[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





 
               FROM PREMIUM INCREASES TO FAILING CO-OPS:


                          AN OBAMACARE CHECKUP

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

                                HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON HEALTH CARE,
                   BENEFITS AND ADMINISTRATIVE RULES

                                 OF THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 13, 2016

                               __________

                           Serial No. 114-122

                               __________

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              MATT CARTWRIGHT, Pennsylvania
CYNTHIA M. LUMMIS, Wyoming           TAMMY DUCKWORTH, Illinois
THOMAS MASSIE, Kentucky              ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDA L. LAWRENCE, Michigan
RON DeSANTIS, Florida                TED LIEU, California
MICK MULVANEY, South Carolina        BONNIE WATSON COLEMAN, New Jersey
KEN BUCK, Colorado                   STACEY E. PLASKETT, Virgin Islands
MARK WALKER, North Carolina          MARK DeSAULNIER, California
ROD BLUM, Iowa                       BRENDAN F. BOYLE, Pennsylvania
JODY B. HICE, Georgia                PETER WELCH, Vermont
STEVE RUSSELL, Oklahoma              MICHELLE LUJAN GRISHAM, New Mexico
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, Subcommittee on Health Care, Benefits and Administrative 
                          Rules Staff Director
                 Sarah Vance, Professional Staff Member
                         Chris Hinkle, Counsel
                           Willie Marx, Clerk

                                 ------                                

     Subcommittee on Health Care, Benefits and Administrative Rules

                       JIM JORDAN, Ohio, Chairman
TIM WALBERG, Michigan                MATT CARTWRIGHT, Pennsylvania, 
SCOTT DesJARLAIS, Tennessee              Ranking Member
TREY GOWDY, South Carolina           ELEANOR HOLMES NORTON, Distict of 
CYNTHIA M. LUMMIS, Wyoming               Columbia
MARK MEADOWS, North Carolina         BONNIE WATSON COLEMAN, New Jersey
RON DeSANTIS, Florida                MARK DeSAULNIER, California
MICK MULVANEY, South Carolina, Vice  BRENDAN F. BOYLE, Pennsylvania
    Chair                            JIM COOPER, Tennessee
MARK WALKER, North Carolina          MICHELLE LUJAN GRISHAM, New Mexico
JODY B, HICE, Georgia                Vacancy
EARL L. ``BUDDY'' CARTER, Georgia



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 13, 2016....................................     1

                               WITNESSES

Mr. Kevin Counihan, Chief Executive Officer of the Marketplace 
  and Deputy Administrator and Director, Center for Consumer 
  Information and Insurance Oversight, Centers for Medicare and 
  Medicaid Services
    Oral Statement...............................................     3
    Written Statement............................................     6
Linda J. Blumberg, Ph.D., Senior Fellow, The Urban Institute, 
  Health Policy Center
    Oral Statement...............................................    19
    Written Statement............................................    21


     FROM PREMIUM INCREASES TO FAILING CO-OPS: AN OBAMACARE CHECKUP

                              ----------                              


                        Wednesday, July 13, 2016

                  House of Representatives,
         Subcommittee on Health Care, Benefits and 
                               Administrative Rules
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 3:00 p.m., in 
Room 2247, Rayburn House Office Building, Hon. Jim Jordan 
[chairman of the subcommittee] presiding.
    Present: Representatives Jordan, Walberg, DesJarlais, 
Meadows, Walker, Hice, Carter, Cartwright, DeSaulnier, and 
Lujan Grisham.
    Mr. Jordan. The Subcommittee on Oversight and Government 
Reform on Health Care, Benefits, and Administrative Rules will 
come to order.
    Without objection, the chair is authorized to declare a 
recess at any time.
    Welcome, Mr. Cartwright, and welcome to our witnesses. We 
will get to you in just a moment. You know how this works. 
You've done this many times, opening statements, and then we'll 
get your testimony, and then we'll get right to our witnesses.
    Just about everything stated about ObamaCare when it was 
passed has turned out to be false. You like your doctor; you 
can keep your doctor. False. You like your plan; you can keep 
your plan. That turned out to be false. Premiums are going to 
go down, we were told. That turned out to be false. Premiums 
are going to go down an average of $2,500. Of course, that 
turned out to be false. The Web site will work, we were told. 
That turned out to be false. The Web site is secure. That was 
false too at the time. Deductibles will decrease. We found out 
that wasn't accurate either. And, of course, we were told 21 
million people would get insurance under the exchange. Now 
that's been revised down to almost half, 11 million Americans. 
And, of course, we were told the CO-OPs were going to work. 
Just yesterday, Illinois' CO-OP folded. That's the fourth one 
since May. That's 16 now out of 23. That's after the 
administration spent $2.4 billion setting up nearly two dozen 
CO-OPs. Over $1.6 billion in Federal loans have gone to the 
failed CO-OPs, money that probably will never be recovered. 
More closures are expected. My guess is every single one of 
these, every single one, all 23, are ultimately going to fail. 
And that's why we're having this hearing today, to just 
underscore the simple fact that it's not only just CO-OPs. It's 
not only some of the things--it's just this law has been a 
complete failure. And the American people know it. Business 
owners know it. I think insurance companies know it. And we're 
looking forward to hearing from our witnesses today on the CO-
OP issue and other issues related to ObamaCare or, as some call 
it, the Affordable Care Act.
    So I want to thank our witnesses for being here, and with 
that, I would now recognize the ranking member, Mr. Cartwright, 
for an opening statement if he has one.
    Mr. Cartwright. Thank you, Mr. Chairman.
    And I'd like to thank our witnesses for taking the time to 
be with us today. I hope the committee uses this hearing as an 
opportunity to have a meaningful, productive discussion about 
the ACA, what aspects of the law are working, areas still in 
need of improvement. But I've been on this committee long 
enough and this subcommittee long enough to know that this 
hearing was called to give my colleagues in the majority an 
occasion again to attack the law. In fact, just the one-sided 
title of today's hearing says it all, ``From Premium Increases 
to Failing CO-OPs.'' A fair approach might be titled ``From 
Improved Access to Health Care to Historically Low Uninsured 
Rates'' or ``From Reducing Medical Debt to Slowing National 
Health Expenditures.'' But, of course, my Republican colleagues 
don't want to highlight the ACA's successes, only its flaws. 
That's the kind of partisan political hearing they believe 
serves their interests in an election year, but another 
partisan hearing doesn't serve the public interests because 
there are some accomplishments of the ACA that the Republicans' 
partisanship ignores.
    Because of the ACA, 20 million people who used to be 
without insurance now have access to quality, affordable 
healthcare coverage. And what that means at home on Main Street 
is that your hospitals, your local hospitals, are much less 
likely to fold because they are not doling out as much 
uninsured care as they used to have to do. That's true in my 
district. We had two hospitals that failed after 2010 and 
before the implementation of the ACA.
    But here's another accomplishment. The uninsured rate in 
this country is at a historic low. That means there are fewer 
people in this country than ever before that have to worry 
about what happens if they get sick, they can't afford to go to 
the doctor, or can't afford to pay for for their medications 
out of pocket.
    And here are some more accomplishments. Because of the ACA, 
people with preexisting medical conditions can no longer be 
denied access to coverage because of their health. Hospitals 
and States that expanded Medicaid have seen their rates of 
uncompensated care decline, as I just mentioned. Those States 
have also seen a decline of medical debt. So many of the people 
that declare bankruptcy in this country had to do so because 
medical debt put them under water.
    But even with all these accomplishments of the ACA, my 
Republican friends have chosen to hold more than 60 votes 
attempting to repeal or undermine this law. And we all know 
there are aspects of the ACA that still need a lot of work. For 
example, CO-OPs have faced daunting challenges, just as any 
startup businesses would. We have to remember the reason that 
CO-OPs were created: to inject much-needed competition into the 
insurance market so that rates can stay low for consumers. 
Instead of taking steps to help support the CO-OPs, however, 
the Republican-led House, has voted multiple times to slash 
that program's funding. There are certainly other aspects of 
the law that could be improved. I'm looking forward to hearing 
from our witnesses about how we can make the ACA better, how we 
can make it stronger and work for all Americans.
    But I'd like to close by focusing on why we passed this law 
in the first place. In June 2015, Brent Brown of Wisconsin 
wrote the President a letter thanking him for enacting health 
reform. Mr. Brown who has, quote, ``voted Republican for the 
entirety of his life,'' unquote, but who also had a preexisting 
medical condition that made it impossible for him to get health 
insurance before the ACA, he wrote, quote, ``I would not be 
alive without access to care I received due to your law,'' 
unquote. Mr. Brown's letter is a reminder to all that the ACA 
is about helping real people live better, healthier lives, and 
it is working, unlike the harmful proposals recently put 
forward under the Speaker's Better Way plan, which would roll 
back healthcare protections for women, raise medical costs for 
seniors, and cut long-term Medicaid funding to the detriment of 
patients and medical providers.
    After 6 years, Republicans still have not proposed a viable 
legislative alternative to the Affordable Care Act. I would 
urge my colleagues to keep this perspective in mind during 
today's hearing.
    Mr. Chairman, I yield back.
    Mr. Jordan. I thank the gentleman.
    We'll hold the record open for 5 legislative days for any 
members who would like to submit a written statement, and we'll 
now recognize our witnesses.
    I'm pleased to welcome Mr. Kevin Counihan, Deputy 
Administrator and Director of the Center for Consumer 
Information and Insurance Oversight at the Center for Medicare 
and Medicaid Services, U.S. Department of Health and Human 
Services; and Ms. Linda Blumberg, Ph.D., senior fellow at the 
Urban Institute.
    Welcome, again, to both of you.
    And pursuant to committee rules, all witnesses will be 
sworn in before they testify. Please raise your right hand, if 
you would stand and raise your right hand, excuse me.
    Do you solemnly swear or affirm that the testimony you are 
about to give will be the truth, the whole truth, and nothing 
but the truth, so help you God?
    Let the record show that both witnesses answered in the 
affirmative. We will now start with--we'll just go right 
across, Mr. Counihan and then Ms. Blumberg.

                       WITNESS STATEMENTS

                  STATEMENT OF KEVIN COUNIHAN

    Mr. Counihan. Good afternoon, Chairman Jordan, Ranking 
Member Cartwright, and members of the subcommittee. Thank you 
for the opportunity to provide an update on the Affordable Care 
Act.
    I joined CMS nearly 2 years ago after over 30 years serving 
various roles in the health insurance industry. At CMS, my 
focus is on the day-to-day operation and management of the 
Marketplace and other programs that help consumers gain access 
to affordable, high-quality healthcare coverage. Thanks to the 
Affordable Care Act, millions of Americans who were previously 
uninsured now have access to affordable, high-quality health 
care. An estimated 20 million more people now have coverage 
because of the law, and at 9.1 percent, the uninsured rate in 
America is the lowest it has been on record. Preexisting 
conditions no longer preclude individuals from gaining health 
insurance, and lifetime and annual dollar limits are now a 
thing of the past. Tens of millions of Americans have new 
access to preventive services with no cost sharing, and 
consumers now have the comfort of knowing that if their 
employment changes or if they lose coverage for any reason, 
they can purchase affordable coverage through the Marketplace.
    The Affordable Care Act has also resulted in cost savings 
for both consumers and taxpayers. The law requires health 
insurers to provide consumers with rebates if they spend too 
much of a consumer's premium on advertising and marketing 
instead of health benefits and quality care. Since this 
requirement has been put in place in 2011, almost $2.9 billion 
in total refunds have been paid to millions of consumers. And 
before the Affordable Care Act, insurance companies in many 
States were able to raise rates without explaining their 
actions. The law brought unprecedented transparency into health 
insurance pricing through the rate review process, and in 2015, 
rate review led to an estimated $1.5 in savings for consumers.
    Since the Affordable Care Act became law, healthcare prices 
have risen at the lowest level in 50 years. The Congressional 
Budget Office has estimated that the law will generate 
substantial deficit savings that grow over time, translating to 
a total savings of more than $3 trillion over the next two 
decades.
    One critical provision of the Affordable Care Act is the 
creation of the Health Insurance Marketplace. The Marketplace 
was designed to foster competition, facilitate comparison 
shopping, and ensure affordability. Three years in, the Health 
Insurance Marketplace is a competitive, growing, and dynamic 
platform, a transparent Marketplace where issuers compete on 
price and quality, and people across the country are finding 
health plans that meet their needs as well as their budgets. 
Every year, we encourage consumers to return to the marketplace 
and shop for the plan that is best for them and their family. 
For 2016, marketplace coverage, approximately 67 percent of 
marketplace consumers selected a new plan and saved an average 
of $42 a month, or $500 a year, in premium costs.
    In addition to providing consumers with a simple way to 
compare and find the plan that's right for them, the Affordable 
Care Act also includes tax credits to help make that coverage 
more affordable. Roughly 85 percent of marketplace consumers 
receive these tax credits, and for 2016 coverage, their average 
monthly premium increased by only 4 percent or just $4. After 
taking these tax credits into account, nearly 70 percent of 
healthcare.gov consumers had a coverage option for $75 a month 
or less, and 74 percent had an option for $100 a month or less. 
Importantly, consumers say they can now afford primary care, 
prescription drugs they could not afford before the Affordable 
Care Act, and a majority are satisfied with their coverage.
    While we are encouraged by the progress we have made, we 
know that implementation of the Affordable Care Act is a 
multiyear process. As CMS, our efforts to improve all of our 
programs, including the marketplace, are an ongoing commitment.
    This year among numerous other efforts, we are taking steps 
to enhance our outreach to young adults who are more likely to 
remain uninsured. We have also strengthened requirements for 
enrollment through special enrollment periods, ensuring that 
this tool is available for consumers when they need it, while 
preventing misuse and abuse.
    And we aren't the only ones that are learning. Since the 
Affordable Care Act became law, I've seen an unprecedented 
amount of innovation in the private sector. The marketplace is 
increasingly serving as a laboratory for strategies that are 
helping improve care and control costs. For example, one issuer 
is creating plans based on the different needs of unique 
geographic communities, bringing together interdisciplinary 
teams focused on improving care for high-risk populations in 
particular communities.
    We look forward to continuing to work with Congress and 
other key stakeholders on ways to strengthen our operations to 
ensure the American people have access to affordable coverage 
and high-quality health services. Using the tools created by 
the Affordable Care Act, we are all working toward a healthcare 
delivery system that works better for everyone, where care is 
improved through better coordination and integration, where we 
spend our healthcare dollars in smarter ways, and where our 
system is person-centered and Americans are healthier.
    I know you have a number of questions, and I am happy to 
answer them to the best of my ability.
    [Prepared statement of Mr. Counihan follows:]
    
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    Mr. Jordan. Thank you, Mr. Counihan.
    Ms. Blumberg, you are now recognized.

             STATEMENT OF LINDA J. BLUMBERG, PH.D.

    Ms. Blumberg. Mr. Chairman, Ranking Member Cartwright, and 
members of the committee, thank you for the opportunity to 
testify before you today. The views that I express are my own 
and should not be attributed to the Urban Institute, its 
funders, or its trustees.
    The Affordable Care Act can claim substantial successes, 
including health insurance coverage for 20 million additional 
people through Medicaid and private nongroup health insurance 
and the elimination of discrimination related to health status 
in small employer and nongroup markets. The law also has 
contributed to the slowdown in national health expenditure 
growth and has created significant price competition in many 
nongroup health insurance markets. At the same time employer 
coverage rates have remained steady, and there have been no 
adverse employment affects.
    No one should expect one piece of legislation to address 
all problems in the Nation's complex healthcare system, nor 
should one expect the full promise of the legislation to be met 
in the first few years of reform. Now is the appropriate time 
to assess remaining issues and to work seriously to improve 
upon these without sacrificing the many gains already achieved. 
I am going to address two areas where public policies could 
make further strides toward ensuring access to adequate 
affordable health care regardless of health status or income.
    First, some geographic areas have had less success 
engendering strong price competition in their nongroup 
insurance markets. Second, while the ACA has improved 
affordability for many families, some still face high 
healthcare expenses relative to income given premiums and out-
of-pocket costs. In many larger States, the ACA has led to 
strong insurer participation in nongroup insurance markets and 
true price competition for the first time, replacing the 
previously rampant insurer competition for the best healthcare 
risks. Our research shows that areas with low premiums and low 
premium growth tend to have more insurers competing, larger 
State populations, and competition from provider-sponsored and 
formerly Medicaid-only insurers.
    Nationally, 48 percent of the population lives in rating 
areas where the lowest cost silver premium in the marketplace 
either decreased or increased by less than 5 percent in 2016. 
However, 36 percent of the population lives in areas that 
experienced increases of 10 percent or more. Thus the dynamics 
at play are uneven both across the country and across areas 
within individual states.
    We need to design approaches that improve competition where 
it is missing without disrupting competition where it has been 
successful. Competition could be strengthened by reducing 
insurer and/or provider market power, adverse selection into 
the nongroup insurance market, and insurance policies not 
compliant with ACA standards. Strategies, such as continuing 
the reinsurance program or introducing a Medicare-based 
qualified health plan, can be useful to address these problems, 
but markets vary considerably, as will the appropriate types of 
intervention. The attraction of the ACA's private sector focus 
was its potential to create real economic competition, yet that 
approach also allows for instances of continued local 
variability.
    Next, healthcare affordability remains an issue for some. 
While the share of families reporting difficulty paying for 
medical bills or having unmet medical need due to cost has 
decreased significantly since 2013, not all families have 
enjoyed similar gains. Poor adults in 19 States are ineligible 
for Medicaid because their State governments did not choose to 
expand eligibility despite the strong State budgetary 
advantages of doing so. Further incentives or other strategies 
may be required to bring all States into the expanded program. 
Financial assistance through marketplace tax credits and cost-
sharing reductions are generous for those with incomes below 
200 percent of the Federal poverty level, but assistance 
decreases markedly above that level, leaving adequate coverage 
for some still out of financial reach.
    Healthcare costs have grown much less than originally 
anticipated when the ACA was implemented. Using just a portion 
of the systemwide savings that have resulted from that lower 
growth, we could improve upon the ACA subsidies to ameliorate 
the remaining affordability gaps and further reduce the number 
of uninsured Americans.
    In contrast, repealing the ACA would by 2021 increase the 
number of uninsured people by 24 million, reduce private 
insurance coverage by over 9 million people, increase State 
government spending, and substantially reduce the amount of 
medical care delivered to low and modest income families.
    The House Republicans' plan combines repeal of the ACA with 
the introduction of policies that would substantially reduce 
assistance to low- and middle-income individuals and would 
undermine the ACA's many advances in improving access to care 
for people with health problems. The ACA's underlying framework 
increases the sharing of healthcare costs between the healthy 
and the sick. The House Republicans' proposed strategies, such 
as continuous coverage requirements, elimination of benefit 
standards, sale of insurance across State lines, and individual 
health pools, would place much higher financial burdens on 
those with current or past health problems. And while such 
strategies can create savings for those who are healthy at a 
given time, they discount the fact that we tend to develop more 
health problems as we age and that even a 20-something who 
appears perfectly healthy one day can wake up the next to find 
his luck has changed horribly. Focusing on how someone benefits 
financially by being insured in any given year is to 
misunderstand the inherent nature and purpose of insurance and 
seriously underestimates the value of continuous access to 
adequate affordable coverage regardless of circumstances.
    With that, I'm happy to answer any questions you may have.
    [Prepared statement of Ms. Blumberg follows:]
    
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    Mr. Jordan. Thank you, Ms. Blumberg.
    The chair recognizes the gentleman from Tennessee, Dr. 
DesJarlais.
    Mr. DesJarlais. Thank you, Mr. Chairman, and thank you, 
panel, for being here.
    Mr. Counihan, let's start with the CO-OPs. How many CO-OPs 
were initially created under the Affordable Care Act?
    Mr. Counihan. Initially, we had granted 24. One never 
started, so in all practice, 23.
    Mr. DesJarlais. And how many are still active today?
    Mr. Counihan. Seven.
    Mr. DesJarlais. Seven. Okay. And we had a hearing in 
February, and at the time, I think there were 11, so there has 
been 4 more that have failed since February?
    Mr. Counihan. Yes.
    Mr. DesJarlais. About how many individuals have been 
impacted by the CO-OP closures?
    Mr. Counihan. I'm going to have to get back to you on that.
    Mr. DesJarlais. I have 870,000. Does that sound right?
    Mr. Counihan. I need to confirm that one.
    Mr. DesJarlais. Okay. If you and your family were going to 
buy insurance through one of the remaining CO-OPs, would you 
think that maybe you should be warned that two-thirds of these 
CO-OPs have closed in the past year or so?
    Mr. Counihan. Yeah. I do not, and I'll tell you why. The 
CO-OPs are like any other insurance company that are certified 
by a State division of insurance. They have to have the same 
actuarial standards, the same capital standards. They have to 
meet a solvency requirement. They have to meet a variety of 
certain circumstances. If the State certifies those issuers, if 
the State certifies that CO-OP, that feels to me that they 
should be on a level playing field with any other issuer.
    Mr. DesJarlais. Okay. Well, President Obama said if you 
like your plan, you can keep it. But, apparently, if you get a 
CO-OP, that's not necessarily the case. You got a two-out-of-
three chance that you're going to lose your insurance. So 
you're saying you would still recommend people and their 
families to go to the CO-OPs to obtain insurance?
    Mr. Counihan. I would say that, if they are certified and 
licensed by the State, which they are, that they should be 
judged on the same basis as any other, and I think it would be 
unfair not to.
    Mr. DesJarlais. The two-thirds that have failed, they 
weren't certified and licensed by the State?
    Mr. Counihan. As you know, sir, this is a challenging 
business. The CO-OPs are not the first issuers to have felt the 
challenge of that or to have closed.
    Mr. DesJarlais. Well, you painted a pretty rosy picture of 
the successes of the healthcare law. Our chairman tended to 
disagree. Mr. Cartwright said that we're enjoying a 
historically low uninsured rate. What is the historical low, 
and what year was that noted or documented?
    Mr. Counihan. Well, as of 2015, the uninsured rate is 9.1 
percent. That was a drop from 16 percent before the Affordable 
Care Act.
    Mr. DesJarlais. And what's the historical low? Do we know? 
I'd asked this question before dating back to 1950, and no one 
knew, and they were supposed to get back to me, but they never 
did.
    Mr. Counihan. I will need to do the same, sir.
    Mr. DesJarlais. Okay. So how many people are uninsured now 
in America? What percentage?
    Mr. Counihan. 9.1 percent.
    Mr. DesJarlais. Is that taking into account the people who 
have lost their insurance because they couldn't afford 
premiums? Has there been any study? I guess I would like to 
know where we got this data. The chairman mentioned that 11 
million had insurance. You're saying 20 million. What did 
President Obama say was uninsured when we needed this law?
    Mr. Counihan. Well, I think the difference there between 
what the chairman had quoted and what I had quoted was the 
difference is Medicaid expansion. So the 20 million that I 
quoted, for example, includes marketplace enrollment plus 
expanded Medicaid enrollment.
    Mr. DesJarlais. So the average person has not really been 
helped then by the healthcare law that has to pay for it with 
the increased deductibles and increased premiums. We don't 
really have a study showing how many are just opting to pay the 
tax that the Supreme Court ruled was not a penalty but a tax. 
Do we have any studies indicating how many people have just 
opted out of the insurance and chosen to pay the tax?
    Mr. Counihan. Well, I think it's actually the opposite. I 
think what we're finding is that the average American has 
completely benefitted from this law, and I'll tell you how. A 
is through the elimination of preexisting conditions. B is 
through the elimination of lifetime caps. C is there are no 
gender premium differentials that there were. There is expanded 
coverage. It's more affordable than before.
    Mr. DesJarlais. I get the talking points. You're in a 
parallel universe with what I'm hearing. We hear different 
things back home, but I appreciate and respect your right to 
have an opinion. I just don't know that those can be backed on 
facts.
    Now, we had $1.6 billion in loan money that was given out. 
Dr. Mandy Cohen was here before, and she said that we're going 
to recoup this. I asked, why didn't they just call them grants, 
because I don't think we have any real chance of getting them 
back? Now she said that they were very much loans, and we 
expect to get these taxpayer dollars back from these failed CO-
OPs. And at the time, she had just started. Can you give us an 
update of how successful the recoupment efforts have been?
    Mr. Counihan. So the Department of Justice is engaged in 
the recoupment efforts. I cannot speak for them with respect to 
their progress. Happy to have somebody from DOJ come to report.
    Mr. DesJarlais. A half year later, we still have no update 
on how we're going to recoup the $1.6 billion to these failed 
CO-OPs. This is taxpayer money, and they have a right to know.
    Mr. Counihan. As I said, the way taxpayer, these moneys can 
be received, how they can be recovered, is typically when 
administrative expenses are paid and runout claims are fully 
satisfied. For most of these wind-downs, that has not occurred 
yet, so it's really premature to be able to speculate.
    Mr. DesJarlais. So I'm just about of time, but I guess I 
tend to agree with the chairman. We have seen 24 turn to 23 to 
11. Now we have seven, and you're telling people they should 
still go use these CO-OPs with confidence that their family can 
get insurance, and they're not going to lose it, and then 
you're also trying to tell them that we're going to recoup the 
money from all these failed businesses. I have an idea we'll 
probably be having this hearing again in a few months, and I 
anticipate, unfortunately, the chairman's predictions will come 
true, but we'll see where we're at. I would like to get the 
data on the numbers where you're saying 20 million are now 
uninsured, and I'd like to see how many people have lost their 
insurance because that's what I tend to hear back home, not the 
successes that the both of you have laid out for us today.
    I yield back.
    Mr. Jordan. I thank the gentleman, and I now recognize Mr. 
Cartwright for 5 minutes.
    Mr. Cartwright. Thank you, Mr. Chairman.
    In the 6 years since the ACA was enacted, as I mentioned, 
Republicans have held over 60 votes to repeal or undermine the 
law, but they still haven't proposed a viable legislative 
alternative. Now, the Speaker recently unveiled his, ``Better 
Way'' plan for health care. The title of this plan is something 
of a misnomer because it is the wrong way, not a better way. A 
Better Way plan is short on specifics but contains many ideas 
that really would be harmful to working Americans.
    And, Dr. Blumberg, I'd like to ask you, are you familiar 
with Speaker Ryan's Better Way plan?
    Ms. Blumberg. Yes, I did read the materials that they 
released.
    Mr. Cartwright. And you commented on this in your 
testimony. Do you think it's a viable alternative to the ACA?
    Ms. Blumberg. Well, it is not an alternative to the ACA in 
terms of an equivalent way to expand coverage and to reduce 
costs for individuals--regardless of their health status, to 
make that coverage adequately accessible.
    Mr. Cartwright. One element of the Speaker's plan is to 
encourage the use of these health savings accounts combined 
with high-deductible health plans, and according to the plan, 
this is supposed to help patients understand the true cost of 
care.
    Dr. Blumberg, isn't it true that this change could increase 
the out-of-pocket costs for middle class Americans?
    Ms. Blumberg. Well, it certainly increases out-of-pocket 
costs when individuals move into a health savings account 
combined with a high-deductible health plan. They are designed 
to be, at this point anyway, to be combined with a high-
deductible plan. Individuals then have larger cost-sharing 
requirements, but they have certain tax advantages which tend 
to accrue most greatly to those who are high income, so they 
are--the health savings account itself can act, if not used for 
health purposes, as an additional IRA, which is beneficial for 
the high income. The problem comes in for those individuals who 
don't get the tax advantages and don't have the extra money to 
put into the HSAs. They are certainly disadvantaged, and it 
tends to pull healthy people out of the insurance market where 
they would otherwise be sharing healthcare costs with those 
with healthcare problems.
    Mr. Cartwright. Okay. So it's the Better Way plan for 
higher-income people, is it?
    Ms. Blumberg. Well, a lot of components of the Better Way 
approach would be most advantageous to those with higher 
incomes and those very much in particular who are healthy at a 
given point in time.
    Mr. Cartwright. Well, do you think the people who couldn't 
afford health insurance before the ACA was enacted really need 
help understanding the true costs of their medical care?
    Ms. Blumberg. Well, for the lowest income population, those 
that are assisted through the Medicaid expansion under the 
Affordable Care Act and those who receive the most generous 
assistance under the marketplaces really are in situations 
where having higher out-of-pocket costs are going to very much 
reduce the amount of care that they receive. And contrary to 
popular belief, individuals are not very good at discriminating 
between care that is necessary and care that is unnecessary. So 
what happens is, when you increase their out-of-pocket costs, 
particularly for the modest income, they use much less care, 
and a lot of it is necessary care.
    Mr. Cartwright. The Speaker's plan would also irreparably 
harm Medicaid. First of all, it would prevent any more States 
from expanding Medicaid as provided by the ACA. It would also 
force States to choose between receiving Medicaid payments as a 
per capita allotment or a block grant.
    Now, Dr. Blumberg, what would these changes mean for people 
who rely on Medicaid for their health coverage?
    Ms. Blumberg. Well, in both cases, regardless of what the 
States chose, the amount of Federal dollars going to States for 
the Medicaid population would be reduced over time. There would 
be both initial reductions because of changes in matching 
rates. There would also be--the intent is to lower the rate of 
growth in Federal dollars going to States. The biggest concern, 
while there's danger for sure with the per capita caps, the 
block grant, as I read it in the materials that were released, 
suggests that the only mandatory populations that would 
continue to be required that States provide Medicaid coverage 
for under the block grant approach would be the elderly and the 
disabled.
    Mr. Cartwright. Okay. Now, the Speaker's plan would once 
again allow insurance companies to discriminate by charging 
higher premiums based on health status, sex, and age, and it 
would eliminate caps on out-of-pocket expenses.
    Mr. Counihan, aren't these the types of abusive insurance 
practices that the ACA protects against?
    Mr. Counihan. Those are good examples of dramatic 
improvements that the Affordable Care Act brought.
    Mr. Cartwright. The Speaker's plan would also harm seniors 
by raising the Medicare eligibility age to age 67. Now, the 
Center on Budget and Policy Priorities said this about the 
Speaker's plan, ``Overall, the plan would represent an enormous 
step backward for our country, reversing historic progress in 
expanding health coverage under the Affordable Care Act.''
    Dr. Blumberg, do you agree with that statement?
    Ms. Blumberg. I do.
    Mr. Cartwright. I don't know why anybody would want to go 
back to the bad old days before the ACA, and that's apparently 
exactly what the Republicans are trying to do with this 
misguided plan.
    I yield back, Mr. Chairman.
    Mr. Jordan. I thank the gentleman.
    I now recognize the gentleman from Georgia, Mr. Hice, for 
his questions.
    Mr. Hice. Thank you, Mr. Chairman.
    I respect my colleague, but I thought we were here to 
discuss the Affordable Care Act and ObamaCare, and I have 
anything to say about it other than the false belief that 
somehow it has ushered us into the good old days. This has been 
nothing but a disaster and continues to be a disaster. Premiums 
and deductibles are raising. I hear it every time I go home. 
People can't afford it. Insurers are reducing plan offerings. 
CO-OPs, as we have already discussed, are imploding. We have 
administrative requirements that are ballooning to the tune of 
$273 billion in administrative expenses attributable to 
ObamaCare, which amounts to hundreds and thousands of hours of 
paperwork to try to keep up with the requirements. The 
enrollment is skewed, going down. I don't see how in the world 
this has ushered us into the good old days. It is absolutely a 
disaster every way I can possibly look at it.
    Mr. Counihan, you mentioned today that, because of the 
Affordable Care Act, that a lot of people have insurance 
because of ObamaCare. But what you did not mention, in all 
honesty, is that these folks are older; they're sicker; they're 
more expensive to insure even than the administration ever 
anticipated. As a result, we now have insurers who are rising 
the premiums because it is so expensive to insure these folks. 
Kaiser predicts that premium increases this year are going to 
be steeper than they have seen so far. And it has already just 
gone up and up and up since the beginning. The former CMS 
Administrator recently predicted the same thing.
    We have high deductibles that, quite frankly, are just 
making insurance coverage less affordable and less accessible 
to the people. This is anything but an Affordable Care Act. 
People can't afford it. I hear it constantly, not only from 
people in my district but from small rural hospitals: 17 
percent of the people have a deductible over $5,000. They can't 
afford the deductible. They go to the hospitals, and hospitals 
end up never getting paid, and they are going under.
    We have already mentioned ObamaCare promised to keep the 
doctors, keep your health plan, and we, of course, all know 
that that simply has not been the case. Insurers have limited 
their provider networks trying to cover the cost of this thing. 
Brian Webb of the National Association of Insurance 
Commissioners recently said that the individual market is a 
mess. I mean, how in the world can we look at this in any other 
possible honest way but to say, ``This is a disaster''? And I 
really, Mr. Chairman, I really don't have any questions. I'm 
just flabbergasted that we are still in any way trying to 
defend this and trying to continue to push it on the American 
people, rather than face the reality. We have fewer plans. We 
have fewer doctors. We have reduced choice. And I guess my only 
question, is this the legacy of ObamaCare? I don't see any 
other way out of it.
    Mr. Chairman, I thank you for holding this hearing.
    And I yield back.
    Mr. Jordan. I thank the gentleman.
    I couldn't agree more with his sentiments on the disaster 
that this legislation has turned out to be.
    Mr. Counihan, is the CO-OP program in ObamaCare a complete 
failure?
    Mr. Counihan. No, not in my view, and I'll tell you why.
    Mr. Jordan. Okay. Tell me why or define to me what would be 
a complete failure if the facts--let me just recite the facts 
again. Twenty-three programs were given money just 2 years ago, 
and 16 of them have already failed. The seven that haven't 
failed yet, four are on corrective action plans. Isn't that 
accurate?
    Mr. Counihan. No. Six are on corrective action plans.
    Mr. Jordan. So the six that haven't failed--six of them are 
on--of the seven that haven't failed, six of them are on 
corrective action plans?
    Mr. Counihan. Correct.
    Mr. Jordan. Oh, wow, so it's worse than I thought. Because 
of the last four that failed, all those were on corrective 
action plans, and they all failed here, one in Ohio just a few 
months ago. So 23 started. Sixteen have failed. Of the 
remaining seven, six are on corrective action plans. Every 
other CO-OP that was put on a corrective action plan did, in 
fact, actually then later fail. $2.4 million allocated--$2.4 
billion allocated; $1.5 given out and now lost. And yet you 
don't think that defines a complete failure?
    Mr. Counihan. Let me just if I can, Mr. Chairman----
    Mr. Jordan. Tell me what would be a complete failure. Let 
me ask this way, if all 23 actually fail, would that be a 
complete failure, because that's where this is headed----
    Mr. Counihan. I think we're seeing with the CO-OP program, 
as we are with other parts----
    Mr. Jordan. No. Answer that question. If all 23 fail, would 
that be a complete failure?
    Mr. Counihan. I think if all 23 fail, it underscores how 
challenging the health insurance business is.
    Mr. Jordan. That's not what I asked you. Would it be a 
complete failure if every single CO-OP that you guys authorized 
just 2 years ago failed? Would that be a complete failure? 
Because we all know that's where it's headed. Sixteen have 
already failed. Of the seven left, six are on corrective action 
plans, and they're going to fail too. So when all 23 fail, 
would that be a complete failure of the CO-OP program under 
ObamaCare?
    Mr. Counihan. As I said, I think it underscores how tough 
this business is. I think it underscores how challenging it is 
it being a small business----
    Mr. Jordan. Mr. Counihan, you're a witness here today, and 
I'm asking you to answer one question. If they all fail, if 
they all fall apart, like we know they're going to, is that a 
complete failure? Just give me a yes or no to that one. That's 
all I'm asking you.
    Mr. Counihan. I'm just, Mr. Chairman, it underscores again 
that this is a very tough business.
    Mr. Jordan. Is it a no? Is it a yes?
    Mr. Counihan. And, Mr. Chairman, I've worked for an 
insurance firm that was about the size of one of the larger CO-
OPs. We became successful, but I understand very, very 
specifically----
    Mr. Jordan. Are you saying some of these 16 are going to 
come back to life? They're not dead forever. They're going to 
miraculously revive and resurrect themselves? Is that what 
you're saying?
    Mr. Counihan. What I'm trying to say is the following.
    Mr. Jordan. Let me ask you this. Are you sitting here today 
and saying you're going to assure me that the seven left, that 
they're not going to fail? Those seven are going to keep 
working? They're going to be fine. Will you tell me that? Would 
you tell me that? Are they going to continue to be in 
operation? The seven that haven't failed yet, are they going to 
still be good when you come back here in a few months and we 
have this same kind of hearing?
    Mr. Counihan. Nobody could make that kind of prediction, 
sir, but let me tell you one of the reasons why. It's because 
there are so many variables that could impact the success of a 
business like that, most fundamentally claim costs. So, for 
example, if an issuer like a CO-OP has a very tough year----
    Mr. Jordan. We just heard from you, Dr. Blumberg, and the 
ranking member that ObamaCare is the greatest thing since 
sliced bread. We just heard that. And yet we have this 
phenomena in front of us. Sixteen of 23 have completely failed. 
And we know the other seven are going to fail. And yet you just 
all told us ObamaCare is the greatest thing in the world. And 
I'm just asking you, can we at least just focus on the CO-OP 
and say, if all 23 of those fail, that part of ObamaCare, at 
least that has to be a complete failure, right?
    Mr. Counihan. Yeah. As I've said, I've worked for a company 
that's one of the sizes of the larger CO-OPs. What can impact 
the business of a CO-OP----
    Mr. Jordan. I'm not looking for excuses. I'm just looking 
for an answer to that question. If they all fail, is it a 
complete failure?
    Mr. Counihan. What I'm trying to tell you, number one, is 
that the CO-OP program is not the whole Affordable Care Act. 
Number two is that it's a very, very tough low margin business. 
Number three is it deals with a lot of----
    Mr. Jordan. Do you know what the COOP program is, Mr. 
Counihan? It's one more thing that was promised when ObamaCare 
was first enacted that was going to be just so special, just 
like you all just had said earlier--well, one of the other 
things that was promised: ObamaCare passes, there will be no 
one without insurance. We know that's not the case because you 
even said it. There are still several million people that don't 
have insurance. One of the things we were promised when 
ObamaCare passed is 20 million people will use the exchange. We 
know that's not true because you all had to change the 
definition. You now say, well, it is 20 million, but it's the 
exchange plus Medicaid expansion. You totally changed the 
definition to meet that number.
    So, not to mention all the other--if you like your plan, 
keep it; like your doctor, keep it; premiums are going to go 
down--all those other things have turned out to be false as 
well. And all I'm asking you is one program, the CO-OP program, 
and you won't answer my question. It seems, by definition, if 
23 out of 23 fail, then you should be able to say that, of 
course, by definition is a complete failure.
    Mr. Counihan. Yeah. So let me tell you, sir, what the CO-OP 
program has done. The CO-OP program has provided more choice. 
It's provided more competition. It's helped consumers in a 
variety of different States, giving them opportunities that 
they may not have had before. If I may, sir, tell you something 
else. It's also given the opportunity to innovate. Several of 
these CO-OPs have introduced new types of care management 
programs that have been new in their markets and new in their 
States.
    Mr. Jordan. So new and so great; that is laughable. So new 
and so great that they actually went out of business. I find 
that to be laughable on its face.
    Mr. Counihan. But the others, sir, are replicating. So the 
health insurance business and the healthcare business, as you 
well know, is highly dynamic. It changes. There are a lot of 
variables to it. The CO-OP program has provided a lot of choice 
to people, and that's a key part of what it was for.
    Mr. Jordan. Are you willing to tell this committee today, 
Mr. Counihan, that when you come back later this fall and we 
have another hearing on the CO-OPs, that the seven that are 
still in business are still going to be in business then?
    Mr. Counihan. Sir, I would, number one, be very happy to 
come back at any time. Number two is I could not predict the 
future of any issuer.
    Mr. Jordan. You were here a couple months ago, and it was 
11, and we asked you then, and you wouldn't commit. We said we 
think they're all going to fail, and here we are a couple 
months later and four more are gone, and the other six or the 
other seven are on corrective action plans. Let me ask you 
this. Have you done anything to recover the $1.5 billion that's 
out the door?
    Mr. Counihan. Yes, sir.
    Mr. Jordan. What have you done?
    Mr. Counihan. So the Department of Justice is in the 
process of working with several of the CO-OPs----
    Mr. Jordan. I didn't say that. I said ``you.'' Not the--
you're CMS. You don't work for the DOJ, do you?
    Mr. Counihan. No.
    Mr. Jordan. Okay. So I'm asking CMS. You have the ability 
to terminate the loan agreements, don't you?
    Mr. Counihan. Well, what I was trying to do----
    Mr. Jordan. Is DOJ a signatory on the loan?
    Mr. Counihan. What I was trying to say, sir, is that these 
are Federal loans. Once those Federal loans become in recovery, 
that moves over to the DOJ.
    Mr. Jordan. What are you doing? You're the one who gave out 
the--you're the one who decided who got the money. You 
allocated the money. You gave it out. What is CMS doing to 
recover the $1.5 billion of taxpayer money?
    Mr. Counihan. The process of how this works, sir, is when a 
Federal loan goes into recovery of that sort, it moves to DOJ 
for that process, and I am very happy to have someone from DOJ 
come here to give you an update.
    Mr. Jordan. You can't terminate yourself?
    Mr. Counihan. Well, I'm talking about loan recovery. I 
thought your question was about recovery of the loan. The 
process of recovering a Federal loan is that DOJ takes over 
that process.
    Mr. Jordan. But what have you done? Have you terminated a 
loan so that DOJ, in fact, can do that?
    Mr. Counihan. Sir, it very much depends on the situation of 
the CO-OPs. I think what's important for everyone to remember--
--
    Mr. Jordan. We know the situation, Mr. Counihan. Sixteen of 
them have completely failed. What are you doing to get the 
money back?
    Mr. Counihan. And these are independent, licensed issuers 
by States. They compete just like any other health insurance 
company in that State.
    Mr. Jordan. Okay. I went a couple minutes over. I 
apologize.
    So we will now turn to the right fine gentleman from North 
Carolina, Mr. Meadows, for his questioning.
    Mr. Meadows. Thank you, Mr. Chairman.
    Good to see you both. Kevin, good to see you. Let me do a 
little housekeeping if I could on one particular issue, Mr. 
Counihan. You are aware I guess that Ways and Means and Energy 
and Commerce has issued subpoenas as it relates to I guess the 
cost-sharing reduction program. Is that correct?
    Mr. Counihan. Yes.
    Mr. Meadows. And so have you been instructed to collect 
materials that are responsive to that subpoena?
    Mr. Counihan. No.
    Mr. Meadows. You haven't?
    Mr. Counihan. No.
    Mr. Meadows. So no one has reached out to you? Because 
that's a real problem.
    Mr. Counihan. My job----
    Mr. Meadows. Again, if that's your sworn testimony--so what 
you're saying is no one has asked you to collect any documents 
responsive to a congressional subpoena regarding that program?
    Mr. Counihan. Yeah. We have a staff of people that I work 
with that are responsible for collecting documents of that 
sort, and they're responsible for doing it. That's not in my 
role.
    Mr. Meadows. But you haven't been instructed? So have you 
instructed anyone to collect those documents?
    Mr. Counihan. No.
    Mr. Meadows. So are you aware of anyone who has been 
instructed to collect those documents?
    Mr. Counihan. You know, as I said, sir, we have a whole 
staff of people that are responsive to that.
    Mr. Meadows. But you know the point I'm trying to get to. 
Is somebody collecting those documents or not, Kevin?
    Mr. Counihan. Congressman, to that very issue that you are 
speaking to, we have tried to be as responsive as we possibly 
can because I know the issue about document retrieval is very 
important to the committee----
    Mr. Meadows. So when will we get them--or when will they 
get them?
    Mr. Counihan. I'll need to get back to you.
    Mr. Meadows. But you're saying no one's asked you, and 
you've instructed no one. Wouldn't you know if someone were 
instructed? Because you're the head of the--we have had a 
number of conversations about responses and the lack thereof.
    Mr. Counihan. That's right.
    Mr. Meadows. And I guess my question is--you've got a staff 
behind you.
    Mr. Counihan. Yes.
    Mr. Meadows. Are they aware of anybody collecting the 
documents?
    Mr. Counihan. Sir, I want to be responsive to you. Let me 
get back to you, please.
    Mr. Meadows. And you can get back to me by when?
    Mr. Counihan. I'll have to circle that back with you.
    Mr. Meadows. I mean, it's not a hard question. You got a 
subpoena. I'm sure when the subpoena came in, somebody said, 
``Oh, my gosh, we got a subpoena,'' because we don't issue 
subpoenas just willy-nilly. We only issue subpoenas after you 
don't respond.
    Mr. Counihan. Yeah. And Congressman----
    Mr. Meadows. So have you been asked for the documents 
personally?
    Mr. Counihan. Congressman, we want to be responsive. I know 
we have already provided----
    Mr. Meadows. Let me tell you the last person who told me 
that. The last person who told me that was not responsive, 
Kevin. I apologize. I shouldn't be calling you Kevin, Mr. 
Counihan. The last person who told me that was actually part of 
a rulemaking process who they had been working on it for a 
year, and we came to find out they hadn't been working on it. 
So I guess my question is, when can Ways and Means and when can 
Energy and Commerce expect a production of the documents 
according to the subpoena that you acknowledge you're aware of?
    Mr. Counihan. Sir, what I would like to say is I need to 
get back to you with that timing.
    Mr. Meadows. Actually, it would be appropriate for you to 
get back to this committee but also to Chairman Brady and 
Chairman Upton with regards to a timeframe, and so can we 
expect a response by the close of business on Friday in terms 
of a timeframe?
    Mr. Counihan. We'll get back to you.
    Mr. Meadows. Yes or no, is that not reasonable?
    Mr. Counihan. Sir, I need to get back to you.
    Mr. Meadows. Mr. Counihan, you do not have the option of 
not giving me a timeframe, because in doing that, you're 
thereby forcing the same issue, and it would be a contempt of 
Congress to continue to stonewall. So is that what you're 
saying is, is that you're not willing to give me any kind of a 
timeframe?
    Mr. Counihan. Sir, what I'm telling you is the following: I 
want to be as responsive to you as possible. I want to give you 
an accurate timeframe. What I'm asking from you is to give me 
the time to be able to be responsive.
    Mr. Meadows. What's a reasonable amount of time?
    Mr. Counihan. As I said, sir, I need to go back with my 
folks, understand it, and get back to you then.
    Mr. Meadows. Let me, by Friday, the close of business, I 
either want a response on why you can't respond by then, why 
you haven't been able to find it, or some kind of legitimate 
response in terms of a timeframe, okay?
    Mr. Counihan. That's fair.
    Mr. Meadows. And so, as we start to see this--and I 
apologize, Mr. Chairman, if you'll indulge me just a few 
moments. Let me say one of my concerns, and you know, 
philosophically, we probably have a big difference. I don't 
want to get into the philosophical differences. Let me tell you 
where I am troubled, is for all the stories of people who now 
have coverage, I continue to get a disproportionate number of 
people who are saying their premiums are going up or their 
companies are going out of business. And so today we're talking 
about really a CO-OP program. And I've had some of the major 
insurers in the country come to me saying that not only are 
they losing money, but they're hemorrhaging a loss of money 
because they can't get either this on a profitable point of 
view or costs continue to go up. Are you hearing some of the 
same concerns from insurance companies?
    Mr. Counihan. You know, let me tell you what I'm hearing, 
and I talk to a lot of CEOs. And in this past open enrollment, 
I was in 13 States talking to people. What I'm hearing is that 
looking at the traditional way of managing care, contracting 
with the providers, servicing this new population is less 
effective than it is by designing newer, more customized 
approaches that often exist within Medicaid plans. So issuers--
--
    Mr. Meadows. So let me make sure I'm understanding that. 
So, in your 13-State tour and talking to CEOs, they're 
suggesting that we go to a Medicaid?
    Mr. Counihan. No.
    Mr. Meadows. Because I thought that's what you were saying.
    Mr. Counihan. I apologize. I was not clear. What I meant to 
say was that if you look at issuers that have a strong Medicaid 
background, that have served the Medicaid population, that work 
to design and customize care management tools that are more 
specific to this new type of population, they're finding 
themselves being more effective than those that have just 
traditionally served, say, the small group insurance market or 
the large group market.
    Mr. Meadows. But you and I both know that I'm a numbers 
guy.
    Mr. Counihan. Yes.
    Mr. Meadows. In a Medicaid patient, the amount of money 
spent per Medicaid patient is higher than the other patients 
typically. I know it is in North Carolina, exponentially 
higher. So what you're saying is, is that we need to go to a 
model where we spend more per patient?
    Mr. Counihan. No. I'm actually saying the opposite. What 
I'm actually saying is that one of the interesting things I'm 
seeing in talking to CEOs is that they are retooling their 
provider contracting to match a number of issuers that have 
been successful in this business from the beginning. And what 
we're finding, Congressman, is that there's a clear opportunity 
for issuers that have thought of this market more 
strategically, that have used a lot of data to understand the 
specifics of their market, understand the uninsured in their 
State, design products that meet them, tier networks, if 
appropriate, and provide new cost-management tools. That's what 
I'm saying.
    Mr. Meadows. So let me go to one of the biggest ones, Blue 
Cross Blue Shield, in my State, obviously the largest provider. 
They have gone up 30 percent, 34 percent, and anticipated 20-
plus percent this year in terms of the insurance rates. We're 
hoping that it's lower. I talked to them just 2 weeks ago. So, 
when you look at that, you know, you aggregate all of that 
together.
    Mr. Counihan. Yeah.
    Mr. Meadows. That is not affordable health care, and 
certainly my rates are not anywhere close to what they used to 
be 3 years ago. Fortunately, I can afford to pay it. Many 
cannot. They are just barely scraping by. What they shared with 
me is that emergency room visits are not really down. Is that 
correct? Because that was the whole premise: we would get this 
group of uninsured from going to use the emergency room as 
their primary healthcare provider. And, actually, they're 
saying that that went up, and it continues to stay at an 
elevated rate. Are you finding that?
    Mr. Counihan. A couple things that you've raised. First of 
all is that, if you look at cost increases, cost increases are 
at the lowest level during the ACA than they've been 
historically over the past 50 years----
    Mr. Meadows. Lowest level against what? What are we 
comparing it to? Mr. Counihan, how can you say lowest level? 
I'm 57 years old. I've been paying insurance premiums for over 
35 years. So 35 percent, 30 percent, and 18 to 20 percent is 
not the lowest level of increases that I've faced. That is just 
factually incorrect.
    Mr. Counihan. But if you've looked at the average in the 
markets, so, for example, if you looked at the cost increases 
on average nationally----
    Mr. Meadows. Let's look at North Carolina. You knew I was 
going to be here, and you know my numbers, so let's look at 
North Carolina. Is it better in North Carolina over the last 3 
years than it was in the previous 10 years, in terms of rate of 
increase?
    Mr. Counihan. Yeah. And, unfortunately, Congressman, I 
don't have the benefit of the insight of North Carolina----
    Mr. Meadows. Well, you can get back to me.
    Mr. Counihan. But I can speak to nationally, and I can tell 
you that from 2000 to 2010, the average rate increase was 8 
percent. From 2010 to 2015, it was lowered to 5 percent. So I'm 
talking nationally.
    Mr. Meadows. So what you're saying is we're an anomaly in 
North Carolina? Is that your sworn testimony? Because we went 
30, 35, 34 percent, now 18, and we are astronomically more than 
anybody else?
    Mr. Counihan. Sir, what I am saying is that there's not any 
monolithic or consistent level of rate increases nationally. If 
you look at rate actions, they vary by urban areas versus 
rural, as you and I have discussed?
    Mr. Meadows. They vary by Medicaid and Medicare more so 
than anything else.
    And I will yield back.
    Mr. Counihan. Well, okay. All right.
    Mr. Jordan. I thank the gentleman. I now recognize the 
gentleman from Tennessee for an additional round of questions.
    Mr. DesJarlais. I guess I'm going to kind of follow up 
where Representative Meadows was on numbers. You are saying 
that 20 million people now have insurance. What percentage of 
that is Medicaid expansion?
    Mr. Counihan. Roughly half, about 9 million.
    Mr. DesJarlais. Okay. So what did President Obama claim we 
had in terms of the number of uninsured when he was proposing 
his healthcare law?
    Mr. Counihan. I can't remember, Congressman, exactly. You 
want to use your percentage? You said 16 percent?
    Mr. Counihan. Oh, excuse me. The percentage of uninsured? 
Excuse me, 16 percent.
    Mr. DesJarlais. Okay. And we have 300 and some odd million 
people in the country, so 40, 45 million people.
    Mr. Counihan. Yeah, 43 or so, yeah.
    Mr. DesJarlais. So what we have done is we have doubled the 
number of people on Medicaid, and of the other 10 million that 
now have insurance, how many of those have significant 
subsidies?
    Mr. Counihan. About 85 percent of our population have 
subsidies apply, tax credits apply.
    Mr. DesJarlais. I can see where the cash flow problem might 
be coming from then, because only just a million and a half 
then are actually paying for their health care or a small 
number, small percent?
    Mr. Counihan. I guess I believe, Congressman, that 
everybody is paying for their health care. It's just that these 
individuals, based on their income, are getting tax credits to 
help them make it more affordable, but everyone's paying.
    Mr. DesJarlais. Did we ever figure out how many people--
there are people that are living here illegally that are 
getting health care, correct?
    Mr. Counihan. I'm not familiar about the number of people, 
illegals, that are getting health care in this country.
    Mr. DesJarlais. It seemed like there was an estimate of--I 
don't remember--10, 15 million people possibly that were 
getting that, but you don't know?
    Mr. Counihan. No.
    Mr. DesJarlais. We're talking about the cost of 
deductibles. Even President Obamaacknowledged that too many 
Americans are straining to pay other physicians for their 
deductibles and costs. And I think somewhere that you said the 
deductibles have decreased $850. We have heard numbers thrown 
around here upward of $5,000 is the deductible cost. Why the 
discrepancy? That's a big difference.
    Mr. Counihan. The median deductible in our plans actually 
was lower this year by about 5 percent from the year before, to 
about $850.
    Mr. DesJarlais. That's the median. And that's for the 
people who are being subsidized, the 10 million who are not 
getting Medicaid expansion?
    Mr. Counihan. Yeah. That's correct. That's in that number 
of the 11 million. That's right.
    Mr. DesJarlais. So, basically, healthcare costs have gone 
up for about 90 percent, maybe even 95 percent, of Americans 
because of ObamaCare?
    Mr. Counihan. I think it's actually the opposite, sir.
    Mr. DesJarlais. You're saying that healthcare costs have 
gone down?
    Mr. Counihan. What I'm saying is that healthcare costs have 
been made more affordable than ever because of the Affordable 
Care Act. If you look at last year, just as an example, the 
average individual out-of-pocket increase went up by $4, 4 
percent. So we're making costs more affordable. We're making 
coverage more accessible.
    Mr. DesJarlais. And the CO-OPs are going broke, and there's 
been money that's come out. The Court ruled that the Obama 
administration was using funds to subsidize insurance companies 
that it wasn't authorized to do. That's probably a topic for 
another hearing.
    Ms. Blumberg, you're talking about access to care. I 
practiced medicine for 20 years. I know if you're on Medicaid, 
you essentially have no deductible. You can go to the ER. You 
can go to a clinic, but if you have private insurance, if you 
go to the ER, your deductible might be $300, $400 or more. So, 
even if you have an emergency, you can't afford to go to the 
ER, so you might wait to the next day to come see the doctor. I 
know I've seen that happen. Now people have deductibles up to 
$5,000. Middle class folks are not going to the doctor, and 
they're not seeking to get care, so their quality of care is 
actually going down. We have helped some people. We have helped 
some people. As you've said, we've helped people get Medicaid, 
and we have helped subsidize people, but there's a whole lot of 
other people hurting because they can't afford to go to the 
doctor, or they won't go to the doctor, and they let problems 
fester because of that high deductible. What would you say to 
them?
    Ms. Blumberg. Well, I think, with regard to the emergency 
room care, according to the rules under the Affordable Care 
Act, if it's emergent care that you're receiving through the 
emergency room, you don't face those deductibles. So it may be, 
yes, if you're going in to get nonemergent care through the 
emergency room and you've got a private insurance plan----
    Mr. DesJarlais. Are you talking Medicaid or private 
insurance?
    Ms. Blumberg. But if you're getting nonemergent care, then 
out-of-pocket cost is going to be significant if you go use the 
emergency room because the intent is to give financial 
incentives to get alternative sources of care for nonemergent 
care. And what we have found in our survey work is that, 
indeed, the number of--the percentage of adults reporting a 
usual source of care outside the emergency room has increased 
significantly since 2013, and those not obtaining necessary 
care due to cost has gone down substantially since then.
    Mr. DesJarlais. I'd like to see those numbers.
    Ms. Blumberg. Certainly.
    Mr. DesJarlais. Mr. Counihan, quickly, how many people 
now--ObamaCare has been around for a while. How many people 
have paid the penalty on their IRS taxes rather than getting 
health care? In other words, how many people had health care 
that have dropped their health care and opted to pay the taxes?
    Mr. Counihan. Yeah. So I--sir, I can't remember the exact 
number of people that have paid that penalty. I'm, again, happy 
to get back to you with that figure.
    Mr. DesJarlais. Can you ballpark? Can you guess?
    Mr. Counihan. You know, I really wouldn't----
    Mr. DesJarlais. Okay. We still have 10 percent uninsured by 
your number.
    Mr. Counihan. Nine percent, yeah.
    Mr. DesJarlais. Nine percent. Okay. So that is roughly 30 
million people. Who are they?
    Mr. Counihan. Excuse me?
    Mr. DesJarlais. Who are the 30 million people that don't 
have insurance? If 10 percent are still uninsured and we have 
all of these other people that now have insurance, who are the 
ones that don't have it?
    Mr. Counihan. Yeah. So it's in a couple of different 
segments. So one would be Medicaid expansion States, States 
that have an expanded Medicaid; a significant component there. 
Number two would be young people. I mentioned earlier about the 
importance of enrolling younger folks and the outreach efforts 
that we are making to that. That's another cohort that's 
critical for that.
    Mr. DesJarlais. Yeah. It's really expensive for young 
people. I know that by talking to them. But I think what we've 
done is shifted health care. Some people that didn't have 
health care where now they get subsidized, but a large group of 
people that had health care can't afford it now, so they are 
paying taxes to the IRS and going without insurance. And the 
ones that do have high deductibles and they can't get health 
care because they are afraid they have to spend their 
deductible. But somehow you both seem to think this is a 
success; not at all what we are hearing back home.
    Mr. Counihan. Yeah. To your point, sir, around young people 
and affordability, the vast bulk of them would be eligible for 
subsidies, for tax credits, and I think that would make that 
coverage much more affordable for them.
    Mr. DesJarlais. But that's going to make the overall 
program--any time you give cash subsidies to somebody, it makes 
it way more expensive somewhere else. Right?
    Mr. Counihan. As I said, sir, our job is to enroll people 
into affordable care. I think we've made good progress. We've 
got more to do, as you say.
    Mr. DesJarlais. Sounds like socialized medicine. Thank you.
    Mr. Jordan. I thank the gentleman.
    I will now recognize the gentleman from Pennsylvania.
    Mr. Cartwright. Thank you, Mr. Chairman.
    So I'm going to throw this one open to both witnesses. It's 
a tossup question. Mr. Hice of Georgia just said that because 
of the ACA, we have fewer doctors. Is there any substance to 
that? Do we have fewer doctors in this country since the 
enactment of the ACA?
    Ms. Blumberg. I don't know that we have any evidence of 
that whatsoever.
    Mr. Cartwright. That would have been a shock to me. And of 
course, my friend, Mr. Meadows of North Carolina, was lamenting 
the premium increases and he was talking about his advanced 
age, and I'm a bit long in the tooth myself. And I was a 
business owner for many years and year after year, we would 
have premium increases. This was long before the Affordable 
Care Act, you know, 20 percent and 30 percent and 35 percent in 
a single year. And that was tough to take. It's still tough to 
take. But how about either of you, can you put your finger on 
the ACA as the reason for annual premium increases as opposed 
to what went on in the world before ACA?
    Mr. Counihan. Yeah. If I could just answer that, 
Congressman?
    Mr. Cartwright. Sure.
    Mr. Counihan. I understand exactly what you're referring 
to, and I actually think that the ACA has had the exact 
opposite effect. It's moderating increases. And I will just 
give you an example. In the mid-1980s, mid to late 1980s, 
annual trend, inflationary trend in health insurance was in the 
mid 20s, 24, 25, 26 percent. That's beyond the impact of any 
utilization expense. That was pure inflationary trend. That's 
been dramatically, dramatically cut back. So I think that helps 
prove your point.
    Mr. Cartwright. Do you want to weigh in on that, Dr. 
Blumberg?
    Ms. Blumberg. Sure. There definitely has been a long 
history of variability in premiums from year to year. What we 
are finding in terms of the increases in the nongroup 
marketplace plans, which I think is the focus of some of the 
concern here, is that there is huge variation by geographic 
area. We have seen that in the areas that tend to have the 
biggest increases, we're talking about the smallest population 
centers. We're also talking about seeing larger increases 
coming where the premiums had been in the prior years quite low 
relative to the national average.
    And so we think some of this is a regression to the mean 
over time, that some of these insurers came in too low and 
they're correcting now, but it's not necessarily that they're 
all going very high, relative to what you're seeing in other 
parts of the country, but they made some errors in judgment 
originally and they're correcting for them. So some of these 
large percentage increases are on a much smaller premium basis. 
And so the----
    Mr. Cartwright. Like a market correction.
    Ms. Blumberg. Exactly.
    Mr. Cartwright. All right. And I don't mean to cut you off. 
You have long interesting answers, but we're on the clock here.
    Ms. Blumberg. Sorry.
    Mr. Cartwright. So we're very--we have to have short, 
couple of sentence answers. Not paragraph answers.
    Ms. Blumberg. Understood.
    Mr. Cartwright. Your research found, and I quote, ``Rates 
of increase vary tremendously across States and across rating 
areas within States.''
    The question is: Why do premium rates vary in this way?
    Ms. Blumberg. They vary depending upon the market 
conditions that were there prior to the Affordable Care Act to 
some extent, how many insurers are competing, and that is 
related to the historical situation, what types of insurers are 
competing and the types of insurers that have come in or have 
exited from the market.
    Mr. Cartwright. Okay. And here's my question. The 
Affordable Care Act, has it helped facilitate increased 
competition that is needed to drive down the rates?
    Ms. Blumberg. Definitely. Because in the nongroup insurance 
market, in particular prior to the ACA, we didn't really have 
price competition in these areas. But what the insurers were 
doing was competing for healthcare risks. Now there is 
transparency, there is equivalency of the plans. And so for the 
first time, we're seeing price competition where we didn't see 
it before in this market.
    Mr. Cartwright. Now, Mr. Counihan, I want to get your 
answer on that as well.
    Mr. Counihan. I just wanted to say, in addition to that, we 
have significantly enhanced the quality of the coverage that 
the individual market now gets access to. Both the substance of 
that coverage and also the elimination of the ability to 
discriminate in that coverage. So just the elimination of 
preexisting conditions alone is a significant and a huge 
improvement. The fact, again, that there is no annual lifetime 
maximums, there is no caps on specific types of procedures. All 
of these types of things are significantly enhancing.
    Mr. Cartwright. No penalty for being a woman.
    Mr. Counihan. That is exactly right. In my old State, women 
were typically priced twice as high as men for the same type of 
coverage. We have also seen that the number of bankruptcies due 
to medical costs have dramatically reduced since the 
introduction of the ACA. So, again,you know, significant 
movement and progress.
    Mr. Cartwright. Now, it's also important to remember that 
the premium rates insurers have filed for next year, 2017, are 
not necessarily the rates that will be approved by State 
departments of insurance. Am I correct in that?
    Mr. Counihan. Correct.
    Mr. Cartwright. All right. And in fact, ACA created a rate 
review program to help State departments of insurance 
strengthen their rate review process. Is that right?
    Mr. Counihan. That's correct.
    Mr. Cartwright. According to a 2015 HHS report, rate review 
reduced total premiums in individual small group markets by 
$1.5 billion.
    Mr. Counihan. That's right.
    Mr. Cartwright. Rate review process. Mr. Counihan, what 
other tools did the ACA provide to help consumers mitigate the 
effects of the premium increases?
    Mr. Counihan. Well, number one, we talked about the tax 
credits. We talked about other ways to make things affordable. 
You've mentioned already the ability of States to take a more 
aggressive, transparent view for the creation of rates. We've 
created more competition. We've created more choice.
    Just to give you a quick example, last year the average 
enrollee had an option of looking at three health plans--three 
issuers, and 50 health plans to choose from. So there's a 
variety of different ways that we're using the marketplace to 
help dampen prices and give people more options.
    Mr. Cartwright. You know, I was just complaining about, you 
know, as a business owner, what it was like to go through these 
every year, double-digit premium increases. I just saw a figure 
that premiums increased by 58 percent during the last 6 years 
of the Bush administration.
    Have you seen that number?
    Mr. Counihan. I hadn't.
    Ms. Blumberg. I haven't.
    Mr. Counihan. My colleagues in the majority have also 
brought up the fact that UnitedHealth and a small number of 
other issuers have decided not to participate in the ACA 
marketplaces in 2017 as evidence that the ACA is not working.
    Dr. Blumberg, what do you make of that argument?
    Ms. Blumberg. We looked pretty seriously at the United 
situation and they came in very--mostly in the second year. 
They really didn't participate much at all the first year and 
where they came in, they ended up coming in really high. In a 
few areas they were the low-cost insurer, but in general, they 
priced very high relative to the others. As a consequence, it 
is a very price-sensitive population. They really didn't get 
much enrollment.
    Mr. Cartwright. Is that evidence that the ACA is not 
working?
    Ms. Blumberg. No. It's evidence that United strategically 
was not paying enough attention to how this market was working.
    Mr. Cartwright. Okay.
    Mr. Counihan. And Congressman----
    Mr. Cartwright. Yes.
    Mr. Counihan. --that is not uncommon in business of any 
sort or in the health insurance business. People's strategies 
change, their strategic direction can evolve. So we see more of 
that. But the----
    Mr. Cartwright. Not only that, startup businesses in 
general fail for a whole spectrum of reasons. Right?
    Mr. Counihan. That's correct. And particularly health 
insurance. It's a low margin, very, very challenging industry.
    Mr. Cartwright. Now, a recent article in JAMA, the Journal 
of the American Medical Association, it's titled ``Reports of 
ObamaCare's Demise Are Greatly Exaggerated.'' It notes other 
large insurers like Anthem and CIGNA have, quote, ``expressed 
more confidence in the ACA's marketplaces as a business 
opportunity.'' In fact, CIGNA is even planning to expand its 
presence in the marketplaces.
    Mr. Counihan. Yeah.
    Mr. Cartwright. Mr. Counihan, what do you make of the fact 
that some insurers are deciding not to participate in ACA 
marketplaces in 2017?
    Mr. Counihan. I think it's a couple of things. I think, A, 
this is an example as strategies evolve. Two, I think an 
example so that people look at opportunities. You used the 
example of CIGNA. That's a good example. There are other 
examples of big national publicly-traded firms that are 
expanding into new markets.
    I think the other thing that it's showing is that with any 
new market--and this is a new market and there hasn't been a 
new market like this in a long, long time--it takes a 
combination, whether looking at it from an underwriting 
perspective, an actuarial perspective, a risk management 
perspective, a care management perspective, a provider contract 
perspective, all these are different. And what we're finding is 
that those that are using the same kind of pattern that they 
used for their commercial business are being less successful 
and are in the process of retooling, versus those that have 
looked at this market and this enrollment more uniquely.
    Mr. Cartwright. All right. Last question, and this is the 
$64,000 question, Dr. Blumberg. If my Republican friends get 
their way and we repeal the ACA, what do you think will happen 
to health insurance premiums in this country?
    Ms. Blumberg. Well, I think health insurance premiums would 
go up extraordinarily for those who have past health problems 
or current health problems. And that's really the key is, are 
we going to leave those who are most vulnerable at their time 
of most need with inadequate access to care or are we going to 
pool them together with people who are currently healthy?
    Mr. Cartwright. Well, thank you.
    I yield back, Mr. Chairman.
    Mr. Jordan. I thank the gentleman.
    Dr. Blumberg, Mr. Counihan wouldn't answer the question, 
probably can't answer the question. He is in the 
administration. When I asked him the fact that 16 of 23 CO-OPs 
have already failed and the other 7 are going to, he wouldn't 
answer the question whether that's a complete failure. But you 
don't work for the government. You work for the Urban 
Institute. Is that right?
    Ms. Blumberg. That's right.
    Mr. Jordan. You are here on your own capacity today.
    Ms. Blumberg. Correct.
    Mr. Jordan. All right. So you're not part of the 
administration. Right?
    Ms. Blumberg. I am not.
    Mr. Jordan. So when you have a program where 23 CO-OPs are 
created in this CO-OP program in ObamaCare, 16 have already 
failed and 7 are going to, would you describe that as a 
complete failure?
    Ms. Blumberg. I'd say it's a--you know, you can't say 
that's a success when all of those plans fail. But I also think 
that there's--the important thing is for us to look at why 
those plans failed. I think it was a combination of issues 
related to they had a big hill to climb as new insurers to 
begin with. But I also think that the problem with the 
redefinition of what the risk corridors were going to be and 
making those, forcing those to be budget neutral, which they 
were not intended to be, had bad implications for those CO-OPs 
as well. And that was something that came after the Affordable 
Care Act.
    I also think that it's an indication that we have some 
improvements to make in the risk adjustment system that I think 
are some in progress, additional ones that could be done. And I 
think that, you know, the timing of those support payments from 
the risk adjustment reinsurance and risk corridors were 
important there.
    Mr. Jordan. Mr. Counihan, we've asked certain individuals 
to be scheduled for transcribed interviews, including yourself, 
Mr. Cleary, Ms. McNeill, and--I guess just three. When are we 
going to get that scheduled?
    Mr. Counihan. Sir, I need to get back to you on that. I 
don't do that type of scheduling and I'm happy to respond to 
you fast.
    Mr. Jordan. Yeah, but you're the boss there at CMS and so 
we've been trying to do this. Can you make a commitment that 
you're going to get it done here? We want to get it done this 
month.
    Mr. Counihan. You're absolutely right, sir, that I am the 
boss. But the CO-OP program, for example, has its own director, 
it's own team of people that are dedicated to it. I need to 
circle back with you.
    Mr. Jordan. But they answer to you. Right?
    Mr. Counihan. Correct.
    Mr. Jordan. Okay. Well, that's why I'm asking you. You're 
the guy here on the witness stand. You're the boss at CMS.
    Mr. Counihan. Yeah.
    Mr. Jordan. So we want to get you and two other people in 
for an interview.
    Mr. Counihan. Yeah.
    Mr. Jordan. We're just asking you, can we make that happen 
in 2 weeks?
    Mr. Counihan. Yeah. And, sir, I want to comply with that. 
As I said, I'm just looking----
    Mr. Jordan. Okay. We've also requested----
    Mr. Counihan. --for a time to be able to get back to you.
    Mr. Jordan. We've also requested documents from you. When 
are you going to give those to us?
    Mr. Counihan. So, sir, we have already given you, as you're 
probably very, very much aware, thousands of pages of documents 
to be responsive.
    Mr. Jordan. We want them all. We want the ones--we want the 
ones that we need, the ones we've asked for, not some--you 
know, we hear this every time in congressional committees. 
We've given you thousands of--I don't care if you have given us 
a bazillion. If they're not the ones that matter----
    Mr. Counihan. Yeah.
    Mr. Jordan. --who cares? I want the ones that matter. When 
are you going to give those to us?
    Mr. Counihan. Well, and the ones that--and I'm not sure how 
you're defining the ones that matter, but the one that have----
    Mr. Jordan. The ones that matter are the ones we asked for.
    Mr. Counihan. Well, the ones that have business risk to 
those businesses, those CO-OPs, have been available in camera. 
They continue to be available in camera to your staff. We're 
not hiding anything from you. But----
    Mr. Jordan. Sure sounds like you are when you're saying in 
camera. Give them to us. We want them. We don't want to have to 
come over there with a special thing in a special room, look at 
them, can't take notes and all this. We've been through this 
before in other committees as well.
    Mr. Counihan. Yeah.
    Mr. Jordan. It's just ridiculous. It's a congressional 
investigation, congressional inquiry. We want the information. 
Give it to us.
    Mr. Counihan. Yeah. And we want to give you the 
information, but we can't have the information leak out for 
businesses. As I told you, I worked for a small business----
    Mr. Jordan. Now, that is, again, almost laughable. They're 
all going to fail. Anyone with a brain can see that, and now 
you are telling us, oh, we got to be X--we're going to be 
confidential with the information. But to say you have to see 
them in camera because, oh, by the way, some of these things 
might fail, we already know that. Anyone with a brain knows it 
because every one of these are going to fail. So that's sort of 
a lame excuse, frankly, Mr. Counihan. Just let us have the 
documents. Will you?
    Mr. Counihan. Well, sir, I respectfully have a different 
perspective on your comment about them all going to fail. What 
I would tell you is that we have an obligation, a fiduciary 
obligation, to make sure that no confidential information about 
their businesses gets leaked out and can be used against them. 
And I'm sure you can appreciate that.
    Mr. Jordan. I certainly can, and we can certainly keep 
confidential information confidential.
    Mr. Counihan. Yeah.
    Mr. Jordan. How about the materials relating to the CO-OP 
risk committee? When are we going to get those materials?
    Mr. Counihan. Yeah. So I will have to check on the status 
of your request for information related to that. That's not an 
area that I personally get engaged with, so I will follow up 
with you on that.
    Mr. Jordan. What about the notes from the weekly calls you 
have with the CO-OPs? When are we going to get that 
information?
    Mr. Counihan. Yeah. Sir, as I said, I'm not responsible for 
responding for those types of document requests. And we'll be 
happy to get back to you with details.
    Mr. Jordan. The gentlelady from New Mexico is recognized 
for 5 minutes.
    Ms. Lujan Grisham. Thank you, Mr. Chairman, and thanks to 
the witnesses.
    So I know that Mr. Counihan is very familiar with New 
Mexico and our woes. And to be fair, given what I've heard in 
your answers today and in reading your prepared testimony--and 
I agree with my colleague Mr. Cartwright, that there were 
plenty of significant difficult issues pre-ACA. And the reality 
is, is that a private insurance, private healthcare market has 
significant challenges for a sick population in this country 
that's not very homogeneous and we are effectively, as a 
result, have been very poor healthcare consumers.
    I believe in the fundamental consumer protections 
unequivocally in the ACA, but between my colleagues asking 
questions, I find myself in a very interesting position where I 
may disagree with you about the ACA and its impact and about 
whether or not we've really been proactive in dealing with the 
issues that we were clear or we wouldn't have had a risk 
corridor, we wouldn't have worked on a CO-OP model. We knew 
there were going to be some very interesting competitive 
issues. We were also a bit nervous about premiums and premium 
stability, which is why were alerted to the fact, but I think 
in many States, particularly mine, very surprised by the out-
of-pocket costs and the very high deductibles which, quite 
frankly, has just pushed people into emergency rooms. And we 
just cost shift somewhere else.
    And as you're well aware, New Mexico has never had 
competition in the marketplace. And now, in my district, this 
minute, I only have one. Now, Secretary Burwell, and I know 
that you're aware, have known that these issues--so to the 
credit of my colleagues behind me, you have seen them coming. 
I've alerted the White House. I've alerted HHS. I've alerted 
CMS on multiple occasions. Our superintendent of insurance is, 
you know, feeling really confident that he can manage this. I 
would say I don't share his confidence. We've got another 
10,000 enrollees, 80 percent of whom need those and get those 
subsidies. They are going to find themselves maybe in a 
precarious position.
    The rates that are published that are not yet agreed to is 
an 80 percent increase by Blue Cross Blue Shield. That was with 
Presbyterian in. If they're out, I don't know what that means, 
and given that nationally they've been another one like United 
that's given us great pause about what they can and should and 
are willing to do.
    So given that, that New Mexico doesn't fit any of the 
things that you've described as successes, what are we going to 
do? And that CO-OP is in the most precarious position. What 
strategies have you specifically thought about, given that 
rural and frontier States and poor States, higher risks to 
begin with--it's not like we didn't know that.
    Mr. Counihan. Yeah.
    Ms. Lujan Grisham. I've seen nothing that's been targeted 
or strategic for those States, and I've seen very little, quite 
frankly, from the administration about dealing with these 
issues, except telling me that the marketplace is incredibly 
competitive and people have great choices and it's all going to 
work itself out. So I want to know, and I haven't given you 
very much time, but what specifically have you done in the 7 
years given these serious issues? I know that you weren't there 
for the whole 7----
    Mr. Counihan. Yeah.
    Ms. Lujan Grisham. --but you are at the top now.
    Mr. Counihan. Yeah.
    Ms. Lujan Grisham. --about New Mexico, and what are you 
going to do to help us make sure that consumers really are, in 
fact, protected as is the vision in the ACA? Because I'm not 
seeing it.
    Mr. Counihan. Okay. First of all, thank you for the 
question. I happen to be fairly familiar with New Mexico and 
with the competitive environment there.
    Ms. Lujan Grisham. Or the lack thereof, you mean.
    Mr. Counihan. I'm aware too--I have a valued relationship 
with the DOI superintendent, and actually just spoke with him 
about 10 days ago about the competitive environment, also rate 
actions by Blue Cross. So I had that review. So we had a good--
--
    Ms. Lujan Grisham. Did he actually tell you that 
Presbyterian was going to pull out yesterday?
    Mr. Counihan. No, he did not.
    Ms. Lujan Grisham. I would say that your relationship with 
our superintendent needs to be reevaluated.
    Mr. Counihan. Well, I value the relationship that we have. 
And I will tell you that he and I have discussed a variety of 
things about different issuers. One of the things that we both 
understood is some of the complexity about urban versus rural 
counties.
    Ms. Lujan Grisham. In fact, the rural counties, Mr. 
Counihan, have higher competition, given the regional plans 
that are on the marketplace. It's the urban area that is the 
most at risk currently today with both the CO-OP and now 
Presbyterian, all the large insurance carriers are pulling off 
the marketplace in the largest city and the most urban area in 
the State. It's contrary to what you just said, in fact.
    Mr. Counihan. Yeah. Well, one of the things that we've 
talked about is I think that the CO-OP is a good example of new 
choice, of more competition, of innovation.
    Ms. Lujan Grisham. Right. But that hasn't translated. And 
I'm out of time. But the reality is, I'm going to ask you to 
give me in writing--and hope that the chairman will continue to 
let me have a few more seconds. I need those specific 
strategies, given that we have asked for them from this 
administration on multiple occasions. I believe you have an 
obligation to hold us accountable, to work on strategies that 
are going to protect those consumers, because so far, that has 
not translated and I think we can get it right. We have 
significant challenges. That is not occurring currently, and I 
don't think that the administration has really been thoughtful 
about that.
    In addition, which is not really in your wheelhouse, but 
I'd like you to take back to the administration that I think 
that they should be--look very seriously at the 6 percent 
Medicaid cuts that are going to drive even more providers out 
of New Mexico. So you have a very precarious situation there 
that I'm not sure is getting the attention that it really 
deserves and needs.
    Thank you. I yield back.
    Mr. Carter. [Presiding.] The gentlelady yields.
    I now recognize myself for 5 minutes.
    Mr. Counihan, to date, we know that 16 of 23 ObamaCare CO-
OPs have collapsed and it's impacted 870,000 enrollees. That's 
including the Land of Lincoln, Co-Op of Illinois, which 
announced just yesterday, just yesterday, that it will close 
after only 3 years of operation, leaving 50,000 enrollees 
without insurance.
    What's more troubling than that, perhaps, is that CMS 
loaned nearly $1.5 billion to these failed CO-OPs, despite the 
administration's projection that the program would lose a 
significant amount of taxpayers' dollars, over 40 percent 
predicted to never be repaid. That's a lot of taxpayer dollars. 
I think you would agree with that. A lot of taxpayers' dollars 
casually thrown away to prop up yet another failed facet of 
ObamaCare.
    Mr. Counihan, I'm concerned that despite the previous 
oversight hearings that we've had and on the failing CO-OPs and 
the staggering amount of taxpayer dollars that are at risk, 
that CMS still has yet to come up with a plan or a process for 
recouping the loans lost by these CO-OPs.
    Mr. Counihan. Yeah. So----
    Mr. Carter. Am I right? I mean, tell me I'm wrong.
    Mr. Counihan. Yeah.
    Mr. Carter. Do you have a plan to recoup the money?
    Mr. Counihan. We have a specific process for recoupment of 
moneys. I explained some of it just before you were able to 
arrive, and if you don't mind, I'd like to explain it again.
    Mr. Carter. Very briefly.
    Mr. Counihan. Yeah. So fundamentally, this is a matter of 
make sure that claim runouts are finally resolved and paid and 
administrative expenses to vendors are paid. Moneys left over 
from that are typically the best ways for us to recover money. 
The Department of Justice is in the process right now of doing 
just that with a couple of these CO-OPs.
    Mr. Carter. So you're trying to do it through payment 
offsets or what?
    Mr. Counihan. No, I'm trying to do it through recovery of 
Federal loans. And recovery----
    Mr. Carter. And are you doing witness all of the CO-OPs 
that have failed?
    Mr. Counihan. As appropriate as in at the appropriate time.
    Mr. Carter. When is the appropriate time? I mean, after 
they fail, they failed, and there's no money left. Right?
    Mr. Counihan. But--no, not necessarily. And as I mentioned, 
the vast majority of these CO-OPs still are in runout, which 
means that their claims, their incurred but unreported claims 
still need to be paid.
    Mr. Carter. Okay. So let's go back here. It's my 
understanding that now we have got seven remaining CO-OPs. Is 
that correct?
    Mr. Counihan. Correct.
    Mr. Carter. How are they doing? From my understanding, 
they're not doing well at all. They're in very similar 
situations and they're set to fail.
    Mr. Counihan. Sir, these are small businesses. They're 
small businesses in the health insurance business. This can 
very much depend on a month-by-month basis. So----
    Mr. Carter. Well, let me ask you something. You know, I was 
always taught that you don't want to throw good money after 
bad. While they still have got some good money, why don't we 
just go back and get it and recoup it and just call it a day? 
Obviously, if 16 out of 23 have failed, why should we think 
that the remaining seven are going to make it?
    Mr. Counihan. The moneys that have been--that we have have 
been obligated already to those businesses. Those businesses 
right now are in the process of succeeding like any other 
business or any other insurance company does in the State where 
they do business. This is a tough industry, as you very well 
know. It's very tough to be a small business and it's tough to 
be a small health insurance company. I used to work for one, so 
I can tell you that.
    But we're doing everything that we can to collaborate with 
the State divisions of insurance, and with the CO-OPs to make 
them successful.
    Mr. Carter. But it's not working. It's failed 16 out of 23. 
Another one failed yesterday. The remaining seven are in bad 
shape and you know it.
    Mr. Counihan. So, sir, if you look at the history of new 
entrants in health insurance, typically, at least half of them 
or so have a hard time making it. So this is not inconsistent 
with the industry.
    Mr. Carter. Okay. Well, let me ask you something, Mr. 
Counihan. Out of the seven that are still currently operating--
--
    Mr. Counihan. Yeah.
    Mr. Carter. --how many of them are profitable?
    Mr. Counihan. So profitability very much can depend on the 
month.
    Mr. Carter. That's yes or no.
    Mr. Counihan. It depends on the month, sir.
    Mr. Carter. It depends on the month?
    Mr. Counihan. Yes.
    Mr. Carter. This month, how many of them are profitable?
    Mr. Counihan. I can't tell you that.
    Mr. Carter. Last month?
    Mr. Counihan. The claims data that we have right now----
    Mr. Carter. Can you tell me last month?
    Mr. Counihan. --it's typically through May. You know, we've 
got actuarially certified data through the second quarter. You 
know, we're trying--actually, we get that in August. We're 
trying to do our best to keep up, as we are with the State 
divisions of insurance, but when you're a small carrier like 
this, it very much depends on the claims you get for that 
month.
    Mr. Carter. Mr. Counihan, this looks like a total failure. 
I mean, not only are we throwing good money after bad, losing 
money, but now we got all these enrollees who don't have any 
insurance coverage.
    Mr. Counihan. Well, so, can I give you another perspective 
on that?
    Mr. Carter. Please.
    Mr. Counihan. So another perspective on that is that 
because of these CO-OPs, we've been able to give people more 
choice. Because of the CO-OPs we've been able to enhance 
competition in these States. Because of these CO-OPs we have 
been able to innovate. Many of these new CO-OPs have come up 
with new care management models that are being replicated by 
some of their larger competitors. So there's been all sorts of 
dynamics.
    Mr. Carter. If I were one of their larger competitors, I 
would not--I wouldn't copy anything they've done. They've 
failed.
    Mr. Counihan. But, sir, there's a variety of different 
reasons that lead to the expenses in a health insurance 
company. Care management models are things that can help 
migrate between sizes of firms and profitability of firms. So 
I'm giving you three examples of where they've added specific 
value.
    Mr. Carter. Okay. Okay. Okay. If there is a silver lining, 
perhaps you just--you've just described it. I fail to believe 
that. Nevertheless, let's shift gears for one second. Okay? 
Let's talk about--we know the CO-OPs are not the only entities 
that are struggling under ObamaCare. UnitedHealth has pulled 
out of a number of markets, abandoned a number of exchanges due 
to profit concerns. If the Nation's largest insurers can't 
assume the risks and burdens of ObamaCare, why should we 
believe that anyone can?
    Mr. Counihan. Well, could I--if I could just give you some 
examples for that, because----
    Mr. Carter. Please very quickly.
    Mr. Counihan. Okay. I've got a deep history in this 
industry. Often, insurers that came into this market were 
making some assumptions about the utilization and the morbidity 
of the new enrollees. What we're finding is some of those 
assumptions and old care management tools have been less 
appropriate to this new population than those that innovated 
and created new ones. And so many right now, issuers, are 
retooling based on looking at new models.
    Mr. Carter. Okay. All right. I need to finish up. I'm 
sorry, Mr. Counihan. Out of all due respect, sir, they're 
failing. They're losing money. The patients aren't being 
covered. Their premiums are going up. It looks to me like it's 
a total failure.
    Mr. Counihan. Sir----
    Mr. Carter. I've got a closing statement I want to make. 
Okay. In a July 11, 2016, article in Healthcare Reform, 
President Obama acknowledged that too many Americans still 
strain to pay for their physician visits and prescriptions, 
cover their deductibles, or pay for their monthly insurance 
bills. That's directly from the President. Even the President 
can't avoid the fact that after 6 years, his signature 
healthcare reform bill has completely failed. Completely 
failed. Healthcare costs are higher than ever. Families have 
seen their premiums double and deductibles increase and the 
average American cannot afford health insurance.
    This is why we've come out with Speaker Ryan's A Better Way 
policy agenda, and I hope that we will look at that. We all 
want healthcare coverage here in America. Republicans, 
Democrat, we want it. And we feel like we have a better way. 
Obviously, to anyone who's looking at this, this is not 
working. It is failing.
    Finally, there's some documents that we've asked you to 
produce. On November 20, December 23, and May 18, we sent 
letters, and on February 17 we sent a subpoena to Secretary 
Burwell. Are you familiar with this?
    Mr. Counihan. I am familiar with the request, yes.
    Mr. Carter. Have you been asked to collect any of the 
material?
    Mr. Counihan. Sir, a couple of things. One is, I know that 
we've already sent thousands of pages in response. Number two 
is, to the extent that there are requested documents that are 
confidential that could put any of these businesses at risk--
and again, I used to work for one.
    Mr. Carter. I thought it was a subpoena we sent.
    Mr. Counihan. We have made those available in camera. They 
remain that way, but we can't have those divulged publicly or 
those businesses----
    Mr. Carter. Mr. Counihan, if we agree on anything in this 
committee, Democrats, Republicans, Independents, whoever, it is 
that y'all need to pay attention, and when we ask you something 
we expect for you to get it to us. I don't think you will find 
anyone who disagrees with that.
    Mr. Counihan. That's understood. But we have a fiduciary 
responsibility to these firms, as I'm sure you can appreciate.
    Mr. Carter. I can appreciate that, but you have an even 
greater responsibility to this committee and to answering to 
the people who have been elected to represent the American 
citizens. All right. That's all.
    Mr. Cartwright. Mr. Chairman, I have a unanimous consent 
request.
    The witness was questioned about profitability and was not 
able to answer questions on second quarter because they won't 
be out until--and audited until August.
    Mr. Counihan. Yeah.
    Mr. Cartwright. I request unanimous consent to put into the 
record a Financial Press article noting that for the first 
quarter, at least three ACA created CO-OPs turned Q-1 profits 
in Maryland, New Mexico, and Massachusetts.
    Mr. Carter. Without objection.
    Mr. Cartwright. Thank you.
    Mr. Carter. Mr. Counihan, Ms. Blumberg, I want to thank 
both of you, and thank you for taking time out to appear before 
us today.
    Is that it? Did you have anything else? We're all done.
    If there's no further business, without objection the 
subcommittee stands adjourned.
    [Whereupon, at 4:30 p.m., the subcommittee was adjourned.]