[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
EXAMINING THE AFFORDABLE CARE ACT'S PREMIUM INCREASES
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 14, 2016
__________
Serial No. 114-97
__________
Printed for the use of the Committee on Oversight and Government Reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio ELEANOR HOLMES NORTON, District of
TIM WALBERG, Michigan Columbia
JUSTIN AMASH, Michigan WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee JIM COOPER, Tennessee
TREY GOWDY, South Carolina GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois
CYNTHIA M. LUMMIS, Wyoming ROBIN L. KELLY, Illinois
THOMAS MASSIE, Kentucky BRENDA L. LAWRENCE, Michigan
MARK MEADOWS, North Carolina TED LIEU, California
RON DeSANTIS, Florida BONNIE WATSON COLEMAN, New Jersey
MICK MULVANEY, South Carolina STACEY E. PLASKETT, Virgin Islands
KEN BUCK, Colorado MARK DeSAULNIER, California
MARK WALKER, North Carolina BRENDAN F. BOYLE, Pennsylvania
ROD BLUM, Iowa PETER WELCH, Vermont
JODY B. HICE, Georgia MICHELLE LUJAN GRISHAM, New Mexico
STEVE RUSSELL, Oklahoma
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama
Jennifer Hemingway, Staff Director
David Rapallo, Minority Staff Director
Sean Hayes, Health Care, Benefits and Administrative Rules Subcommittee
Staff Director,
Sarah Vance, Professional Staff Member
Willie Marx, Clerk
C O N T E N T S
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Page
Hearing held on September 14, 2016............................... 1
WITNESSES
Dr. Mandy Cohen, M.D., MPH, Chief Operating Officer and Chief of
Staff, Office of the Administrator, U.S. Department of Health
and Human Services
Oral Statement............................................... 5
Written Statement............................................ 8
Mr. Al Redmer, Jr., Commissioner, Maryland Insurance
Administration, on Behalf of The National Association of
Insurance Commissioners
Oral Statement............................................... 18
Written Statement............................................ 20
Mr. Chris Carlson, Principal, Oliver Wyman, on Behalf of
America's Health Insurance Plans
Oral Statement............................................... 27
Written Statement............................................ 29
Mr. Kurt Giesa, Partner, Head of Actuarial Healthcare Practice,
Oliver Wyman, on Behalf of Blue Cross Blue Shield Association
Oral Statement............................................... 36
Written Statement............................................ 37
Mr. Topher Spiro, Vice President, Health Policy, Center for
American Progress
Oral Statement............................................... 45
Written Statement............................................ 47
EXAMINING THE AFFORDABLE CARE ACT'S PREMIUM INCREASES
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Wednesday, September 14, 2016
House of Representatives,
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to call, at 9:03 a.m., in Room
2154, Rayburn House Office Building, Hon. Jason Chaffetz
[chairman of the committee] presiding.
Present: Representatives Chaffetz, Mica, Duncan, Jordan,
Walberg, Amash, Gosar, Farenthold, Massie, Meadows, DeSantis,
Mulvaney, Buck, Walker, Blum, Hice, Carter, Grothman, Hurd,
Palmer, Cummings, Maloney, Norton, Lynch, Cooper, Connolly,
Duckworth, Kelly, Lawrence, Lieu, Plaskett, DeSaulnier, Welch,
and Lujan Grisham.
Chairman Chaffetz. The Committee on Oversight and
Government Reform will come to order. And without objection,
the chair is authorized to declare a recess at any time.
We have an important hearing today examining the Affordable
Care Act premium increases. There is a deep concern, I think,
in most Americans about the cost of health care.
Under the Affordable Care Act, health insurance premiums
are soaring, soaring to say the least. President Obama promised
multiple times that the Affordable Care Act would lower a
family's health insurance premium by $2,500. We would love to
hear from any Americans who think that their health care
premiums went down $2,500.
American families are still waiting for the cut in cost.
Instead, the health care insurance premiums have skyrocketed
under the Affordable Care Act. The New York Times this summer
acknowledged the Affordable Care Act is causing increased
premiums warning to its readers ``Get ready for big
increases.''
In Utah, health insurers in the individual market requested
premium increases of nearly 30 percent on average. Most
Americans are seeing even higher proposed premium increases.
Conceding to the massive premium increase, the administration
then relies on tax subsidies. However, regardless of the
subsidies, Americans are feeling the full brunt of just how
costly the Affordable Care Act is.
Second, under the Affordable Care Act, with soaring
premiums, many Americans then must pay massive deductibles.
Health care costs are one of the top concerns for families, and
even people with insurance oftentimes can't afford to use it,
especially individuals enrolled in high-deductible health plans
under the ACA. Again, this is no longer deniable. Another New
York Times article reported ``Many say high deductibles make
their health law insurance all but useless,'' all but useless.
Third, remember the promise for the increase competition.
According to the New York Times again, in many parts of the
country, ``Customers will be down to one insurer when they go
to sign up,'' hardly a choice. Insurers are seeing
unprecedented losses on the exchange. Losses on the exchanges
are reaching into the billions of dollars with the health
insurance industry. As a result, several large insurers are
pulling out of the exchanges with the concerns of even more
insurers pulling out this year unless premiums are going to be
allowed to be increased significantly.
According to an analysis done for the New York Times, 17
percent of Americans may only have one insurer to choose from,
17 percent. UnitedHealthcare, Aetna are limiting their
participation in the marketplace. And I know that Chairman
Meadows is particularly concerned about that in North Carolina
where they may face the prospect of having no insurer
participating at all.
This committee has been warning for almost a year about the
collapse of the co-op program. HHS has refused on numerous
occasions to provide us with the information about the program.
Then, this week, another co-op failed. There are only six left,
down from 23.
And finally, of course, we cannot forget the ACA was sold
on one of the biggest political lies of all times: ``If you
like your plan, you can keep it. If you like your doctor, you
can keep your doctor.'' That wasn't true ever. It was a
political lie. Even the President had to apologize for that
one.
Today, I want to hear from industry about why premiums
continue to increase under the ACA and hear about their
proposed solutions and how we can lower premiums for Americans.
I want to hear from the State regulators to learn more about
the challenges they are facing as premiums skyrocket and more
insurers pull out of the health insurance exchanges. And
finally, I want to hear from HHS on the implementation of the
ACA. I want to know what can be done to control premium
increases and to get younger, healthier individuals enrolled in
the health insurance.
To our HHS Health and Human Services witness, I would like
to point out the sad truth about the health care law. Every
step of the way this administration--everything the
administration has told us that would be just fine and it is
not. It is not just fine. You can keep putting lipstick on it
but it doesn't look good and it ain't good.
So premiums will go down, HealthCare.gov will work, these
are all things that they told us would be just great. Co-ops,
they would be there. They are failing, failing, and failing. It
is only when faced with the undeniable evidence or public
outcry do we finally hear that maybe the ACA isn't quite so
perfect.
So I look forward to good discussion today. We all care
about health care insurance. We have got an important hearing
next week that Elijah Cummings and I have been working hard on
to deal with some of the costs that Americans are going
through. EpiPen in particular is something that we will be
addressing next week. But we are here to talk about the ACA and
the problems that are associated. We need some candid talk and
some solutions. So it is going to be a good hearing.
Chairman Chaffetz. I now recognize the ranking member, Mr.
Cummings of Maryland.
Mr. Cummings. Thank you very much, Mr. Chairman, and I want
to thank you for holding this hearing. This is a very important
hearing. And I thank you, all of our witnesses today, for
testifying on this very important subject.
I would like to start off by reading a few headlines. Let
me start with this one: ``Anthem BlueCross dramatically raising
rates for Californians with individual health policies.'' Here
is another one: ``Health insurance rates soar as Oregon
regulators nod.'' And here is another one: This one says,
``Millions in U.S. can't afford health insurance.''
The thing is, these headlines are not from today or this
week or even this year. They are from several years ago before
Congress passed the Affordable Care Act. Of course, that will
not come as a surprise to anyone who remembers how horrible the
individual insurance market was before Congress passed the
Affordable Care Act.
Insurance companies used to be able to discriminate against
women. They could charge more for people with preexisting
conditions from asthma to cancer. They could impose exclusions
and caps on coverage. They could terminate policies when people
got sick, and they could deny coverage altogether. People who
were lucky enough to get health insurance were often stuck with
whatever premiums the insurance companies decided to charge.
These premiums were increasing by double digits every year,
double digits every year. Before we passed the Affordable Care
Act, the individual insurance market was indeed a complete
mess.
The purpose of today's hearing is to examine recent
increases in health insurance premiums.
The Republicans love to attack the Affordable Care Act even
though it has improved the health care of millions of our
fellow Americans and millions of our constituents. But there is
one critical fact that they do not want you to know. Premium
increases have actually been lower than the Congressional
Budget Office predicted when Congress passed the Affordable
Care Act. They are lower than we anticipated. Based on CBO's
projections at that time, they estimated that premiums would be
12 percent to 20 percent higher than they are today.
Here is another key fact you will never hear Republicans
admit: National health care spending has slowed even more
significantly than projected when we passed the Affordable Care
Act. That includes spending across Medicare, Medicaid, any
private insurance market. National health care spending for
2014 through 2019 will be $2.6 trillion less, $2.6 trillion
with a T, trillion than CMS projected in 2010 when we passed
the Affordable Care Act. Of course, all this is happening as
the Affordable Care Act expands health coverage for 20 million
Americans, offers them more comprehensive coverage, and ends
the discrimination of the past. As a result, we now have the
lowest uninsured rate in our nation's history.
Unfortunately, my Republican colleagues do not want to talk
about these facts. This is the rest of the story. They want to
attack the ACA for political reasons without offering solutions
of their own. From day one, Republicans have been focused on
undoing and undermining this law. They have taken every single
opportunity to sabotage it by any means necessary. They
challenged the law in court, tried to defund it, and voted more
than 60 times--hello, 60 times--to repeal or weaken it. They
are truly obsessed.
If we want to talk about premium increases, we need to also
talk about drug companies that are jacking up the prices of
their drugs. And I want all of our witnesses to talk about
that, drug companies that are jacking up prices and how does
that affect premiums. One of the biggest drivers in premium
increases is skyrocketing prescription drug prices. And that is
across the board, not just for people with plans under the
Affordable Care Act.
For that reason, I am very pleased that the chairman agreed
to the request from Democrats to hold a hearing next week to
examine the massive price increases with EpiPens, and including
Representative Grace Meng, Stephen Lynch, Tammy Duckworth, and
Peter Welch, all requesting a hearing. And, Mr. Chairman, I do
appreciate you doing that and working with us to get the
documents that we will be getting from Mylan.
Let me be clear. I have told my staff, prescription drug
prices and the unconscionable raising of those prices is one of
my top three priorities in this Congress. And the reason why it
is one of the top three priorities is because I think it is
unfair. It is like putting a gun to a sick person's head and
say either you pay or you go into bankruptcy, either you pay or
you get sicker, either you pay or you die. So we cannot even
have this discussion about premium increases unless we address
that, and I hope that our witnesses will do that.
So a majority of Americans--Democrats, Republicans, and
independents by the way--believe that this is our number one
health care priority as a nation, number one. It used to be the
Affordable Care Act. Now, it is prescription drugs. That is
Republicans, Democrats, independents. They are saying this is a
major problem, and you know why? Because it is affecting them
every single day, and they are tired of it.
One of the reasons why I think the American public is so
frustrated, they want us to do something about these problems.
They don't want us to just skirt down the road and say lolly,
lolly, have a good day. They are trying to get well. As one of
my constituents said to me, Congressman, I can get the
treatment but can't get the cure. I can't afford the cure.
So I am so glad that we are having this hearing. But let's
be clear. There is something else that goes to the bottom line
of this. It is the health care of Americans. It is health care
of Americans. We are all in this country right now. We are all
on this planet right now. And it would be nice for us to do
everything in our power to keep our nation healthy. And how do
you keep the nation healthy? You keep the individuals healthy
because when you keep the individuals healthy, you have a
stronger company.
And so with that, Mr. Chairman, again, I appreciate it. I
am excited about the EpiPen hearing coming up. I am excited
about possibly bringing Shkreli back. He said he wants to come
back. That would be very nice. I hope he provides some
testimony this time. And I thank you again and again,
witnesses, thank you. And I yield back.
Chairman Chaffetz. I thank the gentleman.
I am not sure Pharma boy is coming back, but I appreciate
your passion on it.
We will hold the record open for 5 legislative days for any
members who would like to submit a written statement.
Let's now recognize our panel of witnesses. We are pleased
to welcome Dr. Mandy Cohen, the chief operating officer and
chief of staff to the Office of the Administrator at the United
States Department of Health and Human Services; Mr. Al Redmer,
Jr., commissioner of the Maryland Insurance Administration,
speaking on behalf of the National Association of Insurance
Commissioners; Mr. Chris Carlson, principal at Oliver Wyman,
speaking on behalf of America's Health Insurance Plans; Mr.
Kurt Giesa, partner and head of the Actuarial Healthcare
Practice at Oliver Wyman, speaking on behalf of Blue Cross Blue
Shield Association; and Mr. Topher Spiro ----
Mr. Spiro. Spiro.
Chairman Chaffetz. Spiro, sorry. Spiro, vice president of
Health Policy at the Center for American Progress.
We thank you for being here. Pursuant to committee rules,
all witnesses are to be sworn before they testify, so if you
will please rise and raise your right hand.
[Witnesses sworn.]
Chairman Chaffetz. Thank you. You may be seated. Let the
record reflect that the witnesses all answered in the
affirmative.
In order to allow time for discussion, we would appreciate
it if you would limit your oral testimony to no more than 5
minutes. Your entire written statement will be made part of the
record.
Dr. Cohen, you are now recognized for 5 minutes.
WITNESS STATEMENTS
STATEMENT OF MANDY COHEN
Dr. Cohen. Thank you so much. Thank you, Chairman. Thank
you, Ranking Member Cummings and members of the committee.
Thank you for the invitation to discuss CMS's continuing work
to implement the Affordable Care Act and provide consumers with
affordable access to high-quality health coverage.
The changes to the Affordable Care Act has made our health
system--are providing countless Americans the security that
comes from knowing that they'll have access to health coverage
when they need it. At the same time, this fundamental shift to
a health insurance market that serves all consumers regardless
of their health history requires all of us--consumers, issuers,
State regulators--to work together to build and test new
businesses, coordinated care systems, and reform payment models
in order to provide the care people need.
We're making historic gains in coverage. As of earlier this
year, an estimated 20 million more Americans have coverage
because of the law, and 8.6 percent of--and an 8.6 uninsured
rate for Americans is the lowest on record. We believe these
remarkable results are at a lower cost than the Congressional
Budget Office originally projected with coverage provisions
costing 25 percent less than the original estimates.
But we do expect 2017 to be a transition year for the
marketplace with several one-time factors putting upward
pressure on premiums. Because the individual market previously
operated by excluding sick people, no one knew how much it was
going to cost to start covering everyone. As a result, some
marketplace issuers initially priced below the cost of new
enrollees and now they need to catch up.
As evidence of this fact, independent experts have
estimated that marketplace premiums are currently 12 to 20
percent lower than what CBO predicted when ACA was passed. This
year also marks the end of some of ACA's premium stabilization
programs, which were designed to support the new market in its
early years.
However, with high consumer satisfaction, more people
getting care, and an improving risk pool, data shows that the
future of the marketplace is strong and we're confident issuers
will continue to participate given the growth opportunities.
Nonetheless, we know that premium increases have real-life
consequences for families. That's why it's so important that
the marketplace has built-in protections for consumers. The
marketplace provides tax credits that mirror premium increases
so consumers are always protected. Even with significant rate
increases, the majority of consumers can access coverage for
less than $75 per month.
And we continue to work in partnership with State
Departments of Insurance, who remain the primary regulators of
health insurance in the States to help support their efforts to
effectively enforce ACA's rate review provisions. Rate review
ensures that in every State proposed rate increases are
evaluated by experts to make sure they are actuarially sound
and justified.
It's also important to remember that for the roughly 150
million Americans who get coverage through their employer,
premium growth has slowed. Four out of the five last years have
seen the slowest growth rate on record, saving families
millions of dollars.
Since the ACA was passed, health care prices have risen at
the slowest rate in 50 years, but we know more needs to be
done. Just as in the private sector, rising health care costs
impact all of CMS programs, and we work every day to control
health care costs for the benefit of taxpayers, beneficiaries,
and consumers.
We're working to improve affordability and quality for all
consumers whether they get their coverage--no matter where they
get their coverage by rewarding health care providers for the
quality of the care that they deliver, not the quantity.
Many health plans are meeting the challenge of providing
quality coverage to all with marketplace serving as a
laboratory for those innovations and strategies that are
helping build a better health care system overall. Innovative
insurers are succeeding in serving these new consumers, and
it's paying off for the marketplace as a whole. Per-member,
per-month costs in the ACA individual market actually fell
slightly by .1 percent from 2014 to 2015, which is a positive
sign to the long-term health of the individual market risk
pool.
States that saw above-average growth in enrollment also saw
an above-average drop in costs, showing that growth of
enrollment is leading to a broader, healthier risk pool that
brings down costs.
We're also using the tools at our disposal to make the
marketplace even more attractive for consumers and issuers
alike. Over the past several months, CMS has moved aggressively
on things like special enrollment periods. We've made
improvements to the risk adjustment program, which could bring
more certainty to the marketplace and help issuers account for
the risk of all enrollees. And we're reaching out to
marketplace consumers turning 65 helping them successfully
transition to the--to Medicaid coverage, among many other
actions we've taken.
CMS is committed to strengthening the growing marketplace
as it matures. We have heard suggestions from stakeholders,
issuers, States, Congress, and others, and we have responded.
Working together, I know we can further our shared goal of
improving the health care for America and making sure American
families continue to have access to quality, affordable health
coverage. Thank you.
[Prepared statement of Dr. Cohen follows:]
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Chairman Chaffetz. Commissioner Redmer, you are now
recognized for 5 minutes.
STATEMENT OF AL REDMER, JR.
Mr. Redmer. Thank you, Mr. Chairman, Ranking Member
Cummings, and members of the committee. My name is Al Redmer.
I'm the appointed commissioner of the Maryland Insurance
Administration. I want to thank you for the opportunity to be
here today representing the National Association of Insurance
Commissioners.
I'd like to begin my comments by offering a short
historical review of the health insurance market in Maryland,
which I believe will add some context to our discussion
regarding rate changes coming in January of next year.
In the early 1980s and early '90s, Maryland's health
insurance market had conditions similar to those discussed
during the debate of the Affordable Care Act. In 1993, the
Maryland General Assembly passed small group insurance reform,
which included provisions similar to those contained in the
ACA, including such things as guaranteed issue, a ban on
preexisting condition limitations, a standard benefit plan, and
adjusted community rating. Initially, those changes created
disruptions to the market, but it has evolved into a
competitive market that is seeing moderate, single-digit
premium increases. Given that experience, we knew that there
would be considerable instability in the individual market when
the ACA was enacted, but hopefully eventually that there would
be some equilibrium to the small group market.
Unfortunately, due to a variety of factors, the instability
in the individual market created by the ACA has now extended
into the fourth year of implementation, and corrections are
long overdue.
I recently attended a national NAIC meeting where
regulators across country expressed serious concerns about the
condition of the individual market in their States. Major
insurance carriers have pulled out of the exchanges citing
substantial losses in the individual markets, and some carriers
have closed their doors or failed to meet solvency
requirements. This means thousands of consumers will need to
reenroll in a new health plan from a different carrier by
December 15 or they will not have coverage on January the 1st.
In addition, in too many counties there are only one
insurance carrier offering individual coverage on the exchange,
and there could still be one or two without any plans at all on
the exchange. Furthermore, many insurance carriers are only
offering the HMO-style health benefits with very narrow
provider networks in the individual market, which dramatically
reduces the coverage options available for consumers and
increases the pricing.
Finally, my colleagues have reported that individual market
carriers are requesting premium increases of 30, 40, and in
some cases more than 50 percent.
I and my colleagues take very seriously our responsibility
under State law to ensure all rates are actuarially justified,
nondiscriminatory, and sufficient to ensure solvency. Proposed
rate increases are thoroughly reviewed, and under the ACA, they
are more transparent than ever. In Maryland, for example, we
had two public rate hearings. But individual market premiums
continue to rise, and for too many consumers, is still
unaffordable and consumers want to know why. Rising health care
costs remain the driving force behind rising health insurance
premiums, and this must be addressed if health insurance
coverage is ever going to be truly affordable for the broadest
possible group of policyholders.
Another key factor we are seeing, as a result of the ACA
and its implementation, is uncertainty. And as any actuary will
tell you, insurance hates uncertainty. And the ACA has been--as
implemented, has considerable uncertainty in three areas: risk
pools, funding, and regulations.
The fact that far fewer younger, healthier consumers are
enrollees than expected, even with increasing penalties means
the risk pools are sicker than either we or the policy carriers
expected. Other contributing factors at work are the
uncertainty of Medicaid, abuse of special enrollment periods,
which contributes to adverse selection.
We would urge Congress to consider legislative proposals to
improve the risk of the pools and act before the market
deteriorates further.
As far as funding, carriers receiving less with the--I'm
sorry, the risk corridor payments have higher-than-expected
risk adjustment bills and potentially receiving less
reinsurance payments than expected.
And finally, to wrap up, I would like to point out that if
the Department of Justice is successful in seeking precedence
over policyholders, we will see even more carriers fail as
regulators are forced to step in sooner to preserve those
dollars for the benefit of policyholders. And I'll look forward
to any questions you might have.
[Prepared statement of Mr. Redmer follows:]
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Chairman Chaffetz. Thank you.
Mr. Carlson, you are now recognized for 5 minutes.
STATEMENT OF CHRIS CARLSON
Mr. Carlson. Thank you, Chairman Chaffetz, Ranking Member
Cummings, and distinguished members of the committee. Thank you
for the opportunity to testify today on the premium rate
increases for 2017 in the non-group health insurance market.
My name is Chris Carlson, and I'm a principal in the firm
of Oliver Wyman Actuarial Consulting. I'm testifying today on
behalf of America's Health Insurance Plans, the national trade
association representing health insurance plans and the
millions of Americans they serve across the country.
My testimony will focus on three main issues: the evolution
of the premium rates on the exchanges, the current factors that
are being considered in calculating premium rates for 2017, and
policy options for making health insurance premiums more
affordable in the long term.
The Affordable Care Act changed many of the rules regarding
premium rating that existed prior to 2014, which has allowed
for a broad increase in the number of individuals with health
insurance and has significantly reduced the uninsured
population.
As health plan actuaries, we were preparing the rate
filings for exchange products back in 2013 and had limited
information available to support the estimates for premium
rates due primarily to the considerable amount of uncertainty
about the characteristics of the population likely to enroll in
the exchange market.
Further, the premium rates for 2015 were developed by
actuaries in a manner consistent with 2014. In both cases there
was limited amount of data available for the pricing
assumptions. Premium rates for 2016 also followed a similar
pattern. While there were a wide range of rate changes, both
increases and decreases, the average increase for the second-
lowest-cost silver plan was 7.5 percent, consistent with
underlying medical trend.
To put it simply, health insurance is a reflection of
medical care delivery and is priced accordingly. Underlying
medical trend has always been the primary driver in the
increased cost of health insurance. When costs of delivering
medical care go up, so too does the cost of health insurance.
More specifically, some of the key components of the
premium rate calculations being considered in developing rates
for 2017 include: the underlying medical trend, the risk pool
composition, the expiration of two of the three premium
stabilization programs, and special enrollment periods.
Actuaries use the experience of the risk pool in setting
the premium rates. However, as discussed earlier, the risk pool
was relatively unknown when premiums were priced for 2014 and
2015. In general, the actual composition of the risk pool has
been less healthy than originally expected.
Another significant factor is the expiration of the
transitional re-entrance program, which forces insurers to
build these costs into their premiums. Moreover, the temporary
risk corridor program has not worked as designed and has led to
upward pressure on premium rates.
Oliver Wyman reviewed the impact of special enrollment
periods on health insurers and found that individuals that
enrolled during SEPs had claim costs that were 24 percent
higher during the first 3 months of enrollment than those that
enrolled during the open enrollment period, leading to higher
health care costs than were anticipated by insurers.
While health insurers are trying to utilize their best
estimates of cost to provide health insurance, this continues
to be a market in transition. To make health insurance premiums
more affordable in the long term, additional action must be
taken to address the factors that are driving underlying health
care costs.
My written testimony discusses several areas where there
are opportunities for legislative and regulatory action to
provide relief from rising health care costs and to stabilize
the market. I will just name a few, though: strengthening the
risk adjustment program to promote greater payment accuracy,
improving verification of special enrollment periods, and
providing further relief from the health insurer tax. These
changes and others will help deliver more affordable coverage
and more choices in the marketplace. That's what consumers
deserve and that's what health insurance plans are committed to
delivering.
Thank you for this opportunity, and I look forward to
answering any questions.
[Prepared statement of Mr. Carlson follows:]
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Mr. Meadows. [Presiding.] Thank you, Mr. Carlson.
Mr. Giesa, you are recognized for 5 minutes.
STATEMENT OF KURT GIESA
Mr. Giesa. Chairman Chaffetz, Ranking Member Cummings, and
distinguished members of the committee, thank you for allowing
me to be with you this morning to provide testimony related to
the rising premiums in the Patient Protection and Affordable
Care Act.
I'm here today on behalf of the Blue Cross Blue Shield
Association. The association is a national federation of 36
independent community-based and locally operated Blue Cross and
Blue Shield companies that collectively provide health care to
more than 107 million members. Blue Cross and Blue Shield plans
have an 85-year history of providing individual health
insurance coverage in local communities across the United
States.
Issuers and their actuaries face extraordinary challenges
in setting premiums in the non-group market, which I described
in my written testimony. Two thousand seventeen will be the
first year that issuers are setting premiums in the non-group
market based on a relatively thorough understanding of the
health of that market, meaning the makeup of the people they
are insuring.
But issuers have come to understand that the people they
have enrolled are older and sicker than they had initially
assumed. In its report titled ``Health of America,'' The Blue
Cross and Blue Shield Association found, for example, that the
prevalence of HIV is four times higher and the prevalence of
hepatitis C is twice as high as the prevalence of these
diseases in the employer group market. Inpatient hospital
admissions are 40 percent higher, and allowed costs per member
are 22 percent higher.
In my written testimony I present data showing that almost
half the enrollees in the exchange are ages 45 or older. That
was in 2014, and that situation persists today in spite of the
growth in the non-group market.
In order to create a viable and sustainable marketplace,
younger, healthier individuals will need to enroll, which will
require changing the value equation for younger people
purchasing coverage. Congress and the administration could take
steps to ensure the long-term viability of this market by
improving the verification of eligibility for special
enrollment provisions and making other changes to encourage
continuous enrollment. In addition, Congress should make
changes to the age band structure and the premium tax credits
to encourage more and younger, healthier people to enroll.
Again, thank you and I look forward to the discussion this
morning.
[Prepared statement of Mr. Giesa follows:]
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Mr. Meadows. Thank you.
Mr. Spiro, you are recognized for 5 minutes.
STATEMENT OF TOPHER SPIRO
Mr. Spiro. Thank you.
When evaluating the status of ACA markets, context is
important. Before the ACA, the individual market was volatile,
and people in rural areas do not have much choice. The
difference is that this market did not work at all for anyone
who was sick. Even as the ACA put in place consumer
protections, the average benchmark premium in 2014 was 10
percent lower than the average premium in 2013. The rate of the
uninsured is now at historic low, giving more peace of mind to
an additional 21 million Americans.
Contrary to popular perception, the ACA risk pool is stable
and improving. From 2014 to 2015, the cost per enrollee in
exchanges actually fell by .1 percent. So this begs the
question, why are insurers increasing premiums substantially?
Well, when the new markets launched in 2014, insurers
significantly under-priced premiums. There was a lot of
uncertainty about pricing, and some insurers under-priced
premiums to establish a foothold. As a result, the average
benchmark premium came in 15 percent lower than the CBO had
projected.
Congress also constrained the risk corridor program, which
was designed specifically to address pricing uncertainty in a
new market. Congress did so after insurers had already priced
their plans for 2015 and 2016. The resulting shortfall is
responsible for about two-thirds of the financial losses
incurred by insurers in 2014.
Premium increases in 2015 and 2016 were not sufficient to
close the gap from 2014. Compounding the problem, the
reinsurance program began to phase out in 2015. So it is not
surprising that the markets are due for a correction in 2017.
Although this correction will be significant, the ACA's subsidy
structure will act as a stabilizing force. Even after the
correction, premiums will still be 11 percent lower than
average premiums would have been in the absence of the
Affordable Care Act.
Even though ACA markets are not in crisis, policymakers
should take additional actions to accelerate the transition to
equilibrium. The administration should err on the side of
caution, acting as urgently and proactively as possible.
First, the administration should verify eligibility for
special enrollment periods, and in my written testimony I
detail several important conditions and consumer protections
that would be necessary.
Second, the administration should quickly prohibit
providers from steering high-cost patients from Medicare and
Medicaid to the exchanges.
Third, States should establish their own reinsurance
programs. Under innovation waivers, the administration should
offer States the Federal savings that would result from lower
premium tax credits to help pay for this reinsurance.
Fourth, the administration and States should expand rating
areas to cover larger geographical areas. In States that have a
mixture of rural and urban areas, this policy option would
provide greater choice in rural areas.
Fifth, States should require all plans to be sold through
the exchange. Although there is a single risk pool for each
insurer, insurers that sell plans only outside of the exchange
steal enrollees who might help broaden the risk pools of other
insurers.
Sixth, States that have not done so should expand their
Medicaid programs. In States that expanded Medicaid, ACA market
premiums are about 7 percent lower than in States that did not.
Seventh, the government should use active purchasing to get
the best deal from insurers for all programs. Insurers that
profit from participation in Medicaid and Medicare Advantage
should be willing to participate in the exchanges.
Eighth, Congress should create a guaranteed choice plan. In
perhaps less partisan times, Congress created a fallback option
in the Medicare prescription drug program.
Ninth, Congress should tackle the high cost of specialty
drugs, as Mr. Cummings mentioned. This is one of the biggest
factors cited by large insurers for leaving ACA markets.
Tenth, Congress should increase cost-sharing subsidies to
lower deductibles and increase premium tax credits for young
and middle-income people.
But most of all, the administration, Congress, States,
insurers, and other stakeholders should act in a constructive
spirit to fix any problems that arise rather than root for
failure or cut and run. Thank you.
[Prepared statement of Mr. Spiro follows:]
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Mr. Meadows. Thank you, Mr. Spiro.
I am going to go to the gentleman from Michigan, Mr.
Walberg, for a series of questions, but I would like to
comment, Mr. Spiro. Some of your comments in your opening
remarks defy reality, and so I look forward to some robust
questioning as you make your premise and see if you can back
those up.
So I will go to Mr. Walberg for 5 minutes.
Mr. Walberg. Well, thank you, Mr. Chairman. I think you
said it as well as I was going to say it. But it started with
Dr. Cohen, as well as Mr. Spiro, some comments that defy
credibility and reality. I mean, I know positions have been
taken and we have to sell certain things, but my gracious, it
is not dealing with reality and I am expecting Toto in the Land
of Oz and we are not in Kansas yet.
And in Michigan I read in the Detroit Free Press, not an
organ of conservatism, health plans sold on Michigan's
insurance exchange could see an average 17.3 percent increase
next year, and we are a Medicaid expansion State. It goes on to
say that rate increases would mean a financial hit for
taxpayers in general and the 345,000 Michiganders who buy their
health insurance on the HealthCare.gov Web site.
It goes on to point out that of the 14 insurers with
individual market plans, 10 are seeking increases exceeding 10
percent. They include a proposed 13.9 percent average increase
by Priority Health, 18.7 percent by Blue Cross Blue Shield of
Michigan, 16.8 percent by Health Alliance Plan, and 39.2
percent by Humana. The Avalere health analysis of 2017 rate
increases for individual plans in 14 States, including
Michigan, found that the average silver plan, the second-
cheapest classed after bronze, would rise 11 percent in 2017.
We have got a problem, and we have to admit that. And I
appreciate the hearing today to do that very thing and get away
from simply selling something that was doomed to fail. And one
of the providers says it has failed 2 years ahead of time and
it is getting worse. And when I talked to my ratepayers back in
my district, people who say yes, I have insurance but I don't
have health care because when I go in to take care of my
health, I find out that my out-of-pocket expenses, it precludes
me caring for my health.
Having got that off my shoulder, Mr. Carlson, what impact
has the rate filing process had on competition and insurance
premiums?
Mr. Carlson. Well, I think that the industry as a whole is
fairly highly regulated, and certainly premium increases that
are being requested are higher than anybody would like to see.
And, you know, from the health plan perspective, you know, we
certainly want to be able to justify the rates that are being
asked for. And the regulatory process puts somewhat of a
barrier but it--you know, it also puts a, you know, an
opportunity for everyone to see exactly what is being
requested.
And, you know, as far as making it more--you know, limiting
the choice in the marketplace, you know, I can't speak directly
to any specific plan but, you know, it is--you know, does make
it more difficult for a health plan to make sure that they, you
know, maintain their solvency to be able to get these rate
increases that are necessary for that fact.
Mr. Walberg. Okay. Mr. Redmer, can you explain the rate
process?
Mr. Redmer. Certainly. In--the law around the country is
pretty specific. The law requires us to approve or disapprove
rates to make sure that those rates are adequate to protect
solvency. They cannot be excessive, they have to be actuarially
justified, and they cannot be discriminatory.
So what happens is the beginning of May we receive the
proposed rate increases from the carriers, along with all the
supporting actuarial data. We have a team of actuaries. Some
States use outside actuarial consultants to scrub the data, to
challenge the data and the projections of the carriers.
In Maryland, we had not one but two separate rate increases
where different stakeholders, consumer groups come in and
provide their feedback and information, and at the end of the
day we come out with our final rates. In Maryland as an
example, if you look at the aggregate price increases and you
look at what we ultimately approved, we approved aggregate
rates that were about $24.5 million less than were ----
Mr. Walberg. Let me ask a question quickly in the remaining
seconds here. Some State regulators have said that they are put
in the position of having to decide between agreeing to the
price increases or have plans withdraw from the markets
entirely. Is that what you are finding?
Mr. Redmer. Well, no. The end result is we're required to
approve adequate rates, so if--the problem that some carriers
have is they can't get the rates that they believe are
sufficient to operate their business. Insurance 101 is you have
to collect revenues to pay the claims, the administrative
expense, and the reserves that government requires. The key is
not necessarily the approval process but carriers being able to
get sufficient rates in order to run their organizations.
Mr. Walberg. Thank you. I yield back.
Mr. Meadows. I thank the gentleman.
The chair recognizes the gentleman from Tennessee, Mr.
Cooper, 5 minutes.
Mr. Cooper. Thank you, Mr. Chairman. I would like to
welcome this distinguished panel of experts.
And for most viewers of this hearing, it is about as
exciting as watching paint dry, so let me try to put the
cookies on a low shelf and simplify some of these issues.
Here, we have a distinguished panel of experts, and none of
them are really echoing the political outrage that my friends
on the other side of the aisle are trying to express. You know,
we do not have the real chairman of the committee chairing this
hearing, and the hearing is very sparsely attended, so they are
not getting the political impact that apparently they were
expecting.
I think the testimony is best summed up by the NAIC witness
Mr. Redmer when he concludes in his final paragraph on page 7
and says this: ``It has been over 6 years since the ACA was
signed into law, and the time is long past due for State and
Federal policymakers to move past the politics and come
together to make substantive corrections to the law to bring
about more stable risk pools, dependable funding, and
reasonable regulations for the individual health insurance
markets. The markets are suffering. Let's roll up our sleeves
and fix them.'' Well put.
Mr. Redmer. You said it better than I could.
Mr. Cooper. But here, we have a committee that literally
has no jurisdiction over any fix. We are purely an
investigative committee. And oftentimes that translates into
pure political theater. Members of this committee, if they
wanted to study the issues, couldn't do anything about them.
So let's review the bidding. The American Enterprise
Institute, a conservative think tank, reported in their journal
just last year that there still is no substitute Republican
plan for the ACA. Now, there are band-aids here or there but
really there is no alternative so it is not a question of if we
had only done the Republican plan.
I was one of the supporters of the bipartisan plan, the
alternative to ObamaCare, the so-called Wyden-Bennett plan,
that would have solved many of these problems, but we had
difficulty getting people to be constructive, to be for
something. It is much easier to criticize.
So as you deal with these important issues and the most
important lesson to learn is like who is hurt? Where are the
victims?
Ms. Cohen pointed out in her testimony that still the vast
majority of folks who are getting marketplace insurance are
paying less than $75 a month. That is a pretty awesome deal.
With marketplace subsidies, a lot of these large-looking
rate increases in terms of percentage translate into $2 or $3-
a-month increases in cost. And while that is regrettable, as
Ranking Member Cummings pointed out in his opening testimony,
spiraling insurance costs have been happening to America for
some 40 years. And the costs under the ACA are actually less
than expected. Let me repeat that for some of my friends who
prefer not to live in a fact-based world, less than expected.
Now, no one knows if these trends will continue, but this
is astonishingly good news, and yet we live in a political
culture in which people don't want to talk about the facts,
especially if they include good news for what might be
happening.
So this is a time, I think, to focus on the details,
understand how this is done. Most folks back home don't
understand that Congress gave away jurisdiction on insurance in
1947 with the McCarran-Ferguson Act. Most of the regulatory
power is really at the State level, and some States do a good
job managing this, some not so much. So there is really not
even a committee in Congress that has jurisdiction over
insurance per se as most of the work is properly done at the
State level.
But the fundamental issue of controlling rising health
costs is a challenging one. And my friend from the State of
Michigan, who has now already departed the hearing, when the
big three automakers have their very nice health plans, some of
those folks were considered to be one of the instigators of
high health costs because when you have first-dollar coverage,
no one questions pricing.
And I think it was former HEW head Joe Califano who pointed
this out, that medical prices in the Detroit area were far
higher than the rest of the country because nobody was
questioning the bills.
So we are moving into an era in which people are
questioning the bills, they are paying close attention to
deductibles and copays and coinsurance, and that is a good
thing. And when you are comparing silver plans with bronze
plans and things like that, we already have more clarity in the
market than we had in previous generations, and most important,
a better benefits package.
I am proud of Maryland for having instituted some of these
reforms as far back as 1993, a guaranteed issue ban on
preexisting conditions, things like that, that are necessary
elements of a decent insurance market.
So there are ways to solve these problems, and let's all
echo Commissioner Redmer's call for bipartisan action. Let's
roll up our sleeves and fix the glitches that remain.
Thank you, Mr. Chairman.
Mr. Cummings. Mr. Chairman?
Mr. Meadows. Yes.
Mr. Cummings. Just one moment. I want to associate myself
with everything the gentleman just said, but I also want to
make sure, in all fairness to Chairman Chaffetz, of course he
was here, and the fact that he is not here at this moment does
not mean that he doesn't consider this very important.
Chaffetz and I have been in a lot of hearings and rarely
does he or I miss one moment, but he has a bill on--a major
bill that he is--his bill testifying in another committee. So I
didn't want to let that--I wanted to make sure that is clear to
all of us that he rarely misses a moment, but he does consider
this an important hearing. We have talked about it many times.
And I just wanted to straighten that out.
Mr. Meadows. I thank the gentleman. And as we go to the
gentleman from Tennessee, Mr. Duncan, I do want to clarify one
quick thing. Mr. Cooper said you are not outraged. Dr. Cohen,
do you by your health insurance from HealthCare.gov?
Dr. Cohen. No. I'm a Federal employee.
Mr. Meadows. Okay. Commissioner, do you by your health care
from HealthCare.gov?
Mr. Redmer. No, sir.
Mr. Meadows. All right. Mr. Carlson, do you buy your health
care from HealthCare.gov?
Mr. Carlson. No, I have employer coverage.
Mr. Meadows. Okay. Mr. Giesa, do you by your health care
from HealthCare.gov?
Mr. Giesa. I have employer coverage as well.
Mr. Meadows. You have employer--and, Mr. Spiro, do you by
your health care ----
Mr. Spiro. No.
Mr. Meadows. No? Well, so perhaps they are not outraged
because they are not having to use the system.
I will recognize the gentleman from Tennessee, Mr. Duncan,
for 5 minutes.
Mr. Duncan. Well, thank you very much, Mr. Chairman.
I want to read just a tiny portion of some of what I have
received. Linda Mays, a registered nurse for 30 years, who
decided to retire this year at the age of 63, she says she was
shocked at the price that she was quoted. The cheapest plan was
$586.23 and covered nothing with a $4,000 deductible and $6,350
out-of-pocket expenses and no medication coverage. She says,
``I'm still looking for the affordable part of health care.''
Les Gotto of Knoxville--and I don't know any of these
people personally--sent me this email. ``Blue Cross Blue Shield
of Tennessee up 62 percent''--that is the percentage increase
that Blue Cross Blue Shield requested in Tennessee. ``Blue
Cross Blue Shield of Tennessee up 62 percent after going up 39
percent last year, and these plans pay for nothing.'' And he's
got ``nothing'' in all capital letters. ``Where am I supposed
to get another 6,000 bucks next year? I paid $10,000 this year
for premiums and four wellness exams? I also paid at least
$6,000 out of pocket for health care.''
Christopher D. Bush, an average--it says an average,
healthy 30-year-old male, and he said that his policy that he
got 2 years ago, it is going up--it is now four times the
original cost of the premium. Blue Cross Blue Shield cites
ObamaCare as the cause for the increase.
Ann Kovaleski, a 61-year-old from Knoxville, is paying $761
a month now, which was nearly a 63 percent over her prior
premium the year before and included a $3,000 in-network
deductible, $6,000 out-of-network, and said this is quite
expensive since she will have paid down more than $9,000 in
premiums and $3,000 in deductible before their policy pays out
a cent. Now, she has been notified for the 62 percent Blue
Cross Blue Shield increase. She said, ``This would bring my
monthly premium to $1,234 a month, $14,794 annually, this much
out of pocket plus the $3,000 deductible.'' And she says, ``The
President promised on many occasions that the average family's
health insurance premiums will be lowered by up to $2,500.''
And finally, Mr. William H. Power of Knoxville sent a
message about his premium increases, and he says ``In reality,
I feel what we are experiencing is the sellout of the Federal
Government to pass along the issues that we were told would not
happen as a result of the ACA.''
My late mother was from Iowa. There was a public hearing
out there where one individual testified that his policy would
increase by $4,000 from $15,000 a year to $19,000 a year.
That is what we are hearing not only from all over my
district but all over Tennessee and all over the country. And I
tell you, the people are really up in arms about this and we
are going to have to make some major changes.
I went to a reception in the mid-1990s where the doctor who
delivered me came and brought my records, and I asked him, I
said, how much did you charge back then? He said he charged $60
for 9 months of care and the delivery if they could afford it.
Medical care was cheap and affordable until the Federal
Government messed it all up, and the few people who know how to
manipulate the system have been getting filthy rich.
And it makes no sense whatsoever because we have got more
doctors, more nurses, more health care workers per person than
any country in the world by far. And I really sometimes think
that the people who foisted this so-called unaffordable care
plan out on us knew that it wouldn't work but that it would get
so bad that people would then demand that we go to a single-
payer plan, and then we will end up with shortages, waiting
periods, lower quality of health care, and we will have this
Russian/Cuban type of medical system.
I was on a congressional CODEL a few weeks ago, and the
front page of the largest newspaper in Ireland had a front-page
story while we were there and said they had 530,000 people on
waiting lists in Ireland for medical care. You multiply that
times 70 for the United States, you see where we are heading.
Thank you, Mr. Chairman.
Mr. Meadows. I thank the gentleman.
The chair recognizes the gentlewoman from Michigan, Mrs.
Lawrence, for 5 minutes.
Mrs. Lawrence. Thank you, Chair.
In the 6 years since Congress passed the ACA, we have found
ourselves in this hearing again and again as it is being
debated in some would call obsession with undoing and
undermining this historic law. There has been more than 60
times that we voted to repeal and undermine the ACA. There have
been lawsuits filed. They have cut critical funding. And the
majority have held hearing after hearing just like today's
using overheated rhetoric and claims that seem to be
exaggerated.
It is not productive. It is really tiresome. Because when I
came to this Congress, I recognized that the ACA was not
perfect, and I am willing to work with the other side of the
aisle to make it better. But I never get a chance to have that
conversation on what to do to make it better because it is
continuous, continuous attacks to repeal it.
So, Dr. Cohen, how many Americans have gained quality,
affordable insurance coverage since the ACA has passed in 2010?
Dr. Cohen. Twenty million.
Mrs. Lawrence. I'm sorry?
Dr. Cohen. Twenty million.
Mrs. Lawrence. Twenty million. Twenty million people have
gained insurance coverage. The ACA has also cut the uninsured
rate nearly in half. It is now at a historic low of 8.6 percent
according to the National Center on Health Statistic. Dr.
Cohen, what was the primary goal of ACA?
Dr. Cohen. To increase access to affordable, quality
coverage.
Mrs. Lawrence. Then I would say we are well on our way to
reaching that goal. Just imagine how much we could accomplish
if Republicans and Democrats would work together instead of
against this. I can understand differences of opinion, but it
is unacceptable to have a stalemate on an issue that is so
important to the American public. And if we can sit here today
and clearly identify the areas that we should address so that
we can make it better, then why don't we do that? Why don't we
come together and work to make this plan? Because we have
changed 20 million people in America? We have affected 20
million people, and we have increased--the goal of ACA--we are
on our way and we have increased that number.
And I am speaking today--the facts are the facts, and I
will not say the ACA is perfect, but I can tell you it is the
foundation for us to build on. And we waste time hearing after
hearing after hearing where we refuse to come to the table and
say let's fix what is wrong with this so we can continue to
make this country competitive with other countries who are
providing health care for all of the citizens of that country
to make it affordable.
With that, I yield back my time.
Mr. Meadows. I thank the gentlewoman.
The chair recognizes the gentleman from Arizona, Mr. Gosar,
for 5 minutes.
Mr. Gosar. Thank you, Mr. Chairman.
Now, before being elected to Congress, I owned and operated
a dental practice in northern Arizona for more than 25 years,
so I know a few things about health care and how it really
works in the real world. In fact, one of the primary reasons I
ran for Congress in 2010 was out of the frustration in the way
that Washington was damaging health care with ObamaCare.
Now, sadly, another ObamaCare failure is hitting Arizonans.
Ms. Cohen, I am coming right at you. Last month, health
insurance provider Aetna pulled out of the growing list of
insurers that have announced their intention to pull out of
Arizona due to the heavy losses introduced by ObamaCare
regulations. This move is leaving my constituents in Pinal
County without access to any--without any insurance place
marketplace plan. The Pinal County marketplace is the first,
but I am afraid it won't be the last to be abandoned and
wrecked by the ObamaCare regulations.
So, Dr. Cohen, was leaving Pinal County residents with zero
marketplace options, exactly what President Obama meant when he
told them that if you like your plan, you can keep your plan?
Dr. Cohen. I think you may have seen last week Blue Cross
Blue Shield of Arizona did announce that we--they will be
staying in that county.
Mr. Gosar. Good. Once again, you can keep your plan?
Dr. Cohen. So, again, I think what the Affordable Care Act
is meant to ----
Mr. Gosar. There is absolutely no ----
Dr. Cohen.--do is to give access to affordable coverage by
providing financial ----
Mr. Gosar. That is not what he meant. That is not what he
meant.
Dr. Cohen. Okay.
Mr. Gosar. The President's health care law is a quagmire of
bureaucratic red tape, regulatory hoops, and cost-shifting tax
increases that has left tens of thousands of Arizonans
scrambling to find health care insurance for 2016. So, Dr.
Cohen, the administration seems to know the bill is inherently
flawed and unworkable as it was passed. As a result, the
administration has decided to delay many aspects of the law,
isn't that correct?
Dr. Cohen. We have said, as we do with the Medicare
program, we want to continue to make improvements ----
Mr. Gosar. Once again ----
Dr. Cohen.--to the marketplace ----
Mr. Gosar.--answer the question. Answer the question.
Dr. Cohen. Yes, it's ----
Mr. Gosar. You have delayed implementation? Thank you for
answering.
How many individual changes have been made in the law since
it was passed to try to make it workable?
Dr. Cohen. How many congressional actions have been taken?
Mr. Gosar. How many actions have you taken ----
Dr. Cohen. To make improvements to the ----
Mr. Gosar. Seventy.
Dr. Cohen.--to the ----
Mr. Gosar. Let me answer that for you. Seventy. Now, in my
first three terms, I have now represented over 85 percent of
the geography of Arizona, most of the rural aspects. So for
every person I hear that has been helped by the program, I can
give you two that have been hurt. You can make statistics say
anything you want to make statistics. I have got a pretty good
background in statistics.
So, Mr. Giesa, I am going to come back to you. So if we
took this highly regulated industry and we streamlined the
process, we have money to people for their ability to buy in
the marketplace and came up with the industry coming up with a
different idea and competitive advantage, do you think that we
could actually come up with a fairly--industry solution to this
problem?
Mr. Giesa. I'm afraid, Congressman, that question is a
little beyond what I'm prepared to talk about today. It's
certainly possible, but I can't say with any sort of certainty
that the answer is yes.
Mr. Gosar. So when you are looking at this marketplace, I
mean, we are seeing fewer and fewer options. Is the whole
intention a single payer?
Mr. Giesa. I can't, again, speak to the intention, but I
can say that with certain changes, the changes that we've--that
are in my written testimony, I think the marketplace can
continue and can continue to improve.
Mr. Gosar. A vibrant marketplace has lots of entries and
opportunities and options, is that true?
Mr. Giesa. That is true.
Mr. Gosar. So are we shrinking in options and
opportunities?
Mr. Giesa. We are shrinking in options and opportunities
going into 2017, yes.
Mr. Gosar. Now, you know, I want to make a comment. You
know, we also made it even worse in health care. So my wife on
election day in Arizona ends up being in the emergency room
with a neck injury that we can't figure out. It is going to be
3 months before she sees her primary care doctor. She has been
in the emergency room twice, and they won't take an MRI because
she doesn't have her authorization from her primary care
doctor. It is pretty incredible that that is what exists today
in Arizona. It is pretty incredible that that is what is
happening.
So it is causing a deformation of the marketplace. It is
causing a deformation in regards to the way care is being
applied. And I think the marketplace and the industry has an
opportunity that we could reset that bar. I am one of the
people that has looked at different options outside that in an
evolutionary process, and I have got to say I am pretty sad
with what I see my folks on the other side of the aisle
complaining about.
So I yield back.
Mr. Meadows. I thank the gentleman.
The chair recognizes the gentlewoman from the District of
Columbia, Ms. Eleanor Holmes Norton.
Ms. Norton. Thank you very much, Mr. Chairman.
Mr. Chairman, it has been 6 years since Congress passed the
Affordable Care Act, and the majority has been the majority for
that entire time. All they have done is to propose to repeal it
60 times. They could have come forward with their own bill. The
closest they have come is no bill at all. It is a recently
unveiled proposal from Speaker Ryan that he calls the ``Better
Way.''
It is terribly short on specifics after all this criticism
of the ACA, but it does recycle a lot of bad ideas. For
example, it rolls back the ACA's vital consumer protections,
and if you can imagine this, would allow companies once again
to discriminate by charging higher premiums based on race and
sex and health status. I cannot believe that any Member of
Congress would want to go back to those bad old days.
Mr. Spiro, what effect would repealing these consumer
protections have on those who have gained coverage under the
ACA?
Mr. Spiro. Well, in general it would shift costs to
consumers--back to consumers. And I think the way to think
about it is that the goal of the ACA was to spread risk
broadly, and some of the alternatives that have been floated to
replace the ACA, what they in effect do is quarantine the sick
instead.
And so what they do is repeal essential health benefits so
you are not guaranteed coverage for prescription drugs, for
maternity care, for mental health care, which I think we would
all agree are essential, eliminate out-of-pocket--limits on
out-of-pocket costs, and most critically, reduce the value of
coverage. I mean, one Congressman was talking about how the
constituents have written in about the high deductibles.
So the answer is not to actually reduce the value of
coverage back to the way it was before, to rely on health
savings accounts and high-deductible plans. That is going in
the exact wrong direction. And it seems to me that there are
obvious constructive solutions to address that issue.
Ms. Norton. Yes. Any large piece of legislation, this is a
work in progress. It is amazing the progress that has been
achieved on its first iteration.
You mentioned the cap on out-of-pocket expenses. Let me ask
Dr. Cohen. How important have the premium tax credits been in
helping people afford health care?
Dr. Cohen. We've seen them be essential on the marketplace.
Eight-five percent of consumers do qualify for some sort of
financial assistance. And we put out an analysis earlier this
year that goes State by State so folks can see for their own
State, even with significant increases, that consumers are
protected because if premiums do go up, the financial
assistance goes up as well. So the majority of consumers can
purchase a plan for less than $75 a month.
Ms. Norton. Imagine that, less than $75. And I know that is
important out here. The majority of these consumers can be
protected for less than $75 a month. If it were not for these
tax credits, they obviously wouldn't be in the market at all.
And Mr. Spiro's notion about what insurance is all about,
spreading the risk, and that is essential to this or any
insurance program.
Which leads me to a question about the option for turning
Medicaid into a block grant, here be the options: block grant
program, which would say to the States do whatever you want to
do; or imposing a per-capita cap on benefits that would not
keep up with the growth of health care costs. So both of those
options would leave States with less funding and take away care
from those who can least afford it, the poor and the elderly.
Mr. Spiro, do you think that the Speaker's proposed changes
to Medicaid would have a negative effect on the private
insurance market?
Mr. Spiro. To--Medicaid would have a negative effect on the
private insurance market? Yes, because they would roll back the
Medicaid expansion. And as I mentioned in my testimony, States
that have done Medicaid expansion, their premiums in the
private markets are 7 percent lower, and that is because the
population from 100 to 138 percent of poverty would be in the
Medicaid risk pool instead of the exchange risk pool.
Mr. Meadows. The gentlewoman's time is expired.
Ms. Norton. Thank you very much. I think my questions have
been aimed at showing the benefits and showing that the
majority has filed on its option to not propose but to come
forward with a bill.
Thank you very much, Mr. Chairman.
Mr. Meadows. All right. I thank the gentlewoman.
The gentleman from Texas, Mr. Farenthold, is recognized.
Mr. Farenthold. Thank you very much.
And I can't get started without questioning some of the
characterizations of the Speaker's and the House Republicans'
plan. I am not sure that our panelists or the gentlelady from
the District of Columbia has actually reviewed the very
detailed plan outlined on the Better.GOP Web site, and I would
encourage them to do that.
But at this point I am going to go ahead and ask some of my
questions. Dr. Cohen, I am going to start with you. In your
testimony you said that the CBO estimates said that we were
actually below the CBO estimates for what this plan would cost.
How does that jibe with everybody's health insurance is going
to go down $2,500? It seems like you knew with the CBO
estimates you referred to in your testimony the time the
Affordable Care Act was enacted we knew they were going to go
up.
Dr. Cohen. So I think we're talking about two different
groups of folks. Both--I mentioned--one are the 150,000 million
Americans, all of these panelists who get our health insurance
through our employers. And if you look at the cost of those
premiums, it has actually been the slowest growth in the last
----
Mr. Farenthold. But, ma'am, wouldn't you say ----
Dr. Cohen.--4 or 5 years.
Mr. Farenthold.--the benefits have gone down? I will just
use an anecdotal example. My daughter's employer, based on the
increased cost of coverage, was forced to take her from a very
generous first dollar plan to a $3,000 deductible plan that
when she had to visit the emergency room earlier this year
wiped out her savings account.
Dr. Cohen. So we very much agree with you that high-
deductible plans are challenging for folks, which is why the
Affordable Care Act has limit on out-of-pocket costs, and for
folks who have incomes below 250 percent of poverty, they have
limits and they have ability to do cost-sharing----
Mr. Farenthold. All right. Now, under the Affordable Care
Act, as a Member of Congress, I am required to purchase my
insurance on the D.C. exchange. I pay over $1,000 a month for
that insurance. With these premium increases that we are
talking about of double digits, I could see as much as a
$2,000-per-year increase in my premiums. That doesn't sound
affordable to me either.
Dr. Cohen. So the important part about the Affordable Care
Act is now that you know--you know what you're buying when you
buy that insurance. It covers those essential health benefits,
prescription drug costs, and such. In addition, if you had any
preexisting conditions before, you have options. You can now
have ----
Mr. Farenthold. No, I was better off under FEHB, I will
tell you that. And again, I am also concerned about the lack of
coverage options that are available.
Mr. Giesa, I am going to go to you, and I am going to go
Texas-specific since I am a Texan. We are seeing projections
for 2017, rate increase for your company, just phenomenal. I
mean, what do you see going and happening with those rate
increases for people forced to buy through the exchange?
Microphone, please.
Mr. Giesa. First, please understand that the Blue Cross
Blue Shield Association that I am here representing is a
federation of 36 ----
Mr. Farenthold. Right.
Mr. Giesa.--independently run plans. The strategy and
pricing decisions of any specific plan are ----
Mr. Farenthold. All right. I will go to Mr. Redmer for a
second. One of the complaints I am hearing out of my hometown
of Corpus Christi and the areas that I represent is if you
wanted to buy a PPO plan now in cities like Houston--and we are
getting there in Corpus Christi--there simply isn't one
available. You are stuck with an HMO where you have things like
with Mr. Gosar. You have a gatekeeper before you can get the
care. Why are we losing all these choices?
Mr. Redmer. That's one of the problems that we're seeing
all around the country. In some parts of the country, we're
seeing folks only have an option of a PPO. In other parts of
the country, other counties, they may only have an option of an
HMO. So the shrinkage of competition and carriers is a real
problem.
Mr. Farenthold. All right. Thank you very much.
And, Dr. Cohen, one last question for you as my time is
about to expire. When Dr. Gosar asked the question about was
the intent all along to move to a single-payer system, you
smiled. Is that because you believe that to be true or what is
your take on that?
Dr. Cohen. No, it is because we work so collaboratively
with the State Departments of Insurance and the many private
issuers to provide Americans access to affordable coverage
through private insurance, so I think my smile was we work so
closely with folks in the private sector that I don't see how
that intent could be read into what we are doing ----
Mr. Farenthold. It certainly seems to be the end result
with premiums going so high and deductibles skyrocketing and
choices going down. The American people are incredibly
dissatisfied, and it seems like if you to create a system
designed to wreck what I consider to be the best health care
system in the world, you have done it.
I see I am out of time, and I will yield back.
Mr. Meadows. I thank the gentleman.
The chair recognizes the gentlewoman from Illinois, Ms.
Duckworth, for 5 minutes.
Ms. Duckworth. Thank you, Mr. Chairman.
I am very concerned about the significant premium increases
that we have been discussing, especially the ones that are
going to be going up in 2017 on the Illinois health insurance
exchange. Of course, the ACA's premium tax credits will shield
the vast majority of the 335,000 Illinois residents who shop
for insurance on the Illinois exchange with significant
increases in premium rates, but as the Chicago Tribune reported
recently, even if the premiums increased by 50 percent, the
ACA's premium tax credits would ensure that nearly two-thirds
of Illinois enrollees could still enroll in plans that cost
them $100 or less per month.
I am concerned, however, about the impact of this increase
on the 84,000 Illinois residents who don't qualify for tax
credits, and I would like to know what steps we can take to
empower these consumers to be smart shoppers in the exchange
and what reforms are needed to ensure regulators effectively
protect these people from unreasonable rate hikes.
With that, Dr. Cohen, I would like to address this idea of
falling health care rate increases. I understand that all
States are required to file health care rate increases of 10
percent or greater with CMS. Each State determines whether or
not to reject or modify these rates, even though they have to
file them with the CMS.
So am I correct in understanding that the State review
programs are not created equal? Some regulators are weak and
some are strong?
Dr. Cohen. I think that'd be correct in that there are a
number of States in which we, CMS, do that process but in the
majority of States the Department of Insurance does do that
process. But I agree with you that--variable in terms of the
authorities that they have.
Ms. Duckworth. Okay. So while some States are empowered to
provide relief from the skyrocketing rates for their citizens,
others like Illinois, we don't have to enable regulators to
reject these astronomical rate increases. I am hearing the term
file-and-use for States like Illinois. So long as insurers
properly file the rates with their regulators, they can use
them, is that correct? Can you explain that, file-and-use term
a little bit?
Dr. Cohen. Yes. I mean, I think my colleague from the
Department of Insurance can probably speak to this in addition,
but yes, those are--depending on what State you're in that
there are different authorities, and Illinois has one where
they can review them but essentially can't change them.
Ms. Duckworth. Okay. Is it Mr. Redmer who--do you have a
comment on that?
Mr. Redmer. I will not speak to Illinois. I can tell you
that Maryland is not file-and-use when it comes to health
insurance, but other parts of the insurance market are file-
and-use. But just because it's file-and-use does not mean that
we lose our regulatory authority over those rates ----
Ms. Duckworth. Okay.
Mr. Redmer.--in Maryland.
Ms. Duckworth. Okay. Back to you, Dr. Cohen. Can you tell
me, do we need to change policies for regulators in Illinois
and other States so they can do more to stop these rate
increases that make the care unaffordable? Or what could
potentially be done?
Dr. Cohen. Well, if you look across the country--and I
think Congress--what you're seeing in States that do have the
ability to do rate review, you are seeing folks look at those
rates and make changes to them.
I think what we've been talking about for this year is that
there are some one-time upward pressures on those rates, but we
have been working very closely with the State Departments of
Insurance and, you know, when they are working closely with
their insurers to make sure that those rates are appropriate.
Ms. Duckworth. So is this a State-by-State issue or is
there anything that can be done at the Federal level?
Dr. Cohen. That's correct, State by State.
Ms. Duckworth. State by State. Is there any type of
coincidence or matching with the States that are more file-and-
use and have less enabled regulators versus the States who, for
example, have refused Medicare expansion?
Dr. Cohen. So we have seen that in Medicaid expansion
States that the ----
Ms. Duckworth. Okay. Yes ----
Dr. Cohen.--private market--the marketplace has seen
premium increases that are about 7 percent less, so we
definitely are seeing where Medicaid expansion is having an
impact on marketplace premiums. And I could get back to you
where--I don't have at my fingertips, but I know that there are
cities that have shown where rate--where States are effective
rate reviewers, that there is more engagement on the rate
process, they do these open public hearings, and they are able
to do some additional work on understanding and justifying
those rates.
Ms. Duckworth. Do you have the public hearings in Maryland?
How does that work?
Mr. Redmer. In--I discussed this earlier. In Maryland we
have--the rates--proposed rates are given to us May 1. We
receive all the actuarial documentation and data. We have a
team of actuaries that scrub the data. They challenge the
projections and the experience. In Maryland this year, we had
two public hearings, and then we ultimately approved rates that
in aggregate were about $24.5 million less than was originally
requested.
But you bring up a great point and that is the--as is
always the case, the vast majority of the middle class that
does not have access to Medicaid, they don't have access to
subsidies, and they really are being hurt by these rates. And
my concern is that it is the business death spiral. In other
words, as the rates increase and folks have to pay 100 cents on
the dollar of these increases without a subsidy, it's going to
be the folks that are healthier and younger that are going to
choose to leave the market, pay the penalty, and the experience
will deteriorate further.
Ms. Duckworth. Thank you. I am out of time. Thank you, Mr.
Chairman.
Mr. Meadows. I thank the gentlewoman.
The chair recognizes the gentleman from Florida, Mr.
DeSantis, for 5 minutes.
Mr. DeSantis. Dr. Cohen, Congress has imposed limitations
on appropriations vis-a-vis the risk corridor program in recent
years, is that correct?
Dr. Cohen. That's correct.
Mr. DeSantis. And I think that obviously reflects the will
of the Congress who controls the purse. But I was wondering
because this memo that CMS issued on September 9 said about
these risk corridor payments and the prospect of lawsuits from
the insurers ``We know that a number of insurers have sued in
Federal court seeking to obtain the risk corridor amounts that
have not been paid to date. As in any lawsuit, the Department
of Justice is vigorously defending those claims on behalf of
the United States. However, as in all cases where there is
litigation risk, we are open to discussing resolution of those
claims. We are willing to begin such discussions at any time.''
So was the purpose of that to basically invite lawsuits and
try to provide the risk corridor payments through the judicial
process rather than through the appropriations process?
Dr. Cohen. So I think we--as we had said last year and we
said again this year, these payments are an obligation of the
Federal Government. That is not new. There are ongoing lawsuits
and DOJ represents us in those suits and continues to work
through a legal process.
Mr. DeSantis. Can you say whether anybody with HHS has
encouraged lawsuit settlements for risk corridors?
Dr. Cohen. Again, I think DOJ would be the one that would
need to answer questions about ongoing litigation ----
Mr. DeSantis. Well, no, I mean, if there are people in your
department who were encouraging this either in conversations
with insurers or others, that would be something that would be
noteworthy. So can you say whether that has happened?
Dr. Cohen. So what I could say is that we are--you know,
that the process of litigation has been moving forward, and DOJ
is doing their work as they would in any other cases.
Mr. DeSantis. But nobody in HHS has done anything to try to
point in this direction where you would have lawsuit
settlements ----
Dr. Cohen. What I ----
Mr. DeSantis.--is that what you are saying?
Dr. Cohen. What I think HHS has done is said, as we said
last year, that this is an obligation of the Federal Government
and ----
Mr. DeSantis. I understand that, but the question is, as
Congress has not saw fit to provide that money in the
appropriations process. Obviously, you disagree with that, but
the question is is knowing that Congress has expressed its
intent and has refused to provide the funds, can you now try to
use the judicial process to get around an expressed prohibition
that Congress enacted? Can you provide the committee with any
documentations on your end where people are discussing these
lawsuits?
Dr. Cohen. So, you know, we have just been doing at HHS is
focusing on implementing the law and ----
Mr. DeSantis. So you have--so there are no documents that
we would get correspondence involving the lawsuits?
Dr. Cohen. So the lawsuits are handled by the Department of
Justice.
Mr. DeSantis. So the answer to that is no?
Dr. Cohen. So I could refer you to the Department of
Justice ----
Mr. DeSantis. I am not asking about the Department of
Justice. I am asking whether you and anyone in your agency has
correspondence about facilitating lawsuits for risk corridor
payments.
Dr. Cohen. So obviously ----
Mr. DeSantis. Can you answer the question?
Dr. Cohen. So obviously we are the client, right? They--DOJ
is representing us. And so our general counsel does correspond
with DOJ ----
Mr. DeSantis. What about outside actors?
Dr. Cohen. Our general counsel is the one that interacts
with DOJ on our behalf because we're the client.
Mr. DeSantis. But not outside actors?
Dr. Cohen. Outside actors?
Mr. DeSantis. Well, just, I mean if our--is there
interaction between either general counsel or people at HHS
trying to bring people along to see that the litigation track
is the track that the administration would like to see?
Dr. Cohen. I think it's been very public that the
litigation has moved forward. A judge in the--one of the cases
related to--one of the first cases moving forward asked for all
motions to be submitted by September 23. So the--everything is
evolving sort of in the normal ----
Mr. DeSantis. Well ----
Dr. Cohen.--course of litigation ----
Mr. DeSantis.--we may do then--we may have to send a
request for some of these documents to just see so this is
transparent.
Let me ask you this. Does the Department of Health and
Human Services agree with the Department of Justice's Office of
Legal Counsel, which has stated in analysis that judgment funds
cannot be used to circumvent a prohibition on appropriations
enacted by Congress?
Dr. Cohen. I'd have to talk to my lawyers on that so I
can't speak to that.
Mr. DeSantis. Okay. Well, we'd like to get an answer to
that.
Mr. DeSantis. Do you know, did your counsel or anyone at
HHS confer with DOJ before the September 9 memo was issued, do
you know?
Dr. Cohen. So, like I said, our counsel does interact with
the Department of Justice as we are the subject of those
litigation, and so--and DOJ ----
Mr. DeSantis. Do you know if DOJ reviewed the memo?
Dr. Cohen. So I know that they are working towards whatever
legal process is unfolding, as they would in any ----
Mr. DeSantis. Well, no, no, that is not the issue. This
issue is this conflicts with a 1998 OLC opinion about whether
you can use judgment funds in this way. DOJ has been on record
as saying that is illegal and improper, and my question to you
is was that shown to the Justice Department for their advice or
consent on that?
Dr. Cohen. I wouldn't be able to speak to that.
Mr. DeSantis. Okay. So is it the position of HHS's general
counsel that using judgment funds in that manner is appropriate
and legal?
Dr. Cohen. So I'd have to have our lawyers get back to you
on that.
Mr. DeSantis. Okay. Well, we will--but the general counsel
of HHS did approve the memo of September 9? Do you know if the
general counsel reviewed it?
Dr. Cohen. They did review it, yes.
Mr. DeSantis. Okay. Thanks. I am out of town. I yield back.
Mr. Meadows. I thank the gentleman.
The chair recognizes the gentleman from Massachusetts, Mr.
Lynch, for 5 minutes.
Mr. Lynch. Thank you, Mr. Chairman. And I want to thank the
witnesses for helping us with our work.
So we have this article in the Boston Globe of September 9,
and it really does in a very concise way explain the problem we
are having. So we have one subsidized network plan that offers
access to the Mass General Hospital and Brigham and Women's
Hospital, two of really the finest hospitals with the best docs
in the country. They are a teaching hospital, do a lot of
important research for us.
But the neighborhood health plan that would allow enrollees
who are subsidized to go to those hospitals has just pumped up
their premiums by about 21 percent. So a lot of people,
thousands of people are faced with the fact that--one of the
big fears of the Affordable Care Act when it came out--and I
want to confess I voted against it. I voted against it for a
number of reasons that I will go into. And my opinion and my
vote would not change if it were held again today.
But we were worried that we might end up with two systems,
two health care systems, one for the people who could afford it
and then everybody else who is on the subsidy. They can't get
access to the good docs. That is exactly what is happening here
or is threatened here. We have got one subsidized network, and
if this goes away, if people can't pay that 25 percent
increase, then the doors are locked to Mass General, the doors
are locked to Brigham and Women's, two of the finest hospitals
in the country. And I am worried about that.
The basic idea behind the Affordable Care Act was, as it
was presented to Congress, was that since we were paying
multiples of what other countries were paying in terms of
trying to provide health care for their citizens, if we could
just squeeze the cost, get that cost down, we could use the
savings and the cost curve, use the savings to cover the people
who were uninsured. That was the idea.
But as we have seen and as Jonathan Gruber--I know people
use that as a punch line, but he actually is a very smart man,
testified before the Senate, and he even admitted, he said we
punted on cost containment. We punted on that. We have very
strong incentives to get coverage, very low incentives to
actually squeeze the cost down.
And there were several other items in the Affordable Care
Act that caused me to vote against it. One was an antitrust
exemption. So in the Senate version we gave back the antitrust
exemption to companies under the Affordable Care Act so that
they could act in restraint of trade so that one insurance
company can cover an entire State and squeeze out competition
because they have got everybody signed up. We allowed that. We
put that into law. It was taken out in the House, put back in
the Senate, and then it was part of the final bill.
The other piece, we eliminated the public option. So we
were relying on the public option, even a State-run public
option to put out a bare-bones plan to compete with some of
these private plans so that by competition, if the State put
out a bare-bones plan at low cost but reliable and providing
adequate health care, people would buy that, and it would be up
to the private insurers to compete with that. We took out the
public option, so we eliminated a lot of competition that would
have otherwise occurred.
And then lastly, we put in a Cadillac tax, a so-called
Cadillac tax. So you have these good employers, a lot of them
union employers who sat down with their employees and worked
out a plan because health care was not taxed back then. So a
lot of these union employees said, okay, rather than take money
in our envelope, rather than take pay raises, we are going to
take good health care, which would help their families. Now, we
turned around after they did that, to those employers and those
unions that sat down and worked together, we punished them. We
put in a Cadillac tax. Now, Congress in its wisdom has
postponed that.
But what has--eliminating the antitrust exemption, the
Cadillac tax, and eliminating the public option, Mr. Spiro,
what impact has that had on moving forward here? And we are
trying to meet the goals of the Affordable Care Act, the
original goals.
Mr. Spiro. Thank you for the question. I think if you look
at the hospitals in Boston, that is a unique situation and we
shouldn't judge hospital quality based on reputation alone. I
would refer you to your ----
Mr. Lynch. These are the best docs, though, just so you
know.
Mr. Spiro. Okay.
Mr. Lynch. I live in the city. I know where the best
doctors are. That is where my wife goes. And, look, I think it
is generally accepted that those are the best hospitals.
Mr. Spiro. But I would refer you to your own State's cost
commission, which has identified growth in hospital prices as
the main driving factor in the rise of health care costs. So
that's an issue that needs to be addressed.
Mr. Lynch. We are also teaching hospitals, though, right?
So the benefit is benefitting the rest of the country by--it
costs more obviously to deliver health care when you are a
teaching hospital than if you are not.
Mr. Spiro. Well, again teaching hospitals are heavily
subsidized without much transparency or accountability. But
that's a different issue from, I think, the thrust of your
question, which is on antitrust and the public option. On
antitrust, the ACA did not change the law on the antitrust
exemption.
Mr. Lynch. Right. We changed it in the House version. We
did. We changed it in the House ----
Mr. Spiro. Sure.
Mr. Lynch. We took out the antitrust exemption but ----
Mr. Spiro. But I just want to clarify that that was ----
Mr. Lynch.--the ACA put it back in.
Mr. Spiro.--preexisting the ACA, the antitrust exemption. I
would support removing it, but ----
Mr. Lynch. All 300 Members of Congress voted to change it,
Republicans and Democrats.
Mr. Spiro. I don't think it's fair to blame the ACA for
changing the law. It didn't change the law ----
Mr. Lynch. Well, we put it back in.
Mr. Spiro.--it actually ----
Mr. Lynch. It included an antitrust exemption ----
Mr. Spiro. No, the ----
Mr. Lynch.--so ----
Mr. Spiro.--House bill never became law.
Mr. Lynch. Right.
Mr. Spiro. So the ACA--the Senate bill--the ACA did not
change the law on the antitrust exemption. On the public option
I said in my testimony I support--I would call it the
guaranteed choice plan, and I think the President has voiced
support for that idea.
Mr. Lynch. Okay.
Mr. Spiro. I think it's important ----
Mr. Meadows. The gentleman ----
Mr. Spiro.--to add to the law ----
Mr. Meadows.--is out of time, so I appreciate it. I am
sorry to cut you off, but as we go, we have got a few other
members.
So the chair recognizes the gentleman, Mr. Hice, from
Georgia.
Mr. Hice. Thank you, Mr. Chairman.
I have really some comments here. I am kind of just amazed,
shocked at some of the things I have heard here today. You
would literally think--in fact, it has been implied that ACA
has somehow reduced cost and increased coverage. In fact, I
believe I heard someone actually say something along the lines
of we now have the lowest health care cost in our nation's
history. I am trying to wrap my head around this kind of
nonsense.
Now, look, it is not the Federal Government's
responsibility to take over the health care industry in the
first place. And I am as concerned as anyone with health care
costs, but government intrusion is the problem, not the
solution. And if ObamaCare is as great as it is, I am curious
why none of our witnesses here participate. I mean, we all know
that this is a disaster.
And, Mr. Chairman, what sets this hearing apart from other
hearings on the ACA is that now we have a track record that we
are able to look back on and see where this thing has been
taking us. We have a track record to look at what the President
and his administration originally told us versus what has come
to fruition, things like what has already come up today. If you
like your health care, you can keep it. If you like your
doctor, you can keep your doctor. We now have the track record
to know that was totally false.
And, you know, as we look at these kinds of things, we have
got to face reality. Now, we are facing the fourth enrollment
period, and this whole thing is coming off the tracks. It is a
national disaster. It is a health care disaster. It is an
economic disaster. We have got the--Ms. Cohen, you mentioned 20
million people have been enrolled. You are including the
Medicaid people. The real numbers are 12 million actual people
enrolled in ObamaCare, just over half of what was predicted.
And all this contributes to the problem. I mean, many of
you know firsthand we have got insurers that are leaving. It
wasn't long ago UnitedHealth backed away. A couple weeks ago
Aetna backed out. And why? Why are these insurance companies--
because they are hemorrhaging in their costs. They cannot
survive, despite the fact that billions of taxpayers' dollars
are subsidizing this thing. Insurance companies are still
losing their shirts, and it can't continue.
And for those insurance companies that remain, premiums
going up and up and up and up and up just to cover the costs,
this year, going up again in 2017. I think looking at a
national average, a 25 percent increase this year. My State of
Georgia we are expecting double-digit increases, more and more
increases. Blue Cross Blue Shield going up over 20 percent in
Georgia this year just to cover costs.
And, you know, we talk about all these people, all these
millions of people, Ms. Cohen, getting insurance coverage.
Let's face reality. We have 20 million perhaps who think they
have insurance, but in reality--and I have heard this--if I
have heard it once, it has been dozens and dozens of times,
particularly rural hospitals across my district--people go to
the hospital thinking they have insurance only to find out they
have got 5, 10, 15 whatever thousand dollars of deductible.
They can't even make the deductible payment. So the hospitals
don't get paid. We have got rural hospitals on the verge of
collapse because nobody is paying for the coverage they are
getting.
And the problem goes up and up. This year, what, 65 percent
of Americans are actually going to have the higher deductible
option in this thing. This is not affordable for anybody. It is
not affordable for our entire nation, and yet we have people
continuing to try to defend it.
I think it is clear to anyone watching and anyone
experiencing this, which none of you are experiencing it
because none of you participate, but people who are
experiencing the horrors of ObamaCare, they know what it is
doing to their families, they know what it is doing to their
health care options.
And I think it is time, Mr. Chairman, that we get honest
with this whole reality and face the facts that this is a
disaster and we need to get rid of this thing and let the free
market enterprise and individuals with their doctors determine
what is best for them rather than government getting involved
in this. And with that, I yield back.
Mr. Meadows. I thank the gentleman.
The chair recognizes the gentleman from Virginia, Mr.
Connolly, for 5 minutes.
Mr. Connolly. I thank the chair.
And I couldn't disagree more with my friend from Georgia
and his characterization. I find it ironic. Mr. Spiro, was not
the ACA absolutely modeled on a Republican Governor's health
care bill in Massachusetts?
Mr. Spiro. Yes, Mitt Romney's.
Mr. Connolly. Right. Was not the scheme here rather than
having a single-payer system but the idea of stakeholders
having skin in the game so they become cost-conscious, a
Republican think tank idea?
Mr. Spiro. The Heritage Foundation, in fact, came up with
the idea for the individual mandate.
Mr. Connolly. Right.
Mr. Spiro. So a lot of ----
Mr. Connolly. Not a Democratic idea, a Republican idea,
absolutely heart and soul incorporated into this so-called
government takeover my friend from Georgia just
mischaracterized.
Mr. Spiro. Correct.
Mr. Connolly. Dr. Cohen, when I had to face voting, I told
my voters there are three things I am going to measure a bill
by: Is there a meaningful basket of reforms that protect
consumers? Does it address the long-term cost curve so we have
some hope of reducing the growth in costs in terms of health
care in America? And does it address the problem, the crisis,
the scandal of huge numbers of uninsured Americans? Does it
reduce the number of uninsured Americans? In your opinion did
we address those three things or not, and are they working or
not today?
Dr. Cohen. So let me take them in reverse. Obviously, on
the uninsured we have talked about the historic lows in
uninsured. On the consumer ----
Mr. Connolly. Let's just stop there for a second ----
Dr. Cohen. Sure.
Mr. Connolly.--uninsured because I don't know what the
Legislature in Georgia has done. I do know what they have done
in my State in Virginia. The Republican majority, against the
wishes of the Democratic Governor, have refused to take
advantage of the provision on Medicaid. Medicaid would cover
400,000 uninsured Virginians, and the scandal of not taking
advantage of that has cost Virginia billions of dollars of
Federal money that we are entitled to but we are not taking
advantage of, and every year we have a voluntary clinic in a
rural part of our State where thousands of people without
health insurance line up overnight to get basic medical care,
highlighting the need.
My friend talked about hospitals closing. We have had
hospitals close in rural areas because of the fact that we are
not taking advantage of that Medicaid provision for political
reasons, not out of concern for patients. If we really want to
do something, that is money waiting to be taken advantage of,
and some Republican Governors have, such as John Kasich of
Ohio, is that not correct?
Dr. Cohen. That is correct, sir.
Mr. Connolly. Okay. Please continue with the other two.
Dr. Cohen. So on the consumer protections, I think now we
have been talking about essential health benefits so that folks
know that they have quality health insurance when they are
purchasing it, but also important to note the preventative
services that everyone has access to without cost-sharing, that
is not just in the marketplace but that is across the market
in--that we're able to take advantage of through our employer-
sponsored coverage as well.
Other consumer protection, given that we're talking about
premiums today, is the medical loss ratio. That is a consumer
protection in and of itself. We have paid--insurance companies
have paid back $2 billion to consumers when they've overcharged
them, and that's an important backstop for what we've been
talking about related to costs and could--insurers increase
their costs. Well, now there's a backstop which protects
consumers as well.
And on your third point about cost containment, that is
some place where, wearing my other hat related to what we're
doing in the Medicare world, we're really thinking about cost
containment every day. We're moving towards alternative payment
models, and we've been making great progress, as well as
thinking about drug costs.
Mr. Connolly. And final question, either to you or Mr.
Spiro, but one of the criticisms at the time of the debate
about ACA was we were going to kill Medicare Advantage. And my
friends on the other side of the aisle just scared the bedevil
out of seniors that that was going to happen.
So what happened, Mr. Spiro, to Medicare Advantage? Did
premiums go up or down? Did benefits get expanded? And what
happened to enrollment? Certainly, it is dead today, right,
Medicare Advantage?
Mr. Spiro. Enrollment has been increasing substantially,
despite the cuts in the Affordable Care Act to eliminate the
subsidies that those plans were getting, the extra subsidies.
So the system is much more efficient and is not cutting
enrollment as scaremongers ----
Mr. Connolly. And in fact, premiums stayed pretty stable?
Mr. Spiro. Yes.
Mr. Connolly. Yes. And benefits actually expanded?
Mr. Spiro. I can't speak to that. I don't know.
Mr. Connolly. Other than that, we killed it. I mean, at
some point the critics have to take responsibility for charges
they made that have in fact not been borne out. The opposite
has been borne out.
Mr. Meadows. All right. The gentleman's time ----
Mr. Connolly. My time is up.
Mr. Meadows.--is expired, so the chair recognizes the
gentleman from Georgia for 5 minutes.
Mr. Carter. Thank you, Mr. Chairman. And thank all of you
for being here. And let me preface my remarks by saying that I
totally disagree with my friend from Virginia. I am not going
to speak for my partisan view. I am going to speak as a health
care professional. And I want to ask you some very serious
questions here.
Mr. Giesa--is that correct, Giesa?
[Nonverbal response.]
Mr. Carter. In the State of Georgia where I have practiced
pharmacy for the last 30 years, the regulators have approved a
21.4 percent increase over the average premium, a 21.4 percent
average premium increase for Blue Cross and Blue Shield for the
2017 exchanges. Is this taking into account the fact that you
are going to be picking up 70,000 to 90,000 more customers from
Aetna because they have exited the market? And that, as I
understand it, leaves Blue Cross Blue Shield as being the only
plan that covers all the counties in the State of Georgia, is
that correct?
Mr. Giesa. Well, as I said, I'm here on behalf of the
association, and I can't comment on the situation for any
specific plan.
Mr. Carter. Well, let me assure you that what I just said
is true, okay, 21.4 percent because of the fact that they are
having to pick up 70,000 to 90,000 more customers because the
insurance plan with Aetna, they exited the market. And that is
understandable. And before they ask for the 21.4 percent, they
were only asking for a 15.1 percent. Do you think a 21.4
percent increase is a significant increase?
Mr. Giesa. I would characterize that as a significant
increase.
Mr. Carter. Anybody disagree with that on the panel?
Dr. Cohen, do you think a 21.4 percent increase is a
significant increase?
Dr. Cohen. Yes, it is significant.
Mr. Carter. Anyone disagree? Please shake your head no if
you disagree.
Mr. Spiro, you look a little bit contemplating this. You
don't think a 21.4 percent increase is a significant increase?
Mr. Spiro. I do. I think you have to look, though, whether
it's the average premium or the premium for the silver plans,
and I'm not sure--having not looked at your--the data in your
State, I'm not sure what you're referring to.
Mr. Carter. Well, let me assure you, it is the average
premium.
Mr. Spiro. Well, you'd want to look at the silver premium
because that's what subsidies are tied to.
Mr. Carter. You know, I don't care whose idea it was. I
don't care if it was Republicans. I don't care if it was
Democrats. It was a bad idea. I am just telling you. It has
been--the one thing it has not been is affordable. Don't we see
that? You know, one of the first things they taught us when I
entered the Georgia Legislature over 12 years ago--I served for
10 years--they said when you are in the hole, quit digging.
Well, guess what? We are in the hole and we keep digging. More
plans keep going out. And what happens? We keep digging.
The co-ops, I mean how ridiculous can we be? Twenty-three
and 17 have gone bankrupt? Duh. Man, we are here from the
Federal Government and we are here to help you. Well, guess
what? We ain't helping health care, a profession that I have
practiced for over 30 years. We are ruining it. The Affordable
Care Act is ruining health care in American. Don't we get that?
Until we put the free market back into the health care
system, until patients have control, doctors have control,
pharmacists, health care professionals have control over health
care decisions, it is not going to work. It is not affordable
and it is not quality. I don't care if it was a Republican
idea, and I don't care if it was a Democratic idea. It was a
bad idea.
Dr. Cohen, let me ask you a question. In July of this year
our President said too many Americans are still straining to
pay for their physician visits and prescriptions, cover their
deductibles, or pay for their monthly insurance bills. Do you
agree?
Dr. Cohen. I think what he went on to say is that with
increased subsidies that we could address a lot of those
issues.
Mr. Carter. There you go, increase subsidies, that is what
we need to do. Haven't we tried that?
Dr. Cohen. And it is working pretty well, 20 million new
covered.
Mr. Carter. It is working pretty well? What health care
system are you practicing in? Obviously ----
Dr. Cohen. The one that ----
Mr. Carter.--not the same one that I am practicing in, Dr.
Cohen.
Dr. Cohen. Well, I'm practicing in the one where folks can
get coverage for less than $75 a month.
Mr. Carter. What good does it do them to get coverage if
they are going to have 21.4 percent increase year after year?
Dr. Cohen. I think that ----
Mr. Carter. Some places are having ----
Dr. Cohen.--when you look at 25 ----
Mr. Carter.--a 50 percent increase. Dr. Cohen, some places
are having a 50 percent increase. Whatever you do, just go back
to your offices and say we are going to take that affordable
part off. That is all I am asking you to do is just take the
affordable part off. Just take that out of the title, okay?
Just say you are doing it for this poor pharmacist from
Savannah, Georgia.
Mr. Chairman, I yield. I am going to take my blood pressure
medicine.
Mr. Meadows. I thank the gentleman from Georgia.
The chair recognizes the gentleman from Maryland, the
ranking member, Mr. Cummings.
Mr. Cummings. On that note, I hope that the gentleman will
be able to afford the blood pressure medicine.
Let me ask this, Mr. Spiro. You said something that I think
we need to stick a pin in. You said that in those States that
took advantage of the Medicaid provisions of the Affordable
Care Act, the premium increases are 7 percent lower. Is that
what you said?
Mr. Spiro. Yes, correct.
Mr. Cummings. And so we have people now, Dr. Cohen, who if
we did not have the Affordable Care Act, would not have
insurance because of things like preexisting conditions. In
other words, if somebody had a breast cancer scare, wouldn't be
able to get insurance, is that right?
Dr. Cohen. That's right. Before the Affordable Care Act,
preexisting conditions could have a--caused you to have
absolutely no options for ----
Mr. Cummings. So they are just out of luck?
Dr. Cohen. Out of luck.
Mr. Cummings. And so they have--if they were like my
mother-in-law, who sadly died from breast cancer, they would be
in a treatment--I guess they would--well, what would they do?
Have to depend on charity? I mean ----
Dr. Cohen. Charity care.
Mr. Cummings. That is the real deal. See, we are the United
States of America, and this is about trying to make sure we
take care of our own. And when I think--I tell you, I have said
it many times. When I look at the States that do not take
advantage of the Medicaid provisions of the Affordable Care
Act, to me, to me that is a very, very sad thing because you
have got a situation where literally people are left to get
sicker and in many instances die early. That is real.
And so when we talk about experiences, the experiences of
being ill and not being able to get the care one needs, that is
something that I think we need to go back to as a nation.
Now, we know that the ACA has significantly expanded the
individual insurance market, and 11 million people did not have
coverage before the ACA now have marketplace insurance. We also
know that some insurers have been more successful in adapting
to the ACA's new marketplaces. Mr. Carlson, it seems that the
smaller regional insurers that have more experience in the
Medicaid market seem to be doing relatively well while larger
legacy insurers have struggled. Why do you think some of these
insurance members have fared better than others in adapting to
this market?
Mr. Carlson. Well, you know, I understand that there are
companies that are doing well and others that are not doing
well. And, you know, I can't speak to any specific company, but
I can tell you that health care is a very--health care
insurance is very local markets. So the ones that are doing
well are probably the ones that have the ability to negotiate
with providers and have authority over, you know, the ability
to manage their costs well.
And, you know, there are other factors in health care
trends that they can't affect such as the great increase in
prescription drugs lately ----
Mr. Cummings. I am glad you said that. You went exactly
where I wanted you to go. Tell me what effect does the high
price of prescription drugs have on insurance premiums, if any?
Mr. Carlson. Well, it is a significant issue. You know,
the--I mean, when you look at a 40 percent rate increase that
we've seen in some States, it's hard to pin prescription drugs
exactly on that. However ----
Mr. Cummings. I am not saying the whole thing.
Mr. Carlson. Right.
Mr. Cummings. I am saying but a contributing factor. People
are getting rich. They are charging these unreasonable prices.
EpiPen is a perfect example. It costs pennies to produce,
pennies, and they go in a few years from I guess, what, about
$100 to $600. And I was just telling my staff that in talking
to reporters, I talked to about 10 reporters over near the
Floor, and eight of them use EpiPens.
Mr. Carlson. And I would add that EpiPens is not a unique
case. There are plenty of other ----
Mr. Cummings. Oh, believe me, I know. Martin Shkreli sat
right in the seat that you are sitting in and thumbed his nose
at us, called us imbeciles because we wanted to know why his
company could raise the price of a pill from $13.50 to $750.
And so nobody can tell me--and that is happening all over the
pharmaceutical industry. So it has to have an impact. I am not
saying it is everything, but it is major.
And so what do you all suggest? You all are experts. What
do you all suggest we do about that? Do we just sit back, Dr.
Cohen, and just let that happen?
Dr. Cohen. So we've definitely been taking steps forward
there. I think you know we proposed earlier this year some
demonstration projects to work on costs in the Medicare program
and the Part D program, so we are certainly making sure that we
are looking at that, as well as what we think about the total
cost of care, the work that we're doing in trying to do
alternative payment models. Prescription drug costs are part of
that, so we want to make sure that all folks are thinking about
the total costs for all the care that they're providing and
thinking about the quantity and the quality.
Mr. Cummings. Redmer, are we doing anything in Maryland?
This is a great man. He is from my State.
Mr. Redmer. Yes, I appreciate that. I'm not going to get
into what we are or are not doing regarding pharmaceutical
costs. That's certainly outside the ----
Mr. Cummings. But this comment on whether it has ----
Mr. Redmer. Oh, certainly ----
Mr. Cummings.--an impact on ----
Mr. Redmer.--it has a significant effect on ----
Mr. Cummings. Would you like to see us do something about
it?
Mr. Redmer. Absolutely. Particularly specialty
pharmaceuticals are having a significant increase.
Mr. Cummings. I see my time is up, Mr. Chairman.
Mr. Meadows. I thank the gentleman.
Obviously, as we look at the market for affordable drugs,
it is something that we have to address, but we also have to
look at affordable health care. And I can tell you, as someone
who is part of the Affordable Care Act, I have seen increased
premiums with higher deductibles and less benefits than when I
was purchasing in the private sector.
So with that, we will go to the gentleman from Alabama, Mr.
Palmer, for 5 minutes.
Mr. Palmer. Thank you, Mr. Chairman.
Dr. Cohen, so far Aetna, UnitedHealthcare, Humana, and
there may be others that will likely be coming down the
pipeline, have announced they are leaving the exchanges. We
have all heard the clip of the President famously saying ``If
you like your doctor, you can keep him,'' which, as it turns
out, was completely untrue.
Hundreds of thousands of people participating in the
exchanges will have to find new coverage at the beginning of
the year, and this will likely mean new doctors. What kind of
comfort can you give these individuals and families that
believe the President but are now experiencing the exact
opposite of what he promised?
Dr. Cohen. Well, what I think we've talked about today is
that before the Affordable Care Act for folks with preexisting
conditions, there were no options ----
Mr. Palmer. I am not talking about the people with
preexisting conditions. I am talking about the promise the
President made to the people who already had insurance that
people who were doing business with some of the companies
represented right here who are dropping out of the exchanges,
who are losing hundreds of millions of dollars. So if you would
structure your answer to the question.
Dr. Cohen. Sure. In the employer market we actually have
seen very little change in what employers are offering in terms
of the number of employers offering coverage. That's one of the
reasons when folks talk about, you know, CBO projections of who
would enroll into the marketplace are actually seeing less
erosion of the employer market, which is a good thing ----
Mr. Palmer. Well, that is interesting in light of the fact
that of the 20 million people who have insurance, Medicaid's
enrollment is now at a record level, 72.5 million, and there
have been 15 million additional people since ObamaCare's open
enrollment began. So it looks like the majority of the people
who are being insured are being insured in the government plan.
There are 4.5 million people who had private insurance,
employer-based insurance who have lost their insurance.
So I think for all of the political speak and the hemming
and hawing around, the bottom line is is that it hasn't worked
the way it is supposed to work. There are millions of--hundreds
of thousands, not millions of people who have lost access to
the health care that they had prior to this. And, unlike my
colleagues across the aisle. I would like to have a
constructive dialogue about it to reform this and correct it
and get it back to where it works.
Mr. Giesa, Blue Cross Blue Shield of Alabama requested a
rate increase for small group plans of 4 percent, yet they
requested an increase of 39 percent for individuals plans on
the exchanges. Can you give me an idea of what accounts for
this disparity?
Mr. Giesa. Well, again, I apologize to answer the questions
the same way, but the Blue Cross Blue Shield Association is a
national federation of independently run plans, and the pricing
and strategy decisions those plans make I am not privy to.
Mr. Palmer. Well, I would expect that you would have some
concern about the losses. I mean, Blue Cross Blue Shield of
Minnesota has lost $500 million. Health Care Services
Corporation, which owns the Blue Cross affiliates in Illinois,
Montana, New Mexico, Oklahoma, and Texas, they lost $1.5
billion. Blue Cross Blue Shield of Tennessee lost $300 million.
Highmark Group, which owns Blue Cross in Pennsylvania,
Delaware, and West Virginia, lost $266 million. Can the
companies you represent sustain those kind of losses and stay
in the market?
Mr. Giesa. No, and that's the primary reason for the rate
increases we've been seeing, I would say.
Mr. Palmer. Well, Mr. Chairman, I would like to point out
that not only does this impact individuals and families, it is
impacting the economy. We now have companies that are
restricting their expansion of employment. They have cut back
hours. It is having a devastating impact.
I just left a budget hearing with former CBO director
Douglas Holtz-Eakin in looking at our economic growth and how
overregulated the economy is, and I think the health care law
is a major contributor to that.
They are now projecting that over the next 10 years the
economy, maybe over the next 30 years might only grow at 2
percent when the 70-year average was 3.2 percent. And I
attribute a lot to the economy being overregulated, but a
substantial part of it has to do with what we have done with
health care. It is having a devastating impact on the economy.
It is having a devastating impact on individuals and families,
and it is driving companies out of the marketplace. Employers,
people who provide insurance--I have gotten my insurance from
Blue Cross Blue Shield for years.
My time is almost expired. I have one last thing. I was
listening to Mr. Spiro's opening statement, and it reminded me
of the old liberal view of communism, that it failed because no
one had done it the right way, and I kind of thing that is the
arguments for the Affordable Care Act. I yield back.
Mr. Meadows. I thank the gentleman.
The chair recognizes the gentleman from South Carolina, Mr.
Mulvaney, for 5 minutes.
Mr. Mulvaney. Thank you, Mr. Meadows.
Dr. Cohen, I have just got a couple follow-up questions,
nothing major, but following up on what Mr. DeSantis was
talking about, which is this memo that CMS sent out--actually,
it was a public memo; it wasn't sent to anybody--regarding the
risk corridors. You mentioned a couple times, and I think you
are right, that the DOJ is your lawyer in these disputes and
you are the client. It makes sense. You are not a lawyer. You
are a doctor. I get that.
Why would you send this out? Why wouldn't your lawyer tell
you not to talk to the people that might be suing you? It's
general advice. Whenever lawyers advise their clients, don't
talk to the people who are going to sue you. Let me do that. So
why did you send this out?
Dr. Cohen. So I think the rest of the document describes
what was happening in this year's program, as well as
reiterating our commitment to the program. And I think what
it's saying there is that whenever there's litigation risk, as
it says right there, that you can always go talk to our
lawyers.
Mr. Mulvaney. Right, but that is not what it says. In fact,
you don't have to say what it says; we can read what it says.
``We know that a number of issuers have sued in Federal court
seeking to obtain the risk corridor amounts that have not been
paid to date. As in any lawsuit, the Department of Justice is
vigorously defending those claims on behalf of the United
States. However, as in all cases where there is litigation
risk, we are open to discussing resolution of these claims. We
are willing to begin such discussions at any time.'' It doesn't
say call the DOJ. It doesn't say don't call us. Has anybody
called you on this, by the way?
Dr. Cohen. So I think folks know that the Department of
Justice represents us in this, and so I'm sure they're going --
--
Mr. Mulvaney. Yes, they do. Yes, they do. So why send it?
Dr. Cohen. Again, it is normal course of business here ----
Mr. Mulvaney. Can you tell me, was it ordinary course of
business?
Dr. Cohen. Yes. So as litigation is moved through the ----
Mr. Mulvaney. Have you all ever sent out a notice before
saying we are getting sued and we know you all can sue us, do
us a favor, call us now and we can talk settlement without DOJ
here? Have you ever done that before?
Dr. Cohen. So what I think the paper is saying is that we
said last year, which is we have an obligation here and we have
always said that. And ----
Mr. Mulvaney. Did you send out a similar memo last year?
Dr. Cohen. We sent out a similar memo, yes, with our
obligation here, but what has ----
Mr. Mulvaney. Did it have ----
Dr. Cohen.--transpired ----
Mr. Mulvaney. Did it have an invitation at the end to
please have people call you to begin discussions on settlement
resolution?
Dr. Cohen. So at that point a year ago we had no
litigation. And so what we're acknowledging this year is that
time has evolved and folks are now suing us in Federal court,
as it says.
Mr. Mulvaney. All right. Then skip ahead to my other
question, which is has anybody contacted you as a result of
this memo going out?
Dr. Cohen. Again, I imagine that conversations are
happening with DOJ, but we are--I'm not ----
Mr. Mulvaney. I imagine a lot of things, Ms. Cohen, but
that is not really my question. Has anybody contacted you ----
Dr. Cohen. No, has not contacted me.
Mr. Mulvaney.--about this yet? They might have contacted
DOJ and you wouldn't know that.
Dr. Cohen. Correct. DOJ handles ----
Mr. Mulvaney. But DOJ hasn't told you anybody has called
you about this yet?
Dr. Cohen. DOJ handles these matters on our behalf.
Mr. Mulvaney. What is the deadline just so everybody who
might be able to sue HHS over the risk corridor payments? When
is the deadline for them to contact DOJ so they can file their
lawsuits or begin negotiation discussions?
Dr. Cohen. I couldn't answer--I don't know if there's a--I
would have to ask lawyers. I don't believe there's a deadline.
Mr. Mulvaney. Not the end of September or something like
that?
Dr. Cohen. No.
Mr. Mulvaney. Is it the end of this term? Is it the end of
this administration?
Dr. Cohen. There--as we've said, this is a 3-year program.
We've said that all along. We've said that there is an
obligation here. I think this is, again, nothing new that we
hadn't said last year.
Mr. Mulvaney. I want to go back because Mr. DeSantis talked
on this, and this would be more for the lawyers in the
audience, not the doctors. But he mentioned briefly whether or
not the judgment fund could be used to pay this, because I
think that is HHS position right now is that there is no money
in the appropriations. We got rid of that. I think that was
Senator Rubio's amendment in the last appropriations bill. So
there is no money left in appropriation for risk corridor
payments. It apparently is the opinion of HHS or DOJ or both
that the judgment fund might be available to make those
payments.
But I want to read what I thought that Mr. DeSantis was
going to read and, you know, he ran out of time. And this is a
quote from the Department of Justice. ``The judgment fund does
not become available simply because an agency may have
insufficient funds at a particular time to pay a judgment. If
the agency lacks sufficient funds to pay a judgment but
possesses statutory authority to make the payment, its recourse
is to seek funds from Congress. Thus, if another appropriation
or fund is legally available to pay a judgment or settlement,
payment is otherwise provided for and the judgment fund is not
available. This is the Clinton administration's decision in
1998.''
So for the folks who are watching this today who got their
little memo who are thinking about calling you folks, I think
they should know that it is the opinion of at least some
lawyers, some of whom are Republicans in Congress, others of
who were Democrats in the administration of Bill Clinton, that
the judgment fund is not available for these payments. And in
order for these payments to be made, folks are going to have to
make the argument to both parties in Congress that Congress
should appropriate that money and that it is not proper for
this administration to be paying any awards out of the judgment
fund.
Thank you, Mr. Chairman.
Mr. Meadows. I thank the gentleman.
The chair recognizes himself for a series of questions.
Mr. Spiro, let me come to you. I told you I was going to do
that, so let me come to you. In your testimony you said ``There
are signs that the insurer financial performance is
improving.'' Do you stand by that statement that the insurers'
financial conditions are improving?
Mr. Spiro. Well, I was citing a Goldman Sachs report on the
not-for-profit Blues plans, which said that their ----
Mr. Meadows. You may be quoting that. So is the insurance
industry improving as a result of the ACA?
Mr. Spiro. I was just citing a report so you'd have to ask
----
Mr. Meadows. Well, okay. So maybe you were. That was your
testimony and I am ----
Mr. Spiro. Yes.
Mr. Meadows.--asking you to clarify it. Is the insurance
industry's financial condition improving?
Mr. Spiro. I think it will improve after this price
correction. As I mentioned in my testimony ----
Mr. Meadows. So what you are saying is ----
Mr. Spiro. There was under-pricing in 2014 and the phase-
out one time ----
Mr. Meadows. Well, so let me ----
Mr. Spiro.--of these transition programs ----
Mr. Meadows. Let me go with that.
Mr. Spiro. After that, once the ----
Mr. Meadows. But hold on. Let me go with that.
Mr. Spiro. I think that we will see ----
Mr. Meadows. It is my 5 minutes, Mr. Spiro. It is my 5
minutes.
Mr. Spiro. I was just answering your question.
Mr. Meadows. No, you were pontificating. You were not
answering the question. I asked you a very simple question. So,
Mr. Spiro, let me ask you this. If you are saying a one-time
adjustment is what will fix the ACA, it is because they under-
priced things because of the risk corridor, is that correct?
Mr. Spiro. Well, as I mentioned in my testimony, there will
be a transition to an equilibrium. How fast that happens
depends on whether Congress can take additional action, whether
States take additional ----
Mr. Meadows. Well, let's assume that Congress ----
Mr. Spiro.--action and whether the administration takes --
--
Mr. Meadows.--is not going to take additional action.
Mr. Spiro. Why is that?
Mr. Meadows. Because the risk corridors in the bill and the
law that I guess you helped work on, isn't that correct?
Weren't you part of the team that wrote the ACA?
Mr. Spiro. I worked for the Senate HELP Committee in 2008
----
Mr. Meadows. Well, according to your bio that you put out,
it says that you were part of the team that actually drafted
the Patient Protection and Affordable Care Act, is that
correct?
Mr. Spiro. Correct, I worked with ----
Mr. Meadows. Okay.
Mr. Spiro.--the Senate HELP Committee.
Mr. Meadows. So is it working the way that you intended it
to work?
Mr. Spiro. It's insuring a lot more Americans ----
Mr. Meadows. That is not what I asked.
Mr. Spiro.--and the costs have come down ----
Mr. Meadows. That is not what I asked.
Mr. Spiro.--further than expected.
Mr. Meadows. Is it working the way that you intended it to
work?
Mr. Spiro. The transition to equilibrium is taking longer
than I had expected it would take.
Mr. Meadows. All right. Well, that is fair enough. Well,
let me ask you, how does your statement of a one-time fix and
an adjustment correspond with your sworn testimony that you
gave in 2013--and I will quote you--``emerging evidence,''
which is the word that you just used, emerging--``Emerging
evidence indicates that the exchanges are working as intended.
The competition among plans and providers are already lowering
premiums.'' Now, that was your testimony in 2013. Now, you have
testimony now that says, well, it is not working as intended.
We may have to do a one-time fix or adjustment. How do you
reconcile the two of those?
Mr. Spiro. I think what's becoming clear now is that
actually competition was too competitive and that rates came in
too low in the initial years.
Mr. Meadows. All right. So you base this--you don't have a
degree in economics, do you?
Mr. Spiro. No.
Mr. Meadows. Okay. So you don't have a degree in finance?
Mr. Spiro. No, but I encourage you ----
Mr. Meadows. Well, the reason I ask ----
Mr. Spiro.--to ask your expert witnesses ----
Mr. Meadows.--is because you say too much competition
actually is what created this?
Mr. Spiro. What's becoming clear is that ----
Mr. Meadows. I want to find the ----
Mr. Spiro.--both premiums ----
Mr. Meadows.--economic principle that you are going to grab
that would suggest that. What economic principle would you grab
----
Mr. Spiro. The markets were hypercompetitive, which
encouraged insurers to under-price their premiums in 2014, so
we're finding now that a correction is due in 2017 for that
under-pricing.
Mr. Meadows. All right. So you are suggesting--and so when
the government gets involved and creates false markets with
subsidies, that has no effect whatsoever on the financial
viability of an insurance company?
Mr. Spiro. I don't understand the question.
Mr. Meadows. When you have a subsidy that comes in and a
guaranteed of picking up and having to pay for preexisting
conditions and having the unintended insurer that you may have
to pick up, would that not make the market react in unusual
ways?
Mr. Spiro. It was a new market. There was a lot of
uncertainty about pricing. There was a new consumer population
----
Mr. Meadows. And your sworn testimony here today is the
whole reason this happened is because we had too much
competition?
Mr. Spiro. We had ----
Mr. Meadows. That is your sworn testimony.
Mr. Spiro. We had too much pricing uncertainty, and yes,
premiums came in too low as it was also ----
Mr. Meadows. And you base that--well, you know, you are a
lawyer. I guess you have a degree in, what, public policy, is
that correct ----
Mr. Spiro. I have a law degree.
Mr. Meadows.--from Princeton?
Mr. Spiro. I have a law degree, yes.
Mr. Meadows. You have a law degree from University of
Virginia. You have an undergraduate from Princeton, is that
correct?
Mr. Spiro. Correct.
Mr. Meadows. Okay. Has any of it allowed you to do Jonathan
Gruber kind of models?
Mr. Spiro. No.
Mr. Meadows. All right. So most of your testimony--here is
the reason I am concerned. UnitedHealthcare has lost over $1
billion on exchanges in the last two plan years. Aetna expects
to lose $650 million on exchanges and lost $475 million in
2015. Health Care Services Corporation, which is kind of a
bundle of some of the Blue Cross Blue Shields in five States
has lost $1.5 billion in exchanges. Now, are you saying that
this is caused by too much competition?
Mr. Spiro. It's caused by under-pricing and Congress
stepping in and constraining the risk corridor program, the
one-time phase-out of reinsurance program, and it's all coming
to a head in 2017.
Mr. Meadows. All right. Now, you are saying that it is
Congress' fault but you drafted the law?
Mr. Spiro. Congress came in and amended the law after it
was passed.
Mr. Meadows. So it is whoever voted for the law's fault
that this is happening, is that correct? Is that your
testimony?
Mr. Spiro. No, I said--my testimony was that Congress, by
constraining the risk corridor ----
Mr. Meadows. Well ----
Mr. Spiro.--program ----
Mr. Meadows.--for the record ----
Mr. Spiro.--and is responsible for ----
Mr. Meadows.--did any Republicans on the House side vote
for that law? You were here. You know. Did any Republicans ----
Mr. Spiro. I don't believe so.
Mr. Meadows.--vote for it?
Mr. Spiro. I don't believe so.
Mr. Meadows. Okay. So is your sworn testimony that it is
the Democrats' fault that it is not working?
Mr. Spiro. No.
Mr. Meadows. Then whose fault it is? You drafted it--you
know, I am just trying to figure out where the ----
Mr. Spiro. I think it's the--I think ----
Mr. Meadows. Let me just tell you, your testimony doesn't
line up with the facts and that is my concern. Are you aware
that out there on the Internet there is a way to game the
system that says what you do is you actually quit paying your
premiums in the fall and then you come back and you reapply in
January? Are you aware that that is on the Internet?
Mr. Spiro. No, I was not.
Mr. Meadows. Okay. Are the health insurers--Blue Cross Blue
Shield, are you aware that some people tried to game the system
as it relates to quit paying premiums because you are required
to continue to cover them even though they are not paying the
premium?
Mr. Giesa. Yes. The Blue Cross Blue Shield Association
plans are familiar with that problem.
Mr. Meadows. How about you, Mr. Carlson? Are you familiar
with that?
Mr. Carlson. Yes. I think we would like to see some kind of
action to prevent that from happening.
Mr. Meadows. All right. Dr. Cohen, don't you think that
would be a good idea to not allow people to game the system and
actually fix that particular problem?
Dr. Cohen. So we have a program integrity unit that is
focused on gaming related to the marketplace in various facets,
and so we very much are focused on that.
Mr. Meadows. So how many people have been denied coverage
when they applied in January under your program integrity
program?
Dr. Cohen. So when someone applies through HealthCare.gov,
they ----
Mr. Meadows. How many people? Do you have a number?
Dr. Cohen. I'm sorry, a number for ----
Mr. Meadows. How many people have you stopped from gaming
the system who quit paying in the fall and go and apply at any
of these other insurers? How many of them have you actually
worked with the insurer to say, oh, by the way they are gaming
the system? How many people have you found?
Dr. Cohen. So obviously those are two different systems, so
the issuers are the ones who know are the folks who haven't
paid ----
Mr. Meadows. But they can't do anything about it. That is
the whole problem. I have talked to them. They can't do
anything about it. What they are doing is people were getting 3
months of free insurance and every year reapplying. And the
problem is they can't do anything about it. They need your
help.
Dr. Cohen. Absolutely. And that's why through the Fraud
Prevention Partnership we do activities like this where we have
information ----
Mr. Meadows. That is great. How many people have you caught
----
Dr. Cohen. We haven't ----
Mr. Meadows.--in fraud ----
Dr. Cohen. We haven't ----
Mr. Meadows.--and prosecuted?
Dr. Cohen. We haven't gotten there yet, but we are
definitely ----
Mr. Meadows. So the answer is zero?
Dr. Cohen. So--fair enough.
Mr. Meadows. No, I am asking you.
Dr. Cohen. Fair enough.
Mr. Meadows. What is the ----
Dr. Cohen. So, again ----
Mr. Meadows. How many have been prosecuted for fraud?
Dr. Cohen. Zero.
Mr. Meadows. Thank you, Dr. Cohen.
I recognize the ranking member.
Mr. Cummings. If there is fraud, we need to get to the
bottom of it. And I am sure we will, Dr. Cohen, won't we? Dr.
Cohen, we will get to the bottom of that, right?
Dr. Cohen. Absolutely. That's our--you know, we are focused
on making sure that the market is solid for the future, and
that includes making sure that folks are taking the rules
seriously, and we work closely with OIG, State regulators, and
others to make sure that folks are following the rules of the
road. And again, the program continues to mature. We will
continue to do that.
Mr. Cummings. Sadly--you know, I haven't practiced law for
many, many years. I have noticed that in all walks of life if
people can find a way to get around something, they do. It kept
me practicing law for many years, getting people out of trouble
where they had tried to get around a system. That does not mean
that the system gets thrown out.
Dr. Cohen. Correct.
Mr. Cummings. It doesn't mean that you deny people health
coverage. It doesn't mean that you just allow them to get
sicker and die. And die. So I say to--you know, I appreciate
that, but when we find fraud, we need to go after it ----
Dr. Cohen. Absolutely.
Mr. Cummings.--and deal with it, and so I agree. We need to
deal with it. All right.
Dr. Cohen. And I would add that on other avenues of fraud
where we've seen that in the marketplace, we have taken action
and whether it's taken action to rescind coverage and--proper
authorities are taking action there. Obviously, we are not that
authority, but we pass that along to those that can ----
Mr. Cummings. I am sure the word will get out after today,
am I right, Dr. Cohen?
Dr. Cohen. Absolutely.
Mr. Cummings. All right. Thank you.
Mr. Meadows. Dr. Cohen, I think what you are hearing is
that in a very bipartisan way ----
Dr. Cohen. Absolutely.
Mr. Meadows.--we need to address this very real problem
because it is affecting ----
Dr. Cohen. Understood.
Mr. Meadows.--the insured.
And so the chair recognizes the gentlewoman from New
Mexico, Ms. Lujan Grisham.
Ms. Lujan Grisham. Thank you, Mr. Chairman.
And actually, this was not my intended question but I am
going to take the privilege of having my 5 minutes and follow
up on the fraud issue. I mean, in fact, under the Affordable
Care Act I can tell you one instance where we so robustly dealt
with fraud and the credible allegations of fraud that the HHS
and CMS allowed the State of New Mexico, by virtue of that
provision, to cancel 100 percent of our behavioral health care
provider contracts under Medicaid. The following AG review
finds no credible allegations of fraud. Oh, and guess what?
Now, we have no access to a required insurance coverage for
behavioral health parity.
So this is a very important question that the chairman and
the ranking member are identifying, that we have to find how to
root out real fraud and how to be careful that these mechanisms
are not used by folks who really don't understand those
provisions. And this really does lead me to my questions.
Here is my opinion. I think that the Federal Government and
State governments are ill-equipped to deal with insurance
companies. And prior to the Affordable Care Act, given that I
ran the high-risk pool and also navigated health care for
constituents, I can tell you countless underutilization,
overutilization, denying of coverage, narrowing of networks,
contracts that are inappropriate, poor parity, inappropriate
discharge and transfer, inappropriate billing, surprise
billing, transfer billing. I could spend 20 minutes just on the
issues that insurance companies are dealing with and have been
dealing with, and I can tell you about lots of profits,
including the profits on the Affordable Care Act through the
Medicaid and Medicare components. So when we talk about losses,
I am not so sure that we are talking about them in the context
that is fair if you look at the entire health care system.
The problem is is that Congress--we want to repeal it or do
nothing to it, and in a health care system as complicated as
this is with groups and policymakers who are ill-equipped to
deal with the system as it is and particularly insurance
companies, it is untenable.
And so, in fact, I think people are paying more, and I
think in many ways, particularly in my State, are getting less
even though the baseline for the Affordable Care Act was to
provide consumer protections so that navigating and providing
access to insurance markets would be fairer, but we have just
cost-shifted outside of premiums and subsidies to out-of-pocket
costs and narrow networks where people don't have choice.
So, Dr. Cohen, I do think that CMS--so take this back to
CMS because, Mr. Chairman, they rarely hear this from me. Here
are some things that I think have worked. I do think that
adjusting the enrollment periods and making some changes to the
risk adjustor were helpful. They are not enough.
What more can you be doing without us? What more can you be
doing?
Dr. Cohen. I appreciate that, that we are taking steps
within our authority to strengthen the marketplace. I think
even just last week we announced taking an additional step
related to special enrollment periods and that we will be
looking at a process for pre-verification before ----
Ms. Lujan Grisham. Got it. I want more than that. So what
else outside of those can you do?
Dr. Cohen. So we are also encouraging States to discuss
with us, for example, thinking about using the 1332 pathway if
they want to create within the State a high-risk pool, for
example, so to come to us and have a discussion about what
folks can do at the State level for ----
Ms. Lujan Grisham. I actually really like that idea, and it
is an issue because the Affordable Care Act really wanted you
to move away from high-risk pools. And the States that did not
do that--New Mexico didn't, although we are in trouble if you
look at our finances, given our Medicaid expansion and related
issues, we are in trouble. So high-risk pools, I think, are
something that this committee, Mr. Chairman, ought to look at
again, and I would like more information.
Given that I have only got a minute left, I am going to
move to Chris Carlson. If you have heard, I don't think that
insurance companies have done their share of trying to address
this issue in a fair and productive way, and in fact I think
the ACA gives you many supports to do this.
Since March 5, 2009, since we began the debate that
preceded the passage of the Affordable Care Act, Aetna's stock
price has increased by more than 200 percent, despite the
increased profits that insurers are seeing in a variety of
markets, and the fact that we don't talk about the private
market versus the marketplace exchanges. And I keep reading
about carriers, which is also including my State where we are
pulling out of exchanges, leaving consumers without the
guaranteed access that they were promised under the Affordable
Care Act, I think that Congress did the health insurance, a
huge industry, a huge favor giving you thousands more
enrollees, thousands of opportunities to decide what kind of
marketplace you want to play in, and it maintained your access
to the Medicaid pool through managed care.
As a result of that, I am very interested in some of the
ideas that are emerging like in the Medicaid and Medicare
managed care option that we might think that certain minimum
participation is required in the exchanges if you are going to
keep those managed care protections. How do you feel about that
idea?
Mr. Carlson. Well, I'm not familiar with those specific
things that have been discussed so, you know, it's beyond kind
of my ability to comment on them. You know, I think from a
premium standpoint, which is what we're here to discuss, you
know, the actuaries are setting the premiums based on what a
cost to deliver the care under the exchanges. And, you know,
that's what we're focusing on.
Ms. Lujan Grisham. Well, I would like you to look at that.
And, Mr. Chairman, I am out of time, but the reality here
is is that our population wouldn't be as sick as they are in
the context in which you are providing care if they were
getting care through insurance companies in the first place.
Mr. Meadows. I thank the gentlewoman.
The chair recognizes the gentleman from Wisconsin, Mr.
Grothman, for 5 minutes.
Mr. Grothman. I remember years ago reading that the
Japanese were the leaders in the world in consuming
pharmaceuticals, but I look at a chart right now, and it looks
like the Americans have blown by them like we are something
like, what, 30, 35 percent more and Japan is second. Any of you
guys give me a shot as to why we are spending so wildly more on
pharmaceuticals than other countries? They are all looking at
each other. It's like that old show ``What's My Line?''
Mr. Spiro. I'll go.
Mr. Grothman. Okay, good.
Mr. Spiro. I think in this country drug companies charge
high prices because they can.
Mr. Grothman. Isn't part of it, though, that we are
prescribing more drugs than other countries?
Mr. Spiro. I think most of the increase in drug spending is
driven by price increases.
Mr. Grothman. Anybody else here comment on it, any other
wildly intelligent people? And when I look at people, you know,
the number of prescription drugs that they are taking is just
shockingly high compared to what they took to me subjectively
20 years ago. Is that true, all you smart people?
Dr. Cohen. So I'll say as the one physician on the panel --
--
Mr. Grothman. Good.
Dr. Cohen.--that medicine has evolved and it's miraculous.
I mean, we have cures for things that we can use
pharmaceuticals for that we never did before. But I think
prices for those pharmaceuticals are a real issue. I'm--I think
we need to find a place where we can both innovate as well as
make sure that we can have access to those lifesaving drugs
that I want to give as a doctor.
Mr. Grothman. You don't believe physicians are
overprescribing drugs?
Dr. Cohen. So I think that physicians are trying to do best
by their patient that is in front of them. I think that prices
are not something that are in the physician's control. I think
they are wanting to use the tools that are in front of them. I
will say as a doctor I want to help my patient that's in front
of me, and pharmaceuticals are one way to do that.
Mr. Grothman. Okay. And I will give you some more
questions, Dr. Cohen, since you spoke up.
Dr. Cohen. Sure.
Mr. Grothman. All those guys were dithering and dathering
and Dr. Cohen grabbed the mic.
Dr. Cohen. Yes.
Mr. Grothman. Dr. Cohen, for the Affordable Care Act-
complying plans, after a consumer pays their premium, what
services is an insurer required to provide for no additional
charge?
Dr. Cohen. So with no additional charge they are certainly
required to provide preventative services both for the
deductible with no cost-sharing. Certain plans decide to offer
more as sort of a benefit to the consumer, and we're seeing
folks do that to attract different types of populations.
Mr. Grothman. Okay. Is the Affordable Care Act required to
cover EpiPens?
Dr. Cohen. So formularies are decided by each of the
individual products. Obviously, they're required to cover
prescription drugs, but they are--you know, there are some very
specific rules about how those things are covered. So
epinephrine is covered. I couldn't say whether EpiPen is
covered and how it's covered by any individual plan.
Mr. Grothman. Okay. Well, do you know why it isn't covered,
why it wouldn't be automatic because it seems like something
that is pretty mandatory for people ----
Dr. Cohen. Yes, and again, I'd have to go back and look at
our rule. Again, epinephrine is covered. It's a matter of the
mechanism of delivery, I think, so that I would need to--and
I'm happy to follow up with additional details. But again, that
would probably need to come from the plans themselves about how
they are covering. We do set the rules of the road in terms of
the benchmark plan and what they require in terms of
pharmaceuticals for coverage.
Mr. Grothman. Okay. Well, we will throw this out to the
guys, too. Do you believe some parents would rather have the
option of choosing a plan that provides EpiPens at no
additional charge?
The answer is yes. It is almost a rhetorical question,
right? Yes.
Would you agree that this is a good example of letting a
consumer decide what kind of health care they need versus
Washington bureaucrats?
It is almost a rhetorical question, too.
Mr. Spiro. Well, if I could just point out, Congressman, in
the markets that existed before the Affordable Care Act,
prescription drug coverage was not a guarantee, and I can give
you a stat on that. About 20 percent of plans did not cover any
prescription drugs. So the Affordable Care Act, by including
essential health benefits and coverage for prescription drugs,
is actually increasing access to things like EpiPen.
Mr. Grothman. Any other comments? No. I guess not. Okay. I
will yield the final 10 seconds to my chairman.
Mr. Meadows. I thank the gentleman from Wisconsin. I thank
each of you for your testimony.
Dr. Cohen, you have been here before, and I appreciate your
testimony. And hopefully, in light of some of the questions
today that you see that there are a number of things that are
bipartisan in terms of our desire to get you to address.
Dr. Cohen. Yes.
Mr. Meadows. The loophole as I see it, it may have been
intentional. I don't know what it is, but the 90-day what I
would say is it does not allow the insurers to do what they
normally have done in the past is if you are not paying your
premium, then your coverage quits. The ranking member and I are
committed to making sure that you address that, and I sense
from your comment that, other than your normal fraud
prevention, that you are willing to address that, is that
correct?
Dr. Cohen. Within the confines of the statute in which we
are required to offer folks a 90-day grace period, we
definitely want to make sure that folks aren't gaming it beyond
what is ----
Mr. Meadows. But you know that they are, right?
Dr. Cohen. So that's what we want to understand, and that
we can't do until we put, as you're mentioning, the data
together.
Mr. Meadows. Okay. So let me ask it--here is my concern is
is that the front end, whether it is under HHS or CMS, it looks
like a car but when you open the hood, all the parts are not in
there. You know, sometimes there is not an air-conditioning
compressor. To give you a prime example, you know, you are
looking at fraud. We had somebody that actually contacted us
and said they were actually able to enroll through
HealthCare.gov on the exchange with a birth date of October 30
of 1124. That means that they were getting insured and they are
891 years old. Now, if they are able to do that under our
system right now, fraud prevention is less than robust,
wouldn't you agree?
Dr. Cohen. Well, so what I'd say is that fraud ----
Mr. Meadows. How do we insure someone who is 891 years old?
Dr. Cohen. Well ----
Mr. Meadows. Now, that is not quite as old as Methuselah --
--
Dr. Cohen. You know, that's pretty old.
Mr. Meadows.--but, you know, I don't know who they might
be.
Dr. Cohen. You know, I think we--we're balancing things
here. We don't want to make--we want to make sure that someone
who maybe had a fat thumb or a fat finger when they were typing
something in doesn't ----
Mr. Meadows. Well, but that is what ----
Dr. Cohen.--does not get insured.
Mr. Meadows.--I am saying. HealthCare.gov ----
Dr. Cohen. Yes.
Mr. Meadows.--should say this says you are 891 years old.
There is a high probability that you are not. Would you think
that there is something automated ----
Dr. Cohen. Yes. There is. There is. So ----
Mr. Meadows. Then how could they enroll?
Dr. Cohen. So when--well, when someone puts their
information into HealthCare.gov, we immediately do a check to
the data sources that we have. We go to SSA and say is this
person's Social Security number there? Is it right ----
Mr. Meadows. I know and I am real ----
Dr. Cohen. And if it's not ----
Mr. Meadows.--familiar because I am kind of dug in, Dr.
Cohen ----
Dr. Cohen. I know. I know you are.
Mr. Meadows.--and you know I have ----
Dr. Cohen. I know.
Mr. Meadows.--and so as we do that--the problem is it
doesn't go from you to the insurers. You know, there is this
huge wall between HHS and CMS and the insurers when it comes to
fraud, when it comes to enrollment. You know, there is a policy
decision and then there is an implementation decision, and the
two of you don't talk. And from what I am hearing, the
insurance companies want you to talk to them, they want you to
actually engage, and when they inquire, they get crickets. You
know, they hear nothing.
And so I guess in the nicest way, Dr. Cohen, I am asking
you on that 90-day issue that if they are seeing fraud ----
Dr. Cohen. Absolutely.
Mr. Meadows.--or anticipating ----
Dr. Cohen. We want to hear about it.
Mr. Meadows.--I need you to go with the full power of the
Federal Government and say we are not going to tolerate this.
Dr. Cohen. Absolutely.
Mr. Meadows. I think it is also appropriate for--perhaps
you probably can go in and figure out who is going to these
sites and how they are navigating the sites. You are aware that
it is on the Internet, right?
Dr. Cohen. We're very aligned in wanting to make sure we --
--
Mr. Meadows. You know it is on the Internet, right, Dr.
Cohen?
Dr. Cohen. About how to get around the ----
Mr. Meadows. Yes.
Dr. Cohen.--programs?
Mr. Meadows. Yes.
Dr. Cohen. Isn't everything on the Internet these days?
Yes, I believe you that it is there ----
Mr. Meadows. Okay. All right.
Dr. Cohen.--and I--we are aligned ----
Mr. Meadows. But you have seen it, right?
Dr. Cohen. We are here--we're aligned.
Mr. Meadows. You have seen it? Somebody on your staff has
seen it?
Dr. Cohen. Well, so we have a partnership where folks, you
know, and the insurers are often ----
Mr. Meadows. Just yes or no. Has anybody on your staff seen
the site ----
Dr. Cohen. I don't know. I don't know ----
Mr. Meadows. So you have not seen it?
Dr. Cohen. I have not. I'd be happy for you to share with
me ----
Mr. Meadows. Well, I am shocked. We will be glad to show it
to you.
So with that, if there is no further business before the
committee, the committee stands adjourned.
Dr. Cohen. Thank you.
[Whereupon, at 11:39 a.m., the committee was adjourned.]