[Senate Hearing 113-592]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 113-592

                      HEALTH INSURANCE EXCHANGES: 
                   AN UPDATE FROM THE ADMINISTRATION

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


                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 6, 2013

                               __________

                                     
                                     

            Printed for the use of the Committee on Finance


                                    ______

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                          COMMITTEE ON FINANCE

                     MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West         ORRIN G. HATCH, Utah
Virginia                             CHUCK GRASSLEY, Iowa
RON WYDEN, Oregon                    MIKE CRAPO, Idaho
CHARLES E. SCHUMER, New York         PAT ROBERTS, Kansas
DEBBIE STABENOW, Michigan            MICHAEL B. ENZI, Wyoming
MARIA CANTWELL, Washington           JOHN CORNYN, Texas
BILL NELSON, Florida                 JOHN THUNE, South Dakota
ROBERT MENENDEZ, New Jersey          RICHARD BURR, North Carolina
THOMAS R. CARPER, Delaware           JOHNNY ISAKSON, Georgia
BENJAMIN L. CARDIN, Maryland         ROB PORTMAN, Ohio
SHERROD BROWN, Ohio                  PATRICK J. TOOMEY, Pennsylvania
MICHAEL F. BENNET, Colorado
ROBERT P. CASEY, Jr., Pennsylvania

                      Amber Cottle, Staff Director

               Chris Campbell, Republican Staff Director

                                  (ii)




                            C O N T E N T S

                               __________

                           OPENING STATEMENTS

                                                                   Page
Baucus, Hon. Max, a U.S. Senator from Montana, chairman, 
  Committee on Finance...........................................     1
Hatch, Hon. Orrin G., a U.S. Senator from Utah...................     3

                         ADMINISTRATION WITNESS

Sebelius, Hon. Kathleen, Secretary, Department of Health and 
  Human Services, Washington, DC.................................     6

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:
    Opening statement............................................     1
    Prepared statement...........................................    49
Hatch, Hon. Orrin G.:
    Opening statement............................................     3
    Prepared statement...........................................    51
Sebelius, Hon. Kathleen:
    Testimony....................................................     6
    Prepared statement...........................................    55

                                 (iii)

 
                      HEALTH INSURANCE EXCHANGES: 
                   AN UPDATE FROM THE ADMINISTRATION

                              ----------                              


                      WEDNESDAY, NOVEMBER 6, 2013

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10:10 
a.m., in room SD-215, Dirksen Senate Office Building, Hon. Max 
Baucus (chairman of the committee) presiding.
    Present: Senators Rockefeller, Wyden, Stabenow, Cantwell, 
Nelson, Menendez, Carper, Cardin, Brown, Bennet, Hatch, 
Grassley, Crapo, Roberts, Enzi, Cornyn, Thune, Burr, Isakson, 
Portman, and Toomey.
    Also present: Democratic Staff: Amber Cottle, Staff 
Director; Mac Campbell, General Counsel; and David Schwartz, 
Chief Health Counsel. Republican Staff: Chris Campbell, Staff 
Director; Jay Khosla, Chief Health Counsel Policy Director; and 
Kim Brandt, Chief Health Care Investigative Counsel.

   OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM 
            MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The committee will come to order.
    In February 1958, against the backdrop of a divided Nation, 
a junior Senator from Massachusetts spoke at Loyola College in 
Baltimore. The young Senator, named John Kennedy, said, and I 
quote, ``Let us not despair, but act. Let us not seek the 
Republican answer or the Democratic answer, but the right 
answer. Let us not seek to fix the blame for the past. Let us 
accept our own responsibility for the future.'' More than 55 
years later, JFK's advice still rings true, and it is important 
for us to remember now as we implement the Affordable Care Act.
    Five weeks ago, the administration launched Healthcare.gov. 
The Federal insurance website was to be the main vehicle for 
millions of Americans to sign up for coverage under the 
Affordable Care Act. Needless to say, it has been a rocky 
rollout. Problems have plagued the website and limited the 
ability of Americans to buy the health insurance they need and 
deserve. Let me say right off the bat, this is unacceptable. It 
has been disappointing to hear members of the administration 
say they did not see the problems coming.
    Secretary Sebelius, the last time you came before this 
committee, I used two words to voice my concerns about the 
law's implementation. Since then, my words have been twisted 
and used to malign the Affordable Care Act.
    Make no mistake, I believe in this law. I spent 2 years of 
my life working on the Affordable Care Act. There is nothing I 
want more than for it to succeed. But months ago, I warned that 
if implementation did not improve, the marketplaces might 
struggle. Other Senators on this committee voiced similar 
concerns.
    When we asked for updates on the marketplaces, the 
responses we got were totally unsatisfactory. We heard multiple 
times that everything was on track, and we now know that that 
was not the case. But that is in the past. Now, it is time to 
move forward and figure out how to fix it.
    Madam Secretary, you deserve credit for coming before 
Congress and the American people and accepting responsibility 
for the website's problems. Your focus is where it should be--
on the future. It is very clear to me that you are working as 
hard as you can to fix Healthcare.gov. Keep at it.
    When this law was created, we made a promise to the 
American people. We made a promise to fix a broken system. We 
made a promise to ensure that all Americans had access to 
quality, affordable health care. We made a promise to ensure 
that no one ever went broke just because they got sick.
    You, Madam Secretary, must make good on that promise. Some 
people have called for your resignation. To borrow Kennedy's 
words, we cannot fix the blame for the past. You need to stay 
at HHS and help get the marketplaces working.
    You said recently that you expect the website to be running 
smoothly for a majority of users by late November. There is no 
room for error. You must meet--and I prefer that you beat--that 
deadline. Why? Because these marketplaces open the door to 
quality care for millions of Americans who lack health 
insurance.
    The nonpartisan Congressional Budget Office estimated that 
7 million Americans will get insurance from the marketplaces in 
2014, and, 10 years in, that number will grow to 24 million. 
There is no question--that cannot happen unless the 
marketplaces run at full speed. But I believe you will fix the 
problems, because you know how critical the marketplaces are.
    For the first time ever, they guarantee consumers will have 
access to high quality, comprehensive insurance. Consumers will 
never be forced into bargain-basement plans or refused coverage 
for services like child birth or cancer treatment. They will 
never be denied coverage because of preexisting conditions. 
They will never be cut off because they hit an annual or 
lifetime limit.
    We already have concrete examples of how the marketplaces 
are helping real people. Just consider these three stories from 
letters I have received since October 1st.
    Gary from Billings, MT wrote that the monthly premium he 
pays for his family of four is currently just over $2,000. But 
thanks to the Affordable Care Act, his monthly premium for next 
year will be $1,165. He will save more than $800 each month.
    Allison from Wolf Point, MT wrote in to say that, thanks to 
the Act, she will have access to affordable insurance for the 
first time in almost 20 years. Allison suffered an injury in 
college and, because of that preexisting condition, the cost of 
insurance was prohibitive. Instead, she rationed visits to the 
doctor and cut back on outdoor activities that make living in 
Montana so great--no skiing, no hiking, no horseback riding. 
But now Allison will have access to high-quality coverage that 
she can afford. She wrote that she looks forward to being 
active again.
    And Tony, a small business owner from Bozeman, MT, wrote in 
to express his excitement that getting insurance on the 
marketplace will save his small business $10,000 a year. Tony 
wrote, and I quote him, ``As a small business owner, I can 
emphatically state that the Affordable Care Act is not only 
good for my business, it is the only way I can afford to 
continue to provide health insurance for my family and 
employee.'' Tony says he can reinvest the $10,000 he saves into 
staffing, training, and the hardware that his business needs to 
stay competitive. And he added, ``This is good for my company, 
myself, my employee, my family, Montana, and our country.'' 
That is a pretty impressive list.
    I have no doubt that stories like these will keep coming in 
over the weeks and months ahead, especially once the 
marketplaces are running at full speed.
    Madam Secretary, I was glad to hear you set a target date 
to have Healthcare.gov fully operational. I look forward to 
hearing how you plan to meet that goal.
    I want to make it clear that the purpose of this hearing is 
not to fix blame, but instead to shed some light on where 
things stand and, more importantly, to learn what the 
administration is doing to correct these problems. And, if 
there is a role for Congress to help, we want to be there. That 
is what matters right now.
    So, as President Kennedy said, ``Let us not despair, but 
act. Let us not seek the Republican answer or the Democratic 
answer, but the right answer.'' Let us get this done.
    [The prepared statement of Chairman Baucus appears in the 
appendix.]
    The Chairman. Senator Hatch?

           OPENING STATEMENT OF HON. ORRIN G. HATCH, 
                    A U.S. SENATOR FROM UTAH

    Senator Hatch. Well, thank you, Mr. Chairman. Thank you for 
scheduling today's hearing. And thank you, Secretary Sebelius, 
for being here today.
    It has been nearly 6 months since you last appeared before 
the committee. Given all that has gone on during that time, 
particularly with the implementation of Obamacare, I would like 
to say that today's appearance is long past due.
    When you were here back in April, you assured us that the 
implementation was on track, that it was all going smoothly, 
and that the exchanges would be ready to go by October 1st. 
Now, it appears that your statements from the previous hearings 
were, at best, misinformed. From where I sit, things do not 
seem to be going smoothly at all. In fact, I think we would all 
agree that thus far, the implementation of the so-called 
Affordable Care Act has been an absolute debacle.
    You admitted as much last week when you testified before 
the House Energy and Commerce Committee, when you said, quote, 
``Hold me accountable for the debacle. I am responsible.''
    Madam Secretary, while I am glad that you are accepting 
responsibility for this disastrous rollout, I would have 
preferred that you and the rest of the administration were 
honest with us to begin with. Perhaps in April, you really did 
believe that things were on track, but you had to have had 
several indications before October 1st that there were problems 
with the website and with the exchanges.
    It is simply inexcusable that the members of this committee 
were not told earlier that these problems were occurring. And 
it was not for wont of asking. I personally sent you a number 
of letters asking for details on the implementation of the 
health care law, many of which were ignored entirely. This 
cavalier attitude toward a Senate committee with oversight 
jurisdiction over your agency is, to put it simply, appalling 
and needs to be rectified.
    If the past month has been any indication, there are likely 
to be numerous additional problems ahead. That being the case, 
I think it is only proper that you provide this committee with 
more regular updates on the issues with which you are dealing. 
In fact, I would ask that you come here once a month for the 
next 6 months to provide this committee with status updates on 
the implementation of Obamacare, and I hope you will agree to 
do so.
    Like I said, Madam Secretary, it is clear that the problems 
you have encountered thus far were not unforeseen. Two separate 
reports--one from the Government Accountability Office in June 
and another from the Department of Health and Human Services 
Office of Inspector General in August--identified significant 
implementation challenges months ahead of the October 1st 
deadline. Yet, there is no indication that the warnings from 
these two independent, nonpartisan government watchdogs were 
heeded by the administration or that any thought was given to 
delaying the startup date as a result.
    When you were here on April 1st, I raised concerns about 
whether adequate testing was occurring to ensure that privacy 
controls were in place for the exchanges. In fact, I 
specifically asked you about having an independent entity 
review the entire system before it went live to ensure that all 
appropriate privacy and security controls were in place. You 
assured me that all testing protocols were being followed and 
that privacy issues were a high priority. However, we now know 
that no end-to-end testing of the system occurred before the 
system went live--none. In fact, key CMS officials knew on 
September 27th that there was a high security risk to the 
system if it went up as planned.
    My colleagues and I have sent several letters since the 
spring asking for, quote, ``more information'' and what privacy 
controls are being instituted as part of the exchange 
infrastructure, and asking for details about whether or not 
testing was being done to address the privacy and security 
concerns we have raised. To date, we have not received any 
answers to those questions.
    So, not only can millions of Americans not log into the 
website successfully, but those who have actually succeeded 
could find themselves at the mercy of identity thieves across 
the globe. I would call this a less than ideal situation for 
all of our constituents.
    That brings us to another set of issues that I hope you 
will be able to shed some light on today. Let me start with a 
simple premise--words matter. We have all heard the golden 
saying ``honesty is the best policy.'' Unfortunately, this age-
old wisdom does not seem to apply to the Obamacare pledges. 
More and more promises made at the time this law was passed are 
now crumbling under the weight of reality on a daily basis.
    Let us start with the famous pledge that health reform 
would reduce costs by $2,500 for the average family. The truth 
is, with all the new mandates going into effect, the cost of 
health insurance in this country is projected to rise at a 
remarkable rate. Some studies, including one from the Manhattan 
Institute, estimate that individual market premiums will 
increase by as much as 99 percent for men and 62 percent for 
women nationwide.
    Then, of course, there was President Obama's promise when 
the law was passed that, ``If you like your health care plan, 
you can keep it,'' and that, ``If you like your doctor, you 
will be able to keep your doctor.'' This, to put it bluntly, is 
simply untrue. And that is why the Washington Post--this was 
October 30th--gave him four Pinocchios, which represents the 
highest level of untruthfulness. You really have to try hard to 
get four Pinocchios. You do not simply get them for making a 
misstatement.
    Yet, it was not until the last few weeks that people in the 
administration and the White House started trying to rewrite 
what the President said. And let us be candid--it was not a 
newfound honest streak that changed the administration's tone. 
It was the fact that Americans started receiving cancellation 
notices from their insurers. According to the Associated Press, 
3.5 million people have received such notices thus far, and the 
same fate is certain to befall millions more before all is said 
and done.
    Put simply, there is a long track record of broken promises 
and untruthful answers to both this committee and the American 
people with respect to how this law should work or would work 
and the impact it would have.
    Now, I hope that that will stop today. No more caveats. No 
more excuses. No more spin. Just give us the truth. Answers 
like ``we don't know'' and ``we were wrong'' are perfectly 
acceptable as long as that is the truth.
    I want to thank you, again, Mr. Chairman for holding this 
hearing. As you can see, we have a lot to discuss.
    I want to thank you, Madam Secretary, for being here. I 
know it is not the most pleasant thing you can do, but the fact 
of the matter is, these are real, legitimate questions that 
really have to be answered by you and others who are in charge 
of these programs. And I have not even gone into--I expect you 
are going to be able to get the IT problems solved, the 
information technology problems solved. That does not even 
begin to answer the questions about why small businesses are 
now employing people for 30 hours or less or why they will not 
employ more than 49 people, because they trigger a huge, huge 
expense under this, I think, very poor bill that was not well 
thought out to begin with.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Hatch appears in the 
appendix.]
    The Chairman. Thank you, Senator.
    I am now pleased to introduce our witness, Secretary 
Sebelius. Thank you very much, Madam Secretary, for appearing 
today. We appreciate you taking the time to explain what is 
going on here.
    Obviously, your statement will be included in the record, 
and you know the drill. I would like you to speak, summarize, 
for about 5 or 6 minutes. Take as long as you want. This is a 
very important matter.
    So, tell us what you want to say.

 STATEMENT OF HON. KATHLEEN SEBELIUS, SECRETARY, DEPARTMENT OF 
           HEALTH AND HUMAN SERVICES, WASHINGTON, DC

    Secretary Sebelius. Thank you, Chairman Baucus and Ranking 
Member Hatch, members of the committee. I do appreciate the 
opportunity to update the committee on the final implementation 
phase of the Affordable Care Act.
    The law, which passed both houses of Congress, was signed 
by the President and upheld by the Supreme Court. It gives 
millions of Americans an opportunity to obtain affordable 
health coverage.
    This is the first opportunity for many Americans to get 
covered, including people living in pain, with chronic 
illnesses, young adults whose employers do not offer insurance, 
and parents struggling to keep up with mounting bills.
    In the last 5 weeks, access to Healthcare.gov has been a 
miserably frustrating experience for far too many of these 
Americans. It is unacceptable. I am focused on fixing it, and I 
am accountable.
    I recognize that there is an even higher level of 
accountability--accountability to the sick, the vulnerable, the 
struggling Americans who deserve better health care. The impact 
on the lives of everyday people is getting lost. I know this 
because I hear their stories, as I am sure many of you do.
    We do have a team of experts working on an aggressive 
schedule so that the consumer experience on the web gets better 
every day. And, as the chairman has said, by the end of 
November, we are committed to having the site working smoothly 
for the vast majority of users.
    While we do not have the fully functioning system yet that 
consumers need and deserve, we do have a plan in place to 
identify, prioritize, and manage the remaining fixes across the 
system. We have reinforced our team with dozens of key 
personnel from both government and the private sector, 
including respected expert engineers, technology managers, 
software developers, designers, and analysts from companies 
like Oracle and Red Hat. They are helping diagnose problems, 
making quick decisions with developers and vendors to analyze, 
troubleshoot, prioritize, and resolve issues in real time.
    As this work continues, we know that Americans are shopping 
for plans, signing up and enrolling online, on paper, on the 
phone, and in person. In fact, more than 2 million people have 
already called into the call center, with average wait times of 
less than 30 seconds. But I want to share with the committee a 
few indications of our progress, what we have improved, and how 
we intend to fix the problems that remain.
    Our two major areas of focus are performance, which deals 
with speed and reliability, and functionality, fixing the bugs 
and other problems in the system. In the first few weeks after 
Healthcare.gov launched, users had to wait an average of 8 
seconds for pages to load. Today, it typically takes less than 
a second. A month ago, viewing and filtering health plans took 
minutes. Today, it takes seconds.
    Many consumers used to see a blank screen at the end of 
their application process. Today, they see whether they are 
eligible for financial assistance, which is the next step in 
the process. Users are receiving far fewer error messages and 
timeouts. And we are now able to process nearly 17,000 
registrants per hour with almost no errors.
    We have made more than a dozen additional fixes this 
weekend, correcting information provided to insurers that 
allows applications to be processed and consumers to complete 
their payments, improving the save-and-continue function, and 
upgrading hardware so the system can handle more users with 
greater stability. Last night, we installed more upgrades, 
focusing on direct enrollment and improving the consumer 
experience, and those updates will continue on an aggressive 
schedule between now and the end of November. We are making 
progress, but there is still a lot of work to do.
    Now, some have asked, ``Why not just delay implementation 
of the new law until all of the problems are fixed?'' and there 
is a pretty straightforward answer. Delaying the Affordable 
Care Act would not delay people's cancer or diabetes or 
Parkinson's. It would not delay the need for mental health 
services or cholesterol screenings or prenatal care.
    Delaying the Affordable Care Act does not delay the 
foreclosure notices for families forced into bankruptcy by 
unpayable medical bills. It does not delay the higher costs all 
of us pay when uninsured Americans are left with no choice but 
to rely on emergency rooms for care.
    So for millions of Americans, delay is not an option. 
People's lives depend on this. Too many hardworking people have 
been waiting for too long for the ability to obtain affordable 
health insurance.
    We want to save families from going bankrupt. We want to 
save the lives of more of our friends and neighbors by allowing 
them to detect medical issues early. We want to keep prices 
down. Delay is not an option.
    We are still at the beginning of a 6-month open enrollment 
which ends at the end of March, and there is plenty of time to 
sign up for the new plans.
    I want to put this into perspective, Mr. Chairman. The 
average private insurance open enrollment is about 2 weeks in a 
work site. Many public plans allow for 4 weeks of open 
enrollment. And for Medicare, the yearly open enrollment, which 
is underway right now, is 6 weeks long.
    The new marketplace was specifically designed for a long 
open enrolment, a 26-week period. And those who enroll by 
December 15th will be able to access their benefits on day one.
    I am accountable to this committee and to the American 
public for getting the fixes in place, and we are committed to 
getting Healthcare.gov fixed so millions of Americans can 
finally obtain the health and financial security they have been 
waiting for.
    Thank you, Mr. Chairman. And I would be happy to answer 
questions.
    [The prepared statement of Secretary Sebelius appears in 
the appendix.]
    The Chairman. Thank you, Madam Secretary.
    You addressed a principal question I was going to ask; 
namely, many people think that the site should be shut down 
until it is totally fixed and ask that question: why just keep 
limping it along; why not just shut it down and put it together 
the way it should be put together?
    Many have pointed out that one-off fixes tend to have 
unintended consequences down the road, that is, at some other 
part of the system. There is no end-to-end running of the whole 
system after all the fixes have been made, and people ask why 
that has not happened, pointing out also that, every day when 
there is a story that someone did not get on, you get a blank 
page or there is a security problem, that is a bad media 
campaign. It is negative. It hurts you. It does not help you. 
So why not just have one bad story or shut down and fix it all? 
Then, when everything is working, however long it takes, 
several weeks, a month, who knows, then look back at that date 
when you were up and running and it was working well.
    You have indicated that that delays health care for a lot 
of people, and I appreciate that, but one more time, why not 
just get it done right?
    I have a series of rules in my office. I will not go 
through the whole set of rules, but one of them is ``do it 
now.'' And the second rule is ``do it right the first time.''
    Why not shut down and do it right?
    Secretary Sebelius. Well, Mr. Chairman, I am relying on the 
advice of not only the inside team of contractors, but a lot of 
the outside experts who have come in to take a look at the 
system. And they did a number of things along the way. They did 
a series of diagnostics, looked at the entire system, and 
determined at the outset that Healthcare.gov is fixable, that 
it is not fatally flawed, which was the initial report out of 
many people.
    Secondly, we have asked that question a number of times: 
would it just be helpful to take the whole system down and make 
fixes along the way? We have been advised that that actually 
does not help, that it is better to do routine upgrades, some 
of which are hot patches which can be done while the system is 
fully running. Others are better to be done in the maintenance 
period between 1 a.m. and 5 a.m., when the user experience is 
pretty low and we actually take the system down for periods of 
time.
    But given the fact that the various fixes, particularly the 
functionality fixes, the codes, have to be written in batches, 
we have been advised that you do not gain much from just taking 
the whole system down for a week, a couple of weeks. It is 
better to do this on an ongoing basis and----
    The Chairman. Now Jeff Zients, who I think is somewhat in 
charge of fixing some of this, near as I can tell, said he has 
a punch list, and they are going to punch them out one by one.
    How many items are there on that punch list, and which of 
them have been punched out? When do you expect them all to be 
punched out? When do you expect to do the end-to-end testing 
after each one is punched out?
    Secretary Sebelius. Well, Jeff has come in to help manage 
the operations between the contractors and the CMS team and the 
aggressive fix schedule. He will be with us, hopefully, through 
this process, and he has been enormously helpful in being a 
management lieutenant, with Marilyn Tavenner, the CMS 
Administrator.
    I would say there are a couple of hundred functional fixes 
that have been identified, and they are in priority grouping. 
The first series of them are underway.
    We are making--and it depends on the night; it is hard to 
give you a moment-by-moment snapshot. There were a number that 
were done last night. Hardware, additional installations were 
done over the weekend.
    At 5 o'clock or 6 o'clock each day, it is really identified 
whether or not the testing for the individual coding fix can 
actually be applied that night. So the list changes.
    But we will get you, Mr. Chairman, an update, and I would 
say we are well into the list. We are not where we need to be. 
It is a pretty aggressive schedule to get to the entire punch 
list by the end of November.
    The Chairman. Are you going to do an end-to-end after you 
go through all of the couple hundred items on the punch list?
    Secretary Sebelius. Well, actually, because the site is 
running, it is end-to-end daily. People are coming into the 
system and going all the way through the system every day, and 
that helps identify some of what we are seeing. So we are 
actually doing, in live time, end-to-end testing that then can 
inform the tech team what else needs to happen.
    The Chairman. Well, speaking for myself, I want this to 
work. I want to do what I can to help you make it work. But it 
means you also have to--it is a 2-way street. You have to tell 
us what is going on candidly, fully.
    Secretary Sebelius. Yes.
    The Chairman. So we do not wake up into November and, lo 
and behold, it is still not there yet.
    Senator Hatch?
    Senator Hatch. Thank you, Mr. Chairman.
    Secretary Sebelius, as you know, for months I have 
expressed concerns about the privacy and security controls 
being implemented as part of this Federally Facilitated 
Marketplace.
    We know now that key officials in the administration knew 
that there were privacy and security risks, as well as serious 
operational issues that might occur if the exchanges went live 
on October 1st. Yet, a decision was still made not to delay the 
launch until those issues were fully addressed.
    Many people, including myself, had called for an 
independent entity, such as the Government Accountability 
Office, for example, to conduct an end-to-end review of the 
marketplace to ensure adequate privacy and security controls 
were in place before it went live. So I have a number of 
questions about why you made the decision to go forward even 
when you knew there were serious security risks and operational 
issues that would likely occur.
    Number one, when did you find out about the potential 
security risks to users of the website?
    Secretary Sebelius. Sir, I would say that the August 
preliminary report from an independent reviewer----
    Senator Hatch. So in August.
    Secretary Sebelius [continuing]. MITRE, identified that 
there were risks. GAO had identified that there were risks. 
There are risks with every system that goes live, and we took 
those risks very seriously.
    Senator Hatch. So by August, you knew.
    Who briefed you on the potential security risks if the 
launch went forward as planned?
    Secretary Sebelius. Again, Senator, I----
    Senator Hatch. Did anybody brief you on the security risks?
    Secretary Sebelius. We discussed security as part of the 
overall operations on a regular basis with the operations team, 
but no one, I would say, suggested that the risks outweighed 
the importance of moving forward, including our independent 
evaluator, MITRE, who made recommendations to CMS, as is 
required.
    Senator Hatch. Well, I had been suggesting that since 
April. You stated that you felt strongly that the launch needed 
to proceed on October 1st for the millions of Americans who did 
not have health insurance so they could get coverage as soon as 
possible.
    However, how did you balance that need with the risk that 
those same Americans might then fall victim to identity theft 
or have their personal information compromised by insufficient 
privacy and security controls? How did you balance that?
    Secretary Sebelius. Well, I share your concerns about 
individual privacy, and I would say the site was developed with 
the highest standards in mind. It is FISMA-certified--FISMA is 
the Federal Information Security Management Act of 2002--which 
is the Federal standard. It meets the National Institute of 
Standards and Technology standards. And we took very 
seriously--the information in the hub was specifically designed 
so that the Federal Government was not storing privacy 
information; it actually accessed other secure government 
websites, but we tried to store the minimum amount of 
information possible.
    We do not collect any personal health information, which is 
typically done by insurance companies----
    Senator Hatch. But you do collect Social Security numbers--
--
    Secretary Sebelius [continuing]. Today. So we do not have 
that at all.
    Senator Hatch. You do collect Social Security numbers. You 
collect----
    Secretary Sebelius. We do not, sir, we----
    Senator Hatch [continuing]. Information on----
    Secretary Sebelius [continuing]. Do not collect them. The 
hub is a router function that actually identifies a Social 
Security number, verifies it with the Social Security 
Administration, but that information is not kept and stored.
    Senator Hatch. But do they not have to give their family 
income and other personal data?
    Secretary Sebelius. And that is verified with the IRS. It 
is Homeland Security-verified.
    Senator Hatch. But it is also on the hub is what I am 
saying.
    Secretary Sebelius. But the hub is just a router.
    Senator Hatch. So these identity thieves can----
    Secretary Sebelius. It is pinging the Homeland Security 
database, it is pinging the IRS database, and it is pinging the 
Social Security database. It is not storing unique information.
    Senator Hatch. Well, what were the tradeoffs with launching 
the exchange on October 1st, rather than waiting until a later 
date? Could other pieces of the marketplace have been delayed 
rather than launch the marketplace with insufficient privacy 
and security controls?
    Secretary Sebelius. Again, Senator, I would say that the 
standards that have been set out for security controls were 
met. You mentioned end-to-end testing, and there were features 
of the system that were loaded very close to launch date, and 
that is why I think the Administrator chose to authorize a 
temporary authorization to operate and not a permanent one, 
because you cannot permanently authorize an authorization until 
you have the entire system.
    We knew we had features in the system which we had chosen 
not to apply from the outset: the shopping feature, the Spanish 
website. Again, those need to be tested before the system can 
be fully authorized.
    Senator Hatch. Could you tell the committee how many people 
have signed up for health care under the current system?
    Secretary Sebelius. Senator, we will have enrollment 
numbers out next week. We are still working on particularly the 
834s, which is the enrollment piece with insurers, and we want 
to make sure we give you valid, accurate numbers.
    Senator Hatch. My time is up, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Wyden?
    Senator Wyden. Thank you, Mr. Chairman.
    Madam Secretary, at community meetings at home, Oregonians 
tell me to do everything I can to stop what they see as 
ridiculous, petty bickering here in Washington and help get 
results by working cooperatively. So in that spirit, as I told 
you, I am going to pass this morning on the blame game and for 
a few minutes, for this moment even, let us just say Democrats 
and Republicans are going to try to find some real common 
ground on this.
    Now, the Affordable Care Act we discuss today focuses on 
expanding coverage and financial help to those who cannot 
afford insurance, and more private sector choices for patients. 
Before the Affordable Care Act, the last health care reform was 
the expansion of Medicare to provide prescription drugs to 
America's senior citizens. Known as Medicare Part D, it was 
enacted during the Bush administration. And like the Affordable 
Care Act, it zeroed in on the same concerns: expanding 
coverage, financial assistance to the needy, increased 
marketplace choices.
    Medicare Part D has been a huge success, and anyone who 
doubts it ought to think about the terrific hearing Chairman 
Nelson held in the Aging Committee just a few weeks ago where 
Democrats and Republicans all made this point. The Medicare 
prescription drug program has been a godsend to millions of 
seniors by offering life-saving medicine, and it has cost 30 
percent less than the Congressional Budget Office had 
predicted.
    But the Medicare prescription drug program, as you know, 
did not start out so hot. The reality of the first few months 
of that prescription drug program was pretty much bedlam. So I 
went back and looked at the newspapers from that time, and I 
will just describe a few of the headlines. ``Glitches in Drug 
Plan Upset Seniors,'' read one paper. ``Medicare Drug Program 
is a Wasteful Disaster,'' read another. ``Medicare Blunders 
Become a Monster,'' read a third. These headlines about the 
Medicare prescription drug program that Democrats and 
Republicans now, together, say is a success, the headlines 
about the Medicare prescription drug program are exactly the 
type of headlines that have been written about the Affordable 
Care Act in recent weeks.
    Now, fortunately, the Medicare prescription drug program 
got fixed, and it got the chance to get off the ground. If it 
had been repealed, millions of seniors today would not have 
access to life-
saving drugs. And not a single member of this committee wants 
that.
    So my question to you is what, in your view, Madam 
Secretary, could Democratic and Republican Senators here on the 
Finance Committee do to make the latest health reforms a 
success the way the Medicare prescription drug program has 
been?
    Secretary Sebelius. Well, Senator, I think that it is 
always welcome to have elected officials in their home States 
give information to constituents about what the law says, what 
their options are, what their benefits could be, what choices 
they have, and how to access the process. That would be 
enormously helpful, particularly to constituents who may not be 
web-savvy, who may not know about the law, who may not be 
following this, but whose families need the benefits.
    I do feel that there is no excuse for what has been a 
miserable 5 weeks. I am committed to the fix of the website. On 
the other hand, I do know that people are using it every day, 
and the experience is getting better every day.
    So, again, encouraging folks to use the website, use the 
call center, enroll in person at a health center, find a 
navigator in the neighborhood, is also enormously helpful. And 
I think working--we would love to work with the committee on 
the issues that look down the road, not just at the marketplace 
that we are talking about, but really the impact of having the 
opportunity to look at delivery system changes.
    I know the committee has just come up with a bipartisan 
proposal around the SGR--a huge issue for Medicare seniors. But 
looking at those kinds of frameworks that actually encourage 
higher-value, lower-cost care as we move forward with more 
Americans insured, I think, is one effort that should have a 
lot of bipartisan support. The SGR framework did, and, as you 
know, the Affordable Care Act has a lot of features in it that 
deal with delivery system changes--how we get a better value 
for the medical dollars we are spending, how access to 
preventive care could actually change a health profile for 
millions of Americans.
    So those kinds of opportunities which are finally here 
thanks to the Affordable Care Act are all one----
    The Chairman. Thank you, Senator, very much.
    Senator Stabenow?
    Senator Stabenow. Thank you very much, Mr. Chairman. And 
welcome, Madam Secretary.
    Let me just say there is no question this website needs to 
get fixed. There are no words that can describe the frustration 
that all of us have.
    What I want to focus on is the real demand for affordable 
insurance that is out there and the response that the public 
has had, wanting to get on the website, wanting to get 
information because they need health care, they need health 
insurance.
    So I want to share some stories with you, and then I would, 
because of the time, just like to move quickly, ask you a few 
questions, and if you can say ``yes,'' ``no,'' or something 
short, that would be great.
    Let me first share with you a story from Michigan that was 
highlighted in an article in the LA Times that talked about a 
woman named Judith. She is 48 years old, works in a department 
store, had an insurance plan that cost her $65 a month. It was 
affordable. She thought she had insurance. Then she was 
diagnosed with cancer and found out that her plan had a $2,000 
annual limit for hospital services, which would get her about 1 
day in the hospital.
    So she delayed her care. Her cancer got worse, and she was 
in a very difficult, difficult situation.
    Madam Secretary, after January 1st, will Judith or any 
other woman face a cap on their coverage for breast cancer 
treatment?
    Secretary Sebelius. No.
    Senator Stabenow. After January 1st, will Judith or any 
other woman be charged more or denied insurance just for being 
a woman?
    Secretary Sebelius. No, Senator.
    Senator Stabenow. After January 1st, will Judith or any 
other woman have to fear being rejected for coverage by her 
insurance company because of her breast cancer?
    Secretary Sebelius. No, she will not.
    Senator Stabenow. These are all good things. Certainly, 
people in Michigan think so.
    This past week, I heard from Greg in Bloomfield Hills, and 
he wrote me a letter that said, ``My wife, Barbara, and I had a 
policy which covered our son. In the first week of October of 
this year, we received a notice that our son's policy was being 
canceled because it was not compliant with the ACA. It had a 
high deductible, paid only one doctor visit a year, no 
preventative care, very limited prescription drug coverage. In 
fairness, our insurer advised us to go to the health care 
exchange to obtain a new policy. We had no problem accessing 
the exchange or navigating through the various policy 
alternatives with much greater coverage than the old policy.'' 
We certainly want to hear more of that. ``Thank you for passing 
Obamacare.''
    After January 1st, will Greg's son's insurance policy be 
guaranteed to cover prescription drugs?
    Secretary Sebelius. Yes.
    Senator Stabenow. After January 1st, will Greg's son's 
insurance be guaranteed to cover important preventative 
screenings without out-of-pocket costs for the family?
    Secretary Sebelius. Yes.
    Senator Stabenow. I think these are good things.
    Yesterday, I heard from Crystal, a small business owner in 
Pontiac, MI, who has not been able to afford insurance for 3 
years, as a small business owner. She admitted that before the 
Affordable Care Act, she was one of the people who was using 
the emergency room and adding to the costs of everybody else 
and everybody else's insurance when she got sick.
    Last month, she went to Healthcare.gov, was able to secure 
health insurance quickly and uninterrupted. In fact, she got a 
plan for $163 a month, and she said to me, ``It's a payment I 
can live with, and I can't tell you how happy I am to finally 
have health insurance, especially at my age.''
    Madam Secretary, we have heard concerns about small 
businesses for years that have struggled to afford insurance. 
Certainly, at every meeting, for years and years, that is the 
only thing anybody wanted to talk about.
    Can you discuss how pooling together small business owners 
like Crystal in the marketplace is going to continue to help 
them afford insurance?
    Secretary Sebelius. Well, Senator, small business owners, 
under the law, employers with less than 50 full-time employees, 
have no obligation to provide coverage, but many of them want 
to. It is a way they recruit and retain their best employees.
    They have often been in a market where they pay higher 
rates and have exorbitant costs if one of their employees gets 
sick or has a diagnosis. So having an option--and small 
business owners can shop in or outside the marketplace, but 
there will be new options for small business owners in the 
market, with plans specifically for them. And for the employers 
with fewer than 25 employees and low-income workers, they may 
actually qualify for a new tax credit to provide that coverage, 
up to 50 percent of the cost of insurance.
    So there are not only more choices, more features, a larger 
pool, but for some, a significant tax incentive for employer 
coverage.
    Senator Stabenow. Thank you.
    The Chairman. Thank you, Senator.
    Senator Grassley?
    Senator Grassley. Thank you for joining us, Madam 
Secretary.
    You know of my interest in the False Claims Act that has 
brought $30 billion to $40 billion back into the Federal 
Treasury and is one of the best tools against fraud. So I start 
by referring to a letter you sent to Congressman McDermott 
October 30th.
    The letter states that the Department, quote, ``does not 
consider qualified health benefits, other programs related to 
Federally Facilitated Marketplaces, and other programs under 
Obamacare, to be Federal health care programs.'' If that 
interpretation stands, it would have serious consequences.
    Your letter calls into question whether vital enforcement 
and oversight tools that ban rebates, kickbacks, and bribes 
would be available to your agency to fight fraud. It weakens 
the ability to use the False Claims Act.
    I do not understand why you are giving insurers within the 
exchanges a blanket exemption from years of civil and criminal 
laws and regulations, including anti-kickback and Stark law 
violations, just to name a few.
    This is not about my position on the underlying law, Madam 
Secretary. You and I disagree on that. However, we can both 
agree, I hope, that you are moving forward with implementation 
no matter how badly it goes and how many promises are broken 
along the way, and right now it is not going very well.
    Trying to exempt Obamacare from a host of criminal and 
civil laws designed to protect taxpayer dollars from fraud just 
adds insult to injury. These laws were put in place to stop 
aggressive practices that ripped off taxpayers. You should not 
be able to just exempt Obamacare from these protections with a 
stroke of the pen.
    So, a few questions. Was this exemption requested by any 
providers, and, if so, who requested it?
    Secretary Sebelius. No, sir, not to my knowledge. This was 
a legal discussion in our department, and, because these are 
private insurance plans--they are not government programs--the 
legal interpretation was that the insurance companies offering 
plans on the marketplace and offering plans off the marketplace 
should be treated the same.
    These are not government insurance programs. They are 
private plans.
    Senator Grassley. Did you have any discussion about this 
issue with any providers that are offering these plans prior to 
their decision to join?
    Secretary Sebelius. No, sir.
    Senator Grassley. And finally, would you make the lawyers 
who review this decision available to my staff so that we can 
ask follow-up questions to better understand why the decision 
was made to greatly weaken the ability to use available 
statutes to protect taxpayers' dollars?
    Secretary Sebelius. Senator, I would be glad to do that. 
Again, we have not given up any authority over fraud. Our 
department continues to have careful monitoring. We can 
decertify plans from being in the marketplace. We can work with 
the Attorney General.
    The State insurance departments throughout the country are 
the regulators of these private insurance plans and private 
companies. They have a very aggressive anti-fraud effort.
    It was just the legal determination, since these are 
private companies--these are not dollars being paid for out of 
the Medicare Trust Fund or others, these are private companies 
and private premiums--that they should not be declared to be 
government health plans.
    Senator Grassley. The Medicare Advantage Plan is the same, 
and so it is covered.
    Secretary Sebelius. Actually, it is not quite the same, 
Senator. It is a private insurance plan, but Federal dollars 
are paid directly out of the Medicare Trust Fund to the 
Medicare Advantage Plans. This is very different. These are 
individuals who are paying premiums to a private plan on the 
marketplace.
    Senator Grassley. Mr. Chairman, my next question is so 
long, can I reserve my time for a second round?
    The Chairman. Yes, you may, absolutely.
    Senator Crapo?
    Senator Crapo. Thank you, Mr. Chairman.
    Secretary Sebelius, I have read your testimony and listened 
to it carefully today, and I appreciate your commitment to 
making the website work.
    I am concerned, though, that a lot of the discussion in 
your testimony and a lot of the discussion that we are in seems 
to imply that the problem we are dealing with is that we fouled 
up on the website. And we have hired a lot of experts, we are 
going to go get the website fixed, and then everything is going 
to be great.
    As the chairman asked you whether it would not be better to 
hold off until we can get the website fixed, I want to expand a 
little beyond that, because I am more concerned, frankly, not 
that you will get the website fixed or not, but that we will 
get the law fixed. And as I see it, we are now finding that the 
concerns that many of us raised before about whether the law 
was properly laid out and whether the promises made about the 
law were real, our concerns about that are coming true.
    The President said, if you like your plan, you can keep it. 
And not because the website is not working, but because of the 
way the law was put together, we now see that, for millions of 
Americans, at least 3.5 million that we know of today, they are 
getting their insurance policies canceled--100,000 in Idaho, 
which is way more percentage-wise than the percentages the 
President is now talking about.
    The President promised, if you like your doctor, you can 
keep your doctor. Again, millions of Americans are finding out 
they cannot keep their doctor.
    The President promised, we can cut the average family's 
premium by about $2,500 a year. And although I read your 
testimony where you talk about premiums going down, I do not 
know what datasets you are using, because the data that I am 
aware of show that the premiums in the individual market are 
skyrocketing. They are not going down. They are going up, and 
they are going up faster than they were projected to before the 
law.
    The President promised, if your family makes or earns less 
than $250,000 a year, a quarter of a million dollars, you will 
not see your taxes increased a single dime. I repeat: not one 
single dime. And yet we have, as we discussed, somewhere 
between $800 billion to over $1 trillion of new taxes that were 
delayed in their implementation, but are now starting to hit 
and squarely hit the middle class.
    My question to you is, is it not time for a time-out? The 
law is not working as it was promised. The website is not 
working, fine. Let us fix it. But the law is not working.
    Is it not time for a time-out so that we can go in and 
start finding out why we are seeing premiums go up, not down; 
why we are seeing people's policies canceled, not being 
protected in their health care; why we are seeing the failure 
of the promised operation of the law to occur?
    Secretary Sebelius. Well, Senator, I would, respectfully, 
disagree with your assessment about the law working.
    In the last 3\1/2\ years, there are millions of Americans 
who have actually received benefits under the law. There are 7 
million young adults who have insurance now who were uninsured 
because they are now covered on their parents' plan. There are 
seniors who are experiencing not only additional benefits in 
their Medicare plan, but, despite all of the accusations that 
somehow Medicare Advantage would cease to exist, we have a 
stronger and less expensive program today than we did.
    We have a 50-percent discount for seniors in their 
prescription drugs if they fall into the donut hole. Millions 
and millions of Americans who have private employer coverage 
now have no co-pays and no co-insurance for preventive care, 
everything from cancer screenings to immunizations. Those are 
all part of the law. And we have the lowest health care cost 
increases in decades in the private insurance market, in 
Medicare, in Medicaid. Costs are at an all-time lower rate of 
insurance than we have had in years.
    Senator Crapo. But, Secretary Sebelius, you can go through 
those points and, for those datasets that you are talking 
about, some of those developments have occurred.
    But on the flipside, we are seeing millions of Americans 
lose their health care. Millions and millions more see their 
health care premiums going up, and the price for some of these 
fixes that you are talking about is phenomenally higher than we 
understood or was represented.
    Is it not time to go in and take a look at the areas of the 
law that are simply failing?
    Secretary Sebelius. Actually, Senator, in the marketplace, 
the rates have come in about 16 percent lower than what the 
Congressional Budget Office projected those rates to be.
    Senator Crapo. That is the projection after--that is not 
lower than actual fact.
    Secretary Sebelius. I would say that those were the 
projections of the rate. So the rates are lower, much like we 
just heard Senator Wyden talk about with the projections around 
Medicare Part D. The rates came in significantly lower than in 
the past.
    Senator Crapo. So are you saying that, in the individual 
market, insurance rates are going down?
    Secretary Sebelius. I did not say they are going down. I 
said the rates are lower than was predicted. And for millions 
of people in the market, they will actually, for the first time 
ever, have some financial help paying for their health 
insurance premiums.
    The Chairman. We are going to have to move on here. Thank 
you very much, Senator.
    Senator Nelson?
    Senator Nelson. Mr. Chairman, one of the toughest public 
service jobs that I ever had was the elected insurance 
commissioner of Florida. And one of the most bedeviling 
insurance markets was the individual insurance policy, because 
what would happen is, people would be enticed to come in to 
cheap health insurance, and then over time, as the group got 
older and sicker, there was no control on the rates. They would 
go up, and then they found they had very limited health 
insurance.
    Now, that is what the Affordable Care Act is trying to 
address, and we are talking about the individual insurance 
policies, not the group policies. And, in this particular case, 
we now have no lifetime limits. We do not have preexisting 
conditions. And you can each look in your States and find many 
examples where the so-called cancellation has occurred, but, in 
fact, these people are going into a policy that is going to 
give them protections because of the 10 things that are 
required in the Affordable Care Act individual health insurance 
policies.
    So I would ask my colleagues, as they look at this, please 
consider, for example, a lady in Florida. She had a policy that 
was $54 a month--that sounds great--that is being canceled. But 
when you got into the internals, as reported by CBS, lo and 
behold, she did not have much coverage at all, and had she 
gotten a disease like cancer, she would have had virtually no 
coverage. She is going to have that coverage under the policies 
in the individual market that are covered under the ACA.
    Now, I want to say one thing about what is going on in the 
States. Take a State like Kentucky. They did their work, and, 
in the first month, they have signed up 30,000 people.
    Look at my State. It is one of 27 States, basically, I 
think, because of politics, that decided not to do anything 
about setup--would not accept money to set up, is not going to 
expand Medicaid. And look at the difficulty now that the 
Federal Government has had to set up these exchanges in 27 
States. Why could we not have been like Kentucky and be way 
ahead of the game?
    Finally, I would say, obviously, there is no excuse for the 
website not working.
    Madam Secretary, I am one of the ones who said, as, Mr. 
Chairman, I heard you say, that people have twisted your words 
when you criticized the fact that the website was not working. 
And I certainly was one who said it is inexcusable and people 
ought to be held to account.
    So, Madam Secretary, what legal authority do you all have 
to guarantee that the contractors who are responsible for this 
thing not working are going to be held to account?
    Secretary Sebelius. Well, Senator, we have significant 
contracts with a number of key outside entities. CGI and QSSI 
are two of them.
    We have paid out, I would say, a portion of the money that 
has been encumbered for the website build. It clearly is not up 
and running at a sufficient level at this point. And we have 
new management with QSSI, one of our key contractors, sort of 
driving part of this fix, and we will make sure that, funding 
that has been provided delivers on the product that was 
promised.
    It is not there yet, and that is a commitment. We are 
working with our auditors and our teams to make sure that, as 
bills come in, they are clearly reviewed and that we have the 
opportunity to make sure that the product that we need and have 
committed to is delivered.
    Senator Nelson. Mr. Chairman, I will just make a final 
statement.
    As someone who has fought and bled for this and who 
sincerely thinks that it is going to work in the long run, I 
want you to hold them to account. I want you to burn their 
fingers and make them pay for not being responsible and for not 
producing a product that all of us could be proud of.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Roberts?
    Senator Roberts. Madam Secretary, I want to remind everyone 
again how we got here today.
    Over a year ago, staff or members of this committee 
requested information on the rollout of the exchanges. Instead 
of details, we only received assurances that everything would 
go smoothly. In March of this year, we started hearing that 
people directly involved with the development and 
implementation of the exchanges were deeply worried about the 
website's launch. In June, the Government Accountability Office 
issued a report that should have served as a warning to you, as 
it highlighted implementation challenges that we now know were 
never addressed. I want to stress it certainly was a warning to 
me. By July, it was clear to me that your department was being 
less than transparent about whether the exchanges would be 
ready by October 1st.
    As a result, I introduced the Exchange Sunset Act of 2013. 
My bill would have sunset the exchanges and the individual 
mandate if beneficiaries were unable to enroll starting October 
1st, as promised.
    In August, the HHS Office of Inspector General identified 
privacy and security vulnerabilities and determined that, 
quote, ``critical tasks remain to be completed in a short 
period of time.'' In early September, your main website 
contractor, CGI, warned CMS that they were falling behind on 
their highest priority items. The warning included that they 
may not have enough time in the schedule for testing and that 
services were intermittently unavailable. And yet, several days 
later, the White House announced that the data hub was, quote, 
``ready for operation.''
    In mid-September, CMS ordered a contractor to make a 
significant change to the system to require people to submit 
their 
personal information before viewing any plans or associated 
costs. On September 26th, mere days before the launch, testing 
showed that a few hundred visitors crashed the site. The very 
next day, the decision was made to move forward with the launch 
of Healthcare.gov, knowing that there was a high security risk 
during testing.
    In short, Madam Secretary, I believe you were given advice, 
counsel, and warning from experts inside your agency and out 
that the health care exchanges were not going to be ready. 
Furthermore, I believe, to protect the administration, you 
chose to ignore these warnings and, as a result, you have put 
our entire health care system and one-sixth of our economy in 
jeopardy.
    People are angry. Millions of Americans are scared. They do 
not know whether they are going to have coverage in a matter of 
weeks. They do not know what their coverage will include. They 
now are getting letters from their insurance companies they do 
not understand. In fact, more people are losing their insurance 
than are signing up on the website, and they are being directed 
to a website that does not even work.
    Now, we do not often talk about life and death in the 
context it deserves, but at this time, it is real and it means 
the difference between life and death for many Americans who 
are at a loss for what to do. And we know, Madam Secretary, 
that fixing the website will not ever fix the uncertainty and 
the ramifications that result from this law.
    So I have to wonder if you have any regrets, any regrets at 
all, that you failed to heed the warnings, that you ignored the 
calls from members of Congress, that you proceeded to open the 
exchanges on October 1st, immediately followed by a taxpayer-
funded promotional tour to tell everyone, quote, ``It's sort of 
a great problem to have.''
    Well, Kansans do not think these are great problems to 
have. From your hometown of Topeka, Steven wrote, ``I am 
completely disgusted. I have spent the last 2 days trying to 
get my application through. This would not be a critical issue 
except the insurance coverage that I currently have is going 
away because of the new Federal requirements, though we were 
promised, if you like your current coverage, you can keep it.''
    Madam Secretary, you yourself know that this law has 
serious problems. You delayed over half of the mandate 
deadlines. You did it for employers, for unions, and for small 
business, but not for the exchanges and not for Steven nor for 
millions of other Americans who are losing their health care, 
and their worry and their fear are palpable.
    Your main goal should have been to protect Americans, to 
lessen their risk, and to ensure their safety. But in your zeal 
to implement this law, not warnings, not advice, not counsel 
would deter you from implementing the exchanges.
    You have said America should hold you accountable, which is 
why today, Madam Secretary, I repeat my request for you to 
resign.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman.
    Madam Secretary, thank you for joining us this morning.
    While the problems we are facing with the marketplace 
website are substantial, unacceptable--you have self-described 
it that way--and need to be fixed immediately, I would like to 
take a second and put things in a historical perspective.
    ``Social Security Act's Old Age Insurance Plan Facing 
Hurdles.'' ``Problems Beset Social Security.'' ``Social 
Security Setup Insane.'' ``Medicare Facing Trouble.'' ``Crisis 
for Medicare.'' ``New Problems in Medicare Drug Benefit.'' 
``The Medicare Drug Mess.''
    Those were headlines of the 1930s, 1960s, and early in this 
decade about major programs that have become beloved in terms 
of the social safety net in this country and health care 
security.
    So, while this is inexcusable, by the same token, it is a 
challenge that has been faced time and time again when any 
major program has been unveiled.
    Now, I find it amazing that those who seek to ascribe blame 
are the same folks who have spent every waking hour of the last 
4 years working to dismantle, destroy, obstruct, and impede the 
success of the Affordable Care Act. They are concerned not 
about its failure. They are concerned about its success. And so 
I hope that what we will focus on is, how do we succeed now?
    I want to get a sense--when those of us on the committee 
worked to put this bill together, I guess we were proceeding on 
the faulty assumption that States controlled by Republican 
legislatures or Governors would put a higher premium on their 
love of State rights and the opportunity for their citizens 
than their dislike of the President or some ideological or 
political opposition, which is why we are seeing far better 
success in those States that have established their own 
marketplace.
    What is the consequence of having so many of the States not 
pursuing their own marketplace and delegating it to the Federal 
Government? Did you envision having that many States not open 
up their own marketplace, and what have been the consequences 
of the burden of that?
    Secretary Sebelius. Well, Senator, I would say we really 
did not know. We knew that 27 States had sued around the 
constitutionality of the bill. There was an uncertainty what 
would happen when the Court declared it constitutional, how 
those States would then react.
    Some have chosen a sort of partnership where we still run 
the bulk of the exchange. Others have refused to participate at 
all, and I would say that that uncertainty certainly added to 
the uncertainty of how large the operation would be.
    Having said that, we did have deadlines in January of 2013 
for States to officially declare whether they would run their 
own marketplace or not and, by the middle of February, submit a 
partnership plan. But we have 36 States that are using the 
Federal hub at this point, and that is, I think, significantly 
higher than people might have predicted initially at the outset 
of the plan.
    We have robust product offerings in those marketplaces, 
very competitive. About a fourth of the insurers are brand new, 
which is very good news to a lot of the people who have been in 
a monopoly market for a very long time. They have choices, they 
have competition, and that was part of----
    Senator Menendez. Is it not fair to say, though, that it 
seems that the State-run marketplaces seem to be having greater 
success than those that have been--at this point, than those 
that are being run federally?
    Secretary Sebelius. Well, I would say that the web features 
of those State markets are certainly running more smoothly. If 
you think about one set of products and one set of prices in 
one State, that is less complicated.
    But all of the States, as well as the Federal markets, are 
using the hub. They come into the Federal market to certify 
security and income and status.
    Senator Menendez. Well, let me ask you one last question, 
because we are hearing from a number of providers, including 
community health centers--for example, in my State; it did not 
set up its own exchange--that insurance companies have yet to 
provide them with networking contracts.
    That is a basic function of the marketplace in order to 
ensure network adequacy. If we are going to say that State 
insurance regulators are responsible for certifying the 
marketplace plans--many of these are actively hostile to the 
Affordable Care Act.
    So how is it possible--how are people supposed to shop for 
a plan if they do not know that it includes their doctor 
because the networks are not even yet in place, and will those 
networks be in place by January 1st?
    Secretary Sebelius. Actually, there is no plan that was a 
qualified plan on the market that does not have a network that 
is actually available and provided and has not undergone the 
scrutiny of the State insurance department. That was one of the 
criteria. So every plan in the market has a network, and 
consumers can access that information as they shop for 
insurance coverage. But you could not just file----
    The Chairman. We are going to have some follow-up, yes. 
Thank you, Senator, very much.
    Senator Enzi, you are next.
    Senator Enzi. Thank you, Mr. Chairman.
    Secretary Sebelius, we all know by heart President Obama's 
promise that if you like the health plan you have, you will be 
able to keep your health plan, period. Well, as millions of 
Americans are, unfortunately, finding out, that just is not the 
case.
    Henry Ford said that customers could have his Model T in 
any color they wanted so long as it was black. Sounds similar 
to what the President has promised with health care. If you 
like your current plan, you can keep it, as long as it is the 
model he chooses.
    I offered a proposal 3 years ago to give people the honest 
choice to keep their plans, but every one of the majority party 
in the Senate voted against it.
    Incidentally, the White House website, as of 4 o'clock 
yesterday, has a little problem too. It still has the 
President's promise on there that if you like your health plan, 
you can keep it.
    Twenty-six hundred Wyomingites--we are the least populated 
State in the Nation--got word Saturday that they could not keep 
the insurance that they have even if they like it, and the 
insurance commissioner assures me that it is plans that they 
like. So I am working on a bill with Senator Ron Johnson and 36 
others that would allow Americans to keep their health care if 
they like it. These insurance cancellation notices are a wake-
up call to the American public, even those who initially 
supported the law.
    It is hurting the economy. It is actually making health 
insurance less affordable. The one-size-fits-all approach that 
this administration likes to push is hurting our country, and 
we need more people in Congress who understand this.
    My hope is that even my Democratic colleagues are seeing 
the light. If not, I bet their constituents will hold their 
feet to the fire and keep them accountable.
    My question to you is this. What is the administration 
doing to help the millions of people who will suffer as a 
result of the President's broken promise? What can I tell my 
constituents who have had their insurance coverage canceled and 
cannot qualify for a subsidy and are facing thousands of 
dollars in insurance costs? Incidentally, Wyoming's costs are 
higher than any other State in the Nation, and we only have two 
providers.
    So there has not been an increase in the number of 
providers. Your answer?
    Secretary Sebelius. Well, Senator, I think that the 
President's promise was in the law from the day it was written, 
and that is the grandfather clause that we wrote as a policy. 
It basically said that plans that were in effect in March of 
2010 that did not change to the detriment of the consumer--even 
though the insurance company could raise premiums, they could 
not eliminate benefits or take away items that the consumer 
liked--that those are in effect and they can stay in effect. 
And millions of Americans in the individual market are enjoying 
those plans today and will enjoy them into the future.
    They do not have to come into compliance with anything in 
the law. But if, indeed, the plan is turned over, and this is a 
market--you heard Senator Nelson, and he and I served together 
as insurance commissioners--talk about churn in the market and 
plan turnover. If plans in this market changed over and over 
again since 2010, then insurers have been on notice since 2010 
that they needed to come into compliance with the same exact 
consumer protections that are in the small group market, in the 
employer market, in every other part of health insurance.
    It just was not available to individuals who were out 
shopping on their own.
    Senator Enzi. I am not worried about the insurers. I am 
worried about the individuals who lost their policies that they 
liked. And they are also finding out, not only are they losing 
their policies, they are losing the doctor whom they like to go 
to. In some instances, they are losing the hospital that they 
like to go to.
    So there are some changes that have been made there that 
are causing some problems.
    Now, you also mentioned that a number of people are signing 
up, and I have noticed that in Washington State, there were 
35,000 people who signed up for Obamacare, but 87 percent of 
them are going to receive their coverage through Medicaid. And 
26,000 people enrolled in Kentucky, and four out of five of 
those are going to be in Medicaid. And Maryland reported 85,000 
people enrolled, and 96 percent of those are going into 
Medicaid.
    Medicaid has costs for the Federal Government, particularly 
with some of the increases that were put in this law. Are we 
going to be able to afford this increase in Medicaid? And it is 
not bringing in the other customers who are going to be paying 
the tab to provide the revenue to do this.
    Secretary Sebelius. Well, Senator, when the Affordable Care 
Act was passed, it was actually anticipated that 100 percent of 
the States would expand Medicaid. That was altered by the 
Supreme Court decision that made Medicaid expansion a voluntary 
expansion for States.
    We now have 30 Governors, Republican and Democratic, around 
the country who have declared their interest in moving ahead 
with Medicaid expansion, and that expansion of 100 percent of 
the States was fully paid for within the Affordable Care Act's 
10-year window.
    In fact, it is part of the law that was passed in 2010. It 
was not on the deficit. It was part of the law, unlike the 
Medicare Part D, which was not paid for when Congress passed 
it.
    The Chairman. Thank you, Senator.
    Senator Enzi. I will submit some more questions in writing, 
the accountant type questions that would not have general 
appeal.
    Thank you.
    The Chairman. Thank you, Senator.
    Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman.
    Mr. Chairman, I am convinced that the fundamentals of the 
Affordable Care Act are sound. We have seen over the last 3 
years the implementation of many provisions of the law in a 
very orderly way, protecting millions of Americans with better 
coverage and giving assurances that the discriminatory 
practices of insurance companies that existed before the 
Affordable Care Act are being ended.
    I think, as my colleagues talk about the actions of private 
insurance companies today, we must look back before the passage 
of the Affordable Care Act and see how many people lost 
coverage, how insurance companies were pulling out of markets, 
reducing benefits, and increasing premiums. We now have 
stability in the market, and that is due to the Affordable Care 
Act.
    I also point out, in regard to the exchanges, the number of 
insurance carriers that are offering plans and the pricing of 
those plans came in much stronger than we anticipated when we 
passed the Affordable Care Act. So it is sound.
    I share the level of disappointment of every member of this 
committee as to how the website shopping and enrollment 
functions have performed since October 1st. As a result of the 
inability of individuals to shop and enroll on the websites, 
there are people who are going to be disadvantaged. We have 
people who have not gotten as far as they want.
    We are going to have consumer fatigue, people who will have 
a more challenging time. We also have a large number of people 
who have lost their coverage, which was understandable, 
because, as you have explained, these are individual market 
policies that were changed since 2010. These are substandard 
policies. These are individuals who changed their insurance 
policies frequently. They want and need to enroll through the 
exchanges by mid-December so that they can get coverage 
effective January 1st.
    So my question to you is, what steps are you taking to deal 
with these individuals who have attempted, but have not yet 
been able to enroll--and individuals who need coverage 
effective January 1st--to make it easier and more convenient 
for people to be able to shop and enroll? It can be done on the 
Internet, but it also can be done by paper and by telephone. 
What steps have you taken to protect those who may have 
suffered from the delay in getting the website working?
    Secretary Sebelius. Well, Senator, step number one, two, 
three, four, five, six, is really getting the site fixed as 
rapidly as possible. In the meantime, we are deploying 
additional assets.
    So the call center operations have additional individuals 
now. We have about 12,000 trained call center representatives 
who not only have an English and Spanish version of scripts, 
but translators who can answer questions in up to 150 
languages, and they can take a consumer all the way from start 
to finish, through the entire process, or just help a consumer 
create an application. Then they can go back to the site and 
visit it later. So that is very much underway, and we are 
trying to increase that visibility.
    Every community health center in America has outreach- and 
enrollment-trained workers on the ground throughout the 
country, and they are very actively working in their 
neighborhoods and their communities.
    Every State has a contract for community groups and well-
known medical advocacy groups trained as navigators to walk 
people through. That can be done in a paper application or on 
the phone or in person.
    Senator Cardin. I am glad you mentioned paper applications, 
because you can do a paper application.
    Secretary Sebelius. Yes, you can, Senator.
    Senator Cardin. And I would just urge you to make that 
option available for those who feel more comfortable using 
paper applications.
    Secretary Sebelius. We always knew that there would be a 
portion of the population who would never use the web, who are 
not web-savvy or do not have access or are not comfortable. So 
we have always had alternate strategies. We are trying to 
actually enhance those alternate strategies.
    Senator Cardin. Let me mention one other point, and that is 
the State exchanges. Those that are being operated by the 
States are having varied results. Some are doing well, some are 
not.
    I urge you to monitor the progress made on the State 
exchanges, because we want to make sure that assistance is 
available to those who have been disadvantaged because of the 
inadequate performance of the online shopping and enrollment. 
The problems go beyond the Federal exchanges, and those 
individuals who are in States with their own exchanges must 
also be protected as you look at ways to compensate for a 
rollout that is far slower than we anticipated.
    Secretary Sebelius. Senator, we have regular updates with 
the State directors. In fact, one is occurring at 4 o'clock 
this afternoon. So we are not only trying to pay attention to 
the Federal marketplace with those 36 States, but also keeping 
in very close touch.
    Lessons learned--we would like to deploy them in other 
areas, figure out what is working and what is not working, and 
use the full 6 months of open enrollment to really reach out 
and enroll people who are eager for affordable health care.
    The Chairman. Thank you, Senator, very much.
    Senator Cornyn, you are next.
    Senator Cornyn. Madam Secretary, in September 2009, the 
Quinnipiac poll said that 88 percent of Americans were 
satisfied with their current health insurance plan, which is 
why the President, no doubt, made the promise that he made.
    As you can see, as of yesterday afternoon, the White House 
website says, if you like your plan, you can keep it and you do 
not have to change a thing due to the health care law. Well, we 
know that lying to Congress is a crime, but, unfortunately, 
lying to the American people is not. I would just like to ask 
you a simple true or false question.
    Is that statement on the White House website true or is it 
false?
    Secretary Sebelius. Sir, I think the statement is that----
    Senator Cornyn. Is it true or is it false----
    Secretary Sebelius [continuing]. You can keep your plan----
    Senator Cornyn. Madam Secretary?
    Secretary Sebelius. The vast majority of Americans who are 
insured are in the employer market or in public plans or in 
veterans' plans, and those plans have stayed in place and 
continue to offer benefits.
    The 11 million people who are in the individual market, a 
majority of those individuals will keep plans that now will 
have stronger coverage, and others will have to choose--if they 
have a brand new plan and not a grandfathered plan--have to 
choose because of a plan that they can no longer get medically 
underwritten.
    Senator Cornyn. My time is limited. So I would just ask 
that the record note that you have refused to answer my 
question whether it is true or false.
    So let me ask you another question. Is it not true that, in 
June of 2010, the department that you head estimated that 
between 40 percent and 67 percent of those buying their 
insurance on the individual market would lose grandfather 
status? And is it not also true that, on that same date, your 
department estimated that 66 percent of the people in small 
employer plans and 45 percent in large employer plans would 
lose their grandfather status by 2013. Is that not true?
    Secretary Sebelius. Senator, that is an inaccurate use of 
those statistics. What the statistics----
    Senator Cornyn. Is it not true?
    Secretary Sebelius. Senator, could I answer the question?
    Senator Cornyn. If you can answer whether it is true or 
not.
    Secretary Sebelius. I can tell you what the statistics 
mean, and then I would like to----
    Senator Cornyn. Well, I am asking you whether it is true or 
not.
    Secretary Sebelius. I would like to tell you what the 
statistics mean.
    Senator Cornyn. Would you answer my question and then 
explain what it means?
    Senator Rockefeller. She did answer. She said you were 
inaccurate.
    Senator Cornyn. Mr. Chairman, I am asking whether it is 
true or false. And you are not answering the question, Madam 
Secretary. So let me ask you another question.
    Secretary Sebelius. Because that is not what the statistics 
say. That was a look back at how much churn there is in the 
marketplace. That was not a projection of what was going to 
happen in 2014.
    Senator Cornyn. Is it not true, according to the 
Congressional Budget Office, that about 156 million Americans 
get their health insurance from their employer-sponsored health 
care plan in 2013, and the Congressional Budget Office has 
estimated, because of the failure to keep the promise on the 
White House website, that 78 million Americans will not be able 
to keep their plans, as promised? Is that not true?
    Secretary Sebelius. I do not have any idea what that 
statistic is. I think there are about 170 million who have 
employer-based coverage, but I do not know that specific CBO 
estimate, Senator.
    Senator Cornyn. Well, I would commend the CBO estimate to 
you, which is what Congress depends upon. CBO estimates 78 
million people will not be able to keep their employer-provided 
coverage, hence my conclusion that this is a false statement 
made to the American people that this administration has 
consistently doubled down on and repeated time and time again.
    The only thing I can conclude is that it is impossible to 
do something in this administration that gets you fired. It is 
impossible. You can lie to the American people. You can 
consistently misrepresent the facts. But it is impossible to 
get fired.
    So I want to ask you about the navigators. The President is 
in Dallas, TX today touting the navigator program, which, as 
you know, consists of people who are hired to help people 
navigate the Affordable Care Act.
    But I would just like to ask you this question, if you 
would answer it. Is it not true that there is no Federal 
requirement for navigators to undergo a criminal background 
check, even though they will receive sensitive personal 
information from the individuals they help sign up for the 
Affordable Care Act?
    Secretary Sebelius. That is true. States could add an 
additional background checks and other features, but it is not 
part of the Federal requirement.
    Senator Cornyn. So a convicted felon could be a navigator 
and could acquire sensitive personal information from an 
individual unbeknownst to them.
    Secretary Sebelius. That is possible. We have contracts 
with the organizations, and they have taken the responsibility 
to screen their individual navigators and make sure that they 
are sufficiently trained for the job. There is a self-
attestation, but it is possible.
    The Chairman. Thank you, Senator, very much.
    Senator Brown?
    Senator Brown. Thank you, Mr. Chairman.
    Madam Secretary, nice to see you.
    I want to start with a letter from Steven, a small business 
owner in Hudson, one of the most conservative suburbs, an Akron 
suburb, in our State. He said, ``I'm a father and small 
business owner. I began my business in 2009, decided to quit my 
day job. It's the best decision I ever made. I'm more 
successful today than I ever would have imagined. But no 
company would sell me health insurance. It wasn't that I 
couldn't afford it, that I didn't want to pay the cost. I 
couldn't get insurance at any price due to preexisting 
conditions. Now, thanks to the Affordable Care Act, my family 
is now insurable.''
    I get letters like this all the time. I think we all do. 
They are from all kinds of people from all kinds of walks of 
life, telling us that this matters to them.
    I want to ask you this. Senator Menendez spoke of the 
difficulty of implementing a huge social insurance program, if 
you will, the difficulty of implementing Social Security, the 
difficulty of implementing Medicare. You can go back to--you 
were a junior or senior in high school, I think, in Senator 
Portman's hometown, when your father, a member of Congress that 
fateful year, voted for Medicare. And I suppose he shared 
stories with you about the opposition in those days.
    The leading Republican politicians, like Congressman Dole 
and Congressman Rumsfeld and Congressman Gerald Ford, voted 
against it. The John Birch Society, the insurance companies, 
the AMA, opposed Medicare.
    In fact, the rolling out of it was very controversial, 
especially because Medicare resulted in integrating southern 
hospitals. And if you think this is controversial, what is 
happening now, imagine the difficulty a year after civil rights 
and around the time of voting rights passing that Medicare 
forced hospitals to integrate. So this whole view that this is 
so controversial and this is so unprecedented when you roll out 
a new program----
    But the important thing, I think, is 5 years later--5 years 
later--people looked back on Medicare and thought, what was the 
big deal, why were people so opposed? This is working for our 
country.
    So tell me, 5 years from now or 45 years from now, 48 years 
after Medicare now, what are people going to say about the 
Affordable Care Act in 5 years and in 48 years?
    Secretary Sebelius. Well, I am hopeful that this will be 
another significant step forward in assuring that all Americans 
have access to affordable health coverage, which is not what we 
can claim today.
    We are the only Western country which does not have health 
care as a basic right, and I think this is a significant 
improvement for not only uninsured Americans--and they will 
have access for the first time either to Medicaid expansion or 
to affordable plans in the marketplace--but also those 
individuals who have been referred to a number of times in the 
individual market, the kind of last marketplace, where they do 
not enjoy the consumer protections that every other person who 
has health care in their work place enjoys: no preexisting 
condition limitations, no medical underwriting.
    Virtually 100 percent of people in the individual market 
are medically underwritten. If you are healthy, that is great. 
If you are not healthy, you are in terrible trouble. And these 
are folks who want health insurance. They are there because 
they want health insurance.
    So I think this is a significant step forward and one that 
we will look back on, hopefully, and applaud the day that we 
finally made the significant step. For 70 years, Republican and 
Democratic Presidents have been attempting to accomplish this.
    Clearly, the opposition is still quite ferocious, and I am 
just hoping that people understand what their options are, what 
their benefits could be, and what their opportunities are.
    Senator Brown. Thank you for that. Senator Cardin and I 
were just talking earlier about how we both opposed the 
Medicare drug expansion. I cannot speak for the reason he did. 
I did because it was far too much a giveaway to the insurance 
and drug interests and did not provide the level that I thought 
it should for a real prescription drug benefit.
    It could have been done in a much better way. But Senator 
Cardin and I also did something that I know a number of people 
on our side of the aisle did, and that is held town hall 
meetings, sent staff out to help people--how can I enroll in 
this, how can I sign up for the prescription drug benefit? We 
helped our constituents navigate what was then a labyrinth--
sort of an arduous path of, how do you get these prescription 
drug benefits?
    I wish that were happening today, and I guess I would 
challenge my Republican friends. You know, it is the law, in 
spite of efforts from the House of Representatives, and I hope, 
after this--disastrous is maybe the way to say it--rollout has 
not worked, I hope after this that my colleagues will work in 
their States to help this work for the American people.
    I was handed a note by my staff, and I will just finish 
with this. Republican House members in Ohio, and there are 12 
of them, have gone so far as to tell their constituents who 
have questions about the Affordable Care Act to call Brown's 
office because he voted for it and we did not.
    I just hope that, as a Nation, as public officials, we do 
our jobs. We all took an oath. I do not mean to sound like I am 
lecturing, but I just hope we pull together and make this law 
work as well as it can in our States and across the country.
    The Chairman. Thank you, Senator. Thank you very much.
    Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    It is the law, but it is a law that the administration has 
chosen to delay portions of, and I think that is done very 
indiscriminately.
    I think we all agree that the rollout has been a failure of 
epic proportions. And there were a couple of front-page stories 
in Politico today in which there was a tech expert who was 
quoted as saying, ``This might just be an error, but you cannot 
pass an undergraduate computer science class by making these 
mistakes.''
    We have all talked a lot about that. We hope you get that 
right. I think eventually that part will be right.
    But I am one of the people who believes that this is 
fundamentally flawed legislation. I mean, all we are seeing is 
higher rates. We are seeing cancellation notices. We are seeing 
fewer jobs. And when you pass something that has higher taxes, 
a guarantee issue, community rating, and all kinds of mandated 
coverage, I think it is inevitable that you are going to see 
rates go up, and that is what we are seeing.
    But the point is, this was built upon a faulty foundation, 
predicated upon a bunch of promises made to the American 
people, which are being broken.
    I want to come back to--because I think it is so 
fundamental to this debate, Madam Secretary--on June 14th of 
2010, you held a press conference announcing this grandfather 
rule, which Senator Enzi referred to, and the rule, you said, 
will make good on the President's promise that Americans can 
keep their health plan and doctor they like under the new law.
    My question is, did you read the regulation when you 
released it?
    Secretary Sebelius. Yes, I did.
    Senator Thune. Well, if you read it, how could you possibly 
say that this regulation would keep the President's promise 
when, on page 34553 of the Federal Register, your agency 
estimates that up to 69 percent of employer-provided plans and 
up to 67 percent of individual market plans would lose their 
grandfathered status by 2013?
    Secretary Sebelius. Senator, what I tried to explain to 
Senator Cornyn was, those estimates were made by the health 
economists, who look back. That was the snapshot that had 
occurred in the individual market year in and year out. Very 
few people stay for more than a year.
    We were doing that as a backwards look, but on notice to 
insurance companies that you can basically avoid any coming 
into compliance with the law by keeping these plans in place. 
That is what, basically, the grandfather clause said. And I can 
tell you, we got enormous pushback from medical disease groups, 
from advocacy groups, from health care----
    Senator Thune. But does it not knowingly violate----
    Secretary Sebelius [continuing]. Allies who said, do not do 
this, this is terrible.
    Senator Thune. Does it not knowingly violate the 
President's and your promise that, if you like your health care 
plan, you can keep your health care plan?
    I mean, there was not any caveat on that at the time. It 
was not like there were asterisks or footnotes on that. It did 
not say, if you like your health care plan, you can keep it, 
unless it gets canceled, or unless it gets changed, or unless 
we do not like it.
    It said, if you like your health care plan, you can keep 
it, period. The President said that over and over and over 
again. Yet, how can you go out, knowing what you know, and 
allow the President to continue to say that, and you and other 
members of the administration to continue to say that?
    Secretary Sebelius. Again, Senator, that is what the 
grandfather clause was all about in the first place, and, as I 
say, it was very controversial, but we felt it was important.
    We also, in the grandfather clause--it is written into the 
larger employer plans, with the same kind of caveat. And I can 
tell you that, for the vast majority of people who get 
employer-based health care, are in a public plan or in the VA 
plan or in Medicare or part of the insurance market, their 
plans are very much in place.
    There is change coming in the individual marketplace, with 
consumer protections that many people have never enjoyed or 
experienced.
    Senator Thune. Well, do you think----
    Secretary Sebelius. They do not have the plan they had in 
2013.
    Senator Thune. So people in the individual market, do you 
think that Americans in that market should be able to keep 
plans they like even if the government does not approve of 
them?
    Secretary Sebelius. If the plan was in place from the time 
that the law was passed, that is what the grandfather clause 
said, sir.
    Senator Thune. Look, I think most Americans believe in 
grace. Most Americans are pretty forgiving people. And so they 
will tolerate and accept honest mistakes. But to me, this is a 
dishonest mistake. This is a dishonesty.
    You have been misleading the American people, and the 
President has, over and over and over again. And I would much 
rather you just come out and say, ``Yeah, we were wrong. Yeah, 
we didn't tell the truth.'' The Pinocchio thing, you got four 
Pinocchios on that statement.
    It just strikes me that it would be a lot--I think people 
would be accepting of it. Take it off the White House website. 
It is not a true statement. It never was a true statement. And 
it is one of the things that, when people were sold this, it 
was based upon.
    I think it is a tragedy that the American people bought 
into this and that you all knew full well it was not going to 
be the case.
    The Chairman. Thank you, Senator. Thank you very much.
    Senator Isakson?
    Senator Isakson. Thank you, Mr. Chairman.
    Thank you, Secretary Sebelius, for being here today. We 
appreciate your testimony.
    You testified, I think, in your opening statement that QSSI 
had been hired to do the end-to-end organization and 
coordination of the web and the hub; is that correct? The 
website and the hub?
    Secretary Sebelius. They have taken on a new role in the 
last couple of weeks of organizing the fixes that are going in. 
They did--Senator, they were the contractor for the hub.
    Senator Isakson. Are you aware that in June of this year, 
the Inspector General issued a report finding QSSI guilty of 
violating CMS requirements on security that exposed 6 million 
Medicare beneficiaries' private information?
    Secretary Sebelius. I am aware of that, sir. My 
understanding is, they basically inherited a contract from 
another contractor. They did not have, initially, the various 
provisions in place. They immediately fixed it in the 
transition, and they did self-report that to us.
    Senator Isakson. And I understand they have a cost-plus 
contract now to do what they are doing. Is there a provision in 
that contract for them to correct that and make sure it does 
not happen again?
    Secretary Sebelius. That was corrected immediately, and, 
absolutely, there is a provision to make sure that they comply 
with all the CMS requirements.
    Senator Isakson. This whole subject of navigators and 
information security is going to be kind of the vein of my 
questions. I had sent a letter, along with some other members 
of the committee, on the 20th of June, asking for the 
requirements you were putting in to protect secure information.
    I have not received an answer yet. I understand you have 
been very busy. I respect that. So I am going to use my time 
now to ask a couple of key questions.
    What are you doing to ensure that the navigators protect 
the private information of American citizens they are exposed 
to?
    Secretary Sebelius. Sir, the navigators must go through a 
minimum of 20 hours of training. A significant portion focuses 
on privacy and security issues.
    As you know, in this new law, there is no personal health 
information ever collected or needed. So they do not have 
access to that, unlike an insurance agent today in this market, 
who collects financial and personal----
    Senator Isakson. Can I interrupt right there?
    Secretary Sebelius. Yes.
    Senator Isakson. Excuse me for interrupting, but I want to 
be sure to get to the--under section 6103 of the IRS Code, 
there are a number of prohibitions for personal information 
being used. And to estimate the subsidy somebody is going to 
get under the Obamacare law, you would have to know their 
income on their tax return previously.
    Are the navigators going to be able to use that information 
in order to make that estimate?
    Secretary Sebelius. If a consumer chooses, yes, to share 
that information, they can give the consumer the information 
about what they would qualify for.
    Senator Isakson. Then I want to get to this point. The law 
prohibits insurance agents from being navigators unless they 
quit their job and become a navigator fully. It also has a 
medical loss ratio prohibition that basically allows insurance 
agents not to be paid a commission for selling health care. The 
navigators were put in to be the connection to the American 
people to the Obamacare law.
    In the State of Georgia, my State has been so concerned 
about the risk on information that they have made it a 
requirement that every navigator have a criminal background 
check. In reference to a question that was asked by somebody 
previously, do you not think there should be a similar 
requirement nationwide by your department to see to it that no 
navigator gets private information unless they have had a 
background check?
    Secretary Sebelius. Well, sir, first of all, there are 
probably 45,000 agents and brokers who have been trained on the 
Affordable Care Act and are very much part of the process of 
reaching out to individuals.
    Secondly, we did write the requirements for the navigators 
that very much mirror what many States have in place for 
licensing insurance agents, and then added a provision that 
States could, indeed, add additional requirements. Some have 
chosen to and some have not.
    Senator Isakson. Would you object to a statute that would 
require them to have background checks?
    Secretary Sebelius. At this point, I think if that is the 
will of Congress, we would certainly take a look at that.
    Senator Isakson. I do not have enough time for my last 
point, so I want to shift over to one other thing.
    My State is known for the capital city of Atlanta and 
probably the vacation city of Savannah, with the port of 
Savannah, but we are also a very rural State, an agrarian 
State. And in our State, in a recent article in the New York 
Times, which I will quote, ``The rates in rural Georgia, 
particularly southeast Georgia, are going up astronomically and 
disproportionately to rate increases in other parts of the 
State.''
    Is rural America getting hit disproportionately hard 
because of the effects of the Affordable Care Act on its 
premium rates?
    Secretary Sebelius. Senator, I was the Governor of a very 
rural State, and I can tell you that rural America has always 
paid a higher price for health care than urban America. The 
competition is less. Often, it is a monopoly market, and I do 
not think that that has changed enough yet with the Affordable 
Care Act. But I think new competition in most markets in the 
country will begin to change that, particularly in this 
individual market where often people had no choice and no 
competition.
    Senator Isakson. I know my time is up. So I will yield back 
on that and ask a follow-up question later. Thank you for your 
testimony.
    The Chairman. Thank you, Senator.
    Senator Portman?
    Senator Portman. Madam Secretary, thank you for being here 
today to answer some of these critical questions.
    Mr. Chairman, I noticed in your opening remarks you 
expressed frustration about the fact that administration 
officials are now saying, as you said, they did not see the 
problems coming. And I share that frustration. There were 
plenty of warnings.
    One, Madam Secretary, was a letter that I sent you back in 
August. This is a letter I sent to you and Director Tavenner, 
and I sent it because I was hearing a lot from Ohio about 
problems with enrollment, and particularly problems from Ohio 
because they did not believe that they were getting the answers 
they needed from you.
    So I asked a bunch of questions. I relayed the concern that 
Ohio did not think there was even the minimal amount of 
coordination. I requested specifically who in your agency is in 
charge, who is the liaison with Ohio. I also expressed my 
concern about what I knew about the IT concerns, information 
technology problems, that were already, as the chairman has 
said, pretty obvious, wondering whether those could be solved 
by October 1st.
    I asked whether you had tested the technology; 
specifically, whether the systems were going to work and what 
were the results of that testing. I said I was concerned that 
there would be a lot of confusion and disarray for Ohioans. 
Unfortunately, there has been.
    So I did not receive a response to the letter, and that 
August letter still remains unanswered. So I want to ask you 
today.
    Who is in charge? Who at HHS is in charge of the Federal 
exchange in Ohio? Whom can I direct my constituents to as they 
have concerns and questions? Because I am trying to help.
    Secretary Sebelius. Well, I would say, ultimately, 
Administrator Tavenner oversees the agency.
    Senator Portman. So there is no one for Ohio.
    Secretary Sebelius. Do we have an individual who is----
    Senator Portman. Who is accountable to the State of Ohio, 
to the Federal exchange in Ohio.
    Secretary Sebelius. We do not have an individual assigned 
per State, no, sir.
    Senator Portman. As you try to fix these sites--you talked 
earlier about how you think you should not take down the site, 
which was a suggestion by the chairman and others. You said, 
instead, better to do routine upgrades while it is happening.
    Again, my question is, are you testing the site? Are you 
testing the upgrades that you are using?
    Secretary Sebelius. We are testing on a regular basis. And 
I can tell you----
    Senator Portman. Are you going to provide the results of 
that testing?
    Secretary Sebelius. To you on a--I do not know what you are 
asking for.
    Senator Portman. To the American people.
    Secretary Sebelius. Yes.
    Senator Portman. To the American people, as you did not 
with regard to the lack of transparency in setting up the site.
    Secretary Sebelius. Sir, testing is going on every day on 
every piece of equipment that is being installed, on every bit 
of coding that is being run, as we did with every piece of 
equipment that became part of the site. It was tested not only 
by the company and the contractor as it was presented to CMS, 
but there was a CMS test that was performed, and then an 
independent verification test.
    So every piece of----
    Senator Portman. Really? So all these problems----
    Secretary Sebelius [continuing]. The puzzle was tested.
    Senator Portman [continuing]. That we are all experiencing 
and talking about, those were a surprise to you, because there 
was testing?
    Let me just continue, because I have a short period of time 
here.
    I hear a lot of stories, as you can imagine, from 
constituents. A guy calls in and says, ``I tried to get on for 
2 weeks, I finally get on, and I find out my premium is 
double.''
    A woman calls in who is having a tough time making ends 
meet. She has a kid in college. She cannot get through, makes a 
telephone call, calls me 2 weeks later and says, ``I still have 
not heard back from them.''
    So those stories are out there. We are told 12 million 
people nationally are going to lose the coverage they have, 
and, again, we have talked a lot about the promises that were 
made on that.
    How many Ohioans have had their insurance plan canceled? Do 
we know?
    Secretary Sebelius. Sir, that is proprietary insurance 
information. I do not know.
    Senator Portman. So other States have provided that 
information. Will we know how many Ohioans have had their----
    Secretary Sebelius. Sir, again, the Federal Government--
these are private plans. Ohio companies could give you that 
information, but that is not information that we have at the 
Department of Health and Human Services.
    These are private insurance companies notifying their 
customers.
    Senator Portman. So we will not know how many people have--
--
    Secretary Sebelius. Well, I think you could ask the Ohio 
insurance companies. That would be a great way to get the 
answer. We do not collect that information.
    Senator Portman. Well, the Ohio insurance companies are 
canceling plans because the legislation that you are 
implementing does not permit these plans because they do not 
meet your mandates.
    So it would be helpful, I think, for you to know how many 
of these plans are being canceled and whether the promise is 
being kept.
    Secretary Sebelius. If a customer is in a grandfathered 
plan, they have not received a notice. If the plan has been 
upgraded with consumer protections, they have not received a 
notice. So I really do not----
    Senator Portman. You do not care about that data or are not 
interested in it?
    Secretary Sebelius. I care about the data, sir, but you 
asked if I could give you that answer.
    Senator Portman. Yes.
    Secretary Sebelius. I cannot tell you for Ohio.
    Senator Portman. Let me ask you a final question, and it is 
about covering the uninsured. We have talked about the promises 
on, you can keep the coverage, the costs being less rather than 
more. We have not talked about coverage.
    Is it true that, after all this sound and fury and all this 
bureaucracy and 19 new taxes and over $1 trillion of new 
spending and so on, that still 30 million Americans 10 years 
from now, after full implementation of this, will not have 
health care insurance? Is that accurate?
    Secretary Sebelius. I hope that is not the case.
    Senator Portman. You hope it is not, but do you believe it 
is accurate? That is what the Congressional Budget Office tells 
us.
    Secretary Sebelius. I understand, and, frankly, I have no 
idea what their premise is. I think that that is unlikely to be 
true if the program can be fully realized, and that is my----
    Senator Portman. Do you have a number on that, how many 
people will remain uninsured?
    Secretary Sebelius. No, I do not, sir.
    Senator Portman. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Toomey?
    Senator Toomey. Thank you, Mr. Chairman.
    Thank you, Secretary Sebelius. As concerned as I am about 
the huge problems with the website, I am more concerned with 
some of the underlying, fundamental design problems with this 
legislation that are starting to manifest themselves.
    I want to share with you just a few short e-mails from the 
hundreds and probably, actually, thousands and thousands of e-
mails that I have received from Pennsylvanians conveying some 
of the concern, and, in particular, how the false promises are 
affecting real people--in this case, my constituents.
    I got an e-mail on October 11th from a dad from Bucks 
County, PA, and I am going to quote this. He said, ``I received 
notice last week that my health care will more than triple. 
Currently, I am paying $265 a month for me and my two young 
sons. On January 1, 2014, my monthly premium will be $836 a 
month.'' He said, ``The President promised you can keep your 
plan and families will save $2,500 per year. I can keep my 
plan. I just can't afford it. I do qualify for subsidies, 80 
bucks a month.''
    Well, there was a promise that families were going to save 
money with this; clearly, that is not the case for this family 
from Bucks County. There is another promise which has been 
alluded to several times, which we all know famously. The 
President and others have said, if you like your health 
insurance, you can keep your health insurance.
    A woman from Lancaster County sent me an e-mail, and it is 
short. I will quote it. She says, ``I am a 2-time breast cancer 
survivor, and I am facing the loss of insurance as of March 1, 
2014. President Obama said that if we liked our insurance, we 
would be able to keep it. That was, obviously, untrue.''
    A third promise that we repeatedly heard was that, if you 
like your doctor, you can keep your doctor.
    I got an e-mail on October 7th from a woman from 
Westmoreland County, and I will quote. She said, ``I've been 
self-employed for 13 years and have never been without health 
insurance. Three years ago, I was diagnosed with multiple 
sclerosis. Having an expensive preexisting condition was not a 
problem for me, as I had never let my insurance lapse. My 
medication costs without insurance would be $4,000 per month. I 
received notice several weeks ago that they were now going to 
cancel my plan and were doing so as of January 1st, and I had 
to sign up for new coverage through the health insurance 
exchange. If my coverage is not in place before January 1st, 
I'll have to go without my medications. This may cause 
permanent disability, blindness, inability to walk, speech 
problems. I'm not disabled now nor am I on Social Security 
Disability. Any plan I find that would cover me channels me 
right back to signing up through the exchange. I'm a small 
business owner and a productive member of society. I own my own 
house. Now, I'm in trouble.''
    We called this woman and we discussed this. It turned out 
there were two options available to her through the exchange. 
One option would allow her to continue to see the doctors that 
had been treating her. The other option would cover the 
medication she needed. Neither option would cover both.
    These anecdotes, I think--well, it is clear to me: they 
have been repeated many, many times, I think millions of times 
across the country, and it is a huge problem.
    So I guess my question for you is, I understand that this 
administration is never going to want to repeal this bill. I 
get that. I understand that you have delayed whole sections of 
it, but do not seem to want to delay the individual mandate, 
for instance.
    My question is, are there any changes you want to recommend 
that we could make to this bill so that the promises that were 
made by the President, by yourself, by others for these people, 
promises which clearly are not being kept, could actually, in 
fact, be kept? Are there any that you would be willing to 
recommend to us?
    Secretary Sebelius. Well, Senator, I would be happy to work 
with members of Congress who want to achieve the goals of the 
bill, which are to provide, for the first time, affordable 
health coverage for millions of people who do not have it.
    And an additional goal of the bill, I would say, is to 
reinvent the marketplace--the last remaining market where 
people have been denied coverage because about a quarter of the 
people who seek insurance cannot get it at all, medically 
underwritten; where people are denied because of preexisting 
conditions--so they have an opportunity to move forward. And if 
there are some frameworks that you have in mind--what I really 
want to do is get the program up and running and get 
information to people about how they can take advantage of the 
program.
    Senator Toomey. The program as it is designed, the bill as 
it is designed, does not honor these promises.
    Let me ask this. The grandfathering clause, we all know, 
has so many exceptions that many plans are simply not 
grandfathered. Are you willing to reexamine the exceptions to 
the grandfathering clause so that more plans could be actually 
grandfathered?
    Secretary Sebelius. Well, I do not think grandfathering 
prospectively can work very well since companies are now in the 
market with an array of new plans.
    Many have actually added consumer protections in the last 
3\1/2\ years. As you said, the regulation came out shortly 
after the bill was written. It provided a framework. We have 
been working with insurers as they look to what plans they 
would put in the new marketplace, what plans they would keep in 
place, and the grandfather clause has been part of that ongoing 
discussion.
    The Chairman. Thank you, Senator. I think we are going to 
have to move on here. Thank you very much.
    Next, Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman.
    Secretary Sebelius, I know you have probably seen lots of 
headlines. I do not know if you have seen this headline: 
``Thousands Face Delay in Health Care Enrollment.'' Over 
100,000 uninsured workers will be unable to sign up for 
subsidized health coverage as of October 1st.
    The reason why I am asking you about that particular 
headline is because it is from the Boston Globe, August 3, 
2006. And in that case, we do know the rest of the story. The 
rest of the story is that the Governor of Massachusetts, Deval 
Patrick, estimated that only 123 consumers signed up in the 
first month, but eventually tens of thousands did, and now, 
today, the State has nearly universal coverage.
    They went from one in four people being uninsured to one in 
10. So we know what the results were, and so, to me, it is a 
reminder of what our goal was, which was to address the notion 
that double-digit increases in insurance rates were preventing 
people from getting insurance coverage.
    So to me, the issues of the website and software, since it 
is part of a background I have had before, to me, it is about 
writing code and getting things tested, and it is very, very 
frustrating, for sure. In my mind, it nowhere resembles 
something like the blowout preventers failing and oil gushing 
into the Gulf and us struggling for months and months and 
months to get a scientific way to clean up that resource.
    In this case, it is about just getting the code right and 
making it work and making it function. In that case, Governor 
Romney asked for and got a 3-month delay. I am not necessarily 
asking you to comment on that. I know the chairman asked you to 
comment on that. But I think there is no shame in pushing out a 
date based on technology. That is my opinion.
    I want to note that Washington State's own experience has 
been, obviously, more positive. One of the issues that was 
cited in our local press was this issue of not having people 
have to sign up to enter the site to get data--as they called 
it, the Amazon model. And I would like to get your comments 
about that.
    Then I want to get your comments too about this issue of 
this individual market and cancelations. I mean, one 2004 
report said that in the individual market, only 17 percent of 
people keep their plans on an annual basis.
    So obviously, there is a huge amount of churn that goes on 
in that individual market, and maybe we do not have a number or 
an answer today, but it would be great to get that data, and, 
if we have to get it from insurers, we should have a number 
about what that annual churn rate has been for the last decade, 
because my sense is that we are probably following that pretty 
closely today.
    So some people are citing what has been a normal churn in 
the individual market and trying to cite it as the end-all-be-
all problem with this, and I think we need to have a better 
understanding.
    So if you have any way to shed light on either of those two 
issues----
    Secretary Sebelius. Well, Senator, I would say, with the 
discussion of the individual market, the data, again, that 
continues to be cited as our projection of what would happen 
with the Affordable Care Act is actually a look back at the 
market.
    Somewhere between 40 percent and 60 percent of people turn 
over on a regular basis. Individual market contracts for 
insurance are 1 year. So it is not unusual to not have the same 
policy or the same practice a year later. They are not a 
continuous work benefit.
    The individuals who are in the market want to get 
insurance. They do not have workplace insurance, they are not 
Medicare-
eligible, they are not a veteran. They want insurance and often 
struggle with, not only price increases at about 16 percent a 
year, on average, but everybody being medically underwritten, 
so that any illness or disease could block you from the market 
in the first place or certainly put you in a pool that could 
skyrocket and lock you out.
    The protections that the Affordable Care Act added to the 
individual market, the last market without consumer 
protections, are the very ones that every worker in a small 
group plan or at a work site enjoys. You cannot be locked out 
because of a preexisting condition. You must be offered the 
policy.
    You actually are in a risk pool. So your own disease 
profile does not determine your rates. That is really what is 
happening with that market. But more than 50 percent of the 
people are not in their policies for a year. A third are there 
for only 6 months. It is a very volatile, very expensive, very 
unprotected marketplace for way too many folks.
    The Chairman. Thank you, Senator.
    Senator Rockefeller?
    Senator Rockefeller. Madam Secretary, I have watched you 
today, and I have watched you being eviscerated over in the 
House. Calls for your resignation, not your head, but your 
resignation, have emanated from this distinguished panel. And 
it all makes me want to just say some things.
    Number one, I attach some importance to the fact that this 
bill--which was crafted, a lot of it, in the Finance Committee, 
a lot of it out, but all open and in public--when it came to 
the floor, there was not one single Republican who voted for 
the plan. This was 2 years ago, maybe a little bit more.
    I am trying to ask myself, how could that be possible? 
Senator Isakson was asking about rural Georgia as I would ask 
about rural West Virginia. And last Saturday, I was at a rural 
health center in a very isolated part of West Virginia, and it 
just casually occurred to me that there is about $10 billion in 
the bill to create about 1,000 new rural health centers all 
across America.
    Does anybody know that? I do not think they do in West 
Virginia, and I do not think they do generally. And I am 
stunned by the prospect of, let us say, 100 million people 
being uninsured or underinsured because the President makes a 
couple of statements that perhaps he should not have made, and 
then that becomes the whole argument, all the letters, you 
know, I was promised this and I was promised that.
    And I am trying to think of all the benefits that come from 
this. As the chairman knows, I worked very, very closely with 
him and others on this bill in the Finance Committee to produce 
it, and I think it is a magnificent work.
    My people in West Virginia do not necessarily share that 
view right now, because I think they have the problem that so 
many others have, that they simply do not know what is in the 
bill because of the absolutely maniacal, really admirable but 
maniacal Republican attack machine, including all the 
television--I mean, this has to be the worst thing that ever 
happened to America.
    Then I looked at the bill and I said, you know, as you 
said, we are the only country that does not do something like 
this, and we have done it very well, and people are going to 
get insurance, and the underinsured are going to get insurance. 
Actually, it is only, I think, 80 percent of consumers who 
change their plans every 2 years. You actually indicated it 
might be a little bit more than that.
    The Republicans were talking about provider shock, saying 
people will not be able to keep their doctors, an argument 
which, in many cases, is almost comical and is so farfetched, 
when you consider that the Affordable Care Act is designed to 
help people who did not have health insurance and, therefore, 
almost by definition, did not have any regular primary care 
physician.
    But taking every single possible dark attack, taking the 
President's two statements, taking the website--which is 
frustrating to all of us, but if there is anything that can be 
worked out, it certainly would be the website. It is a 
technology matter, and that will happen.
    I am not for delaying unless they cannot fix it in time, in 
which case, then I think maybe a penalty or something should be 
lifted. But I am incredibly proud of the bill, and I am 
incredibly proud of you and Marilyn Tavenner going before 
committees and getting eviscerated, but standing your ground 
and knowing exactly what you have done far more than most of us 
and, certainly, far more than most of those who are viciously 
making a political attack.
    That has risen in the last 5 years, along with the Tea 
Party and the Koch Brothers and all the rest of it. And you can 
really sour people with multiple television ads. It is not that 
hard to do to scare people, sour people, give people a chance 
to say, I want your resignation, hand it in today. Those things 
are so totally unrelated to the tragedy of underinsured or 
uninsured Americans, and this bill sets out to successfully, 
over a period of years, actually solve their problems.
    People never talk about tax credits. Businesses, little, 
small businesses--people are saying that they are desperate 
about it, and the fact of the matter is that they get 35 
percent of their premium paid by tax credit in the first year, 
and after that I think it is 50 percent of the premium on a 
permanent basis. You never hear that. You never hear that.
    So this is not so much a question, but a statement of 
sadness about the ability of the upper body, the so-called 
cooling body with the cup and the saucer and that sort of 
routine, that we can be so maniacally political that we just 
seek to destroy and forget the agony that people are going 
through, which this bill will cure.
    The Chairman. Thank you, Senator, very much.
    Senator Carper?
    Senator Carper. Thank you, Mr. Chairman.
    Madam Secretary, welcome. Thank you for joining us today. 
Other of my colleagues have shared with us headlines that they 
have noticed recently or in the past as they relate to 
implementing health care changes.
    I just want to add to that. I asked my staff to dig up some 
headlines, as well, and they did. They came up with--one was 
``Early F,'' as in failure. Another is, ``Not Ready for Prime 
Time.'' A third headline was, ``Confusion Reigns.'' A fourth 
headline was, ``Doctors and Pharmacists Say Some Will Die.'' 
And, as you might guess, those were not headlines from this 
month or last month. Those were headlines from 6 or 7 years ago 
when we were implementing Medicare Part D, which I voted for. I 
was one of 11 Democrats who voted for it. And that was a 
perfect ``no.'' We had problems. It had a huge donut hole.
    A lot of people fell into it. It means that, after they 
bought roughly $3,000 worth of pharmaceuticals in a year, for 
the next $3,000 or so, they did not get any help from Medicare. 
And a lot of people stopped taking their medicines, got sick, 
got sicker, went to the hospital, cost us a lot of money.
    With the Affordable Care Act, we actually went back and 
fixed the problem, and the fix was paid for by the 
pharmaceutical industry. We fixed a problem that was was 
created by the original George W. Bush proposal, which I 
supported.
    We are hearing a lot of lament about folks, understandably, 
who--there are a million people who apparently are not going to 
be able to continue with their insurance policy. Maybe it is a 
substandard policy. I will just say, as we try to work and help 
those folks, let us keep this in mind: a lot of people in this 
country, too many, hundreds of thousands of people, they call 
my office and they call all our offices, they have policies 
that are not worth the paper they are written on, and we need 
to be concerned about those.
    We need to be concerned about the--I do not know--2 or 3 or 
4 million young people who today would not have any health 
insurance because they have aged out. They are 22, they are 23, 
they are 24, they are 25, and today they have coverage, and I 
would have us keep them in mind as well. I would have us keep 
in mind the millions of people over the years who have actually 
lost coverage. They had coverage, but they lost it because of a 
preexisting condition. They lost it at a time when they needed 
it most of all.
    And, as we work to try to address the concerns of a couple 
million people, sadly, who are not going to be able to keep the 
policies that they want and are facing large increases in 
premiums, that is a problem, and we need to try to help them 
and try to fix that. But at the same time, let us put this in 
perspective.
    The other thing we need to put in perspective is this. Over 
in Japan, they spend half as much for health care as we do. 
They spend 8 percent of GDP. We spend 18 percent. They get 
better results. They cover everybody. Last night, when people 
went to bed in this country, 40 million people went to bed 
without any health care coverage at all, and we are trying to 
do something about it.
    I lament the fact that we had--in this committee, in the 
end, the Republicans were unable to work with us. It was sad. 
God knows Chairman Baucus tried hard enough. We had three 
Republicans in that scrum that lasted forever, trying to get to 
``yes.''
    But in the end, the legislation, the law that was signed by 
the President, it actually has a couple of good ideas that are 
Republican ideas. So some good stuff from the Republicans came 
in, found its way into the law in the end. And one of those is 
the idea of large purchasing pools. We call them the exchanges. 
And that is not necessarily a Democratic idea. I think it was a 
Republican response, if I am not mistaken, to Hillarycare. It 
was the Republican alternative. We have taken an idea and tried 
to actually incorporate it and make it work, and it is a good 
idea.
    The idea of the individual mandate, that is--as I recall, 
that is, I think, a Heritage Foundation idea that Governor 
Romney embraced and is part of the law in Massachusetts.
    Let me just ask, Madam Secretary, kind of looking forward, 
we have had, I think, roughly 10 hearings, congressional 
hearings, just before implementation of the law and since the 
implementation of the law on October 1st.
    I think when we were doing this 6 or 7 years ago, I think 
we had two hearings. I think maybe the first one was 4 months 
after the program was implemented, and we decided back then not 
just to harangue and harass people who were trying to implement 
the program. We said, let them do it and then we will bring 
them in for a hearing sort of after the fact and say, what went 
wrong and what went right? That is what we need to do here.
    Here is my question. What can you report to us today on the 
progress with repairing the Federal exchange? What improvements 
have Americans seen within the last month? What can we see in 
the next several weeks?
    Secretary Sebelius. Well, Senator, I think I am the first 
to admit that the rollout has been excruciatingly awful for way 
too many people. A lot of people could not get into the site in 
the first place, and then, when they were able to access the 
site, screens would go down all the time, and they could not 
get from place to place.
    I would say that those are the two primary areas of focus, 
and we are in a continuous improvement era where, on a very 
regular basis, with a very rigorous schedule of improvements, 
we are adding hardware and software to fix the functionality 
and get people from place to place, to increase the speed, and 
to make sure we are able to handle the volume of people who 
clearly want to use and access the site on a regular basis.
    So there have been significant improvements. We are not 
satisfied at all with where we are now. We are committed to an 
end-of-November experience that is significantly better on 
volume and speed and reliance and making sure we get to people. 
And we have a very specific plan to go back and re-invite 
people back to the site who started at one point along the way 
and may have been so frustrated that they gave up.
    We do not want to do that until we are sure that their 
experience will be significantly better than it was the first 
time. We know that a lot of young folks have little patience 
with any technology that does not work instantaneously. So for 
that audience it is particularly important to get a very highly 
functional site up and running, and that is exactly what we are 
doing.
    The Chairman. Thank you, Senator, very much. I appreciate 
it.
    Now, I will turn to the most patient member of this 
committee, Senator Burr.
    Senator Burr. Thank you, Mr. Chairman.
    Secretary Sebelius, thank you for being here.
    Yesterday, Administrator Tavenner testified on the security 
testing for Healthcare.gov, which was broken down into testing 
for the hub and for the Federally Facilitated Marketplace 
system.
    She testified that there had been no end-to-end testing on 
the Federally Facilitated Marketplace. In fact, she approved a 
September 27th memo to move forward with issuing the authority 
to operate. The memo specifically noted this, and I would like 
to quote it. ``From a security perspective, the aspects of the 
system that were not tested due to the ongoing development 
exposed a level of uncertainty that can be deemed as high risk 
for the Federally Facilitated Marketplace system.''
    Yes or no? Were you aware of that memo?
    Secretary Sebelius. I was made aware of it recently. I did 
not know that the memo existed in September.
    Senator Burr. How many times did you and Administrator 
Tavenner talk about the security aspects and specifically this 
decision to move forward with the authority to operate?
    Secretary Sebelius. We did not discuss the authority to 
operate.
    Senator Burr. Did you at any point notify the White House 
of the security concerns that existed about the exchange?
    Secretary Sebelius. I would say that there were 
conversations, Senator, about risks in terms of getting a new 
system----
    Senator Burr. Did the White House know that there had 
been----
    Secretary Sebelius [continuing]. Up and running, but I was 
not aware of this, and I did not have these discussions with 
the White House, because I was not aware of them.
    Senator Burr. Did the White House know that there had been 
no end-to-end testing of the security aspects of the exchange?
    Secretary Sebelius. I think the White House was aware of 
the operational issues involving end-to-end testing, but I do 
not know the specifics of--again, I did not have discussions 
about this 
authority-to-operate issue with the White House.
    Senator Burr. You testified last week in the House that it 
was the law that made you stand up the exchange on October 1st. 
In fact, the statute, as I read it, requires enrollment to 
start. It does not require the exchange to stand up.
    Were you given different legal advice within HHS?
    Secretary Sebelius. Senator, what the law says is that 
benefits started on January 1st. The law also said that the 
Secretary shall designate by regulation a date of open 
enrollment and that that regulation needed to be promulgated 
by, I think it was, June of 2013.
    Senator Burr. Correct. But that did not require you to 
stand up the website. It required you to open enrollment.
    Secretary Sebelius. Well, open, yes. And a significant 
portion of open enrollment was----
    Senator Burr. Well, let me ask you. If Administrator 
Tavenner had not done the authority to operate, if she had not 
signed it, the exchange would not have stood up on October 1st, 
would it?
    Secretary Sebelius. That is correct. But a short-term, 
temporary authority to operate was done specifically because 
she had advice from her senior IT and operations team, as well 
as the contractors.
    Senator Burr. So it was not the statute that made the 
website stand up on October 1st, was it?
    Secretary Sebelius. Open enrollment began, and a 
significant part of open enrollment was on the website.
    Senator Burr. Administrator Tavenner testified yesterday 
that the estimated target enrollment number for the end of 
November was approximately 800,000. And I know that your plans 
are to release next week that update through last month.
    When you release that, do we have your assurance that you 
will break that down so that you will show whether individuals 
chose Medicare or private plans, bronze, silver, platinum 
levels, and a State-by-State breakdown?
    Secretary Sebelius. I can tell you, Senator, that we will 
be able to delineate between--my understanding is, what we are 
still trying to determine is, how many metrics we can give.
    We certainly will have a State breakdown. We certainly will 
have a differentiation between private coverage and Medicaid 
coverage. We intend to give you as much information as we can 
validate.
    I do not know that we can delineate the level of the plan 
that----
    Senator Burr. And what is the October through the end of 
December target enrollment?
    Secretary Sebelius. Senator, there are all kinds of 
different target enrollments. I think there was a memo 
internally that called for about a million people to be 
enrolled through December, but we are updating those targets. I 
can tell you our early enrollment numbers are going to be very 
low.
    Senator Burr. In an effort to set the record straight, Mr. 
Chairman, the Secretary has highlighted, as have others, that 
premiums seem to be lower than CBO projected.
    When CBO made their projections on premiums, CBO made some 
assumptions, because health care cost is directly linked to GDP 
growth. And the assumption that CBO made was that we would have 
GDP growth in 2011 of 3.5 percent, in 2012 and 2013 of 4.7 
percent. The reality is that GDP growth was 1.8 percent in 
2011. It was 2.2 percent in 2012, and it looks to be under 2 
percent in 2013.
    So I think it is actually hugely disappointing that, in 
fact, premiums have now gone up so far, because we have had 
relatively anemic growth in the United States. But there were 
incredible assumptions that were made for GDP growth by the CBO 
that went into their estimates of insurance premium costs.
    Madam Secretary, I thank you.
    Secretary Sebelius. Well, Senator, I would just comment 
that, in terms of the underlying health cost growth, the 
private insurance market, the public insurance plans, the first 
year or two after the President signed the Affordable Care Act, 
there was a lot of assumption that the very slow rate of cost 
increase was due principally to the recession.
    Most health economists have now concluded that there are 
significant cost restrainers that were part of the Affordable 
Care Act that actually are having a very positive impact on our 
health care spending, on Medicare spending, which has grown at 
the slowest rate in 50 years. Medicaid spending nationally went 
down last year overall, and private health insurance rates, 
again, since the Affordable Care Act was passed, have been at 
the slowest cost increase that has been seen in decades.
    So there is now a conclusion that some of the provisions 
written into the bill about delivery system changes, payment 
changes, different ways to measure quality outcomes, some of 
the preventive care issues, have produced lower costs.
    Senator Burr. I am sure all of these were included in the 
Manhattan Institute report when they completed an analysis of 
49 States and found that, on average, premiums in the 
individual market increased by 41 percent under Obamacare. And 
in my State of North Carolina, the Manhattan Institute 
estimates that the average increase was 136 percent under the 
Affordable Care Act.
    The Chairman. Thank you.
    Senator Burr. I thank the chair for his leniency.
    The Chairman. Thank you, Senator.
    Thank you, Madam Secretary. I think a couple of Senators 
would like a couple more questions.
    Senator Hatch?
    Senator Hatch. Well, I will not keep you very long, Madam 
Secretary.
    Did I misconstrue that you said that you felt there would 
not be a lot of people signing up between now and the beginning 
of the next year?
    Secretary Sebelius. No, sir. I said that the enrollment 
numbers, which we will release next week--which will be for the 
first month of enrollment--are likely to be quite low given the 
struggles that people have had getting access to the site and 
getting information.
    Senator Hatch. Do you expect the numbers to be very high 
during the month of November and December? That is my question.
    Secretary Sebelius. Well, I am hoping that, with the site 
improvement, we will see more robust numbers. But until the 
site is fully improved and we really kind of open up the doors 
wide to a lot of people, we are going to have, I think, a 
struggle getting significant numbers to sign up.
    Senator Hatch. Sure. I am not trying to put you on the 
spot, but what I--it comes back to my original concern. Why is 
it so difficult to put this off until we have it up and 
running, running right, with the right kind of security so that 
people's personal and private information is not subject to 
fraud and these fraudsters who naturally come into the system 
because we are not prepared?
    Secretary Sebelius. Again, Senator, I would say that the 
site has met the highest standards of security for Federal 
Government sites. We have taken great care, again, not to store 
personally identifiable information in the hub. We have met--
the testing is going on 24/7 as each piece of software is 
added.
    We need to continue to test the site, and that is part of 
why we have a temporary authority to operate and not a 
permanent one. When all the pieces of the system are fully 
installed, then you can do end-to-end testing at the very end, 
but that will not be for a while.
    So the mitigation strategies are in place. It is ongoing. 
It is daily. And we take the privacy and security of the 
American public very, very seriously.
    Senator Hatch. But do they not have to give their personal 
information: Social Security number, their earnings, what their 
income is, family income is, et cetera? Is that not put into 
the system?
    Secretary Sebelius. When they hit the hub, Senator, that is 
actually referred back to databases in Social Security and 
Homeland Security and in the IRS.
    The Federal marketplace will retain application information 
in case there needs to be subsequent determinations.
    Senator Hatch. My question was, do they not have to give 
that kind of information now?
    Secretary Sebelius. For the application, yes.
    Senator Hatch. See, that is what I am worried about, that 
if we do not watch this and if we do not have a fail-safe 
system, and you pretty much admit you do not have a third-party 
testing unit in there trying to make sure that this works----
    Secretary Sebelius. No. We do have a third-party testing 
unit.
    Senator Hatch. And who is that?
    Secretary Sebelius. MITRE is the contractor that does the 
third-party testing. It tested prior to going live in October. 
They did sign off on going live in October. They are continuing 
to test. We have a security team that is monitoring and 
performing weekly testing of border devices, conducting daily 
scans of the monitoring tools, and they will conduct a full 
security test in a stable environment when the entire site is 
loaded.
    But we do not have the Spanish website up yet. That is an 
additional piece that will be coming. The shop website is 
coming. You cannot do the end-to-end testing until the entire 
system is stood up.
    Senator Hatch. That is, again----
    Secretary Sebelius. But that testing is going on every day.
    Senator Hatch. That, again, makes my case that we should 
not be getting into this until it is all set up. It would be 
better, it would be safer, be more protective of people's 
rights and of their personal information.
    I guess what I am saying is, I think you do need an 
independent testing agency that is not a hired contractor to do 
this. I just wanted to raise these issues. I know this is very 
difficult for you, and I have appreciated you testifying here 
today.
    I hope you will answer our letters when we send them to 
you, because I have had letters out to you that I have never 
gotten any answers on. And, look, we are not in it to just give 
you a rough time. We are in it to try to hopefully get it 
right.
    Secretary Sebelius. I would love to work with you to get it 
right.
    Senator Hatch. Thank you.
    The Chairman. Thank you, Senator.
    That is the main point of this whole hearing: to get it 
right. And you just heard Senator Hatch, the ranking member of 
the committee, say he wants to work with you to get it right.
    I mentioned in my opening statement that I--and I am 
speaking for at least a majority of this committee--want to 
help you to get it right. But it is a 2-way street.
    You have to tell us what is working and what is not 
working. The American people strongly believe in transparency. 
We do in this committee. And the more you do not tell us, the 
greater the problems are going to be. The more you do tell us, 
the good and the bad, the more likely it is that we are going 
to get this right at an earlier date.
    Do not wait until the end of October before telling us, 
``Uh-oh, we are not going to be up and running until the end of 
November--up and running the first of December.''
    Work with us. This is the law. We want to do this right. 
And there are many points in the law that are so meritorious 
that have not been brought out. One is, I do believe strongly 
the main feature of this law is to reduce the rate of growth of 
health care cost in this country. We move more toward delivery 
system reform, all the parts of that--bundling, the ACO, et 
cetera--in addition to efforts by private entities to control 
costs. We are making headway.
    One Senator mentioned that Japanese health care costs are 
about 8 percent of GDP; administrative costs are about 7 to 8 
percent. In the U.S., they are about 18 percent. We have to 
work to get that 18 percent down and solve other problems with 
fee-for-service in this country.
    So we want to keep working with you. Why? Because that is 
our job. We represent Americans. We represent people from all 
across this country, and they want this to work. They do not 
like the politics in this town. They do not like the carping 
and sniping back and forth. They just want the doggone thing to 
work. So let us work together to make it work.
    Secretary Sebelius. I would welcome that. Thank you.
    The Chairman. Senator Rockefeller?
    Senator Rockefeller. Just one comment. Actually, there is 
another party that has to have the attitude, Mr. Chairman, that 
you do, and that is the Republican Party in the Senate and the 
House, and the Republican National Committee and all of those 
people who are doing everything they can to destroy you and the 
President. And there is, obviously, lots of speculations as to 
what the motivation for that might be. They have to cooperate.
    In other words, what the chairman is saying is that we will 
do everything we can, and he did everything he possibly could, 
and was unable to, on the floor of the Senate, get a single 
Republican vote for the bill.
    It is a far-reaching, quite extraordinary bill. And I just 
want to add that they have a responsibility to help as opposed 
to simply criticizing a couple of statements that have been 
made.
    The Chairman. Thank you, Senator.
    I expected you probably would answer that one, Senator 
Hatch.
    Therefore, Senator Rockefeller, I do not know if it was 
wise for you to make that statement.
    Senator Hatch. Look, I think this is a terrible bill, and 
that is not because I am a Republican or a Democrat.
    I have worked as much on health care issues around here in 
the last 37 years as any number of people, and, frankly, better 
than most.
    I have a desire to have things work. But let me tell you, 
Senator Reid, I think, said it very well when they asked him, 
is this basically going to work, and he basically said that it 
is just a step on the way to a single-payer system, meaning a 
one-size-fits-all 
government-run system--Federal Government-run system.
    That is what worries Republicans, and I think it worries 
good Democrats too. And I am very concerned about this going 
into a socialized medicine situation where we really, really 
cannot control the costs, cannot control the system, and we 
denigrate the system instead of helping it.
    So, naturally, I am concerned about it, and I think a lot 
of Republicans are concerned about it, and I even know some 
Democrats who are concerned about it. This is not a simple 
bunch of political hacks working at it. This is a very serious 
set of problems.
    I do not envy you to be in your position and have to answer 
all these questions and have to be the front person and try to 
make this thing work. All I can say is that, yes, I will try to 
help make it work, if I can, but I do not think it is going to 
work--and that is the problem--without costing America an arm 
and a leg and without really taking people's health care away 
from them.
    But I think there are sincere people on both sides who 
would like to solve our health care problems in this country. 
And just think about it. The President said 85 percent of 
America had health insurance they were satisfied with. Why did 
we not just work on getting the 15 percent to have the health 
care that they need rather than jeopardize the whole system and 
have all these problems that are not going to go away very 
quickly and may never go away?
    The Chairman. Well, Senators, thank you both very much. But 
let us remind all of us to keep our eye on the ball, and the 
ball that we are keeping our eye on is get this thing working. 
That is the charge for the day.
    Given the level of interest, I just want to indicate that 
Senators will have a week to get their questions in, Madam 
Secretary, to you and I urge you to respond immediately to 
those questions so we can keep moving ahead.
    Thank you very much. The hearing is adjourned.
    [Whereupon, at 12:40 p.m., the hearing was concluded.]
    
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