    I now recognize the ranking member of the full committee, 
Mr. Cummings, for his opening statement. Also, if you would 
please take time to introduce Mr. Lee of California, as well. I 
am sorry, of Maryland. Sorry, you are a representative from 
Maryland. Apologize.
    Mr. Cummings. You just moved me clear across the Country.
    Mr. Lankford. I know. That is quite a shift. Sorry. I just 
shifted your time zones. I apologize.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Today is April the 3rd, just three days after the deadline 
for Americans to sign up for health insurance under the 
Affordable Health Care Act. A lot has happened in the past six 
months since the Federal and State exchanges opened for 
business. It has not always been pretty, but we should take a 
moment to reflect on what we have accomplished.
    More than 7 million residents of our States have signed up 
for affordable health care. Millions of people who could not 
afford health insurance and were one accident or illness away 
from financial ruin now have health insurance. This is very 
significant. This is something that we all should be proud of.
    And that is not all. We hear talk about what it didn't do, 
but under the Affordable Health Care Act insurance companies 
are no longer allowed to discriminate against people with 
cancer, diabetes, or other preexisting conditions. They are no 
longer allowed to discriminate against women. That is happening 
now. Millions of our residents receive free preventative care 
so they can stay well. We all know that it is cheaper to keep 
somebody well than to treat them when they are sick, if you 
want to talk about driving down the cost of health care. 
Millions of kids can stay on their parents' plan until they are 
26, and billions of dollars in rebate checks have been sent to 
consumers across the Country. That has happened and it is 
happening now.
    Ladies and gentlemen, put simply, the Affordable Health 
Care Act saves lives and it prevents people, from going through 
pain, and it allows people to live longer, like the gentleman 
who is probably watching us right now with colon cancer, 
knowing that he has a way to be treated and he will be able to 
walk his daughter down the aisle; or the person who just wants 
to survive long enough to see their child graduate from high 
school. That is what the Affordable Health Care Act is all 
about.
    Sometimes I think we get so caught up in the problems that 
we are going through that we forget the big picture. Emerson 
said it best, he said do not be pushed around by your fears and 
your problems; be led by your hopes and your dreams. That is 
what this is all about, hopes and dreams.
    So to the witnesses here today and to the State and Federal 
employees who are working tirelessly to implement the law, I 
want to say thank you. I look at Dr. Sharfstein of Maryland, 
the head of our health department. This is a man who has given 
his blood, his sweat, and his tears trying to make life better 
for people when he was the commissioner in Baltimore, and now 
with our State. And I can probably say that if I knew all the 
people there, I know that you all are doing the same thing. And 
you don't do this for the money; you do it because it feeds 
your souls. You do it because you want to make a difference. 
You do it because you want to affect generations yet unborn. 
And that is what we are all about, we should be about, making a 
difference so that people can live the best lives that they 
can.
    The road we took to get here today was rocky for the 
Federal Government. It has also been challenging for some 
States, including my home State of Maryland. I cannot fully 
express how frustrated I was with the troubled rollout of the 
Maryland Health Connection. In my State, as in many of yours, 
people have a desperate need for quality, affordable health 
care. We needed the system to work. Let me say it again, we 
needed the system to work. Lives depended upon it. And when it 
did not, unnecessary obstacles were put in the way, which is 
completely unacceptable.
    Now, let me say this. Sometimes you have contractors that 
advertise more than they can produce, so they sell you a bill 
of goods. Maybe those are the folks that we need to be looking 
at. But let's be clear. This is not just about a Website. It is 
not just about a Website. This is about making a difference for 
people so that they can be the best that they can be and be all 
that God meant for them to be.
    The answer to the problems is not to decimate the 
Affordable Health Care Act. The solution is not to eliminate 
health care for millions of people, to gut the funding for the 
ACA, or to return to the days when insurance companies could 
discriminate against us based on our medical conditions.
    I have said it before and I will say it again, we are 
better than that, to let insurance companies do that to us. The 
remedy certainly is not to try to scare people away from 
enrolling in health care they have a right to under the law. 
When you scare them away from enrolling, you have scared them 
away from having health care, from having insurance for being 
able to take care of their child when the child gets sick or 
prevent the child from getting sick. We are better than that.
    Unfortunately, our Republican friends have voted more than 
50 times to repeal, de-fund, and undermine the Affordable 
Health Care Act. And my friend Mr. Issa, the chairman of the 
committee, I agree with him, we need to move not to common 
ground, but to higher ground, what this Nation is all about. 
Higher ground, where we come together to try to figure out what 
is wrong and correct it and move forward.
    So when history is written, when that man is able to walk 
down that aisle with his daughter, when that mother is able to 
see her child graduate from college, when that person lives 
long enough to see their first grandchild born, they are not 
going to be worried about whether a Website failed. They are 
not even going to be talking about that. They may not even know 
that it was the Affordable Health Care Act that saved them and 
gave them a life. All that will matter to them is they had an 
opportunity to live and live in dignity and have a moment of 
happiness.
    So I am hoping that, as we move forward, since this is the 
law, by the way, that we move forward to make the law better, 
and not try to destroy it. And the only reason I mention these 
past efforts with regard to the numerous hearings is because I 
have not seen in these hearings one effort to improve the law, 
not one. If we could move to that, then we could move to higher 
ground.
    With that, I yield back.
    Mr. Lankford. Members will have seven days to submit 
opening statements for the record.
    I would like to recognize our panel.
    Mr. Cummings, would you like to introduce your guest from 
Maryland, as well?
    Mr. Cummings. Yes.
    Dr. Sharfstein is the head of our health department in 
Maryland. As I said before, he has also served--by the way, he 
was a staff member on this committee, Mr. Chairman, some years 
back. Then he came to Baltimore and he was our commissioner of 
health there, where he brought all kinds of innovative projects 
to Baltimore, and now he is head of our health department for 
the State of Maryland; and I am very pleased to have him.
    Mr. Lankford. Ms. Speier, would you like to introduce 
anyone?
    Ms. Speier. I am delighted to introduce Mr. Peter Lee, who 
is the Executive Director of Covered California, who has had a 
storied career in health care both in the private and public 
sector, and formerly was the Deputy Director of the Center for 
Medicare and Medicaid Innovation at CMS, among many other 
places.
    Welcome. We are very glad you are here.
    Mr. Lankford. Thank you.
    Mr. Matsuda, you definitely have the longest time zone 
change here of any of the folks that are here. We are glad you 
are here. He is the Interim Executive Director of the Hawaii 
Health Insurance Exchange.
    Ms. Jean Yang is the Executive Director of the 
Massachusetts Health Insurance Exchange.
    Mr. Scott Leitz is the Interim Chief Executive Officer of 
the Minnesota Health Insurance Exchange.
    Mr. Greg Van Pelt is the Advisor to the Governor of the 
Oregon Health Insurance Exchange.
    Pursuant to committee rules, all witnesses are sworn in 
before they testify, so if you would please stand and raise 
your right hand.
    Do you solemnly swear or affirm that the testimony you are 
about to give will be the truth, the whole truth, and nothing 
but the truth, so help you, God?
    [Witnesses respond in the affirmative.]
    Mr. Lankford. Thank you. You may be seated.
    Let the record reflect all the witnesses answered in the 
affirmative.
    In order to allow time for discussion, I ask you to be able 
to limit your testimony to five minutes. Your entire written 
statement, which all of you have submitted, will be a part of 
the permanent record as well.
    Mr. Matsuda, you are batting off the beginning here, to do 
a little spring baseball conversation there. So you are first 
up. If you press the talk button, we would be glad to be able 
to receive your testimony for five minutes.

                       WITNESS STATEMENTS

                    STATEMENT OF TOM MATSUDA

    Mr. Matsuda. Thank you, Chairman, ranking members, and 
members of the subcommittees. My name is Tom Matsuda, Interim 
Executive Director of the Hawaii Health Connector, speaking on 
behalf of the Connector and its board of directors.
    Hawaii has long been a leader to ensure that our residents 
have access to quality, affordable health insurance. In 1974 
Hawaii enacted a groundbreaking State law, the Hawaii Prepaid 
Health Care Act. This law requires that most employers in 
Hawaii provide health care coverage to employees who work more 
than 20 hours per week for at least four consecutive weeks.
    Hawaii's Prepaid Health Care Act requirements are generally 
stricter than those of the Federal Affordable Health Care Act. 
As a result, Hawaii has a low uninsured rate, estimated at 
about 8 percent, or 100,000 individuals. Because the State law 
is so strongly supported by the people of Hawaii, the Aloha 
State authorized the establishment of a State-based marketplace 
to harmonize the ACA with the Hawaii Prepaid Health Care Act.
    My written testimony provides detail about the Connector 
and I would like to focus on some specific issues.
    First of all, enrollment. As of March 31st, 2014, we have 
7,596 individuals enrolled in commercial plans through the 
individual marketplace, 265 people enrolled through the SHOP 
small employer marketplace, and 24,641 completed applications 
in our system.
    The Connector does not handle Medicaid eligibility or 
enrollment for the Medicaid population; that is handled through 
the Department of Human Services, or DHS. DHS had over 28,800 
Medicaid enrollments from last October through February this 
year, for a total of over 36,661 enrollments across the entire 
Hawaii marketplace.
    We launched our online marketplace on October 15th and 
accepted initial application forms between October 1st and 
15th. The system has been operating since then, but it was very 
difficult to use at first. As of now, we have made significant 
improvements. The system is better today than it was back in 
October. Our system is working from end-to-end, but more 
improvements can be made.
    Sustainability. As a State-based marketplace, we must be 
self-sustaining by January 1st, 2015. Last year, the Connector 
board approved a 2 percent premium assessment for plans sold on 
the Connector. Our board is now engaged in a sustainability 
planning process. The key is to reduce operating expenses while 
supplementing enrollment, especially in the SHOP exchange. The 
Federal and State decisions to give small employers the option 
to remain with their existing insurance plans through 2016 have 
reduced the volume of participants in SHOP.
    Hawaii has received four Federal grant awards. While Hawaii 
is a small State, we are subject to the same Federal 
requirements as all other States to establish the 
infrastructure to operate these State-based marketplaces. The 
establishment costs will be comparable from State to State to 
ensure that the structural components of the marketplace are 
compliant and secure. Our small population and low uninsured 
rate mean that Hawaii has a smaller market to support our 
operating costs. As of December 31st, 2013, the Connector has 
spent about $57 million of the total $204 million in Federal 
grant monies awarded to us and we have an operating system.
    For our priorities going forward, we have roughly 11,000 
incomplete applications. These individuals' enrollment is not 
yet complete. We have increased staff to complete this process. 
We are also working on extending our outreach into island 
communities that are underserved to help educate these 
populations about the services available to them.
    On behalf of the Hawaii Health Connector, I appreciate the 
opportunity to discuss these issues with you today. We have 
much left to accomplish, but we believe in the mission of the 
Connector and are fully committed to contributing our part in 
Hawaii's long history of providing access to affordable, 
quality health care coverage to our residents. Thank you.
    [Prepared statement of Mr. Matsuda follows:]

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    Mr. Lankford. Thank you.
    Mr. Sharfstein.

              STATEMENT OF JOSHUA SHARFSTEIN, M.D.

    Dr. Sharfstein. Thank you, Chairman Lankford, Chairman 
Jordan, Ranking Member Speier, Ranking Member Cartwright, and 
other members of the committee. I appreciate the opportunity to 
testify today. It is true that I used to staff this committee, 
I used to be one of the people sitting along the back wall. I 
think I can say that every staffer wonders what it would be 
like to sit on this side of the microphone, and after the 
hearing I will be able to tell them.
    As has been widely reported, Maryland has faced 
considerable IT challenges in establishing our State-based 
exchange. On October 1st the system barely worked at all. For 
weeks we struggled with a range of software and hardware 
problems. But we did not give up. We now expect to hit our 
enrollment goal. In fact, we expect to exceed it by 10 percent 
or more. We expect the number of enrollments in qualified 
health plans to come within 10 percent of what was predicted by 
independent experts and to exceed our expectations for Medicaid 
enrollments. By the time the dust settles, we could see 
enrollments more than 300,000 in Maryland.
    Maryland's story includes decisions we wish we could make 
again, failures by multiple vendors, and too many IT 
frustrations to count. But Maryland's story is also about an 
exchange that is a lot more than a Website; it is about a State 
that is battling back and is looking towards the future. I have 
submitted detailed written testimony, so I will just make some 
key points.
    First, the exchange is a lot more than the Website. It 
includes our close partnership with more than 2,000 brokers; it 
includes a very competitive market with four carriers offering 
45 plans; we have some of the most competitive insurance rates 
in the Country, including dental plans; we have a Website that 
has a physician at work for each carrier and a community-based 
Navigator program that includes more than 30 grassroots 
organizations.
    Second, we did face serious Website problems. We made a 
major misjudgment, in retrospect, initially in adopting a 
strategy of trying to buy commercial off-the-shelf software 
that could be configured for the purpose of the Affordable 
Health Care Act, instead of building something specifically for 
this purpose. The products that were advertised as being ready 
actually were defective and deficient. This caused immense 
frustration for consumers and at certain points made us wonder 
whether anyone would be able to enroll.
    Third, rather than give up in the face of these IT 
challenges, Maryland tackled the problem head-on. Changes 
included new leadership, including when the governor asked the 
secretary for IT to step aside from her job and be the single 
leader for all IT development; hiring a general contractor, 
Optum/QSSI, the same company that helped fix the Federal 
Healthcare.gov; implementing hundreds of critical IT fixes; 
collaborating closely with carriers to allow for special types 
of enrollment for people who had trouble on the Website; manual 
workarounds which allowed us to process certain types of 
eligibility by hand; elbow grease by the gallon and the 
incredible tough work of hundreds of consumer assistance 
workers; and, finally, a strong finish, with as much enrollment 
in the last two days as in the first 10 weeks or so.
    As a result, as I said before, we expect not only to meet, 
but to exceed our enrollment goals. Quality and affordable 
health coverage is providing peace of mind and access to 
lifesaving care to families across Maryland, and is also going 
to reduce the hidden tax that all of us pay for poorly managed 
and uncompensated care under our unique system in Maryland of 
rate-setting for hospitals, which not only, I think, to 
Chairman Issa's point, is going to reduce the costs for 
uncompensated care within that system, but also we are using 
across all payers with no cost-shifting to address the 
fundamental challenge of cost in health care.
    Let me finally say talk to next steps. In addition to the 
significant work and the hundreds of fixes that it took to get 
us to the point where we could exceed our enrollment goals, our 
secretary of information technology has led a process of 
figuring out the future for the Website, and after an extensive 
analysis the board, this week, voted to leverage the 
Connecticut IT solution in order to upgrade our Website. This 
is a model that has proven very effective and allows us to use 
something that works very well in time for the second open 
enrollment period.
    As the chair of the board of the Maryland Health Benefit 
Exchange, I deeply regret the frustration that many Marylanders 
have experienced. I am also proud of the efforts of so many who 
have worked tirelessly to overcome the IT challenges and help 
their friends, neighbors, and fellow citizens gain access to 
affordable and quality health coverage.
    Thank you for the opportunity to testify and I look forward 
to your questions.
    [Prepared statement of Dr. Sharfstein follows:]

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    Mr. Lankford. Thank you.
    Ms. Yang.

                     STATEMENT OF JEAN YANG

    Ms. Yang. Thank you, Mr. Chairman. Chairman Jordan, 
Chairman Lankford, Ranking Member Cartwright, Ranking Member 
Speier, and members of the subcommittees, good morning. Thank 
you for the opportunity to testify about our experience 
implementing the Affordable Health Care Act in Massachusetts.
    As you know, Massachusetts is very familiar with the 
framework of the ACA. In 2006, former Governor Mitt Romney 
worked with our State legislature to fashion an approach to 
expanding health coverage that drew ideas from both ends of the 
political spectrum. Once he took office in 2007, Governor Deval 
Patrick worked to bring the statutory framework to life, in 
close collaboration with our State's legislature, our health 
care providers, our business and labor leaders, our insurers, 
our consumer advocates, and countless others.
    We are extraordinarily proud of the results we have 
achieved together over the past eight years. Virtually all of 
the Commonwealth residents are now ensured, at 97 percent. 
Ninety-one percent of our residents report having access to a 
primary care physician and 88 percent having seen their 
physician in the previous 12 months. On a whole host of 
measures, we are healthier.
    At the same time, more employers are offering coverage and 
our State's budgets have been consistently balanced.
    One of the most important lessons we have learned in the 
years since 2007 was that health care reform takes time. We 
refined our plan as we learned new lessons in collaboration 
with our partners, including the Bush and Obama 
Administrations. It has not always been easy, but we kept our 
eye on the goal of getting people adequately covered. As 
Governor Patrick has remarked, we learned early that health 
care is not a website.
    We support the Affordable Health Care Act because it 
embodies the principles of our Massachusetts reforms and 
because it gives our State new tools to sustain and expand on 
our success. We know that it is already helping to put 
affordable coverage and care in the hands of Americans across 
the Country. In Massachusetts itself, since the ACA took full 
effect in January, over 200,000 more people have signed up for 
subsidized coverage. Almost 30,000 people have purchased 
unsubsidized ACA-compliant plans through our health connector. 
The health connector is also offering dental policies for the 
first time, with over 2,300 plans purchased to date by 
individual shoppers.
    Even so, while implementing the ACA, we have experienced 
Website challenges. These are mainly due to failures of our 
system integrator. But with our new team in place we are on a 
path to go live with a functional, reliable exchange Website 
for the next open enrollment period.
    Challenges with our system integrator and project 
management shortcomings impeded our progress in achieving our 
full vision for the Website by October 1st of last year. On 
that account, we decided to deploy only parts of the new system 
on that date. Given these constraints, and with many people 
encountering errors and wait times even with the parts that 
were deployed, we have developed alternative pathways to 
support enrollment. These mechanisms have enabled us to protect 
and expand coverage with strong cooperation from our health 
insurers, providers, and consumer advocates. Many residents of 
the Commonwealth have experienced difficulties with some of 
these processes and we fully share their frustration. But we 
have not allowed Website problems to prevent us from meeting 
the ultimate goal of the ACA: getting people covered so that 
they can enjoy health and economic security.
    Though the website challenges are mainly the result of an 
underperforming IT vendor, we are holding ourselves accountable 
for fixing them, and we are making progress. We have stabilized 
our system, eliminated a backlog of paper applications, and 
substantially reduced call center wait times. We continue to 
maintain strong data security protocols that meet Federal 
standards and have kept personal information of applicants safe 
from data breach, and we have a detailed plan to open up new 
parts of the Website only when we know they are ready for 
users. In the meantime, through the creativity and flexibility 
of our team, people are getting covered.
    We have an unwavering commitment to ensuring quality, 
affordable health care for the people of Massachusetts, a 
commitment that kept us moving forward through both the peaks 
and the valleys of our State reforms, a commitment that keeps 
us moving forward today as we strive to realize the ACA's full 
potential for improving care and improving lives.
    Thank you for your time. Look forward to your questions.
    [Prepared statement of Ms. Yang follows:]

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    Mr. Jordan. [Presiding] Thank you, Ms. Yang.
    Mr. Lee.

                     STATEMENT OF PETER LEE

    Mr. Lee. Good morning and thank you to Chairman Issa, 
Jordan, and Lankford, and Ranking Members Speier, Cartwright, 
and Cummings. I want to appreciate also the other distinguished 
members of the committee having us here. I am Peter Lee from 
Covered California and I am glad to share with you our early 
implementation lessons in California in launching the 
Affordable Health Care Act.
    I think it is important that we are excited in California 
to, across a whole range of constituents, whether they be 
insurance agents, county workers, health care providers of a 
range of political positions who have come together in 
California to launch this to expand coverage. We are seeing the 
fruits of that effort today.
    California is one of 15 State-based exchanges, and when we 
started we looked to the data and said that somewhere around 4 
million Californians could benefit from Federal support, either 
expanded Medi-Cal or subsidies through Covered California. In a 
very few short years we have gone from being a 10 person 
organization to an organization with over 1,000 people. We are 
a very, very fast startup that is working to change history.
    So how is it going so far? Well, you have heard some of the 
numbers: 1.2 million Californians now have coverage directly 
through Covered California. An additional 1.9 have coverage 
through Medi-Cal today, and over 800,000 are signed up for 
pending eligibility. This is close to 4 million Californians. 
Every single one of them went through CoveragedCA.com, our 
Website. Many of them were touched by humans in the enrollment 
process. And I really can't agree too strongly; again and again 
exchanges are about more than Websites. And I want to talk a 
little bit about what they are about.
    But I also want to underscore when we think about State-
based exchanges, there are five exchanges out there that, as of 
a month ago, had already covered more than 30 percent of those 
eligible. Those States included California, Rhode Island, 
Vermont, Washington, and Connecticut. Other States have done a 
very good job as well: Kentucky, New York. As of three days 
ago, California had brought coverage to more than 50 percent of 
those subsidy-eligible in the exchange. That is a remarkable 
number when you think about what it takes to grow a brand new 
and historic program.
    So let me talk briefly about what it takes to make a State-
based exchange work. And I would note that when we say work, we 
do not mean perfect. It has been rocky, it has been bumpy, and 
it will continue to be rocky and bumpy. This is historic. This 
is a very big change to the health care system. But, all in 
all, we feel good about the progress we are making. It takes, 
in our mind, three things for an exchange to work: it takes 
having affordable health plans delivering quality care; it 
takes effective marketing and outreach; and it takes effective 
enrollment.
    In the area of affordable care, Covered California has been 
what is called an active purchaser. Thirty-three health plans 
originally expressed interest in participating in our 
marketplace. We selected 11. Covered California specifically 
went through a process of standardizing our benefit designs to 
give consumers better tools to make choices and understand what 
they were choosing between their plans. We ended up getting 
very competitive rates and we are optimistic those rates will 
stay very competitive and affordable. Right out of the gate, we 
have been giving consumers information to choose. That is 
having affordable plans that consumers can use their 
information to make the right choice for them.
    Second element of success is effective marketing and 
outreach. Covered California has been reaching out to 
Californians across demographic mix, across languages through a 
whole range of marketing channels; through TV, through radio, 
through newspapers, but as, or more importantly, through over 
250 groups anchored in local communities doing outreach and 
educating people about the importance and opportunities of 
enrolling in Covered California.
    Finally, effective enrollment. It is more than about an IT 
system and it is a complex IT system. The enrollment system 
that we have, like the other people testifying with me here, 
has to connect with more than 11 different major databases, 
including the Federal Government, but also State systems. We 
have our system up and running. It has been up 91 percent of 
the time in the scheduled running time. It has served more than 
12 million unique visitors.
    It is working well but, more importantly than it working 
well, the over 25,000 Californians, these are county workers, 
these are licensed insurance agents, these are certified 
enrollment counselors in every community in the State have been 
helping literally millions of Californians get enrolled. That 
is why we think it is largely working in California, because 
Californians have stepped up. They have stepped up to talk to 
their neighbors, members of their churches, members of their 
schools to get them covered.
    We do have lessons learned we can share. Those are in my 
written testimony.
    And I look forward to responding to questions from the 
committee. Thank you very much.
    [Prepared statement of Mr. Lee follows:]

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    Mr. Jordan. Thank you, Mr. Lee.
    Mr. Leitz, you are up for your five minutes.

                    STATEMENT OF SCOTT LEITZ

    Mr. Leitz. Chairman Jordan, Chairman Lankford, Chairman 
Issa, Ranking Member Speier, Ranking Member Cartwright, Ranking 
Member Cummings, and members of the Oversight and Government 
Reform Committee, good morning. Thank you for inviting me to 
come here today to talk about Minnesota's experiences in 
establishing MNsure, our online health exchange.
    I want to start by telling you about Corey and Kate 
Needleman, who live in Minneapolis. Corey is a teacher. For 
years the family had health insurance through his job. But over 
time the family's out-of-pocket costs grew. After welcoming 
their third son, Irving, into the family, they had to choose 
between paying their mortgage or paying their health bills. 
Last fall, when MNsure opened, her three boys qualified for 
medical assistance with no premium or deductible, and she was 
able to purchase a plan for herself that is less than $200 a 
month without tax credits. In her words, I was thrilled. It 
blows my mind that we are going to be able to be cared for and 
we are not going to lose our house.
    Today, I am proud to say MNsure is stable, secure, and 
successful; and, because of our efforts, the Needlemans are 
just a few of the nearly 170,000 people in Minnesota who now 
have access to affordable, comprehensive coverage because of 
MNsure.
    Of that 170,000, nearly 88,000 have enrolled in Medicaid, 
over 34,000 have enrolled in MinnesotaCare, our State's basic 
health plan for people between 133 and 200 percent of the 
Federal poverty line. In other States, these individuals or 
enrollees would be in private plans with tax credits. The 
remaining over 47,000 have enrolled in private qualified health 
plans.
    It is also worth nothing that in Minnesota 95 percent of 
the people enrolled in health coverage have paid for it. And as 
we continue to process applications, we expect our numbers to 
grow even higher.
    It isn't news to this committee that MNsure's rollout was 
rocky. Our initial launch in October was plagued by software 
errors and technical glitches. I was appointed interim chief 
executive officer on December 18th, after the resignation of 
MNsure's first executive director. In recognition that more 
must be done to ensure Minnesotans have access to a functioning 
Website and comprehensive affordable health coverage, I took 
immediate action. In January I commissioned an end-to-end 
review of our exchange by Optum Health. They recommended we 
make a number of enhancements to customer experience to help 
boost enrollment and to improve customer satisfaction.
    Working in close partnership with our vendors, we were able 
to stabilize our system. Our eligibility software is now 
operating with an over 99 percent success rate, compared to 70 
percent in mid-December, and our online marketplace has been 
stable enough to process more than 2,000 enrollments a day.
    December's software problems caused our call center wait 
times to climb to over an hour, and up to 70 percent of 
consumers were simply giving up before they could be helped. We 
resolved this issue by more than doubling the size of our call 
center and by bringing stability to our software system. 
Average wait times for the month of March were dramatically 
less.
    Moving forward, we are planning our budgets for 2015. I am 
happy to say that next year's calendar year budget is balanced 
and does not seek additional State or Federal funds to operate 
MNsure.
    In the longer term, we are in the process of selecting a 
lead vendor that will help MNsure assess the larger 
architectural software issues that were identified in the Optum 
report. The goal is to not just make the 2015 open enrollment 
period a better experience for consumers, but to have a 
comprehensive roadmap for continuously improving MNsure and 
enhancing the exchange for consumers in every open enrollment 
period to come.
    I had the opportunity to meet Kate Needleman and her son 
Irving recently. She told me that having affordable insurance 
has opened the door for her family. Health reform is indeed 
more than a Website; it is about getting real people and 
families into affordable comprehensive health coverage. This is 
something we are doing well in Minnesota.
    Thank you for the opportunity to testify, and I look 
forward to your questions.
    [Prepared statement of Mr. Leitz follows:]

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    Mr. Jordan. Thank you, Mr. Leitz.
    Mr. Van Pelt, you have been patiently waiting. You are up.

                   STATEMENT OF GREG VAN PELT

    Mr. Van Pelt. Thank you very much. Mr. Chairman, ranking 
members, and other members of the Oversight and Government 
Reform Committee, thank you for allowing me to speak before you 
today about Oregon's health reform efforts. My name is Greg Van 
Pelt. I recently retired as chief executive officer of 
Providence Health and Services in the Oregon region. Throughout 
my career I have had direct experiences with the challenges of 
expanding access to quality health care while managing costs.
    Last year, Governor Kitzhaber asked me to step in to help 
navigate the challenges around the launch of the State's health 
care exchange. Currently, I serve as the president of the 
Oregon Health Leadership Council and voluntary advisor to the 
governor and Dr. Bruce Goldberg, acting director of Cover 
Oregon, for whom I am appearing today because he recently 
suffered a broken leg.
    While the launch of the ACA in Oregon has been different 
than we hoped, over 300,000 individuals have enrolled in health 
insurance plans since October 1st. Governor Kitzhaber, two 
weeks ago, released an independent assessment of Cover Oregon 
produced by the company First Data. The report, which I also 
request to be included in today's record, was based on 67 
interviews with stakeholders from Cover Oregon and Oregon 
Health Authority employees to the governor and legislators from 
both sides of the aisle and a review of more than 3,200 
documents. It assesses the technical problems with the 
development and rollout of our health exchange Website.
    Members of the committee, I want you to know that in 
response to First Data's findings, the governor announced 
numerous steps he has taken or will take to improve 
performance, accountability, and oversight. These steps are 
detailed in my written testimony, which also has been shared 
with you.
    We do know that some things have worked very well. We have 
used our technology investment to roll more than 300,000 
Oregonians in health care coverage since October thanks to 
Cover Oregon and the Oregon Health Authority. We continue to be 
proud of the work we have done to improve Oregonians' lives, 
and we know that that will endure.
    I welcome your questions and the opportunity to discuss 
with you Oregon's ongoing health care transformation work, as 
well as the progress that we have made to secure the public 
trust to make good on Cover Oregon's promise to enroll more 
Oregonians in affordable, high-quality health insurance. Thank 
you very much.
    [Prepared statement of Mr. Van Pelt follows:]

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    Mr. Jordan. Thank you, Mr. Van Pelt.
    We will now turn to questioning. We will start with the 
gentleman, the vice chair of the committee, Mr. Gosar, the 
gentleman from Arizona.
    Mr. Gosar. Well, thank you very, very much.
    Mr. Leitz, I want to start off with you. You talked about 
the rocky start for your exchange earlier. So my first question 
is, in the three months leading up to the botched Website 
rollout, 14 managers of the sites received bonuses for work 
they did on the exchange. Is that accurate?
    Mr. Leitz. Congressman, it is.
    Mr. Gosar. Now, why would the State pay people a total of 
$27,000 for a botched Website? Usually, bonuses go to 
exceptional work. Botched doesn't seem to meet exceptional.
    Mr. Leitz. Congressman, those bonuses were approved by the 
previous executive director.
    Mr. Gosar. Oh, I am glad you said that because have you 
done anything to claw back those bonuses?
    Mr. Leitz. Congressman, not to date, no.
    Mr. Gosar. Interesting. Now, in January, United Health's 
Optimum division released a report stating that the exchange's 
current program management structure and process is 
nonexistent, and management leadership decision-making is 
occurring via crisis mode. That report also concluded that the 
exchange might be so badly flawed that MNsure might have to 
scrap all of it. In the same article you were quoted as saying, 
we do intend to take actions--in fact, I thought I heard you 
speak about this in your comments--we intend to take actions as 
result of the report.
    Have you fired anyone in the State government for the 
bungled launch and the massive loss of taxpayer dollars?
    Mr. Leitz. Congressman, we have made changes within the 
organization.
    Mr. Gosar. I asked you a question. Have you fired anybody 
for----
    Mr. Leitz. Congressman, personnel actions have been taken.
    Mr. Gosar. People have been fired?
    Mr. Leitz. Congressman, I am not----
    Mr. Gosar. Or they have just been reassigned, like here in 
the Federal Government, and given a new title?
    Mr. Leitz. Congressman, individuals are no longer with the 
organization who previously had been.
    Mr. Gosar. Are they still in the State government?
    Mr. Leitz. Congressman, no.
    Mr. Gosar. So you did make some changes.
    Mr. Leitz. Yes, Congressman.
    Mr. Gosar. Now, last week the Los Angeles Times reported on 
how Governor Dayton referred to the Minnesota exchange as the 
black hole, where he was referencing consumer applications that 
were frozen or had vanished. Did you ever find out where those 
vanished applications went?
    Mr. Leitz. Congressman, yes, we did.
    Mr. Gosar. You have a total accounting of all those 
vanished?
    Mr. Leitz. Congressman, yes, we are able to identify any 
applications that had previously been in the system that we 
weren't able to track during the fall rollout.
    Mr. Gosar. Will you provide that to the committee? I mean, 
a lot of the folks back in Minnesota don't know that story.
    Mr. Leitz. Congressman, I would be very happy to provide an 
accounting of those individuals, in the aggregate, of course.
    Mr. Gosar. Thank you very much.
    Now I am going to go to everybody, so we are going to try 
to go fairly quickly. How many people did you have to hire to 
process paper applications because of the problems with your 
exchange Website? Start with you, Dr. Matsuda.
    Mr. Matsuda. In our contact center, recently we increased 
staffing to handle the backlog that I mentioned in my remarks 
by a total of 80 people.
    Mr. Gosar. How much did that cost?
    Mr. Matsuda. I will have to supplement that to the record. 
I can get the exact number for you.
    Mr. Gosar. We would like to know how it was paid for, too.
    So let's go to the next. Mr. Sharfstein?
    Dr. Sharfstein. About 200 more people through the call 
center and fulfillment center, about $6 million.
    Mr. Gosar. And how was it paid for?
    Dr. Sharfstein. Through our grants through the usual rules.
    Mr. Gosar. Through the Federal Government?
    Dr. Sharfstein. Federal and State government, right.
    Mr. Gosar. Okay.
    Ms. Yang?
    Ms. Yang. Congressman, we have leveraged the workforce of 
about 300 individuals through an intensive work period in the 
past four weeks, and we are happy to report that the paper 
application backlog has been eliminated.
    Mr. Gosar. And how much did it cost?
    Ms. Yang. I do not know the precise number for that period. 
We can get back to you on that.
    Mr. Gosar. And how it was paid for.
    Mr. Lee?
    Mr. Lee. We have a customer service staff that we expanded 
by about 250 people that do both phone and mail, but we also 
have shared into the paper processing work with county partners 
throughout the State of California and additionally did some 
extra contracting of vendors to help us get through the paper 
backlog. I am not sure the exact number; I will happily follow 
up with you on that number, but it was absolutely paid for out 
of our Federal establishment grants.
    Mr. Gosar. Okay.
    Mr. Leitz?
    Mr. Leitz. Congressman, approximately 50 individuals were 
added for that purpose. We also paid for that out of the 
establishment grant.
    Mr. Gosar. Gotcha.
    Mr. Van Pelt?
    Mr. Van Pelt. Thank you. Oregon also leveraged workforce 
from different State agencies, but I will have to get back to 
you on the precise number and payment source.
    Mr. Gosar. I am going to come right back to you real 
quickly, Mr. Van Pelt, because when did the State first alert 
CMS that the exchange was not going to be operational?
    Mr. Van Pelt. That is all in the first data assessment, and 
I would have to defer to that report, congressman.
    Mr. Gosar. So you can't address the oversight?
    Mr. Van Pelt. My particular role was such that I was called 
in shortly after the governor and the Cover Oregon determined 
that this was not working or going to work, and, that being the 
case, my time focused on setting up the paper application 
process and steps going forward.
    Mr. Gosar. And my point was that CMS had very, very poor 
oversight. In fact, your predecessors were talking in regards 
to their lackluster questions and how they had impressed CMS 
with unimpressive answers. So I would like to have a detailed 
report on that.
    Mr. Van Pelt. Be happy to do that.
    Mr. Gosar. I yield back.
    Mr. Jordan. I thank the gentleman.
    Gentlelady from California, the ranking member, is 
recognized.
    Ms. Speier. Mr. Chairman, thank you.
    And thank you again for your really outstanding testimony. 
It is really a tribute to you as executives in each of your 
programs that you have turned lemons into lemonade.
    I would like to start by quoting the speaker when he 
referenced the rollout as horrendous and a launch was anything 
but smooth. Representative Barton called it a huge undertaking 
and there is going to be glitches.
    Now, those were comments made by the speaker and by 
Congressman Barton on the rollout of Part D, Medicare Part D, 
which was seen as full of problems with the initial rollout; 
and, yet, Republicans at that time were all about fixing it 
because it was in President Bush's Administration. I would like 
to see the same kind of frankness and willingness to fix the 
system now that it is in President Obama's Administration and 
we are undertaking a much, much larger effort.
    Now, what is good about everything I have heard here this 
morning is that you have fixed the initial problems. You are 
all optimistic about the success of your programs. Can I just 
have each of you indicate whether or not you believe that you 
have met your goals or will meet your goals?
    Mr. Matsuda. Thank you, Ms. Speier. We do believe we are 
going to reach our goals. Our system is working, as I testified 
earlier, and, really, our goal now for the short-term is to 
improve the functionality and the usability of our system.
    Dr. Sharfstein. Maryland has exceeded its enrollment goal.
    Ms. Speier. Ms. Yang?
    Ms. Yang. Congresswoman, as you have heard in my testimony, 
we are proud of the fact that we are achieving the fundamental 
goal of the ACA, which is expand coverage on top of an already 
solid ground on Massachusetts. Our work is not done, but we are 
on a very solid path.
    Ms. Speier. Mr. Lee?
    Mr. Lee. Well, we actually have never had specific goals. 
We have exceeded all expectations and all independent 
projections. Our goals are to insure every single Californian, 
so we still have work to do.
    Ms. Speier. Mr. Leitz?
    Mr. Leitz. Congresswoman, Minnesota is solidly on track and 
we feel very good about the future of what is ahead of us.
    Ms. Speier. Mr. Van Pelt?
    Mr. Van Pelt. Thank you. Oregon is very much on its way to 
achieving its enrollment goals and feels confident in the steps 
we have taken to improve our technology.
    Ms. Speier. Great.
    Mr. Lee, California is a great sunshine story here and we 
are proud of that. Would you tell us what some of the reasons 
for the success were?
    Mr. Lee. Congresswoman, I would be happy to, and some of 
these are highlighted in my testimony, and I would highlight 
just very briefly five things.
    One, leadership across the State focused on consumers. We 
put politics aside and said let's make this work for consumers.
    We had very effective collaboration both between State 
agencies, the Medi-Cal agency, which I partner with, but also 
with the regulatory agencies; Department of Managed Health 
Care, Department of Insurance. This has changed the entire 
insurance market. It is not just about exchanges, it is about 
changing the marketplace. That coordination is critical.
    Partnerships. This has worked because it has worked on the 
ground in communities, with community clinics, with counties, 
with insurance agents. That partnership collaboration has been 
vital.
    Finally, that we have had a culture of both transparency 
and learning. We have had bumps along the way, and we have 
adjusted our course continually, and will continue to do that. 
This is the beginning of a very long road and we look forward 
to learning and improving as we go forward.
    Ms. Speier. Dr. Sharfstein, you are going to implement the 
Connecticut IT solution. I don't know how many other States 
are, but they seem to have made it work very well. What do you 
think the key is to the Connecticut system?
    Dr. Sharfstein. Thank you, Congresswoman. There are several 
things that are very attractive about the Connecticut solution. 
First of all, it is a very simple and elegant design both for 
consumers and the consumer assistance workers. It also has very 
good functionality for insurance brokers, and we have a lot of 
insurance brokers that we are working with in Maryland, so that 
was very good. It also uses some of the same software, not the 
specific software for the Affordable Health Care Act, but some 
of the general software pieces that we already have licenses 
to, and it runs on the same kinds of computers that we have 
already purchased. So there is a lot of overlap and allows us 
to reuse some of the initial investment.
    So those are some of the reasons. And we were able to 
demonstrate it at our board meeting recently. We have gotten a 
lot of positive feedback around Maryland for that.
    Ms. Speier. All right. Thank you all.
    Mr. Jordan. We will now go to the gentleman from Michigan, 
Mr. Walberg.
    Mr. Walberg. Thank you, Mr. Chairman, and thank you for 
holding this hearing to look at a program that is being panned 
as just an exceptional opportunity to, I guess, carry on an 
approach that takes away freedom, competition, opportunity, and 
I think great health care continuation for our Country simply 
because we are unwilling to deal with the costs and increase 
that competition.
    But let me ask a question of Mr. Lee. Thank you for being 
here. A July 2013 State auditor's report that called the 
Covered California plan a new high-risk entity. That was the 
auditor's statement. The report stated that under all 
enrollment scenarios Covered California will not have 
sufficient revenue to cover its operating costs in fiscal year 
2015-2016. Specifically, it said it would be losing $73 
million. You told State finance officials in September that 
``the long-term sustainability of the organization'' is its 
greatest weakness.
    What did you mean by that?
    Mr. Lee. Well, a couple things. One, we are very 
appreciative to receive Federal funding to get going. In 
California, after we are going, we will be running 100 percent 
on our own steam, supported by premium dollars. We, by State 
law, cannot go to the State of California for general funds, so 
making sure we are fiscally well managed is a critical 
important factor for being an ongoing organization.
    The auditor's report also noted, I believe, and our 
budgeting has always planned to have a couple years of what are 
called deficit spending to then be operating in the black. In 
2016-2017, we plan to be operating in the black and put money 
in the bank----
    Mr. Walberg. You still believe that you will be?
    Mr. Lee. Pardon me?
    Mr. Walberg. You still believe that you will be operating 
in the black?
    Mr. Lee. Absolutely. Absolutely. We are actually in the 
process of developing our next year revised budget now based on 
our current enrollment figures that we will be taking in draft 
to our board actually this next month, and we will be able to 
adjust every year our operations both on the revenue and the 
expense side to be fiscally well managed for Californians.
    Mr. Walberg. Well, let me follow up that with, again, the 
State auditor's report noted that premiums in both the 
individual and SHOP markets ``generally would provide the 
revenue required to operate the exchange.''
    Mr. Lee. That is right.
    Mr. Walberg. But you shut down the SHOP market earlier this 
year.
    Mr. Lee. No, we did not, Congressman.
    Mr. Walberg. You didn't shut it down?
    Mr. Lee. Absolutely not. Our SHOP market is running. We 
have more than 6,000 individuals enrolled and over 600 
businesses. We turned off the online enrollment functionality, 
which is generally not used----
    Mr. Walberg. Of the SHOP market.
    Mr. Lee. Of the SHOP market. But that is generally not how 
small businesses enroll anyway, using online functionality. But 
we are enrolling people today and continue to in our SHOP 
program.
    Mr. Walberg. So you don't plan any taxpayer bailout in the 
future?
    Mr. Lee. Absolutely not.
    Mr. Walberg. You are certain of that?
    Mr. Lee. By State law, in California, I want to be clear, 
we cannot be dependent on general fund money, and we expect 
that we are going to be converting to----
    Mr. Walberg. Federal taxpayer bailout as well?
    Mr. Lee. We have been supported by the Federal support to 
get launched.
    Mr. Walberg. But you don't expect any more Federal support 
or bailout.
    Mr. Lee. I do not expect any more.
    Mr. Walberg. We will hold you to that.
    Mr. Lee. Okay.
    Mr. Walberg. I hope that is the case.
    Mr. Lee. Me too, Congressman.
    Mr. Walberg. We both do.
    Let me move on to ask several of you questions.
    Let me start with Dr. Sharfstein. In total, how much has 
been paid to your State to develop and operate its exchange?
    Dr. Sharfstein. So far, our exchange has spent, for all 
costs, including the website, about $129 million.
    Mr. Walberg. That is what has been paid in total to your 
State to operate this exchange?
    Dr. Sharfstein. No. So our Federal grants I think in total, 
if I am correct, are about $180 million. Oh no, I am sorry. Let 
me get the exact number for you here.
    Mr. Walberg. Ms. Yang, you can get prepared for that same 
question.
    Dr. Sharfstein. Yes, it is about $180 million in grants. We 
haven't spent all that, though.
    Mr. Walberg. But that is what has been paid to you thus 
far.
    Dr. Sharfstein. Those are the Federal SSI grants that we 
have been awarded.
    Mr. Walberg. Who are the contractors and how much have they 
been paid?
    Dr. Sharfstein. There is a long list of contractors, so I 
could submit that for the record.
    Mr. Walberg. I would appreciate that. Were they bid 
competitively or sole-sourced?
    Dr. Sharfstein. For the major IT procurement we did a 
competitive procurement.
    Mr. Walberg. Any other contracts sole-sourced?
    Dr. Sharfstein. There were a couple much smaller contracts 
that were sole-sourced.
    Mr. Walberg. Appreciate that on the record as well. How 
would you rate the contractors' performance under contract?
    Dr. Sharfstein. Well, we let go our prime contractor; we 
did not think that they performed well. We were particularly 
disappointed with how some of the software worked. As I 
mentioned before, it was sold to us as out-of-the-box it would 
be able to do a lot of things that in fact it could not do out-
of-the-box, and we wound up with some of the same problems that 
Minnesota had.
    Mr. Walberg. Mr. Chairman, if I could ask, for the record, 
if I could get also information to us that would clearly state 
whether you will seek further Federal funds to fix your 
mistakes.
    With that, my time has expired.
    Mr. Jordan. I thank the gentleman.
    Ranking member, the gentleman from Pennsylvania, Mr. 
Cartwright, is recognized.
    Mr. Cartwright. Thank you, Mr. Chairman.
    And thank you to all the witnesses who have joined us here 
today and thank you for your tireless efforts to get people 
signed up for affordable health care. Unfortunately, I come 
from a State that did not start its own exchange, Pennsylvania, 
which I think the failure to do that in Pennsylvania was an 
abdication of the responsibility of Governor Corbett on behalf 
of Pennsylvania's citizens.
    In the last five yeas we have seen 12 hospitals in 
Pennsylvania close and I see the ACA and enrollment as a way to 
strengthen America's hospital system, and that includes 
Pennsylvania. Governor Corbett's decision back in 2012 to 
decline to establish an exchange was announced in a peculiar 
way: it was first celebrated in a press release by Americans 
for Prosperity, the Koch brothers'-funded enterprise. Twenty 
minutes later the Commonwealth of Pennsylvania itself made the 
same announcements in a press release.
    The timing of that announcement, to me, certainly raised 
questions as to how the Koch brothers influenced that decision 
in the first place. Even more disappointing I want to say is 
Governor Corbett's decision not immediately to expand Medicaid 
for the more than 520,000 Pennsylvanians who could be covered. 
The Federal Government would have paid 100 percent of those 
costs for the first three years, phasing it down to 90 percent 
by 2020.
    I have had a health care CEO in my district, in 
Northeastern Pennsylvania, confide to me that if Pennsylvania 
doesn't accept the Medicaid expansion, he is going to have to 
close one of his two hospitals. That is how important this is.
    Instead of accepting Federal funding to expand a highly 
successful Medicaid program, Governor Corbett, in Pennsylvania, 
submitted a waiver proposal that would impose premiums, work 
search standards and limits to benefits for Medicaid 
recipients. According to the Kaiser Family Foundation, the 
governor's delay will cost Pennsylvanians hundreds of millions, 
if not billions, in Medicaid dollars this year and will leave 
hundreds of thousands of low-income residents without health 
care coverage in 2014 in Pennsylvania. It is unconscionable to 
me. It is time to quit playing politics, as Ranking Member 
Cummings has pointed out, with people's lives, with people's 
health. I urge Governor Corbett to reconsider his wrong-headed 
decisions.
    With that, I would like to turn to the panel today. The 
citizens you represent, ladies and gentlemen, are fortunate 
that all of your States have made the decision to accept the 
Medicaid expansion.
    Mr. Lee, I want to start with you. California has enrolled 
more than 1.5 million new applicants into Medicaid since 
October 1. Am I correct in that?
    Mr. Lee. That is correct.
    Mr. Cartwright. Could you tell the committee about what the 
Medicaid expansion means for those California residents and for 
the State as a whole?
    Mr. Lee. Absolutely. I appreciate the question. We have 
been, in California, in very close partnership with our Medi-
Cal agency; it is an arm-in-arm enrollment process. And people 
don't know what they are eligible for. We have had literally 
thousands of people break down in tears at the idea they have, 
for the first time in their lives, affordable coverage that is 
being provided to them. That is both for Medi-Cal coverage and 
for the subsidized coverage in Covered California. I have 
talked to many of them myself personally and our people on the 
front lines, whether they be insurance agents or customer 
service people, relay these stories constantly. It is touching 
many, many lives.
    Mr. Cartwright. Thank you, Mr. Lee.
    What about you, Mr. Leitz? Can you describe the impact of 
the Medicaid expansion on your residents and your State?
    Mr. Leitz. Congressman, we know in Minnesota that about 60 
percent of our uninsured population is eligible for the 
Medicaid program, so as our numbers have grown through MNsure, 
we know that we are reaching the uninsured by enrolling them 
into Medicaid; and what that has enabled them to be allow them 
to do is to access services, oftentimes for the first time, to 
get preventive screenings, to care for issues that they might 
have had not cared for in the past. So it has been a very, very 
important thing both for them, as well as the caregivers that 
they seek.
    Mr. Cartwright. Thank you, Mr. Leitz.
    What about you, Dr. Sharfstein? Same question to you.
    Dr. Sharfstein. Sure. The Medicaid expansion is extremely 
important in Maryland. We have done an analysis that there are 
well over $150 million in uncompensated care reductions that we 
expect as a result of the expansion, and it matters a great 
deal. I am a pediatrician. I met one mom who was telling me 
this story about a very sick baby who needed a heart surgery 
that the Medicaid paid for, and then out came the daughter to 
give me a hug. They are real people in Maryland. My patients, 
when I see them in clinic, how the Medicaid expansion changes 
their lives.
    Mr. Cartwright. I thank you, sir, and I yield back.
    Mr. Jordan. I thank the gentleman.
    Ranking member of the subcommittee, the gentleman from 
Florida, Mr. DeSantis, is recognized.
    Mr. DeSantis. Vice chairman, not ranking member. I am on 
your team. That is all right.
    Mr. Jordan. You have been called worse, I am sure; you are 
in politics. But vice chair. Excuse me.
    Mr. Connolly. Not a bad thought, though, Mr. Chairman.
    Mr. DeSantis. Thanks to the chairman. I appreciate this 
hearing. I have to tell you, when I hear things like that this 
law is causing premiums to decline sharply for Americans, I 
don't know what to say after having dealt with so many 
disappointed constituents in my district. The question is who 
are you going to believe, those who are defending this law or 
your own lying eyes. And I think that the American people will 
make that determination.
    Some of the things that are said are just factually not 
true. We keep hearing that this has led to expansion of 
coverage for 3 million young adults, but the people who have 
looked at that most recently have debunked that number and said 
it is probably less than 1 million. And oh, by the way, that is 
imposing a cost on families between $160 and $480 per policy. 
And, of course, some of the numbers back and forth are fine, 
but the central promise of this law was that if you liked your 
arrangements, this law would not negatively affect you and, 
indeed, it would benefit you with lower costs, and that central 
promise clearly has been broken.
    If people like their plan, they may not be able to keep it. 
People are losing access to their preferred doctors. I don't 
have any constituent who has come to me and said their policies 
that they had have declined in premiums by $2,500, as was 
promised. Also, we don't talk about the increase in 
deductibles. People are paying higher premiums and seeing their 
deductibles go up, so they are spending way more out of pocket 
than they used to.
    Can we put the slide up on the board?
    [Slide.]
    Mr. DeSantis. So you have all of those things which we were 
told were not going to happen, but then we see a lot of people 
have seen their existing arrangements undermined or changed in 
a way that they would not have chosen to do it.
    So what was the promise of this? It is constantly said 
everyone now has health insurance, but if you look, the CBO, 
when the law initially passed, they said it would be 37 percent 
of Americans right now who are uninsured would be covered, and 
then they said, well, actually, it is going to be closer to 40 
percent of all the uninsured by this point in 2014. And the 
actual number is about 12.5 percent; and that is not just 
including these exchanges, that is including the Medicaid 
expansion and, of course, the age 26 rule.
    So you have about 12.5 percent of the uninsured that have 
now been covered and, of course, at a great cost. We are seeing 
the cost here, just the amount of money that has gone into 
creating these exchanges. We are seeing the cost of people who 
have lost access to their doctors, people on Medicare 
Advantage. So it hasn't even produced what they said in terms 
of expanding coverage, and I think that that is something that 
has made a lot of folks very frustrated when they see numbers 
like that.
    I just have a couple quick questions for California.
    Mr. Lee, I read a news report where a couple in La Mesa had 
signed up for a plan in the Covered California, then they got a 
voter registration card sent to them that had the Democratic 
party already checked. Are you familiar with that report?
    Mr. Lee. Yes, I am.
    Mr. DeSantis. And how does it become to where they would 
get something that would be pre-checked as the Democratic 
party? Is that something that you have control over or is the 
elections office sending this stuff separately from Covered 
California?
    Mr. Lee. Covered California has been designated a national 
voter registration agency, so it is a requirement under law 
that we send these out in California. Every voter registration 
form is provided to us by the Secretary of State's Office. This 
report is something we reported promptly to the Secretary of 
State's Office and is being investigated.
    Mr. DeSantis. Okay, thank you. I also read another report 
about Covered California, whether they are advertising to 
people who are in the Country unlawfully. Obviously, I don't 
think that they are lawfully allowed to get ObamaCare 
subsidies, but can you say how are you guys approaching that? 
Are you trying to get folks who don't have legal status to sign 
up on Covered California?
    Mr. Lee. Absolutely not. And we are absolutely trying to 
communicate very clearly how a family that has mixed status--in 
California there are many families that might have one member 
of the family who is not a documented resident and another 
family member who is. We want to make sure those that are 
eligible for coverage get coverage, so we have been clearly 
communicating the rules on how a family should still come 
forward and we, quite honestly, great appreciated the guidance 
from the Federal Government to make it clear that immigration 
status information provided to Covered California is only used 
for that purpose to not discourage individuals as families 
coming forward to get coverage because they would be worried 
the information might be used by us for immigration purposes.
    Mr. DeSantis. But if someone cannot prove legal status, 
then that would mean they would not get any----
    Mr. Lee. Absolutely not. Absolutely not.
    Mr. DeSantis. Okay.
    Mr. Van Pelt, how many cancellations has Oregon had in the 
individual market, do you know offhand?
    Mr. Van Pelt. I do not know offhand.
    Mr. DeSantis. The number I have is about 135,000 
individuals who have lost policies because of the Affordable 
Health Care Act mandates. How many people have enrolled via the 
individual market in Oregon as of April 1st, do you have that 
number?
    Mr. Van Pelt. In the qualified health plans, approximately 
65,000, and then another 140,000 in Medicaid or Oregon health 
plan.
    Mr. DeSantis. And of the 140,000 in Medicaid, do you know 
offhand how many would have been eligible for Medicaid anyways?
    Mr. Van Pelt. Approximately 100,000.
    Mr. DeSantis. Okay. So it seems to me that there were more 
policies canceled certainly than have signed up in the 
individual market. And then when you kind of control the 
Medicaid numbers, a lot of States have seen increases in States 
that didn't even expand Medicaid. So I think it is important 
that we are able to determine those.
    I think I am out of time, so I will yield back.
    Mr. Jordan. I thank the gentleman.
    The ranking member of the full committee, the gentleman 
from Maryland, Mr. Cummings, is recognized.
    Mr. Cummings. Mr. Chairman, I would rather one of my 
colleagues go ahead.
    Mr. Jordan. Okay. Then I believe the gentlelady from New 
Mexico is recognized.
    Ms. Lujan Grisham. Thank you very much, Mr. Chairman, and I 
also appreciate the panel today. I spent, actually, before 
coming to Congress, some time working with our State 
legislature and our current governor to enact legislation that 
got passed by our legislature. From the immediate we had to 
pass it three years three times in order for New Mexico to get 
started. So while you were pointing out the trials and 
tribulations, one thing that we haven't discussed today is that 
many States waited until the very last minute, and that, I 
think, also exacerbated some of the issues that you have 
identified today.
    I am really interested in some of the education and 
outreach efforts and would love to try to have each of you talk 
to me a little bit about that going forward, targeting those 
folks that are still uninsured, really clarifying these 
numbers, looking at folks and businesses and those trends, 
working with all of your Navigators and Assistors and brokers. 
If each of you would talk to me a little bit about moving 
forward.
    Mr. Matsuda. Our outreach program in Hawaii is called the 
Heinola program, and we have arranged subgrants of our Federal 
funding to about 32 nonprofit organizations on all of the 
islands; and with those grants those organizations are hiring 
people to go out into the community to work with people from 
many different cultures and many different language groups to 
work with them face-to-face to help them understand health 
insurance, first of all, and then the Affordable Health Care 
Act. And if they are interested in looking into applying, then 
they will assist them with going through our application 
process for enrollment.
    Dr. Sharfstein. In Maryland we work with more than 2,000 
insurance brokers. In addition, we have a Connector entity 
program where there are six regions each with a Connector. Each 
of those is working with local agencies. When I was way out in 
Western Maryland, I was meeting for another reason with a group 
called Allegheny Health Right, which it is the sole mission of 
that nonprofit to help people get health care for many years. 
They work with the medical community up there. And I was 
wondering and they said, actually, we are part of the coalition 
that got funded. So we have some great organizations across the 
State. It is one reason we have been able to hit our goals 
despite the IT problems.
    Ms. Lujan Grisham. I think that is really important. And as 
the rest of the panel answers, and I appreciate the reference 
to your partners who are part of those grant investments, but 
also looking at--tell me what you will do differently going 
forward, because while some of you met the targets, some other 
States are still really struggling. We could do a lot better in 
New Mexico. Although we did a good job, we could do a much 
better, for example, in the Medicaid outreach.
    Ms. Yang. Congresswoman, I really appreciate this question 
because one of the things that I can say that based on 
Massachusetts' reform experience in the past eight years, 
outreach and education is really one of the most critical 
efforts; it is the most important investment area, particularly 
the most vulnerable population, the low-income. They are the 
hardest to reach.
    And if you look at the Massachusetts reform records, we 
have 97 percent of the residents insured. The 3 percent 
remaining are primarily low-income. And we are very proud to 
see the fact that we were able to bring 200,000 new people into 
subsidized coverage. That is a major step forward relative to 
where we were.
    Mr. Lee. We have a lot of learning still to do, but I think 
one of the things, as we look forward, having insured probably 
close to 50 percent of those eligible for subsidies, it is 
going to be get harder and harder. The people that are not 
insured are folks that often have never had insurance. There is 
more education about what it means to be insured, and they 
don't believe that it could be affordable. That is a core 
education and outreach message, and we have done it with both 
advertising, but also with our on-the-ground people.
    The other thing that I think has been critical for us and 
we are continuing developing is this is complex stuff, and 
having person-to-person support for enrollment in language; 
people who speak Spanish with Spanish speakers, speak Hmong----
    Ms. Lujan Grisham. And I want to actually, since I only 
have 45 seconds left, really have you hit that. We know that 8 
out of 10 Hispanics are likely eligible for Medicaid, one of 
the Medicaid programs or subsidized coverage, and yet we have 
half the Hispanic population is not going to be insured; and I 
worry that we actually have too many steps in this face-to-face 
process to actually execute the deal.
    Mr. Lee. Well, if I speak to that specifically, in our 
first three months in California, a very big State with a very 
big and important Latino community, 18 percent of our 
enrollment was Latino, which was way off our target. In the 
month of March it was 36 percent. We doubled the rate of 
insuring Latinos because it takes more touches; it takes 
education, it takes people on the ground doing enrollment. We 
are going to try to do better than that in our next round of 
open enrollment.
    Ms. Lujan Grisham. We have a couple seconds, and I think if 
the chairman will allow I think everyone can do a quick, 
concise answer. Thank you.
    Mr. Leitz. Congresswoman, very briefly. We have certainly 
seen the importance of working with agents and brokers on the 
ground; they are in every community, they know the communities 
very well. That has worked very well for us. The other area 
that we have been focusing very heavily on is with our Hmong 
and Somali communities, and also working with them like many of 
the other States on the panel, helping them understand the 
importance of insurance coverage, what the options are for 
them, and working with them in their languages.
    Mr. Van Pelt. Thank you very much. Similar to other States, 
working very closely with community agents and community 
partners to help get the word out and, in fact, walk many of 
our citizens step-by-step through the application process.
    Ms. Lujan Grisham. I am way over, but thank you. I really 
appreciate all that and am very grateful for those responses. I 
would love for everyone to consider, and maybe at a future 
hearing, Mr. Chairman, I know that the importance and value 
with complicated information on that person-to-person touch, 
but in my State I went to several different enrollments and 
they varied; but there were too many touches, and this notion 
of waiting for appointments and not having that work for the 
States who did the education and then a little more in-depth, 
and then go to an appointment with an Assistor and then have an 
Assistor or the Navigator help you actually then sign up, we 
lost, I would say, 50 percent of those folks in that line of 
touches, so I am thinking maybe too much. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Mr. Jordan. You bet. Thank you.
    Dr. Sharfstein, I think earlier you said that you received 
approximately $180 million in Federal taxpayer grant dollars, 
the State of Maryland received that.
    Dr. Sharfstein. Through SSI grants, yes.
    Mr. Jordan. And you have spent approximately two-thirds of 
that, I think you referenced $120 million.
    Dr. Sharfstein. I think of that we probably have spent 
about $100 million.
    Mr. Jordan. Okay. And I think in earlier questions you 
indicated that you had to hire, because of Website concerns, 
approximately 200 more people to answer phones and work at your 
call centers?
    Dr. Sharfstein. That is correct.
    Mr. Jordan. Okay. I also think I remember that when Ms. 
Speier was asking I think each of you how you are doing, I 
think you said, doctor, that the State of Maryland is ``meeting 
our goals.'' I think a lot of people would disagree with that.
    Dr. Sharfstein. Well, I was referring to the enrollment 
goal. I would absolutely agree we did not meet our goal in 
terms of the function of the Website.
    Mr. Jordan. Okay. But you met your enrollment goal as well?
    Dr. Sharfstein. That is correct.
    Mr. Jordan. My understanding is that CMS enrollment target 
number was 150,000 for the State of Maryland, and as of April 
1st, as of a couple days ago, you have enrolled 60,000 people.
    Dr. Sharfstein. Our enrollment goal between Medicaid and 
the qualified health plans was 260,000, and we are about 
295,000.
    Mr. Jordan. I am talking about the individual market 
enrollees.
    Dr. Sharfstein. So for our individual market we had an 
independent assessment of what the estimate would be and they 
estimated around 75,000. And what I testified is that we expect 
to get at least within----
    Mr. Jordan. Wait, wait, wait. I thought CMS told you your 
enrollment was 150,000.
    Dr. Sharfstein. No.
    Mr. Jordan. We have a document from CMS that says that, 
150,000.
    Dr. Sharfstein. If that is the case, I haven't seen it.
    Mr. Jordan. So where is the 75,000 number coming from?
    Dr. Sharfstein. It comes from the Hilltop Institute at the 
University of Maryland at Baltimore County. We could provide 
the letter that explains that.
    Mr. Jordan. And that is your target goal, 75,000?
    Dr. Sharfstein. No. Our goal was for overall enrollment 
across Medicaid and qualified health plans, but insofar as how 
we are doing in terms of qualified health plan enrollment, the 
estimate----
    Mr. Jordan. Well, I guess here is what I am trying to 
figure out. You took $180 million of Federal taxpayer dollars. 
The Federal agency involved in implementing the Affordable 
Health Care Act is CMS. They said your enrollment target should 
be 150. And yet you can take the money but you can get someone 
independent to tell you what your goal really is, something 
smaller. When was that number, 75,000, given to you all?
    Dr. Sharfstein. That was the estimate that was given by the 
University of Maryland, Baltimore County.
    Mr. Jordan. When?
    Dr. Sharfstein. It was a revision of a report that they did 
in the last couple months.
    Mr. Jordan. A revision? What was the initial number, then?
    Dr. Sharfstein. The initial number they gave us was about 
150,000.
    Mr. Jordan. Oh, imagine that, the number I just said. And 
when did you get the revision?
    Dr. Sharfstein. A couple months ago.
    Mr. Jordan. Oh, so you are into this and you are not coming 
close to the 150,000 and, shazam, you get a revision.
    Dr. Sharfstein. Well, they had made an error in the report 
and we can provide you their letter.
    Mr. Jordan. How convenient. The Federal Government gives 
you $180 million, they say 150,000 you need to meet. You see 
you are not going to meet that, you get someone to give you a 
revised number and suddenly, oh, now we are close. Defining the 
standard down is what it sounds like to me.
    Dr. Sharfstein. Well, you can judge for yourself. You can 
look at the letter that they gave, but I don't consider the 
Medicaid individuals to be invisible, Mr. Congressman.
    Mr. Jordan. I am not saying that either. All I am saying is 
the standard was here, then, suddenly, when you are not even 
coming close to the standard, the standard gets revised not by 
the Federal Government, who has given you the money, but by 
some independent agency that Maryland goes to and gets a number 
that they like. And I am not the only one who thinks you guys 
aren't doing the job. You have a Democrat congressman from your 
State. I have four letters from Congressman John Delaney from 
the State of Maryland, two of them were sent to you, where Mr. 
Delaney says this thing is such a mess, we encourage you to 
switch to the Federal exchange. Right?
    So it is not Republicans saying this thing is a mess; it is 
your own congressman from your own State saying, look, I care 
about our constituents. With all the headlines, all the 
problems associated with the Federal exchange, you have a 
Democrat congressman from the State of Maryland saying you guys 
are such a mess, we should bag this and go to the Federal 
exchange.
    Dr. Sharfstein. Well, I testified that the IT didn't work. 
I mean, I don't disagree that we had a major IT problem. But it 
was overcoming that problem that allowed us to hit our 
enrollment goal.
    Mr. Jordan. No, you haven't hit your goal. We are talking 
about individual market enrollees. You have 60,000; you were 
supposed to be at 150,000. That is markedly short from your 
goal.
    Dr. Sharfstein. That was an estimate, never a goal, and it 
was an estimate that was in error. And you can judge from the 
University of Maryland----
    Mr. Jordan. It wasn't an estimate in error, it was the 
number you were given by the Federal Government, the same 
entity that gave you the $180 million of taxpayer money.
    Here is what the President said. When did you let the 
Federal Government know you were going to come far short of 
this 150,000 number? Do you have to give the Federal Government 
periodic reports of where you are going to be?
    Dr. Sharfstein. Well, we have been working very closely 
with the Federal Government the whole time, so we have been 
providing weekly public updates on where our enrollment is 
since October 1st.
    Mr. Jordan. Let me ask you a couple more questions. I am 
over my time, and I will get to the chairman here.
    How many people in your State lost insurance because of the 
Affordable Health Care Act, were kicked off their existing 
plans?
    Dr. Sharfstein. I think very few. There weren't that many 
cancellations, for example. There are some notices of non-
renewal, and the carriers allowed people to renew for 12 months 
if they wanted to, our major carrier.
    Mr. Jordan. According to our reports, according to our 
reports, according to AP, what has been press accounts, 73,000 
individuals in Maryland were going to lose their insurance 
because of the Affordable Health Care Act. And what you are 
telling me is your revised goal is approximately the same 
number, 75,000. So your revised goal of people you were going 
to sign up is we are going to sign up the people who were 
kicked off of the Affordable Health Care Act.
    Dr. Sharfstein. No. The problem with that is that there is 
also a market outside the exchange, and we are going to see the 
overall individual market inside and outside the exchange, 
including the people who also renewed their policy early, to be 
far more than we had in 2013. So you have probably as many 
people in the individual market outside the exchange as inside 
the exchange, plus you have people who renewed early and are 
still in those plans. So our carriers predict significantly 
more enrollment across the individual market.
    Mr. Jordan. You may predict all that. All I am saying is, 
according to press accounts, 73,000 Marylanders are going to be 
kicked off their plan because of the Affordable Health Care 
Act, and you are telling me your goal, the goal you were 
supposed to meet by April 1st, was only 75,000.
    Dr. Sharfstein. You are comparing apples and oranges, with 
all due respect.
    Mr. Jordan. I am comparing people who got kicked off 
because of this law and I am comparing the number you say you 
are going to sign up through your exchange, which is far below, 
roughly half, of what the initial number that CMS gave you.
    Dr. Sharfstein. I think an apples-to-apples comparison 
would be the size of the individual market before and after. So 
whether people have coverage in the individual market before 
January 1st versus after, because some people don't need 
subsidies, they will go right to a carrier.
    Mr. Jordan. Right.
    Dr. Sharfstein. So we are seeing not only just the exchange 
enrollment, the outside the exchange enrollment, which is 
probably going to be at least that, plus the fact that people 
could renew early. We are going to see a much bigger individual 
market. That is the apples-to-apples comparison.
    Mr. Jordan. But I think you are leaving out the fact, your 
calculations, what you just went through, those who were kicked 
off. There are certainly people who are now in the individual 
market; they just got kicked off their plan.
    Dr. Sharfstein. No, they were in the individual market 
before. It was an individual market plan.
    Mr. Jordan. I understand that.
    Dr. Sharfstein. So the apples-to-apples would be you were 
in the individual market before, you are in the individual 
market after. That is apples-to-apples. And we are going to see 
a huge increase in the individual markets after. That is more 
people covered.
    Mr. Jordan. Right, but I am looking at the number. The 
number you are saying is your goal, 75,000. You got lots of 
people kicked off; you got people who didn't have insurance 
before who you are supposed to try to sign up, even though you 
are woefully short in the chart Mr. DeSantis brought up; and we 
are back to the original point. CMS said here is $180 million, 
Maryland. Your goal is 150,000. That gets revised in the last 
few months, out of the blue, down to 75,000, and we have a 
congressman from your own State who is in the other party who 
says this thing is such a mess, you should have switched to the 
Federal exchange a long time ago. In fact, clear back in 
January he was calling for you to switch.
    Dr. Sharfstein. We investigated that possibility. There is 
no disagreement about whether or not our Website worked like we 
wanted it. It absolutely didn't.
    Mr. Jordan. One other thing. The President said, just days 
before, late September, he gave a speech in Maryland days 
before the launch, promising that ObamaCare would be ``smoother 
in places like Maryland, where governors are working to 
implement it rather than fight it.'' And yet we know, you even 
indicated that it was a mess when it started. So what 
information were you communicating with the Federal Government 
that would give the President the assurance that he can make 
that kind of statement in your State, that this thing was going 
to work great, when in fact you said it didn't work well?
    How could the President make that statement when we have 
seen what we have seen since October 1st in your State, where 
we have a Democrat member of Congress saying this thing is such 
a mess, go to the Federal Exchange? How could the President 
make that statement? What was he basing that on? Were you guys 
talking with the Administration? Were you telling them 
everything is going to be fine?
    Dr. Sharfstein. I think that it was well known that there 
were going to be glitches and bumps. We were communicating that 
publicly; the Federal Government was communicating that 
publicly.
    Mr. Jordan. Well, the President didn't get the memo. He 
didn't say there would be glitches, he said it would be 
smoother in places like Maryland, where governors are working 
to implement this rather than fight it.
    Dr. Sharfstein. Well, I think that we were certainly 
surprised by the scale of problems that we had after October 
1st.
    Mr. Jordan. One last thing, if I could, real quick. I want 
to go to this slide. A whistleblower gave us this.
    [Slide.]
    Mr. Jordan. High level business and technical architectural 
diagrams. This was a report. And we will give this to you. And 
this is difficult to read, I see, but we think this is 
important.
    You have a copy there for him? Okay, good.
    And what it says is all the red are problems associated 
with that, here we go, significant delay or risk, all the red; 
and there is a lot of red up there. Now, this was a report 
given to you all back in February 2013, and it shows you knew a 
year ago there were going to be some big problems. And you 
didn't communicate that with the Federal Government, who was 
giving you $180 million in taxpayer dollars?
    Dr. Sharfstein. The Federal Government received the reports 
from our internal IV&V team.
    Mr. Jordan. So the President had access to this report 
before he made that statement, just days before the launch of 
the Affordable Health Care Act?
    Dr. Sharfstein. We were communicating with CMS, the agency 
that we worked with. But I would say that subsequent to that 
period of time we were able to make progress that the team that 
was working on different parts of this----
    Mr. Jordan. Well, of course you were going to make 
progress. When it is this bad, you have no place to go but up.
    Dr. Sharfstein. In June of 2013, we passed an important 
test. I think this probably gave us a little bit more optimism 
that was deserved at the time. We were obviously very 
disappointed with how the IT went.
    Mr. Jordan. All right. I am way over, and I appreciate the 
chairman's indulgence.
    Mr. Cummings. Thank you very much, Mr. Chairman. This is my 
time? This is my time, and I guess I would like to have my 12 
minutes, just like Mr. Jordan.
    Let me go to you, Dr. Sharfstein. I listened to Mr. Jordan 
and I wonder how many people he helped get enrolled under the 
Affordable Health Care Act. And I know it has been difficult. 
As you know, the last three Saturdays I spent all day helping 
people who were trying--as a matter of fact, I sponsored two 
events all day to get people enrolled under the Affordable 
Health Care Act. And I am glad we didn't take the attitude in 
Maryland that because the Website had a problem, that we would 
throw up our hands and say throw everything out.
    I stood on Saturday and I talked to those people that 
waited all day trying to enroll, and I don't know what you say 
to somebody when they come up to you and say this is the first 
time I have been able to get insurance in years because I had a 
brush with breast cancer. I don't know what my colleagues would 
say to that person. Say don't apply for the Affordable Health 
Care Act, when it is the law? I am not sure.
    And we can nitpick and we can go ring around the rosy 
today, but I go back to what I said from the beginning. This is 
not just about a Website. And, as I understand it, the figures 
were adjusted in Maryland. I am going to refer to a February 
23rd, 2014 article. Maybe you can help me with this. I am just 
going to read from it. It is the Baltimore Sun. It said the new 
number is 70,000 after it was corrected by the Hilltop 
Institute at the University of Maryland, Baltimore County, a 
nonpartisan health research organization that discovered its 
error weeks ago and sent a letter dated February 21st to Dr. 
Sharfstein, Health Secretary and Chairman of the Exchange 
Board. It was a footnote to one chart that wrongly also 
included open enrollment targets beginning next fall for 2015 
coverage.
    Does that refresh your recollection? Do you have that 
letter?
    Dr. Sharfstein. Yes, I have that letter here. The letter 
was written----
    Mr. Cummings. Now, did you go seeking that? I mean, Mr. 
Jordan has a way of asking questions that you never get a 
chance to answer. But did you go seeking that out? How did that 
work? What happened there? So we found we had a problem. People 
have problems every day. They don't just throw up their hands 
and just go and get all upset and say I can't do it. They find 
a way to get it done. And sometimes we make adjustments. We 
make adjustments every day of our lives. And I guess maybe the 
reason why I have that attitude is because, again, my mom and 
dad only had a second grade education; they were former 
sharecroppers. Worked like slaves, but yet and still they were 
able to have a son who became a congressman, so we believe in 
the can-do attitude. And I am hoping that we believe in the 
can-do attitude in Maryland.
    Now, would you explain that to me, please?
    Dr. Sharfstein. Sure.
    Mr. Cummings. Since Mr. Jordan made such a big deal of 
this?
    Dr. Sharfstein. I think this is a letter from the Director 
of Economic Analysis at the Hilltop Institute, and he basically 
said that the report where they gave a figure of 147,000 
represented the newly insured for both the first and second 
open enrollment periods. So a reasonable estimate of combined 
enrollment would be 160,000, including approximately 70,000 in 
the exchange and 90,000 in Medicaid.
    Now, of note, at that time we had already set the goal of 
260,000, and people came to us and said, well, now you are 
probably going to lower that goal. But we didn't. Even though 
we were way below 200,000 at that point, we did not lower that 
goal. And the governor still wanted us to shoot for 260,000. 
And I testified in the State legislature and I said even though 
the overall estimate has been lowered by the people that we 
hired to do an independent analysis because they made an error, 
we are not changing our goal, and in the end we wound up 
exceeding it by more than 10 percent.
    Mr. Cummings. Now, on Saturday, when I was at the 
Convention Center in Downtown Baltimore all day, trying to help 
people get insurance, I had an opportunity to speak to the 
Navigators. These are people who are not making a lot of money, 
but giving their blood, sweat, and tears because they wanted to 
touch somebody's future and change the trajectory of their 
destiny. And one of the things that was very interesting, we 
had so many people trying to get health care that, and correct 
me if I am wrong, that we had to basically put some people in a 
queue and say, look, we can't--there were so many we couldn't 
even get to them all and said we are going to get back to you 
during the week and bring you back in. Is that what is 
happening now?
    Dr. Sharfstein. That is exactly right. We expect the 
numbers for the first open enrollment to be higher than what we 
have now, even, and right now our whole call center is doing 
outbound calls to the people who weren't able to enroll by the 
end of March and had called and asked for extra help. It could 
be several thousand more or more than that, we will see. But I 
do think we may be able to surpass 300,000, against a goal of 
260,000 in the face of incredible IT challenges.
    Mr. Cummings. The can-do attitude. Can-do. So let's talk a 
little bit more about the contractors. You know, when I served 
as the ranking member of the Maritime Subcommittee of the 
Transportation Committee, we had a situation where we had 
folks, contractors that were building boats for the Federal 
Government and the boats didn't float, literally. And sometimes 
I think some contractors have moved to a culture of mediocrity, 
and it is so very, very unfortunate because if we continue down 
that road we will be in a situation like I think about a trip 
that I made to Israel years ago, and it was a saying that they 
had everywhere, it said, If we are not better, we will not be. 
If we are not better, we will not be.
    Can you kind of talk about the contractual situation here, 
what happened? You said that you had some bad situations that 
happened. And could we have foreseen some of that, Dr. 
Sharfstein?
    Dr. Sharfstein. Sure. So I think that the major, in 
retrospect, misjudgment, although it was hard to know at the 
time, the States faced the decision of whether to try to build 
a computer system from scratch with the requirements of the 
Affordable Health Care Act or rely on existing products, and we 
thought that it would be less risky to rely on existing 
products. We procured a system that had at its base an IBM 
Quorum software for eligibility and it was portrayed as out-of-
the-box being able to work; we would just be able to configure 
it very easily. This has been a big point of discussion some of 
our State discussions. We have shared with the State 
legislature the parts of the bid that related to this and some 
other advertisements from IBM.
    And, in fact, the software did not work as advertised, or 
even come close to it; it was defective and deficient on the 
launch and created a whole range of problems that we had not 
anticipated. And I think that the States that did more of the 
building themselves for this particular goal were more able to 
be successful, particularly the States that worked with 
Deloitte, California and New York, and we, in the end, because 
we can reuse a lot of the software and hardware, are going to 
go with a particular solution that Deloitte built in 
Connecticut.
    Mr. Cummings. Now, does the State of Maryland plan on 
recouping some of the costs paid to Noridian for the 
development for the flawed product?
    Dr. Sharfstein. We do intend to seek recoupment of the 
funds, absolutely.
    Mr. Cummings. So now you are going with Deloitte, is that 
right?
    Dr. Sharfstein. Correct.
    Mr. Cummings. And what are Deloitte's plans for fixing or 
upgrading the Website?
    Dr. Sharfstein. The basic plan is to take the system that 
was developed in Connecticut, and has been very successful, and 
move it into Maryland with minimal changes; and basically plug 
it in. We have to build the interfaces to the Maryland systems 
and change certain elements of the Website and then use it in 
Maryland for the Fall open enrollment session.
    Mr. Cummings. So who is going to fund that and how will 
Maryland fund a new course of Deloitte's work?
    Dr. Sharfstein. So we will be putting our plan in a 
corrective action plan for the IT challenges that we face for 
the Federal Government and we will be seeking to have the same 
model of partnership funding that we have had so far.
    Mr. Cummings. I want to say to you, and I said it in your 
introduction, you know, I know what you have done for Maryland, 
I know what you have done for Baltimore, and I know the 
dedication of you and I am sure of all the other people sitting 
there. You know, Dr. Sharfstein, when we had Medicare Part D we 
had problems; and when you go back and you look at some of the 
comments that were made back then, we had folks who said, on 
both sides of the aisle, we have a problem, we have to work 
through it; we are going to get there. And we got there. Now 
you don't even hear about the glitches; it is like ancient 
history. And I can recall when Medicare Part D came through, 
and I think you were around then in Baltimore. If you recall, 
what we did is we held the same kind of events. Members of the 
Congress went from senior citizens' house, had all kinds of 
meetings, town halls. Most of us hadn't even voted for it, but 
it was the law and we wanted to make sure that it worked.
    I hear all of this and I do wonder, I really wonder, and I 
know that there are problems with the Affordable Health Care 
Act, nobody has denied that, but I wonder what it would be like 
if we could just join in together to address those issues, 
because as my father used to say, when you are dead, you are 
dead; you are gone. So what we are talking about is trying to 
save people's lives. We are trying to make sure that we keep 
people healthy. We want to make sure that we give people a 
sense of a peace of mind. And I want that for my colleagues' 
constituents and I want it for mine, because I think that we 
have one life to live. This is no dress rehearsal, and this is 
that life. And I think we ought to be about the business of 
trying to help each other live the very best life that we can.
    I will yield back on that.
    Mr. Lankford. [Presiding] Mr. Bentivolio, would you yield 
to Mr. Jordan for a moment?
    Mr. Bentivolio. Yes.
    Mr. Jordan. I thank the gentleman for yielding.
    My point was real simple. In essence what happened is the 
Federal Government enters into a contract with the State of 
Maryland. The initial terms of the contact were 150,000 
enrollees in the individual market and $180 million going to 
the State of Maryland. Dr. Sharfstein just said they are going 
to go after some of the contractors they felt didn't fulfill 
their end of the deal; they are trying to recoup funds. The 
question is real simple: Is Maryland going to return some of 
the money? The initial contract was you get $180 million; you 
said you will sign up 150,000 people. And all of a sudden you 
get a new study that says, oh, we made a mistake, you only have 
to get 75,000. That was my point, plain and simple. So the 
question is real simple: Are you going to return some of the 
money?
    Dr. Sharfstein. Thank you, I will turn to that. I just want 
to say I am not--just having looked at this document, I am not 
exactly sure what this document is, so I am not sure exactly 
who this document was shared with. So if we can----
    Mr. Jordan. I am going with you. The number you gave is 
147,000 people, right? The number----
    Dr. Sharfstein. No, I was just referring to the document 
that was handed to me. I just want to be clear, because I 
thought it may have been a different document.
    To your point, we will follow all the applicable laws, and 
to the extent we are able to recoup funding, I certainly expect 
that it will be refunded to the Federal Government.
    Mr. Jordan. No, no, no. I am talking about the State of 
Maryland. Are you going to return Federal taxpayer dollars? The 
contractual agreement was CMS, here is the deal, 150,000 
enrollees approximately; you get $180 million. You didn't meet 
that. You changed it. But when they issued the money, when it 
all set out, that was the goal. Are you going to return any 
money?
    Dr. Sharfstein. We are going to follow all the applicable 
laws in terms of funding.
    Mr. Jordan. But you are going to go after the contractors 
who you think didn't fulfill their end of their contract 
relative to the functionality of the Website.
    Dr. Sharfstein. That is correct.
    Mr. Jordan. Okay, so it is okay to go after them, but it is 
not okay for the Federal taxpayers to get back some of their 
money.
    Dr. Sharfstein. I think the Federal taxpayers should get 
back some of the money as we get money back from the 
contractors, yes.
    Mr. Jordan. I yield back.
    Mr. Cummings. Unanimous consent for one minute, Mr. 
Chairman.
    Mr. Lankford. It is Mr. Bentivolio's time, but I would 
assume we wouldn't have any problem with that.
    Mr. Cummings. Just for one minute.
    I noticed Mr. Lee was shaking your head. Why are you 
shaking your head, Mr. Lee? Did you have something you wanted 
to say?
    Mr. Lee. Well, the HHS-CMS document that was an integral 
document prepared in September was prepared not as a matter of 
contract between us and CMS, but they pulled from a range of 
things, and I will note the California estimate used in that 
document, because I saw it many months hence, took the end of 
two rounds of open enrollment and misconstrued and thought that 
was the goal for our first round of open enrollment. And our 
numbers for our independent in California, we had independent 
estimates developed. We have been public about them 
consistently. Those independent estimates in California, I 
noted earlier. Our open enrollment period high-end estimate was 
800,000. At the end of two rounds of open enrollment it was 1.2 
million. I think you are alluding to a September CMS internal 
memo that was never part of our contract, never part of our 
receipt. But they got the numbers wrong, with all due respect.
    Mr. Jordan. I wasn't alluding to anything in California; I 
was focused on Maryland, where the gentleman has had 147,000 
and he said it was revised in February down to 73,000. That is 
all I was alluding to.
    I would ask unanimous consent to have put in the record the 
letter from Congressman John Delaney to Dr. Sharfstein 
suggesting that they switch to the Federal.
    Mr. Lankford. Without objection.
    Mr. Cummings. And I would ask unanimous consent that the 
Sun paper article dated February 23rd, 2014, and the Hilltop 
Institute letter to the Interim Executive Director of the 
Maryland Health Benefit Exchange dated February 21st, 2014 be 
entered into the record.
    Mr. Lankford. Without objection.
    Mr. Bentivolio.
    Mr. Bentivolio. Thank you very much, Mr. Chairman.
    As a school teacher, I taught my students there were three 
branches of Government, the legislative, judicial, and 
executive branch. Kind of a checks and balances system, right? 
Except they should have taken my course they keep writing 
checks and my constituents are getting the balances.
    I also taught my students bills were brought to the floor, 
went to committee, and then brought to the floor again for 
debate and passage, considering passage. But the ACA was passed 
before Congress could read and debate the bill. Shame on 
Congress for allowing this to happen. Shame on those who 
circumvented the congressional procedures long established that 
allows open and respectful debate before a vote and passage of 
a law.
    The billions of dollars spent and the division it has 
caused in this Country is inexcusable, because Congress passed 
a bill before it was read and debated. This is shameful.
    It seems here, listening to all these debates, the good, 
the bad, and the ugly, the money that was spent, and all we 
have is billions spent and division in this Country.
    Let me just say this. In Congress we are the fiduciaries of 
the public interest, and I think few attorneys or citizens 
would sign a blank contract based on hopes and dreams. And 
today, after hearing your testimony and reading this testimony, 
all I see is more money wasted for failed systems, coverups. 
That is what I anticipate. Lawsuits will be filed, and every 
citizen knows somehow, something at someone, it is going to be 
swept under the rug. More money spent.
    It is unacceptable and we need to have accountability for 
the money already spent and the actions that are being taken as 
we move forward.
    With that, I just have a few questions.
    Mr. Lee, how many uninsured people are there in the State 
of California?
    Mr. Lee. At this moment, I do not know that. I look forward 
to knowing that at the end of this year, when we do a State-
wide survey, which we do every year in California to assess the 
status of people's insurance.
    Mr. Bentivolio. So do you know the population?
    Mr. Lee. About 35 million.
    Mr. Bentivolio. Thirty-five million people. How many people 
in California have enrolled through the State exchange?
    Mr. Lee. Approximately 1.2 million in Covered California's 
products and another approximately 2 million are currently 
enrolled in Medi-Cal.
    Mr. Bentivolio. Okay, so we have 35 million people in the 
State, 1.2 million. Wow, if it was a good product, you would 
think people would beat a path to your door.
    Does the Website have the ability to show, of those who 
have enrolled in the State exchange, who has paid for their 
insurance premiums to date and those who have not paid their 
premiums yet?
    Mr. Lee. No. After people enroll, they then, directly with 
the health plan they select, pay their premiums, and our plans 
in California report that approximately 85 percent of those 
individuals have paid their premium.
    Mr. Bentivolio. Eighty-five percent.
    Mr. Lee. Yes.
    Mr. Bentivolio. Okay. Do you believe it is important to 
know how many people are actually going to receive insurance 
through your exchange?
    Mr. Lee. Absolutely.
    Mr. Bentivolio. Okay, thank you very much.
    With that, I yield back, Mr. Chairman.
    Mr. Lankford. Thank you.
    Ms. Norton.
    Ms. Norton. Thank you very much, Mr. Chairman.
    I want to ask a question about the contractors. I don't 
think there has been, in all the hearings that have been had, 
enough of a focus on the contractors; Congress is so busy 
fighting off the Affordable Health Care Act itself. But I must 
say that the number of State exchanges that have problems, when 
you combine that with the problems we had in the Federal 
exchange really does show that technology is overrated. And I 
must say it also shows that since this has not been found just 
in the Federal exchange, this rollout problem, this problem 
with technology, just in this State or that State, but, rather, 
much to a wide cross-section of States, that we are dealing 
with a new problem, and that we ought to approach it that way.
    Now, that means if it were new to the Government, State and 
Federal alike, it certainly looks like what we did not 
anticipate is how new it would be to these contractors; and 
that was perhaps over-reliance or over-reliant faith put in the 
contractors. Now, I know that one of them, CGI, has its 
fingerprints on a number of the States, as well as the Federal 
exchange, and I can't believe that that is accidental.
    Let me just ask you who use CGI, did you look to see what 
its record had been, for example, with Massachusetts? I see 
that Massachusetts no longer uses CGI. So those of you who used 
CGI, and there were several of you who did, would you speak up 
and indicate whether you checked to see what CGI's experience 
had been in doing precisely this kind of work, at least in 
Massachusetts?
    Ms. Yang. Thank you, Congresswoman, for the question. First 
of all, let me say that ACA implementation has many components; 
IT implementation is one of them. We work with a wide range of 
different contractors, and some of them have been delivering 
excellent performance, ensuring our overall success.
    Ms. Norton. I am asking about CGI in particular.
    Ms. Yang. Correct. Sorry about that. CGI was involved in 
Massachusetts' ACA implementation, specifically with the 
Website development, and we engaged them through a competitive 
procurement process consistent with guidance applicable to us. 
But, unfortunately, CGI's performance has been disappointing. 
They were behind schedule in delivering a required 
functionality----
    Ms. Norton. Did you use them from the beginning? Did you 
use CGI from the beginning?
    Ms. Yang. I am sorry, I didn't catch that.
    Ms. Norton. Had you used CGI before?
    Ms. Yang. No. The Health Connector was engaged in CGI for 
the first time with this contract.
    Ms. Norton. I see. When you rolled out your own product, 
did you use CGI?
    Ms. Yang. No, we did not work with CGI. It was a very 
different, much simplified Website development. We worked with 
a local vendor.
    Ms. Norton. What led you to use CGI?
    Ms. Yang. Why did we use CGI? We went through a competitive 
procurement process to----
    Ms. Norton. I don't want to know about your process. What 
about CGI led to its selection?
    Ms. Yang. It was selected through a procurement.
    Ms. Norton. Everybody was selected through a procurement, 
Ms. Yang.
    Ms. Yang. I am sorry, I was just trying to answer why we 
ended up with CGI.
    Ms. Norton. I only have so much time. Did they have 
experience? Did they have some other factor that made them 
stand out among those who competed for your contract?
    Ms. Yang. It was the best vendor among the respondents.
    Ms. Norton. Best in what way, Ms. Yang?
    Ms. Yang. In demonstrated experience?
    Ms. Norton. In this kind of work?
    Ms. Yang. Yes.
    Ms. Norton. Mr. Matsuda, you used CGI. What made you use 
this company, which has had this bad experience across a number 
of States?
    Mr. Matsuda. I was not with the Hawaii Health Connector at 
the time the decision was made.
    Ms. Norton. Well, surely you know the answer.
    Mr. Matsuda. But my understanding is that we went through a 
full procurement, and a major factor in the decision was that 
CGI had been selected for the Federal exchange.
    Ms. Norton. Do any of you know whether CGI had experience 
doing this kind of work before? Who else used CGI, please, at 
the table? Anybody else at the table? Had CGI had experience 
comparable to this experience that you engaged them to do, to 
your knowledge, Ms. Yang and Mr. Matsuda?
    Ms. Yang. Congresswoman, as you know, ACA implementation is 
a new project for all of us, so I wouldn't say CGI was engaged 
in identical projects. But in terms of comprehensive system 
integration, CGI does----
    Ms. Norton. All right.
    Mr. Lee, did you consider CGI? You had a successful 
experience. Did they apply to California?
    Mr. Lee. I actually don't think, as I recall, CGI bid, or 
it was not one of the finalists for us. So I don't know if they 
were a bidder, but the folks that did bid didn't have direct 
experience, because it was doing something new, and you needed 
to look at general track record, costs, the staff they 
provided, factors like that that went into our selection.
    Ms. Norton. You know, the District had a real heavy burden 
because Congress, in a spite amendment, made members of 
Congress and their staff go to the exchange and took them out 
of the Federal program. Well, it worked pretty well. I have to 
go back and make sure they didn't use CGI. I do think we have 
to look at these contractors and see what was the difference in 
the experience with contractors in particular. When you are 
doing something entirely new, which Congress has not taken in 
consideration in its criticism of this process, it does mean 
that you probably are asking contractors to do something that 
they haven't done either. The problem with this is we assume 
that contractors do something much bigger. You know, we talk 
about the big parts of the private sector, and we assume that 
these must be the same contractors who have handled things in 
the Country, so surely they could do the health care exchange 
for a particular State or, for that matter, for the United 
States.
    Mr. Chairman, if I could say one thing, just to note for 
the record that Mr. DeSantis, from Florida, put up a graph 
which he said showed and questioned witnesses on the theory 
that it showed that these contractors and others, including the 
Federal exchange, had in fact performed below CGI expectations 
considerably. Please note for the record that his State, and 
now a great many other States, are directly responsible for 
that because they have failed to allow poor and middle class 
and disabled people to get health through expansion of the 
Medicaid exchange. That it happened, I have no doubt that the 
goals would have been met. So, especially coming from a State, 
to use such a graph without taking responsibility for why there 
is a reduction in the uninsured Americans takes a lot of 
chutzpah.
    Thank you, Mr. Chairman.
    Mr. Lankford. I would only say one thing with that. In my 
State we also have that. Some of those individuals were covered 
by our Insure Oklahoma program prior to that, and they lost it. 
And part of the waiver issue was we had to remove that as a 
safety net.
    Ms. Norton. Mr. Chairman, that doesn't take care of those 
where you have an expanded Medicaid.
    Mr. Lankford. That is what I meant. Those individuals that 
would have been----
    Ms. Norton. Did you have expanded Medicaid?
    Mr. Lankford. We do not have expanded Medicaid, but we did 
have coverage there already with our Insure Oklahoma program.
    Ms. Norton. Well, Mr. Chairman, my remarks were limited to 
those who failed to expand Medicaid and had no other way, 
obviously, of insuring them.
    Mr. Lankford. Right.
    Mr. McHenry.
    Mr. McHenry. Thank you, Mr. Chairman.
    I would just ask this question of the whole panel. You all 
are in charge of your exchanges in your respective States. I 
will just go down the line. Yes or no, have you enrolled 
through these exchanges that you are in charge of? Mr. Matsuda?
    Mr. Matsuda. Excuse me? Yes.
    Mr. McHenry. Okay.
    Mr. Sharfstein?
    Dr. Sharfstein. No. You mean me personally, is that what 
you are saying?
    Mr. McHenry. Yes.
    Dr. Sharfstein. No, I am a State employee.
    Ms. Yang. No, I am a State employee.
    Mr. Lee. I am sorry, I don't understand the question.
    Mr. McHenry. Are you enrolled through the very exchange you 
are in charge of enrolling others.
    Mr. Lee. Through State coverage.
    Mr. Leitz. Congressman, through State coverage I am.
    Mr. McHenry. Okay.
    Mr. Van Pelt. Thank you. Two things. First, I need to 
apologize and correct a statement I made earlier.
    Mr. McHenry. No, you can use somebody else's time for that, 
sir.
    Mr. Lankford. I can grant unanimous consent for additional 
time to be able to answer that, if he needs to, as well.
    Mr. McHenry. Go right ahead.
    Mr. Van Pelt. Thank you. Mr. DeSantis asked about the 
enrollment of our qualified health plans of April 1st. The 
correct number is 57,000.
    With respect to your question, Congressman, I am not an 
employee of the State; I am self-employed and did not apply for 
insurance through Cover Oregon.
    Mr. McHenry. Okay. Okay. So the question, and I ask this 
because this is one of the questions that my constituents ask 
about the laws that we live under and those implementing the 
laws, whether or not they are complying with them or living 
under them are going through the same process. So I would ask 
you, there is a concern I have about personally identifiable 
information and folks that are putting information into the 
exchange and the safety of that information.
    Would you personally guarantee that personally identifiable 
information is safe through your respective exchanges? Mr. 
Matsuda?
    Mr. Matsuda. What I do know since I have started in this 
position is that I verified that the exchange was given full 
authority to connect to the Federal hub after passing all 
necessary security----
    Mr. McHenry. Yes, but we have concerns with the Federal hub 
as well. So you are sharing perhaps some concern?
    Mr. Matsuda. No, because----
    Mr. McHenry. So let me ask you again. Would you personally 
guarantee that personally identifiable information is safe 
through your exchange?
    Mr. Matsuda. I believe it is secure, yes.
    Dr. Sharfstein. Recognizing that nothing is 100 percent 
safe, I believe the Maryland exchange has done what it needs to 
do----
    Mr. McHenry. Is it about 80 percent safe, 90 percent safe, 
95?
    Dr. Sharfstein. Well, if you look at what has happened in 
the private sector, there are a lot of things that can happen. 
But we have had no known incursions and, to your point, my 
personally identifiable information is in there. I did start an 
application; I put in my social security number. I had no 
qualms about doing that.
    Mr. McHenry. Well, were you able to complete your 
application?
    Dr. Sharfstein. I didn't complete an application because I 
have coverage. I was just testing it.
    Mr. McHenry. You were testing it. Okay.
    Ms. Yang. Congressman, this is one of our highest 
priorities in terms of protecting people's private information. 
We have not had a data breach and I wouldn't be letting the 
exchange operate without having confidence that personal 
information was protected.
    Mr. Lee. Similarly, the safety of personal information is 
our top priority. We are very confident that that information 
is being kept secure. We have had no data breaches and we have 
no incidences that we know of of individuals' financial or 
personal health information being breached in any way.
    Mr. Leitz. Similarly, Congressman, security is a top 
priority for us. We certainly do everything we possibly can to 
protect the information that goes in.
    Mr. McHenry. Will you guarantee that?
    Mr. Leitz. Congressman, it is very much a top priority.
    Mr. McHenry. I will take that as a modified, if possible, 
yes or no, however you want to see it.
    Mr. Van Pelt. The Cover Oregon also meets the CMS security 
requirements, which have been validated by CMS. And we are not 
aware of any security breaches with respect to connecting to 
the hub.
    Mr. McHenry. Okay. All right. I wanted to at least ask 
that. So in terms of lost applications and incorrect subsidies, 
it is not an error-proof system we have, obviously; there have 
been faults and failures, obviously.
    But I have a story for you, Mr. Sharfstein. In your system 
in Maryland I have a staffer whose mother was given a notice by 
her insurer that, due to the Affordable Health Care Act, her 
insurance was discontinued, so she had to go to the exchange; 
and she began a three-month-long process to enroll in your 
exchange. I know that you have about 4,000 applications in your 
State that were given incorrect subsidies or lost applications. 
Is that about the right number?
    Dr. Sharfstein. We reported a subsidy problem about that 
number, right.
    Mr. McHenry. Similar to that. Okay. So her experience is 
one that I know very well through her daughter and through her 
telling me the story. So the first roadblock for her in filling 
out the application was a question of her citizenship, which 
she could not verify. She calls the Help Line. The Help Line 
obviously is very helpful in all your States, as you all will 
attest to, when people have problems with the website; and they 
have been noted, I don't have to recount this.
    But in her situation she was told through the hotline to 
fax her, I believe it was, driver's license and social security 
number to this open fax line. And she asked, well, do I put it 
to your attention, can I put it to someone's attention? No, 
just fax it to this number. Is that concerning to you, that you 
have somebody's driver's license and social security number 
given to this random fax number in order to proceed with the 
application?
    Dr. Sharfstein. It is not just like a fax in the corner 
that people wander by.
    Mr. McHenry. I would hope not. I would hope not.
    Dr. Sharfstein. It isn't.
    Mr. McHenry. Or a fax at a local truck stop or something.
    Dr. Sharfstein. No.
    Mr. McHenry. I know it is a little better than that.
    Dr. Sharfstein. There is a Fulfillment Center and they have 
an approach to secure personal information, too. And we have to 
verify things like whether people are able to purchase coverage 
under the law.
    Mr. McHenry. So those folks that are privy to that fax 
machine, or whatever the technology is that you use, privy to 
that? Are they vetted? Is there some safety and security that I 
can tell her that there was for her information?
    Dr. Sharfstein. Yes, you can. And particularly for the 
Fulfillment Center.
    Mr. McHenry. Describe that for me.
    Dr. Sharfstein. Well, we work with Maximus, which is a 
company that secures a lot of personal information. They do, 
for example, they are an enrollment broker for the Medicaid 
program, they work in many States. They are a very big company 
that has extremely strong policies around protecting private 
information because they do it in a whole bunch of States. They 
are the ones who were staffing the Fulfillment Center that 
those faxes go to.
    Mr. McHenry. Okay.
    Mr. Chairman, the final question I have is you all have in 
your metrics the number of enrollees as a part of your 
measurement of the success of your respective exchanges. Do you 
have a cost per enrollee? For instance, Maryland has spent 
about, what, $100 million, $150 million, in that range, to 
build the Website and the exchange? Is that about right?
    Dr. Sharfstein. Right. So far, about $129 million.
    Mc. McHenry. $129 million. So about $2,000 per enrollee?
    Dr. Sharfstein. Well, again, we have enrolled 295,000 
people, so it would be a lot less than that if you were to 
divide it. But if you look, from our perspective, we are 
looking over several years.
    Mr. McHenry. Yes. So this is the individual market.
    Dr. Sharfstein. Right. But people on Medicaid are not 
invisible. This is how they get coverage in Maryland.
    Mr. McHenry. But they previously had coverage.
    Dr. Sharfstein. They did not. A lot of them did not have 
coverage.
    Mr. McHenry. A lot? How many?
    Dr. Sharfstein. The vast majority of them did not have 
coverage. These are people who have all gained coverage since 
January 1st.
    Mr. McHenry. So if this is about the individual market 
getting individual folks in the market, the individual market 
getting access to insurance, is that not a fair measurement for 
this?
    Dr. Sharfstein. I don't think so. It is also how people on 
Medicaid get access to insurance.
    Mr. McHenry. But they could have had access to insurance 
previously under Medicaid.
    Dr. Sharfstein. No they couldn't. They couldn't because----
    Mr. McHenry. Not at all? I thought Medicaid was actually an 
insurance program.
    Dr. Sharfstein. The vast majority of people in Maryland, 
single adults, for example, did not have coverage. Now they 
have coverage up to----
    Mr. McHenry. The vast majority of adults in Maryland did 
not have coverage?
    Dr. Sharfstein. Single adults did not have Medicaid 
coverage in Maryland.
    Mr. McHenry. Okay.
    Dr. Sharfstein. Even if they were very poor.
    Mr. McHenry. So how do you enroll in the individual market?
    Mr. Connolly. Mr. Chairman? Mr. Chairman, I don't object to 
my colleague having extra time; I just want to make sure equal 
time is granted to the Minority.
    Mr. Lankford. Has Mr. Connolly seen me be unfair before?
    Mr. Connolly. No. I have no question about that. But I just 
wanted it for the record.
    Mr. McHenry. If I can just ask one final question.
    Mr. Connolly. Certainly.
    Mr. McHenry. And if the gentleman was here to see Mr. 
Cummings, I am being a little less greedy than he was with the 
time; and as members of Congrss we are but a little bit greedy 
with the time. Mr. Cummings is coming back in and I would 
revise that. Mr. Cummings was appropriately useful with his 
time.
    Mr. Cummings. Would the gentleman yield?
    Mr. McHenry. I have no more time.
    Mr. Cummings. I used the exact amount of time that the 
gentleman----
    Mr. McHenry. All right, how about this? I will yield back.
    Mr. Cummings. The exact amount of time.
    Mr. McHenry. If you want to quibble with this. I certainly 
appreciate it.
    Mr. Connolly. Mr. McHenry?
    Mr. McHenry. I reclaim my time.
    Mr. Chairman, thanks so much for your generosity. I 
certainly appreciate the kindness of my colleagues and I will 
show you the same kindness.
    Mr. Connolly. And, Mr. McHenry, for the record, I was not 
objecting; I was simply trying to make sure that the Minority 
was granted equal time.
    Mr. Lankford. I am going to do something out of order.
    You have been seated for two and a half hours. Would you 
like a moment just to stand and stretch? This lady right here, 
Ms. Hanabusa, has also been seated two and a half hours waiting 
for questions. She is going to get the next questions. But 
would you like to stand for just a moment?
    We will take just a very short recess just to be able to 
stand.
    [Pause.]
    Mr. Lankford. Ms. Hanabusa is recognized.
    Ms. Hanabusa. Thank you, Mr. Chair. First, on behalf of the 
people of Hawaii, I want to thank you again. You were the 
manager of the measure that allowed us to name a post office 
after former Congressman Cecil Heftel. Thank you again for 
that.
    And I would like to thank you plus the members of this 
committee for their unanimous consent to allowing me to 
participate.
    Mr. Chair, one of the reasons why I asked to participate is 
because of the fact that the people of Hawaii were also very 
concerned about the reports of the money spent on our 
Connector.
    Mr. Matsuda, I do want to say up front that I know you have 
inherited this. The Connector went into effect in 2011, July 
specifically, and you came on board in November. So to the 
extent that you can address some of these concerns, I would 
appreciate it.
    First of all, one of the things that I think fundamentally 
we must all understand is Hawaii is truly different. I know 
everybody says that, but Hawaii is truly different. We are the 
only State that has the prepaid health care law that went into 
effect in 1974; and I think that is part of the issues that we 
have to understand as we look at these numbers. I saw the 
letter sent to the governor and it speaks to $205 million going 
to the Hawaii Connector, and I think they computed it out at 
about $44,000 per person. But let's begin there.
    So, Mr. Matsuda, $205 million I think was the grant that 
you were entitled to. How much money did the State actually 
use?
    Mr. Matsuda. As of the end of this past calendar year, we 
have spent $57 million out of that amount.
    Ms. Hanabusa. And it is my understanding that there was a 
request to extend so that you could spend the remaining amount 
or however amount you could justify, but the State has been 
denied that, is that correct?
    Mr. Matsuda. The operations and maintenance portion of the 
grant cannot be used beyond this calendar year, that is 
correct.
    Ms. Hanabusa. So of the $205 million, so people understand 
us very clearly, how much money would either be returned to the 
Federal Government, if you want to answer it that way, or how 
much money do you get to continue to use?
    Mr. Matsuda. So in addition to the $57 million that has 
already been spent, we have obligated under contract an 
additional approximately $50 million So that means we have 
about $100 million, roughly, of the Federal grant money that 
has yet to be obligated or spent. The amount or the portion of 
that that is related to operations and maintenance, versus 
development money, which can be extended to next year, has yet 
to be determined. We are working with CMS to figure that out 
because we just got the decision recently. Obviously, we want 
to be careful about how we use taxpayer dollars, so the 
development money will be used just to the extent necessary to 
improve the system to fit our unique marketplace.
    Ms. Hanabusa. And what you have testified before the State 
legislature is that--and I think I misheard you speak earlier--
is that the Hawaii Connector cannot self-sustain in terms of if 
you base it purely on the amount of monies that are coming in 
in terms of premium percentage of 2 percent or so. Was that 
correct?
    Mr. Matsuda. Yes, that is what I testified to.
    Ms. Hanabusa. And I think that was in line with the 
potential request to the Hawaii State legislature for State 
funds of approximately $15 million a year to continue the 
Connector. It may be less because of the number, but that was 
about the amount. Am I correct in that?
    Mr. Matsuda. Well, yes. Actually, we are going through a 
process right now to figure out how we can reduce those 
expenses substantially below $15 million.
    Ms. Hanabusa. So the State is aware that it has to kick in, 
in essence, to cover the continuing cost of the Connector.
    Mr. Matsuda. Yes, but I think it is important to put it 
into context. The issue for us on the revenue side is that 
because of the Prepaid Health Care Act, virtually all small 
businesses in the State already have insurance for their 
employees, so there is very little incentive for them to leave 
a system that they have been accustomed to for almost 40 years. 
So I think it is incumbent on us, looking at that marketplace 
reality, to try to reduce the cost of the operations of our 
system as much as possible.
    Ms. Hanabusa. So if we can just go through this very 
quickly. So there is said to be 100,000 total uninsured in 
Hawaii, of which about 58,000, almost 60,000 are really going 
to be covered by Medicaid expansion. So the only number that 
can be enrolled is about 33,000, is that about right? Because 
we have some that are ineligible because of immigration status.
    Mr. Matsuda. Yes. That is right if you are only looking at 
the uninsured. But there are other people who currently have 
insurance that might be able to find better quality or lower 
cost insurance through the exchange. So the potential on the 
individual marketplace is probably bigger than just the 33,000.
    Ms. Hanabusa. If I may, Mr. Chair, if I can just have a 
little bit of leeway here, if you don't mind.
    Mr. Lankford. I will give you some of Mr. Connolly's time.
    Ms. Hanabusa. Thank you.
    So, Mr. Matsuda, the thing that I really wanted to get to 
is, quite candidly, a level of frustration I have had with your 
predecessor and whoever was there. You know, I was not here 
when we voted the ACA; however, I do know that the ACA has an 
exemption for Hawaii, I think it is Section 1560, which is 
anticipated in the original law, because of our Prepaid Health 
Care Act. I have always asked, okay, what have you done or what 
does it mean, and we have not gotten a response on that. I do 
also know that there is a movement in Hawaii that we avail 
ourselves of Section 1332 of the ACA, which is really an 
exemption from the provisions; and it is supposed to be because 
you have a, I guess for lack of a better description it is 
called the Waiver for State Innovation. And, of course, we like 
to think that we were the major innovators in any kind of 
health care. But that doesn't kick in until 2017.
    So the question is why hasn't the State or the Connector 
looked at this? Because the problem is the fact that prepaid 
health and the ACA are not meshing well. I mean, that is our 
problem. That is the reason why the Connector doesn't work; 
that is the reason why we can't go on the Federal system, 
because it doesn't take into account the uniqueness of Hawaii's 
law. Would you agree with me that that is your fundamental 
problem, that is the reason why it is not working?
    Mr. Matsuda. That is correct, Congresswoman, and we are 
very anxious to take advantage of the innovation waiver in 
2017; and, in fact, we wish it would occur earlier.
    Ms. Hanabusa. But what about the exemption in the law 
itself that exists today, which is Section 1560? Why haven't we 
availed ourselves of that? Or is there a way that you can go to 
the Secretary of Health and Human Services or CMS and say, we 
have got this waiver in the law and we have this waiver that we 
know you probably will qualify us for in 2017? Why haven't we 
done that?
    Mr. Matsuda. I am not an expert on that section of the law, 
but my understanding is that it only refers to preserving the 
exemption that we have for prepaid under ERISA. But the scope 
of the ACA is much bigger than that and includes other areas of 
the law. So I think there is a complicated legal evaluation 
that needs to be made to see if we can take advantage of it in 
the way that you are suggesting.
    Ms. Hanabusa. And we haven't done that yet.
    Mr. Matsuda. I do know that it is under consideration by 
both the legislature and the State administration, and we are 
trying to assist with that.
    Ms. Hanabusa. Thank you. Mr. Matsuda, like I said, this is 
something that you inherited, but, notwithstanding, you can 
imagine how people at home are very frustrated with this and, 
actually, they are very embarrassed that people are saying we 
have all this money and we have only enrolled less than 8,000 
people. But the enrollment of the less than 8,000 is really a 
function of the existing laws that we have that are not 
meshing, and I would really appreciate it if you would keep us 
apprised of that, because that has always been a question that 
we have constantly asked, or I have constantly asked, is why 
have an exemption in a law, not use it, and then have to wait 
until 2017, when we are clearly, I believe, the example that 
that provision, Section 1332, was intended to not have to 
address because we are exempted. But we are truly innovative, 
wouldn't you agree?
    Mr. Matsuda. Yes.
    Ms. Hanabusa. Thank you very much.
    And thank you, Mr. Chair, again. I yield back.
    Mr. Lankford. Mr. Connolly.
    Mr. Connolly. Thank you, Mr. Chairman, and thank you for 
your courtesy to our colleague from Hawaii.
    Welcome to this panel. It is a fascinating panel.
    You know, I wish, on this subject, we could sort of move 
beyond the partisan talking points. If there are things to be 
fixed, why not come together and try to fix them? And if there 
are things to be celebrated, why not intellectually be honest 
and celebrate them?
    But if you go into a subject matter unrelentingly for four 
years in opposition, then you are probably going to have the 
problem we had with today's hearing. In the Majority staff 
memo, the hearing purpose, and it says: The current enrollment 
numbers of ObamaCare are significantly lower than expected. 
Oops. Well, actually they are significantly higher than 
expected; they actually met the highest stretch number CBO set 
for them. They exceeded their own revised numbers after the 
Website rollout, and are at 7.1 million and counting. Anyone on 
the panel, can any of you think of a brand new program from 
scratch in less than six months that enrolled 7.1 million 
people? Anybody? No. Not even California.
    Ms. Yang, Massachusetts. The individual mandate that we 
have in RomneyCare and ObamaCare, do you know where it came 
from intellectually? Do you know where its wellspring was? 
Liberal Democratic idea?
    Ms. Yang. Sorry, Mr. Congressman.
    Mr. Connolly. It came out of the Heritage Foundation. It 
was a conservative Republican idea enshrined in both the 
Massachusetts because of a conservative Republican philosophy 
that felt, correctly, people needed to take ownership for their 
decision-making; and, therefore, they have to have some skin in 
the game, and thus the individual mandate. In fact, no less a 
figure than then Republican Speaker Newt Gingrich said that one 
of the reasons he opposed the Clinton health care initiative 
back in 1993 and 1994 was because it lacked an individual 
mandate. And yet, today, because of partisan politics, that 
individual mandate, conservative Republican intellectual 
wellspring, is now referred to as socialism.
    Do you have an individual mandate requirement in 
Massachusetts that preceded ObamaCare, Ms. Yang?
    Ms. Yang. Absolutely, Congressman.
    Mr. Connolly. And is it working?
    Ms. Yang. It is working very well.
    Mr. Connolly. What happened to the population of uninsured 
in Massachusetts?
    Ms. Yang. There is a very small percentage of our residents 
that were uninsured. Prior to the implementation of the ACA it 
about 3 percent. We are actually very optimistic that number 
has further shrunk because we brought more people into 
coverage, so we expect that number to be even less than 3 
percent now.
    Mr. Connolly. Is that not the second lowest uninsured 
population in the United States?
    Ms. Yang. I thought that was the first lowest.
    Mr. Connolly. Well, I think Hawaii has--what is Hawaii's, 
Mr. Matsuda?
    Mr. Matsuda. I am happy to concede to Massachusetts.
    Mr. Connolly. Oh, all right.
    [Laughter.]
    Mr. Connolly. Then, Ms. Yang, you are even more successful 
than I thought.
    Ms. Yang. Thank you, Congressman.
    Mr. Connolly. So in terms of Website, I heard the testimony 
here that Websites are not the same as the exchange, and 
Websites sometimes do have glitches, sometimes big ones, 
unfortunately. Did Massachusetts have glitches when it started, 
Ms. Yang?
    Ms. Yang. Absolutely, Congressman. In fact, I would just 
say that the Website that we launched in 2007 looked nothing 
like the Website that we had prior to the ACA. Even the pre-ACA 
Website went through a journey both from a performance 
perspective and a functionality perspective. Technology is 
meant to evolve over time; it is meant to be innovative, 
improved as we gain experience, as we react to the market. So 
when we, unfortunately, experienced challenges with the 
Website, we were not panicking. We have gone through this 
before. These are things that we just need to work through. We 
have worked through it before. ACA is complicated, but it is 
not beyond technology. There are technological solutions: we 
need to identify the right vendor; we need to put the right 
team in place, and we can fix them.
    Mr. Connolly. Wouldn't it be fair to say the goal here for 
the ACA, the Affordable Health Care Act, known as ObamaCare, 
was never to have a perfect Website, it was to get people 
enrolled. Website is a method, not an end.
    Ms. Yang. That is exactly right. And I would just say look 
no further than Massachusetts, because we did not have sort of 
the fortune of having a state-of-the-art modern Website. We had 
something very simple, but easy to navigate. We demonstrated 
the concept, but we didn't really have the benefit of the ACA 
Website, which really brings it to the next level. Now, it does 
bring a lot more convenience to people; it does improve 
people's experience. But at its fundamental, ACA is about 
coverage, and Massachusetts is demonstrating it.
    Mr. Connolly. Mr. Lee, one of the things asserted by some 
of my friends on the other side of the aisle who are never 
going to give this, ever, a positive mark of any kind, is that 
actually the number of people enrolled is masking the fact that 
it equals or is less than the number of people who have in fact 
lost their health care coverage. How many people are enrolled 
in California again?
    Mr. Lee. Well, again, enrollment first through Covered 
California directly in our plans, about 1.2 million.
    Mr. Connolly. 1.2 million.
    Mr. Lee. We have 1.9 million enrolled in Medi-Cal plans, 
and we don't know, and this is one of the things that is lost 
in this discussion, the number of people that enrolled directly 
with their health plans in Affordable Health Care Act-compliant 
plans with essential benefits. We think that for the vast 
majority of the individual market that converted out of their 
plans this year didn't come to our marketplace because they 
weren't subsidy eligible, so they are now in the individual 
marketplace.
    Mr. Connolly. Right. But surely the enrollment in 
California is not exceeded by the number of people who have 
lost their private insurance plan.
    Mr. Lee. Absolutely not. But, again, this term that is 
often used of people who have lost their coverage, people 
converted to different coverage. The vast majority kept 
coverage with their existing plan, or some came to the 
marketplace and benefitted from subsidies. So the term of lost 
coverage, people converted coverage and converted to new 
coverage that now meets essential benefits protections under 
the Affordable Health Care Act.
    Mr. Connolly. And is this a brand new phenomenon? 
Apparently, for the first time ever in history, people are 
losing their coverage and insurers are cancelling their 
coverage.
    Mr. Lee. What is new is that no insurance company can turn 
people away that knock at their door. What is new is that 
people cannot be turned away because of a health condition. 
Health plans cancelled policies at their whim previously, and 
if people left jobs they were left potentially without 
insurance, etcetera. So we are in a new set of circumstances, 
but not the set of circumstances of people changing types of 
coverage or losing coverage.
    Mr. Connolly. Thank you.
    Mr. Chairman, you have been generous and I yield back.
    Mr. Lankford. Thank you.
    Let me run through a few things here. The way your agency 
is set up for funding stream, once we get into next year or the 
next year, how is your agency funded, is it general revenue, is 
it percentages? Mr. Matsuda, you mentioned it was a percentage 
at some point. So I would like to just quickly know how is it 
funded in the days ahead. Mr. Matsuda?
    Mr. Matsuda. Currently, we are only funded by the Federal 
grant. We are a nonprofit corporation that is not part of the 
State administration, and we are before the State legislature 
right now with a funding proposal.
    Mr. Lankford. Okay, so there is not a revenue stream at 
this point.
    Mr. Matsuda. I am sorry.
    Mr. Lankford. I am talking about trying to keep your agency 
doors open next year.
    Mr. Matsuda. Excuse me. I forgot to mention we also have, 
by board of directors' policy decision, a 2 percent fee that is 
assessed against all plans that are sold in our marketplace.
    Mr. Lankford. Okay, so that 2 percent fee is what covers 
that, plus whatever general revenue is allocated.
    Mr. Matsuda. Yes.
    Mr. Lankford. Okay.
    Dr. Sharfstein. Ours is through a premium assessment across 
all State-regulated insurance.
    Mr. Lankford. All insurance. And what is that percentage?
    Dr. Sharfstein. It is about $40 million a year. I don't 
know the exact----
    Mr. Lankford. What is the percentage? That is a fee on all 
insurance.
    Dr. Sharfstein. Yes. Whatever it is, it works out to about 
$40 million. But I will----
    Mr. Lankford. Three percent, 5 percent, .2 percent? Give me 
a ballpark. I won't hold you to it because it is ballpark.
    Dr. Sharfstein. It is probably in the 1 to 2 percent, 
roughly, but I will definitely have to follow up.
    Mr. Lankford. But it is on all insurance.
    Dr. Sharfstein. All State-regulated, right.
    Mr. Lankford. Okay.
    Ms. Yang?
    Ms. Yang. Mr. Chairman, as you know, the Massachusetts 
Connector has been in existence for the past eight years. We 
have historically been funded with a combination of State 
funding, the general fund, and insurance carrier administrative 
fee; and that is the reason is because, on the one hand, we 
serve as a distribution channel that really provides backroom 
function for the insurance companies at the same time we 
perform policy responsibilities and service for the State. We 
envision that model is going to continue post-ACA. We do not 
have expectation of additional Federal funding to support the 
administration. We have not yet made a decision at this point 
in terms of the fee percentage. Historically it is between 2.5 
percent and 3.5 percent.
    Mr. Lankford. Okay.
    Mr. Lee?
    Mr. Lee. Our ongoing revenue is going to be based on a 
carrier administrative fee. The current fee is on a per member, 
per month basis, 1395, which is a little bit over 4 percent of 
premium. And we are going to be reviewing and adjusting that on 
an annual basis based on what our revenue needs are as we 
adjust our expenses.
    I would also----
    Mr. Lankford. Could you help me real quick?
    Mr. Lee. Yes.
    Mr. Lankford. Per member, per month, is that the individual 
that holds the policy? Where is that?
    Mr. Lee. That is built into the premium.
    Mr. Lankford. 1395.
    Mr. Lee. Yes. And I would note we did a lot of analysis of 
this, so this actually enables health plans to lower their 
costs, because our cost per acquisition of what it means to 
enroll an individual is far less expensive than it used to be 
in the individual market; and the individual plans have a 
reduction and no longer have an underwriting cost because there 
is no longer underwriting, guaranteed issue.
    Mr. Lankford. It is amazing that people would beat a path 
to your door when they are going to be fined if they don't, so 
that does help for enrollment. And that is not being critical 
of you, but that is definitely a good promoter.
    Mr. Lee. Well, actually, if I could, Congressman, when we 
talked to thousands of them surveying, for the vast majority 
the penalty is not a huge incentive. The incentive is finding 
health care that is affordable. And the size of the penalty 
compared to making health care affordable is a much bigger 
factor. For some it is actually a factor, but for a small 
minority.
    Mr. Lankford. There was a deadline that we faced, as well.
    Mr. Leitz?
    Mr. Leitz. Chairman, we are funded through an assessment on 
policies sold through MNsure, and that is up to a 3.5 percent 
assessment.
    Mr. Lankford. And that is per policy that is sold through 
the system itself?
    Mr. Leitz. Yes.
    Mr. Lankford. Not all. Because Maryland it is everybody, 
right? Every insurance. You all's is just what is being sold 
through the system. Okay.
    Mr. Van Pelt?
    Mr. Van Pelt. Thank you, Mr. Chairman. Going forward, our 
financing is based on a 2.5 percent on premiums sold through 
the exchange.
    Mr. Lankford. Okay. All right, a follow-up question on 
that. As you have the enrollment coming through, obviously the 
open enrollment just ended, another open enrollment opens up 
next year. You are looking at your budgets based on what has 
come in at this point and what you have. Is the agency 
sustainable? Is the target there to be able to make? And I will 
kind of go backwards through here. Mr. Van Pelt?
    Mr. Van Pelt. Right now, the target is sustainable at the 
level that we have enrolled and the projections going forward. 
As many of our colleagues have spoken, you do have to manage 
the expense side to match the revenue side. We expect that, 
with the enrollment that we have, we can do that.
    Mr. Lankford. Okay.
    Mr. Leitz?
    Mr. Leitz. Mr. Chairman, yes, it is sustainable.
    Mr. Lee. Very similar. It is absolutely sustainable and we 
will be balancing both our expenses and the revenue. But when 
we look at the 1.2 million people that are enrolled, we are 
very confident we can have a very going proposition in 
California.
    Mr. Lankford. Okay.
    Ms. Yang?
    Ms. Yang. We also believe we are going to be sustainable. 
We have 30,000 qualified health member. We also have over 
100,000 Commonwealth Care members currently served through the 
exchange. We also have 5,000 small businesses. And, lastly, we 
have 138,000 subsidized members in transitional coverage. We 
expect a meaningful percentage will be exchange members as 
well.
    Mr. Lankford. Okay.
    Dr. Sharfstein. Yes, we believe it will be sustainable.
    Mr. Lankford. Okay.
    Mr. Matsuda?
    Mr. Matsuda. As indicated in my written testimony and in my 
discussion with Representative Hanabusa, right now 
sustainability for Hawaii is going to be a challenge, and we 
are trying to figure out how to reduce expenses and look for 
other ways to increase revenue.
    Mr. Lankford. Okay. Have you talked to other States that 
are experiencing something similar? Most of the States, 
obviously, have found a way to be able to hit the balance on 
it. I would assume you are interacting with those, saying we 
are having this problem, who else is having it? Do you know of 
any other States that are having issues with that as they 
approach next year?
    Mr. Matsuda. No, I do not, but I imagine that any State 
that has a small population like we do and a small number of 
uninsured will be facing the same kind of challenge.
    Mr. Lankford. Okay.
    Mr. Van Pelt, I want to talk a little bit about the co-ops. 
That is a new invention as well. Obviously, that is in the 
middle of the market. Several of you have co-ops in the market. 
Oregon Health and Health Republic, both those names ring true 
there. Each received $60 million to be able to start up as a 
co-op. Are you familiar with how they are doing and how they 
are functioning within the exchange?
    Mr. Van Pelt. No. I can get that information for you. It 
has been relatively low enrollment numbers, but I can get you 
greater detail.
    Mr. Lankford. How is that interacting with the other 
companies and how is that working? Because the initiative was 
the initial perspective from the group that passed this, and I 
wasn't here when it passed, was to create some nonprofit that 
is sitting out there that would compete or that would go into 
markets that other places wouldn't go. Have you experienced 
that they are good competition for the others?
    Mr. Van Pelt. I think it is always, we have had a very good 
turnout in terms of interest in both profit taxable not-for-
profit and not-for-profit plans. So I can't say there has been 
much discussion or analysis of the impact of the co-ops.
    Mr. Lankford. When you say there is not much discussion or 
analysis, can you tell us if it has made an impact? Is there 
any sense of sigh of relief of I am glad the co-ops are there, 
because we would not have met our goals without them?
    Mr. Van Pelt. I don't believe so. I have not heard any of 
that conversation. Again, because the Oregon market has worked 
with both the interest of the, again, the profits, all kinds of 
health plans, I don't believe that it is felt that this has 
been a void that they specifically filled.
    Mr. Lankford. Right.
    Same for Massachusetts and Maryland. Maryland has 
Evergreen; Massachusetts has Minuteman. Is that correct, both 
of you?
    Ms. Yang. That is correct.
    Mr. Lankford. Has there been a sigh of relief to say I am 
really glad the co-op is there, because without them I don't 
know that we would have made it? Or have you experienced any 
issues or how is that working and functioning? Because, again, 
this is a new invention.
    Ms. Yang. We are glad that Minuteman was interested in 
competing in the Massachusetts market. This is not the first 
time that we have had a new entrant into the market.
    Mr. Lankford. Do you know how many enrollees they have at 
this point, how successful they have been in the market?
    Ms. Yang. Several hundred. We can get back to you on that.
    Mr. Lankford. Again, we have all the preliminary stuff. 
Their goal, I think, was 37,000 is what they had hoped to 
enroll.
    Ms. Yang. I would defer to you on that.
    Mr. Lankford. Okay. Just trying to figure out. Again, it 
was $156 million given to start this co-op up to hopefully go 
into an area that was under-served. I am trying to figure out 
in Massachusetts if it was meeting a need of under-served, and 
where that $156 million goes and how is the sustainability. 
They are going to have the same sustainability all of you have 
to deal with in balancing your budget; the co-ops do as well.
    Ms. Yang. Absolutely, Mr. Chairman. We work very 
collaboratively with Minuteman, so to my best knowledge they 
continue to be very interested in competing in the 
Massachusetts market. I would just say that, as you know, 
Massachusetts is already very well served in terms of insurance 
companies. We have great coverage and we have many, many 
carriers competing.
    Mr. Lankford. Right. That was my interest of why we spent 
$156 million to start a co-op to compete in an area that has 
quite a bit of competition already. I just didn't know how 
successful they were.
    Ms. Yang. My understanding is that, and I agree with that, 
Minuteman comes in with a low cost model that could offer 
additional options for members to shop around. And we continue 
to believe that they are able to deliver that once we have the 
functionality.
    Mr. Lankford. Okay.
    Maryland, any issues on there? Anything we can fill in the 
gap on?
    Dr. Sharfstein. I would just say that it is probably too 
early to answer the question about the investment there.
    Mr. Lankford. Sixty-five million dollars to help start up a 
co-op that would stand up, and there is quite a bit of 
competition in Maryland as well.
    Dr. Sharfstein. Maybe not as much as in Massachusetts. I 
would say that Evergreen is really focused on the control of 
cost through a very aggressive primary care approach, which we 
think is promising.
    Mr. Lankford. Do you know how many they have signed up at 
this point?
    Dr. Sharfstein. In the individual market, they have signed 
up on the order of a few hundred. Their prices were higher than 
the market leader and I think that hurt them in the first year. 
But I think that they are signing up more in the small group 
market, where their prices are more competitive, and I think it 
is probably going to take a couple years to really understand 
their role and see whether they are able to succeed.
    Mr. Lankford. When problems came up, and as you were 
approaching deadlines getting to October the 1st, was there a 
key person that you were supposed to communicate with or that 
would give you comeback to sign off, whether that be the Oregon 
site, which is great frustration on the Maryland site? Who was 
the point person that you were to report to and say, okay, we 
have some issues, we don't know where we are, we are still 
working through our testing for security; we are not launching 
well, we are going to have to have a delay, whatever it may be. 
Who was the point person you were going back to for CMS to keep 
them informed?
    Dr. Sharfstein. I can say we had a specific person at Sacio 
who was the main point of contact.
    Mr. Lankford. Okay. What is the name again?
    Dr. Sharfstein. I think her name is Amanda Cowley. She, I 
think, has left Sacio since the launch.
    Mr. Lankford. Oh, so this was a separate contractor working 
for CMS?
    Dr. Sharfstein. Right, she worked for CMS. She was an 
employee.
    Mr. Lankford. Okay.
    Dr. Sharfstein. She was sort of the liaison.
    Mr. Lankford. So the name was Amanda?
    Dr. Sharfstein. Cowley. I just want to quadruple check the 
name.
    Mr. Lankford. Great. So let's kind of run through.
    Who was the point of contact for you? Somebody had to do 
sign-off to be able to answer questions for you. Yes, sir, Mr. 
Leitz.
    Mr. Leitz. Mr. Chair, similarly I believe our primary 
contact administrator at the time was Amanda Cowley at Sacio.
    Mr. Lankford. Okay.
    Mr. Van Pelt?
    Mr. Van Pelt. Mr. Chair, I do not have that information 
with me today; I was not there, but I can get that for you.
    Mr. Lankford. Thank you. We will just follow up.
    Mr. Lee?
    Mr. Lee. Amanda Cowley is the director of State exchanges 
and was the endpoint. We also had a State officer who had sort 
of day-to-day responsibility for sort of making sure all the 
elements were approved and checked.
    Mr. Lankford. Okay.
    Ms. Yang?
    Ms. Yang. Same thing here; Amanda was the point of contact. 
We were in constant contact with the entire CMS team.
    Mr. Lankford. Mr. Matsuda, you weren't there, I don't 
think, at that time, as well.
    Mr. Matsuda. Yes. I will have to provide that on the record 
later.
    Mr. Lankford. That will be fine.
    Ms. Yang, at some point I want to be able to follow up with 
you, as well. We have a document, and I will get you a copy of 
it, that says for policy development. This is a piece that 
walks through as far as how you were hitting the core as 
Massachusetts was walking through this. And I will read this to 
you. And, again, I want you to be able to get a copy of it and 
we can talk again later.
    This was an August document talking through the Website and 
how things were working, and what they considered a go or a no-
go status. Browsing was anonymously a go; creating an account 
was a go; submitting application was a go; eligibility 
determination, no-go; shop and compare, no-go; pay and enroll, 
no-go; lock user account, no-go; IT administration create 
account, no-go; broker quoting information, no-go; browse, 
compare, select plans, no-go. Of the 17 core functions, only 5 
were assessed as a go in August at that point, late August, as 
they were preparing for an October launch.
    Was there a conversation at some point to say, okay, we 
have a lot of no-gos here; let's stall, let's delay? If so, who 
would that go to to be able to say, okay, we have a bunch of 
no-gos and we are getting really close to deadline and we may 
need some extra time?
    Ms. Yang. So a couple of things, Mr. Chairman. I can 
explain this document. This appears to me was a steering 
committee minutes document, so it records the discussion that 
took place at the time. We did go through a comprehensive 
evaluation of the readiness of the system before we deployed 
the system on 10/1, and this was a record of the discussion 
that we had that looked at each component, which ultimately led 
to our decision to deploy what we did deploy and also what we 
did not deploy on October 1st.
    Mr. Lankford. Who did you have to report to at CMS to say 
we are having problems in these areas, we are not going to be 
able to deploy? Was there someone you were held to account to 
to keep them informed?
    Ms. Yang. Yes. As I mentioned, we were in constant 
communication with CMS; we still are. We have weekly 
discussions with them on all levels of details.
    Mr. Lankford. The who is what I am looking for there.
    Ms. Yang. Similar to the other States, Amanda Cowley was 
the director for, I think, State exchanges, and also her team 
that included our State officers.
    Mr. Lankford. Okay.
    This has been a very long day for you. I have a million 
more questions. We will follow up in the days ahead just to be 
able to go through the process.
    I do appreciate you coming and for the conversation. You 
all are working very hard. No one is trying to push back and 
say you are not working hard or you are not trying to make 
something work. The frustration is obviously this is a round 
peg in a square hole at times, and trying to work through 
Federal regulations and what you already have in your State, 
trying to make that work, whether it be Hawaii or 
Massachusetts, and trying to function with that.
    In my own State we had a plan called Insure Oklahoma that 
already existed that we assumed we were going to get a waiver 
for that we ended up not getting a waiver for, and having to 
have that flip; and suddenly a working State plan had to be 
punted to try to get into a website that then wasn't working. 
We had all the chaos of that as well.
    So what you are doing and what you are trying to work 
through the process to be able to serve people is honorable, 
and I appreciate your service on that. The mess that surrounds 
all this in the law, and trying to execute a law that has many, 
many complicating and conflicting parts of it is a major issue, 
and I think will continue to be a major issue.
    So, with that, we are grateful for your time to be here. 
Thank you, and we are adjourned.
    [Whereupon, at 1:10 p.m., the subcommittee was adjourned.]


                                APPENDIX

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