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

                    STATE OF COMPETITION IN THE HEALTH CARE
                      MARKETPLACE: THE PATIENT PROTECTION
                           AND AFFORDABLE CARE ACT'S
                             IMPACT ON COMPETITION

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

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                               REGULATORY REFORM,
                          COMMERCIAL AND ANTITRUST LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 10, 2015

                                   __________

                               Serial No. 114-46

                                   __________

             Printed for the use of the Committee on the Judiciary

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Available via the World Wide Web: http://judiciary.house.gov
                                       ______

                             U.S. GOVERNMENT PUBLISHING OFFICE

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                           COMMITTEE ON THE JUDICIARY

                       BOB GOODLATTE, Virginia, Chairman
    F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
        Wisconsin                        JERROLD NADLER, New York
    LAMAR S. SMITH, Texas                ZOE LOFGREN, California
    STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
    DARRELL E. ISSA, California          STEVE COHEN, Tennessee
    J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
    STEVE KING, Iowa                       Georgia
    TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
    LOUIE GOHMERT, Texas                 JUDY CHU, California
    JIM JORDAN, Ohio                     TED DEUTCH, Florida
    TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
    JASON CHAFFETZ, Utah                 KAREN BASS, California
    TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
    TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
    RAUL LABRADOR, Idaho                 HAKEEM JEFFRIES, New York
    BLAKE FARENTHOLD, Texas              DAVID N. CICILLINE, Rhode Island
    DOUG COLLINS, Georgia                SCOTT PETERS, California
    RON DeSANTIS, Florida
    MIMI WALTERS, California
    KEN BUCK, Colorado
    JOHN RATCLIFFE, Texas
    DAVE TROTT, Michigan
    MIKE BISHOP, Michigan

               Shelley Husband, Chief of Staff & General Counsel
            Perry Apelbaum, Minority Staff Director & Chief Counsel
                                     ------

        Subcommittee on Regulatory Reform, Commercial and Antitrust Law

                       TOM MARINO, Pennsylvania, Chairman

                     BLAKE FARENTHOLD, Texas, Vice-Chairman

    DARRELL E. ISSA, California          HENRY C. ``HANK'' JOHNSON, Jr.,
    DOUG COLLINS, Georgia                  Georgia
    MIMI WALTERS, California             SUZAN DelBENE, Washington
    JOHN RATCLIFFE, Texas                HAKEEM JEFFRIES, New York
    DAVE TROTT, Michigan                 DAVID N. CICILLINE, Rhode Island
    MIKE BISHOP, Michigan                SCOTT PETERS, California

                          Daniel Flores, Chief Counsel

                                C O N T E N T S

                                  ----------

                               SEPTEMBER 10, 2015

                                                                       Page

                               OPENING STATEMENTS

    The Honorable Tom Marino, a Representative in Congress from the
      State of Pennsylvania, and Chairman, Subcommittee on Regulatory
      Reform, Commercial and Antitrust Law...........................     1

    The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in
      Congress from the State of Georgia, and Ranking Member,
      Subcommittee on Regulatory Reform, Commercial and Antitrust Law     2

    The Honorable Bob Goodlatte, a Representative in Congress from
      the State of Virginia, and Chairman, Committee on the Judiciary    11

                                   WITNESSES

    Thomas L. Greaney, Professor of Law, St. Louis University School
      of Law
      Oral Testimony.................................................    13
      Prepared Statement.............................................    16

    Richard J. Pollack, Executive Vice President, Advocacy and Public
      Policy, American Hospital Association
      Oral Testimony.................................................    31
      Prepared Statement.............................................    33

    Barbara L. McAneny, M.D., Member of the Board of Trustees,
      American Medical Association
      Oral Testimony.................................................    43
      Prepared Statement.............................................    45

    Daniel T. Durham, Executive Vice President, Strategic
      Initiatives, America's Health Insurance Plans
      Oral Testimony.................................................    65
      Prepared Statement.............................................    67

    Scott Gottlieb, M.D., Resident Fellow, American Enterprise
      Institute
      Oral Testimony.................................................    81
      Prepared Statement.............................................    84

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan, and
      Ranking Member, Committee on the Judiciary, submitted by the
      Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in
      Congress from the State of Georgia, and Ranking Member,
      Subcommittee on Regulatory Reform, Commercial and Antitrust Law     4

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Letter submitted by the Honorable Tom Marino, a Representative in
      Congress from the State of Pennsylvania, and Chairman,
      Subcommittee on Regulatory Reform, Commercial and Antitrust Law   120

    Response to Questions for the Record from Richard J. Pollack,
      Executive Vice President, Advocacy and Public Policy, American
      Hospital Association...........................................   123

    Response to Questions for the Record from Barbara L. McAneny,
      M.D., Member of the Board of Trustees, American Medical
      Association....................................................   161

    Response to Questions for the Record from Daniel T. Durham,
      Executive Vice President, Strategic Initiatives, America's
      Health Insurance Plans.........................................   164

    Question for the Record submitted to Scott Gottlieb, M.D.,
      Resident Fellow, American Enterprise Institute.................   168

    Response to Question for the Record from Scott Gottlieb, M.D.,
      Resident Fellow, American Enterprise Institute.................   170

       STATE OF COMPETITION IN THE HEALTH CARE MARKETPLACE: THE PATIENT
           PROTECTION AND AFFORDABLE CARE ACT'S IMPACT ON COMPETITION

                                  ----------

                          THURSDAY, SEPTEMBER 10, 2015

                           House of Representatives,

                      Subcommittee on Regulatory Reform,
                          Commercial and Antitrust Law

                          Committee on the Judiciary,

                                Washington, DC.

        The Subcommittee met, pursuant to call, at 10:02 a.m., in
    room 2141, Rayburn Office Building, the Honorable Tom Marino
    (Chairman of the Subcommittee) presiding.
        Present: Representatives Marino, Goodlatte, Collins,
    Walters, Ratcliffe, Trott, Bishop, Johnson, Conyers, DelBene,
    and Cicilline.
        Staff present: (Majority) Anthony Grossi, Counsel; Andrea
    Lindsey, Clerk; and (Minority) Slade Bond, Counsel.
        Mr. Marino. The Subcommittee on Regulatory Reform,
    Commercial and Antitrust Law will come to order. Without
    objection, the Chair is authorized to declare recess of the
    Committee at any time.
        We welcome everyone to today's oversight hearing on ``The
    State of Competition in the Health Care Marketplace: The
    Patient Protection and Affordable Care Act's Impact on
    Competition.''
        I am going to recognize myself now for an opening
    statement.
        Today's hearing marks the beginning of a series of hearings
    on competition in the health care marketplace. The first
    hearing will undertake a broad examination of competition
    within the hospital, insurance, and physician marketplaces.
    Additionally, we will also focus on the impact that the Patient
    Protection and Affordable Care Act, or ``Obamacare,'' has had
    on competition within each of these sectors.
        There is no doubt that there has been significant movement
    in each of the hospital, insurer, and physician markets since
    the enactment of Obamacare. Hospital mergers nearly doubled
    between 2009 and 2013, the period surrounding the congressional
    debate on Obamacare and immediately after its enactment. Four
    of the five largest for-profit health insurance companies
    recently announced their intent to merge, which will be the
    subject of a separate Subcommittee hearing in the coming weeks.
    Additionally, reports of physician practices either merging or
    being purchased by hospitals has increased in recent years.
        On top of all this activity, we are spending more on health
    care than ever before, and that number is only expected to
    grow. I trust that competition will put pressure on market
    actors to deliver quality product at a reasonable price. I have
    infinitely more confidence in the judgment of a competitive
    marketplace over the judgment of government.
        Obamacare is another government experiment attempting to
    replace the will of the market with its own. An experiment
    that, in my view, has gone horribly wrong. As Chairman of the
    Subcommittee overseeing our antitrust laws in competition, I
    believe we have a duty to ensure that the laws Congress pass
    are encouraging competition and that the antitrust laws are
    being enforced effectively. Today's hearing will help inform
    Congress of the status of competition in the predominant health
    care sectors, as well as add to the record of Obamacare's
    impact on the state of competition in each of these sectors.
        I look forward to hearing from our witnesses, and I yield
    back the balance of my time, and I now recognize the Ranking
    Member of the Subcommittee on Regulatory Reform, Commercial and
    Antitrust Law, Mr. Hank Johnson of Georgia, for his opening
    statement.
        Mr. Johnson. Thank you, Mr. Chairman.
        Today's hearing is the first in a series of hearings that
    will examine the state of competition in the health care
    marketplace. It is also the third hearing that this Committee
    has held on this topic in as many years. But much has changed
    since our last hearing in September of 2013.
        Since the first open enrollment period began in October
    2013, the Affordable Care Act has already expanded coverage,
    savings and protections for millions of American consumers.
    Since provisions of the Affordable Care Act have taken effect,
    the law has resulted in the coverage of 16.4 million uninsured
    people, dropping the uninsured rate by 35 percent, the lowest
    in 50 years, and lowering the overall cost of health care for
    both insured Americans and health care providers. It saved 9.4
    million seniors more than $15 billion on prescription drugs, or
    about $1,598 for every beneficiary, and it has dramatically
    slowed the cost of health care spending, to the benefit of
    taxpayers and the entire health care system.
        The Department of Health and Human Services likewise
    reported in July that the law has slowed the cost of health
    care premiums as new competitors in local markets and price
    competition intensifies. The Congressional Budget Office also
    reported that these lower premium costs have lowered previous
    cost estimates for the Affordable Care Act by about $142
    billion, or 11 percent, while the Washington Post reports that
    ``the cost of the law has been falling for several years now
    that analysts are beginning to assess the evidence of the law's
    impact from its first full year of implementation.''
        There is also ample evidence that the Affordable Care Act
    is a reaction to, not a cause of, consolidation in the health
    care marketplace. A unifying bipartisan theme of our hearings
    on this topic is that waves of consolidation among health care
    providers and insurers occurred long before the Affordable Care
    Act. Whether due to lax antitrust enforcement or bad policy,
    many local markets were highly consolidated before the
    enactment of the Affordable Care Act in 2010. According to the
    Department of Health and Human Services Report on Competition
    in Health Insurance Marketplaces, competition has intensified
    across the country as the number of health insurance issuers
    have increased in most counties. As I have already noted, this
    increased competition has had the effect of reducing premium
    growth through an influx of new plans and increased pressure
    for incumbent insurance issuers to moderate the cost of
    premiums. Preserving and promoting this competition is
    critical, and I encourage the antitrust enforcement agencies to
    do so at every opportunity.
        In closing, it is clear that now that we have put it to
    work, the Affordable Care Act is saving lives and money. Rather
    than demonizing the Administration and the law that has done so
    much for so many, we would be ensuring that the progress we
    have made in such a short time is not jeopardized by anti-
    competitive behavior or consolidation. With that in mind and
    notwithstanding the consistently partisan nature of discussions
    concerning health care and the Affordable Care Act, I thank the
    Chair for calling this hearing and I look forward to future
    hearings on this subject. Few topics directly affect the lives
    of American consumers as ensuring that health care markets are
    delivering the best and most health care choices in every
    county in America.
        And with that, I would yield back. But let me say before I
    yield back, I would like to offer into the record, without
    objection, the statement of Ranking Member John Conyers.
        Mr. Marino. So ordered, without objection.
        [The prepared statement of Mr. Conyers follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________
        Mr. Johnson. I yield back.
        Mr. Marino. The Chair recognizes the Chairman of the full
    Judiciary Committee, Mr. Bob Goodlatte of Virginia, for his
    opening statement.
        Mr. Goodlatte. Thank you, Mr. Chairman.
        Before we begin today's hearing, which marks the beginning
    of a series of hearings on competition in the health care
    marketplace, I think it would be helpful to clarify two points
    of overriding concern.
        First, health care is not provided in a true free market,
    and has not been provided in a free market since at least the
    onset of major government intervention in the market through
    Medicare and Medicaid.
        Second, health care as a service is unique in that nearly
    every person in America will require some medical treatment
    over the course of their lives. Health insurance is not like
    fire insurance or car insurance, where there is a hope that one
    will never have to use it. Medical costs inevitably occur and
    hopefully insurance or some funds set aside for these costs
    will be used when the time comes.
        In the face of these facts--that the health care market is
    not a fully free market and that Americans have no choice but
    to participate in the market--it is essential that we preserve
    as much competition and freedom in the overall health care
    marketplace as we can.
        We should strive to enact laws that foster competition so
    that prices are checked, patients have choices, and the premium
    quality of American health care can be maintained. Otherwise,
    costs will go up, choices will narrow, and quality will be
    diminished. That is simply the laws of economics at work.
        In 2010, President Obama signed into law the Patient
    Protection and Affordable Care Act, which I believe is
    antithetical to competition. Rather than promoting free
    markets, Obamacare put in place a regulatory structure that
    stifled competition and instituted incentives for increased
    market consolidation.
        Since the enactment of Obamacare, I have been sounding the
    alarm bells. The Judiciary Committee held hearings on Obamacare
    and competition in each of the last two congressional sessions.
    I am pleased that the Committee meets again to continue to
    sound the siren and supplement the growing record of
    Obamacare's anticompetitive results.
        One of the principal tenets of economics is that
    competition can lead to lower prices, enhanced product variety,
    greater innovation, and downward pressure on costs. When
    markets consolidate, there exists the potential for reduced
    competition resulting in the contraction of the related
    benefits.
        Of course, consolidation does not always lead to a
    reduction in competition. Market efficiencies can be obtained,
    and the expansion of successful products can be achieved more
    rapidly through transactions. However, when non-market and
    government forces compel consolidation, those underlying forces
    and their effects should be closely examined.
        Accordingly, it is vitally important that antitrust laws
    are properly and consistently enforced to prevent
    anticompetitive consolidation and conduct, and that laws that
    promote these activities are subject to strict and ongoing
    scrutiny. Continuous and vigilant oversight, such as at today's
    hearing, will help to ensure that health care markets operate
    as freely and competitively as possible, in order to provide
    consumers with premier and affordable health care.
        I look forward to the testimony of our witnesses on the
    state of competition in the predominant health care markets.
    Thank you, Mr. Chairman. I yield back.
        Mr. Marino. Thank you, Chairman Goodlatte.
        Without objection, other Members' opening statements will
    be made part of the record.
        Now I will begin by swearing the witnesses in. Would you
    please stand and raise your right hand, please?
        Do you swear that the testimony you are about to give
    before the Committee is the truth, the whole truth, and nothing
    but the truth, so help you God?
        Let the record reflect that all the witnesses have answered
    in the affirmative.
        Please be seated.
        We have a distinguished group of witnesses here today that
    I think are going to contribute a great deal to some of the
    questions that we would like to have answered.
        We will begin with Professor Thomas L. Greaney, who is a
    Chester A. Myers Professor of Law and Co-Director of the Center
    for Health Law Studies at the St. Louis University's School of
    Law. Professor Greaney also is the author of Health Law, one of
    the leading health care casebooks, as well as numerous articles
    on the intersection of antitrust and health law that have been
    published in, among other places, the New England Journal of
    Medicine, the Antitrust Law Journal, the Journal of the
    American Medical Association, and the Yale Journal of Health
    Law and Policy.
        Prior to joining the St. Louis University School of Law,
    Professor Greaney served as the Assistant Chief in the
    Antitrust Division of the Department of Justice. Mr. Greaney
    received his B.A. magna cum laude from Wesleyan University and
    his J.D. from Harvard Law School.
        Welcome, professor.
        Mr. Richard Pollack recently became the 11th President and
    CEO of the American Hospital Association, known as AHA, on
    September 1st, 2015. Mr. Pollack has been with the AHA for over
    32 years, recently serving as the institution's Executive Vice
    President for Advocacy and Public Policy, where he was
    responsible for the development, implementation and management
    of the Association's advocacy, representation and public
    affairs activities.
        Mr. Pollack started his professional career here on Capitol
    Hill, serving as a legislative assistant to former Congressman
    Dave Obey. Mr. Pollack earned his Bachelor's degree in
    Political Science and Communications from the State University
    of New York's College at Cortland, and his Master's degree in
    Public Administration from American University.
        Welcome, Mr. Pollack.
        Dr. Barbara McAneny was re-elected on June 2014 to the
    American Medical Association AMA Board of Trustees. Dr. McAneny
    is a board-certified medical oncologist and hematologist from
    Albuquerque, New Mexico, and has served in numerous leadership
    roles at the AMA. Additionally, Dr. McAneny was appointed by
    Health and Human Services Secretary Tommy Thompson to the
    Practicing Physicians Advisory Council from 2002 to 2006.
        Dr. McAneny graduated magna cum laude from the University
    of Minnesota and with honors from the University of Iowa
    College of Medicine.
        Doctor, welcome.
        Mr. Dan Durham is the Executive Vice President of Strategic
    Initiatives at America's Health Insurance Plans, known as AHIP.
    Mr. Durham has over 30 years of leadership experience with
    major policy and regulatory issues, primarily in the health
    care field. In addition to holding senior positions within
    AHIP, Mr. Durham served in high-level policy positions in the
    Federal Government, at the United States Department of Health
    and Human Services, the Social Security Administration, and the
    Office of Management and Budget.
        Mr. Durham received his B.A. from the University of Notre
    Dame and his Master's degree from Duke University.
        Mr. Durham, welcome to you also.
        Dr. Scott Gottlieb is a recent Fellow at American
    Enterprise Institute and a practicing physician. Dr. Gottlieb
    has served in various capacities at the Food and Drug
    Administration, including as a Senior Advisor for Medical
    Technology; Director of Medical Policy Development; and, most
    recently, Deputy Commissioner for Medical and Scientific
    Affairs, in addition to serving as a senior policy advisor at
    the Centers for Medicare and Medicaid Services.
        Dr. Gottlieb is also a prolific writer on health care
    issues, and has been published in leading medical journals and
    other well-respected periodicals.
        Dr. Gottlieb received his B.A. in Economics from Wesleyan
    University and his M.D. from Mount Sinai School of Medicine of
    New York University.
        Welcome, doctor.
        Each of the written statements will be entered into the
    record in its entirety, and I ask each of the witnesses to
    summarize his or her testimony in 5 minutes or less. To help
    you with the timing, you see the lights in front of you. The
    lights will switch from green to yellow, indicating that you
    have 1 minute to conclude your testimony. And when the light
    turns red, it indicates that the witness' 5 minutes have
    expired.
        I do this, and I know that some of you are probably going
    to do it. We are so intent on saying what we want to say or
    reading our statements that we pay no attention to those
    lights, and I will very politely just sort of raise the gavel
    to get your attention to ask you to please summarize. So, thank
    you.
        With that, Mr. Greaney, would you like to make your opening
    statement? Would you put your microphone on, sir?

           TESTIMONY OF THOMAS L. GREANEY, PROFESSOR OF LAW,
                   ST. LOUIS UNIVERSITY SCHOOL OF LAW

        Mr. Greaney. Thank you very much, Chairman Goodlatte,
    Chairman Marino, and Ranking Member Johnson.
        Mr. Marino. Could you pull it a little closer to you? It is
    off to the side.
        Mr. Greaney. I appreciate this opportunity to testify again
    before this Committee.
        Let me summarize my testimony with four key points.
        First of all, the Affordable Care Act both depends upon and
    promotes competition in health care markets. And secondly,
    while there is no doubt that excessive concentration undermines
    the competitive policies of the ACA, it is entirely erroneous
    to claim that the ACA is somehow responsible for this
    consolidation. Mergers to monopoly and oligopoly are efforts to
    avoid or frustrate the Act.
        Third, the recently announced health insurance mergers
    threaten competition in a variety of product markets and bear
    careful scrutiny. The only point I am going to make there is
    that you should not be taken in by the argument that consumers
    are somehow better off having big insurers confront big
    hospitals. I call that the Sumo Wrestler theory.
        And finally, my last point is that if state and Federal
    legislators are concerned about competitiveness of health care
    markets, as they should be, it is finally time to take a hard
    look at the real problems that beset the health care market--
    outdated regulations, anticompetitive practices that can be
    corrected by procompetitive legislation, and payment incentives
    that wrongly encourage consolidation. Those are your real
    culprits, not the ACA.
        Okay, let me begin with my first point. The ACA does not
    regulate prices. It relies heavily on private-sector
    competition, competition between providers and payers and
    rivalry within each of those markets. Why do we need government
    regulation to help competition? Well, let's remember what that
    putative market, as we like to call it, looked like before
    health reform. There was a dysfunctional market for individuals
    and small groups; we had a non-system of service delivery, as
    hospitals and physicians each operated in their own silos; and
    we had payment systems that rewarded volume and not outcomes.
        What has the ACA done to improve market competition? My
    written testimony goes into a variety of areas, but most
    importantly it put in place efficient markets for shopping and
    bargaining in the individual and small-group market. Very
    importantly, the exchanges set up mechanisms to shop and
    compete. And remember that the ACA also put in rules that made
    insurance products now comparable, understandable, and assure
    basic levels of coverage. These are Economics 101 conditions
    for better competition.
        What do we have as a result? Well-functioning exchange
    markets that have enabled over 10 million people to shop for
    and find products.
        The doomsday predictions about the exchanges--risk
    selection would destroy the exchanges, policies would be
    unaffordable, employer-sponsored markets would crumble--proved
    to be wrong, wrong, and wrong.
        As to the commercial market, the ACA also has had important
    salutary effects. First and foremost, it forbid insurers to
    engage in medical underwriting, going after preexisting
    conditions. That sent a message to the insurance market that is
    very important. I want to channel Bill Belichek here. It said
    ``do your job'' to insurers, develop health plans that control
    costs and improve quality rather than chase risk. And widely
    overlooked is what the ACA did with Medicare reform that is
    still ongoing. Medicare payment reform emphasizing now value-
    based purchasing, ACOs and lots of other things, shifted
    delivery in a very important way, and we know that private
    commercial markets follow what Medicare does.
        So is everything copasetic? No. Unfortunately,
    concentration is a big problem, but a little history is in
    order. Much of that, much of the problematic concentration
    preceded the ACA. The good news is that the DOJ and FTC are on
    the job and have won a series of important victories that
    should send a clear message about future consolidation.
        I will just mention very briefly my point on insurance
    sector consolidation since my time is running short. The
    insurance market consolidation is problematic. It is going to
    take an in-depth inquiry by the Department of Justice. But the
    concept--and it is a fallacious one in my view--the idea that
    somehow we are better off where we pit dominant insurers
    against dominant hospitals, that is unsupported by the economic
    evidence, both in theory and in practice. There are lots of
    antitrust cases where we have seen large insurers and hospitals
    confronting each other, and they find a way to either conspire
    with each other, either hurting rivals or simply splitting the
    spoils of their market power. Sometimes we find out that the
    sumo wrestlers would rather shake hands than compete.
        I listed a long list of ideas for a procompetitive agenda,
    including things that would help de-concentrate markets. There
    are a number of steps that could be taken. I commend Dr.
    McAneny's testimony, which I think gives many of the ideas
    which I support.
        So I think those are the steps that would promote
    competition and advance the goals of this Committee.
    [Applause.]
        [The prepared statement of Mr. Greaney follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________

        Mr. Marino. Thank you, Professor.
        Mr. Pollack?

      TESTIMONY OF RICHARD J. POLLACK, EXECUTIVE VICE PRESIDENT,
       ADVOCACY AND PUBLIC POLICY, AMERICAN HOSPITAL ASSOCIATION

        Mr. Pollack. Chairman Marino, Ranking Member Johnson, and
    distinguished Members of the Committee, on behalf of our
    Nation's hospitals, I appreciate your inviting me to be here
    today.
        The health care landscape is rapidly changing, and
    hospitals are helping to lead the way forward. They are
    focusing on improving the patient care experience, enhancing
    quality, and lowering the cost of patient care. Many of the
    market forces reshaping health care were in place long before
    the passage of the Affordable Care Act, but the ACA has
    accelerated that pace of change.
        A major part of that change is the realignment in the
    hospital field that I would like to discuss this morning. The
    emphasis on wellness or population health has encouraged
    collaboration among providers, along with the development of
    coordinated care models. These new models are often value-, not
    volume- or cost-based, which means that providers are at
    financial risk if they don't achieve specified quality and cost
    goals.
        The Department of Health and Human Services has launched a
    number of these programs, and by 2018 it expects to move half
    of all Medicare payments to alternative models of reimbursement
    that reward value. The Department has also recognized that
    achieving these goals would require hospitals to make
    fundamental changes in their day-to-day operations that improve
    quality and reduce the cost of care.
        The hospitals and health systems realigning and
    transforming care means closely working with other providers to
    make sure that patients and communities have convenient access
    to care. That means coordinating with doctors and other
    caregivers to deliver better patient-centered care; it means
    hospitals are aligning with other hospitals to unify patient
    information, better coordinate transitions and follow-up care,
    and share financial risk, among other improvements; and it
    means partnering to keep the doors of certain financially
    failing hospitals open so that patients won't lose access to
    the medical care they and their community rely on.
        For example, a health system in Ohio acquired a small
    community hospital in bankruptcy that saved 250 community jobs
    and actually expanded access to care in that rural area, and
    many small, stand-alone, and rural hospitals are particularly
    in need of partners. Just the cost of acquiring and maintaining
    electronic medical records, which can be as much as $50 million
    for a midsize hospital, can tip the financial balance of these
    organizations.
        Outdated regulatory barriers continue to constrain the pace
    of innovation, and despite repeated calls for the Federal
    agencies to modernize these regulations, to date only one has
    been changed. For example, we have repeatedly asked the Federal
    Trade Commission, which oversees transactions in the hospital
    field, for guidance on constructing clinical integration
    arrangements that could in some instances take the place of
    mergers. However, we have not received this guidance.
        Now, despite these challenges, the results of hospital
    realignment are promising. It is even impressive. The author of
    a recent study in the Journal of the American Medical
    Association used the term ``jaw-dropping'' to describe the
    results, which found hospitalizations and costs going down for
    patients. He observed that there has been tremendous focus on
    making sure that our hospitals are safer and that treatments
    are more timely and more effective. Moreover, he acknowledged
    that the savings per patient did not come at the expense of
    quality.
        And let me highlight just one other fact, and that is that
    hospital price growth is at historically low levels, less than
    1 percent in 2015.
        Now, while I understand that this hearing is not focused on
    the recently announced health insurance acquisitions, I would
    just like to briefly touch on that point. We have serious
    concerns about two potential acquisitions and believe they
    merit the greatest scrutiny from both the Department of
    Justice's Antitrust Division as well as Congress.
        Anthem's proposed acquisition of Cigna, and Aetna's
    proposed acquisition of Humana, would eliminate two of the
    largest national health insurance companies, leaving just three
    dominant national providers of health insurance. That would
    leave consumers with fewer and, no doubt, more expensive
    options for coverage, and it would diminish the insurers'
    willingness to be innovative partners with providers and
    consumers to transform care.
        In conclusion, I just want to say that America's hospitals
    are woven into the fabric of our communities. Hospitals care
    for patients when they are sick, and we work to keep
    communities healthy. We have tried to lead the way and will
    continue to try to lead the way to reshape the system, to
    improve quality, to improve efficiency, and to make health care
    more affordable for patients and families, and we certainly
    look forward to working with the Committee on making sure that
    consumers have access to high-quality, affordable care in their
    communities.
        Thank you.
        [The prepared statement of Mr. Pollack follows:]

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                                   __________

        Mr. Marino. Thank you, Mr. Pollack.
        Dr. McAneny?

     TESTIMONY OF BARBARA L. McANENY, M.D., MEMBER OF THE BOARD OF
                 TRUSTEES, AMERICAN MEDICAL ASSOCIATION

        Dr. McAneny. Thank you. Good morning. I am Dr. Barbara
    McAneny. I am a cancer doctor practicing in New Mexico, and I
    am immediate past chair of the American Medical Association.
    Thank you for inviting us to participate in this oversight
    hearing on competition in the health care marketplace.
        Physicians want to participate in a health care delivery
    system that allows us to deliver high-quality and efficient
    care to our patients. We believe that competition between and
    among health care providers, facilities and insurers is an
    excellent prescription for achieving that goal.
        The Affordable Care Act, which includes provisions that are
    designed to stimulate competitive forces in segments of the
    health care market, is a disruptive force whose impact is still
    being revealed. New payment and delivery models focusing on
    quality and efficiency can foster competition by encouraging
    innovation. Physician leadership in these new models is
    critical both to protecting patients' interests and driving
    down costs.
        Indeed, preserving the ability of physicians to participate
    in alternative payment models, including small or specialty or
    rural practices, is essential because it ensures patient
    choice, preserves the doctor-patient relationship, and provides
    better competition in health care markets. Therefore, we
    recommend reassessing and removing legal barriers that inhibit
    physician engagement.
        Specifically, we strongly support the FTC and DOJ efforts
    to clarify the application of antitrust laws and urge
    additional guidance to encourage the development of physician-
    guided, innovative delivery models. Currently, broad
    prohibitions under the Federal fraud and abuse laws discourage
    physicians from adopting innovative incentive programs that
    could kick-start competition. We therefore urge Congress and
    the Administration to strengthen and expand program integrity
    exemptions for physicians participating in alternative delivery
    and payment models.
        Ultimately, physicians should be able to maintain
    independent practices and participate in innovative care
    models. Anticompetitive hospital markets may undermine the
    incentive of hospitals to compete based on quality, potentially
    laying the groundwork for suboptimal care. Lifting the ban on
    new physician-owned hospitals, which have developed an enviable
    track record on quality and cost, offers one way to inject new
    competition into hospital markets.
        Similarly, we believe that competition, not consolidation,
    is the right prescription for health insurer markets.
    Competition can lower premiums, enhance patient care, and spur
    innovative ways to improve quality while lowering costs. Our
    annual study of commercial health insurance markets shows that
    70 percent are already highly concentrated. We believe that
    there must be a rigorous review of proposed mergers to
    determine their effects on competition and their consequences
    for patient care.
        In 2010, the Department of Justice found that the proposed
    Blue Cross merger in Michigan would have resulted in ``the
    ability to control physician reimbursement rates in a manner
    that could harm the quality of health care delivered to
    consumers.'' The same analysis should be applied to pending
    mergers.
        In practice, the concentration of market power among a
    handful of nationwide insurers impacts physicians' ability to
    facilitate individualized care. Doctors are left with no
    recourse to advocate for our patients, and innovation is
    stifled. Market dominance does not produce patient benefits
    when physicians are squeezed and networks are narrowed.
    Patients should be able to select their doctors based on
    quality and service, and doctors should be free to get patients
    what they need and deserve. This is a stark reminder of what is
    at stake: the health and safety of American patients.
        We are at a critical decision point on health insurance
    mergers because once the handful of national players is further
    reduced, there is simply no going back. Post-merger remedies
    are likely to be both ineffective and highly disruptive. Thus,
    we believe that the time for heightened scrutiny and careful
    consideration is now, before proposed mergers take effect and
    result in a fait accompli wherein patients and physician
    practices are permanently harmed.
        Competition plays a major role in enabling patients to
    access the high-quality care they deserve at a reasonable cost.
    We thank the Subcommittee for your continued efforts on this
    issue, and we look forward to working with you to improve
    health care competition. Thank you.
        [The prepared statement of Dr. McAneny follows:]

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                                   __________

        Mr. Marino. Thank you, Dr. McAneny.
        Mr. Durham?

       TESTIMONY OF DANIEL T. DURHAM, EXECUTIVE VICE PRESIDENT,
        STRATEGIC INITIATIVES, AMERICA'S HEALTH INSURANCE PLANS

        Mr. Durham. Good morning, Subcommittee Chairman Marino,
    Chairman Goodlatte, Ranking Member Johnson, and Members of the
    Subcommittee. I am Dan Durham, Executive Vice President at
    America's Health Insurance Plans, and I appreciate this
    opportunity to testify on issues regarding competition in the
    health care system.
        A competitive health care system is the best way to achieve
    innovative, high-quality, affordable health care. Competition
    among health plans occurs at the local level, and the diversity
    of AHIP's membership, which includes local, regional, and
    national plans, reflects the many choices available to
    consumers.
        Innovation in payment and delivery has resulted in a broad
    range of options available in the marketplace as health plans
    continually work, in collaboration with providers, to improve
    the value of their products for consumers. Our written
    testimony highlights initiatives that our members have
    pioneered to promote quality and affordability, as well as
    consumer tools that promote patient-centered care.
        Regarding competition in the marketplace, the Department of
    Health and Human Services reports that an average of 40 plan
    options are available per county in 2015. That is up from 30
    last year. And McKinsey reports a 26 percent increase in the
    number of issuers competing on exchanges. Competition within
    local markets is evolving, with a variety of high-value
    products, from patient-centered medical homes to bundled
    payments to accountable care models. The range of collaborative
    products that drive value is vast, and health plans tailor
    these products to help meet the specific needs of local patient
    populations.
        As has been reported, there is merger activity in the
    health insurance industry. While I can't speak to the potential
    outcomes of these reviews, it is important to understand the
    broad framework that the antitrust agencies use to evaluate
    whether a particular transaction is procompetitive or
    anticompetitive, and the evolving nature of the market for
    health coverage.
        Assessing the impact of proposed mergers should start with
    a clear understanding that many mergers and acquisitions are
    beneficial to consumers. They facilitate new, high-value
    products and efficiencies that reduce cost. The Department of
    Justice has indicated, ``The primary benefit of mergers to the
    economy is their potential to generate significant
    efficiencies, and thus enhance the merged firm's ability and
    incentives to compete, which may result in lower prices,
    improved quality, enhanced service, or new products.'' The DOJ,
    along with 50 state attorneys general and insurance
    commissioners play an important role in reviewing proposed
    mergers and determining their potential impacts. This includes
    a thorough evaluation of a large body of data and other
    evidence to determine whether a merger would harm consumers by
    adversely impacting competition in specific products and
    specific geographic areas.
        Notably, there is no single national market for health
    coverage. Health plans negotiate with providers in local
    markets and offer particular types of products that differ
    widely from one another. The agencies also consider the nature
    of the market itself and whether it is undergoing changes that
    are relevant to its analysis. For example, the highly regulated
    nature of health insurance markets is relevant to an analysis
    of the potential competitive effects of transactions. This
    highly regulated market we face distinguishes health insurance
    from other less regulated markets.
        The bottom line is that consolidation should be looked at
    on a case-by-case basis and it is problematic only when a
    transaction leads to anticompetitive effects such as an
    increase in cost resulting from harmful consolidation in
    provider markets.
        There is substantial evidence in peer-reviewed research
    that shows a significant share of health care cost increases
    are driven by dominant providers charging higher prices. The
    Robert Wood Johnson Foundation study found that increases in
    hospital market concentration lead to increases in the price of
    hospital care, and that when hospitals merge in already
    concentrated markets, the price increase can be dramatic, often
    exceeding 20 percent. This study further cautions that
    physician-hospital consolidation has not led to either improved
    quality or reduced costs. Other studies that we have detailed
    in our written testimony show that anticompetitive
    consolidation in provider markets is resulting in higher health
    care costs for consumers and employers and government programs.
        Thank you again for this opportunity to testify. AHIP and
    our members look forward to continuing to work with the
    Subcommittee and other stakeholders to improve patient access
    to high-quality, affordable health care.
        [The prepared statement of Mr. Durham follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Marino. Thank you, Mr. Durham.
        Dr. Gottlieb?

     TESTIMONY OF SCOTT GOTTLIEB, M.D., RESIDENT FELLOW, AMERICAN
                          ENTERPRISE INSTITUTE

        Dr. Gottlieb. Thank you, Mr. Chairman and Mr. Ranking
    Member, for the opportunity to testify. My name is Scott
    Gottlieb. I am a physician and Resident Fellow at the American
    Enterprise Institute.
        The health care sector is undergoing a secular
    consolidation as payers and providers assume an historic level
    of acquisition and mergers. These trends were underway prior to
    implementation of the Affordable Care Act, but there is no
    question that the ACA hastened them.
        The consolidation of physicians at the local level should
    be a particular concern. In the end, most health care is local.
    Once an institution has monopolized the providers in its
    market, it renders market-based reforms hard to achieve and
    reduces the ability of competition to be used as a tool for
    improving quality and reducing costs.
        More importantly, the new arrangements that are being
    forged, where doctors become part of large delivery systems,
    usually with a hospital at its hub, reduces productivity.
    Compelling economies of scale are not apparent in a physician
    practice marketplace. This has been borne out by many studies
    that examine the question, some of which I review in my written
    statement for this hearing. There is a lot of evidence that as
    doctors transition to becoming salaried employees of hospitals
    and health systems, their individual productivity in terms of
    metrics such as volume and intensity of care delivered also
    generally declines.
        Looking at this in view of our broader fiscal challenges
    when it comes to health care, the only way that we are going to
    solve some of the challenges facing the entitlement programs
    like Medicare is to get more health care for every dollar of
    GDP that we spend on it. To these ends, the last thing we ought
    to be doing is adopting structures that reduce productivity.
        I know there will be some discussion today of new
    technology, and particularly drugs, as factors driving
    increases in the cost of medical care, and I want to just
    comment briefly on that. However one interprets the data on
    drug costs, it is widely agreed that many new technologies
    improve productivity by improving outcomes or obviating costly
    alternatives.
        Take oncology care. Although very costly, total spending on
    oncology care as a percentage of our $2.7 trillion national
    health care budget has been constant over the last 20 years. It
    is just less than 5 percent of total health care spending. It
    comes out to about .8 percent of GDP. But the mix of
    expenditure has changed dramatically over time. Far less money
    is being spent on services like hospitalizations and far more
    on outpatient medicines. Cancer treatments that used to make
    patients very sick and require costly hospitalizations have
    been replaced with targeted drugs that can allow patients to be
    treated at home.
        So the proportion of spending on inpatient care admissions
    fell from 64 percent of total cancer spending in 1987 to 27
    percent by 2005, according to studies. Here is what happened.
    Transferring cancer care to the outpatient setting produced
    substantial savings. It is cheaper to deliver care outside the
    hospital. This is how technology improves productivity and
    lowers costs, which brings me back to the consolidation
    underway in the market for health care services.
        This consolidation not only reduces productivity and in
    turn increases costs, it also reduces patient access. This is
    especially troubling when it comes to rural markets where there
    is a lower density of doctors and patients can find it harder
    to get care at a site near their homes. It is important to
    remember that the scope of the consolidation that we are seeing
    in health care is not a response to market factors. Rather, it
    is a deliberate function of policy choices. The ACA envisions
    doctors practicing in large integrated health systems, often
    with a hospital at its hub. The idea is that these newly
    consolidated entities will be big enough to take capitated risk
    and invest in the kinds of technologies that it is believed
    will lead to better coordination in medical care. The ACA's mix
    of policies seeks to hasten these outcomes.
        The relationships that doctor practices are forging with
    their acquiring entities are far stickier than past
    arrangements. Moreover, for doctors, the opportunity to unwind
    these business engagements and go back to their old
    configurations are much more narrow. The economics behind these
    arrangements also raises some more fundamental questions. For
    one thing, these constructs were, in part, a response to
    criticism of a fee-for-service approach to payment, which is
    widely presumed to give doctors a financial incentive to
    prescribe more care. As the analysis commonly goes, under a
    fee-for-service arrangement, doctors are paid more when they do
    more things and not necessarily when they improve outcomes. But
    in reaction to these concerns, have we merely traded one flawed
    set of financial incentives for another? After all, if the
    financial incentives work in one direction, they have to work
    in the opposite direction. If doctors will prescribe too much
    care when they are paid to do more, as critics of the fee-for-
    service medicine system maintain, won't these same inducements
    work in reverse? Won't doctors prescribe too little care when
    they are paid to do less?
        This also raises another key question, and this one is
    clinical. Are patients better off on the margin when they are
    prescribed a little more care than they need or a little less?
    The body of literature doesn't fully resolve this question.
        Since all health care is local, and the lack of competition
    will soon make it much harder to implement market-based reforms
    in health care, the resulting monopolies will make more
    regulation the most obvious solution to the inevitable cost and
    quality problems. To change these outcomes, I believe that
    Congress needs to reform the ACA to remove the pervasive biases
    in the ACA that favor health system ownership of medical
    practices. At a time when the urge to merge doctors into health
    systems and turn physicians into salaried roles, there is a
    private market counter-effort to create new models that have
    physicians practicing in smaller units. Many aspects of medical
    practice are not responsive to scale, and where scale does
    help, many of the characteristics of health care that benefit
    from integration can be achieved without consolidation but by
    better use of technology.
        A legislative proposal to improve health care quality that
    manages cost would support local competition between providers
    and choice for patients. We need to improve productivity and
    preserve entrepreneurship, autonomy, and local competition that
    have long been the hallmarks of American medical progress.
    Thank you.
        [The prepared statement of Dr. Gottlieb follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________

        Mr. Marino. Thank you, Dr. Gottlieb.
        Members on the dais will now begin their 5 minutes of
    questioning, and I recognize myself for my 5 minutes.
        Mr. Pollack, I would like to begin with you, sir. There
    have been a number of reports of hospitals purchasing physician
    practices. In some cases, patients enter the same building and
    see the same doctor after the purchase, but the Medicare
    reimbursement rate for the service is significantly higher. In
    some instances, Obamacare increased these pricing disparities.
        Are Medicare reimbursement rates driving purchases of
    physician practices, and do you think that will impact
    Medicare's solvency?
        Mr. Pollack. I think, Mr. Chairman, there are two issues
    here. One is the issue of physicians wanting to be part of
    teams and wanting to be part of group practices that deliver
    care in a coordinated way, and very often they are part of the
    hospital entity. That is certainly a trend that we are seeing.
    When physicians do become part of the hospital entity and they
    deliver services within the hospital entity, there are
    requirements that have to be met that they are part of that
    facility, as opposed to providing service in their own office
    or in a different site.
        Hospital costs for those physicians are legitimately
    higher, and the Medicare rate does, in fact, reflect a higher
    amount. That is legitimate, in our view, because the regulatory
    requirements for practice in that setting are very different
    than what the requirements are in a physician office or an
    ambulatory care center. The patients we take care of in that
    setting are anyone who walks through the door, Medicare or
    Medicaid. We are open 24 hours, 7 days a week. The patients
    that are taken care of in those hospital-based physician
    clinics tend to be sicker, and we have studies that we are
    happy to submit for the record that show they are poorer and
    more economically challenged. They suffer from a more difficult
    set of circumstances. So it is, in fact, more expensive to take
    care of patients in those types of settings.
        Mr. Marino. Thank you.
        Dr. McAneny, would you like to respond to my question?
        Dr. McAneny. Yes. Thank you very much, Mr. Chairman. I take
    care of cancer patients in a very poor community in New Mexico
    which ranks at the lowest for income. While the American
    Medical Association supports the right of physicians to choose
    employment, we focus on the word ``choose.'' We don't believe
    that competition should force physicians to select employment
    over self-employment or other options.
        I do disagree with the statement that we are unable to take
    care of sicker patients in the outpatient arena. In our
    practice, if I sold to the hospital tomorrow and I saw the same
    patient and did the same services, you are absolutely correct,
    my services would be reimbursed at a higher level if I were
    hospital-based than physician fee schedule. But we do take care
    of very ill patients, and we manage to keep them in the
    outpatient arena.
        The regulatory burden that physicians have is one of the
    impediments to physician practices. The ability to be able to
    comply with all the regulatory requirements is one of the
    barriers that has driven younger physicians in particular to
    wanting to join hospitals in hopes that someone else will take
    care of all that and just let me see my patients.
        Mr. Marino. Thank you.
        Dr. Gottlieb, I have a specific question for you. In your
    testimony, you stated that there has been a net loss of
    insurers since the enactment of Obamacare. You also discuss co-
    op insurance plans that have been subsidized under Obamacare.
    Can you discuss the success rate of the co-op insurance plans
    and how the declining number of insurers will affect
    competition in the insurer marketplace? You have about 56
    seconds.
        Dr. Gottlieb. I am referring mostly to the commercial
    marketplace. There has been no new net commercial insurance
    company formation since the enactment of Obamacare, actually
    since 2008. So whatever new plans we have seen, new carriers
    enter the market, we have seen offsetting losses. And actually,
    we have seen a loss of new carriers. We have seen new plans
    enter the market, but they have all been existing carriers that
    have decided to offer plans on the exchanges. They are not new
    carriers. So I don't think that is very robust competition. It
    is an indication that investors aren't allocating capital to
    start new health plans, I think because of the regulatory
    impediments and the high cost of getting into the market.
        As far as the co-ops and the provider-sponsored plans,
    particularly the hospital-sponsored plans, I think the
    Administration envisions that picking up the slack and
    providing competition. But the co-ops are all--I think almost
    all under water, and one has already declared bankruptcy, and I
    am not very optimistic that a lot of the provider-sponsored
    health plans are going to survive. We have done this in the
    past, and it has been demonstrated that hospitals don't manage
    risk well. There is a reason why insurance companies exist.
        Mr. Marino. Thank you.
        My time has expired.
        The Chair recognizes the Ranking Member, Mr. Johnson.
        Mr. Johnson. Thank you, Mr. Chairman.
        Dr. Gottlieb, do you disagree with all of the studies that
    have proven that the cost of health care insurance premiums,
    the increases in the cost of insurance premiums has gone down
    since the onset of the Affordable Care Act?
        Dr. Gottlieb. What I see is that----
        Mr. Johnson. Do you agree or disagree?
        Dr. Gottlieb. I disagree with the premise because what I am
    seeing is that costs are being shifted to consumers. So the
    cost of providing coverage for employers, which is what the
    Administration often cites, has in fact been growing less
    quickly than in the past.
        Mr. Johnson. My question has to do with the premium growth,
    the cost of premiums, the growth in the cost of premiums.
        Dr. Gottlieb. Right. So the cost that would----
        Mr. Johnson. Not shifting of cost to consumers. I am just
    talking about the cost of health care premiums and the rise in
    the cost of health care premiums. Do you agree that the price
    increases have moderated since the passage of the Affordable
    Care Act?
        Dr. Gottlieb. I disagree because the cost to consumers has
    gone up.
        Mr. Johnson. All right. Thank you. You just refuse to
    answer that question.
        Well, let me ask you this. Do you----
        Mr. Marino. Just a minute. I am going to give the witness
    30 seconds to respond to that.
        Mr. Johnson. No, no. From whose time, Mr. Chairman?
        Mr. Marino. From your time. You have to let the witness----
        Mr. Johnson. No, no, no, no.
        Mr. Marino. You must let the witness answer the question.
        Mr. Johnson. Mr. Chairman, the witness has not answered the
    question.
        Mr. Marino. Dr. Gottlieb, please respond if you would like
    to respond.
        Mr. Johnson. I have a problem with parliamentary order.
    Parliamentary inquiry, Mr. Chairman.
        Mr. Marino. Yes?
        Mr. Johnson. Who controls the time during my questioning of
    my witnesses?
        Mr. Marino. I do.
        Mr. Gottlieb, answer the question.
        Mr. Johnson. All right. Well, I am going to take exception.
        Mr. Marino. Exception noted.
        Dr. Gottlieb, you may go ahead and answer the question.
        Mr. Johnson. In fact, I am just going to--if you won't----
        Mr. Marino. No, you have to give the witness an opportunity
    to answer the question.
        Mr. Johnson. Mr. Chairman, when I ask a question and the
    witness refuses to answer the question----
        Mr. Marino. You didn't give him an opportunity to answer
    the question. You kept cutting him off.
        Mr. Johnson. The witness refused to answer the question,
    and it is my prerogative, Mr. Chairman, as the questioner, to--
    --
        Mr. Marino. You still have your time, you still have your
    time.
        Mr. Johnson. My time is running because I am responding to
    your interruption of my questions.
        Mr. Marino. You continue to ask your questions, and we will
    give him 30 seconds when you are----
        Mr. Johnson. Mr. Chairman, you started at 4 minutes and 20
    seconds--I had 4 minutes and 20 seconds----
        Mr. Marino. Go ahead.
        Mr. Johnson [continuing]. When you interrupted me to try to
    give this witness an opportunity to answer my question in the
    way that he wanted to answer it.
        Mr. Marino. You have the extra time. Go ahead again with
    your questions.
        Mr. Johnson. Okay. All right.
        Now, Dr. Gottlieb, I asked you a question, do you agree or
    disagree with the studies that have shown that the rise in
    premium costs has been moderated since the passage of the
    Affordable Care Act, and you went into a discussion about
    shifting of costs to consumers. That is not my question. I will
    give you one last chance to answer my question, and I think you
    understand my question. Do you agree or disagree with those
    studies?
        Dr. Gottlieb. I disagree with those studies because I think
    they are flawed.
        Mr. Johnson. All right. Thank you. All right.
        Now, Dr. Gottlieb, do you agree that Congress should repeal
    the McCarran-Ferguson Act antitrust exemptions for insurance
    companies?
        Dr. Gottlieb. No, I do not.
        Mr. Johnson. All right. Thank you.
        Dr. McAneny, I hope I pronounced that correctly. In a
    speech in June of 2015, FTC Commissioner Julie Brill stated
    that while the antitrust agencies are watchful of
    anticompetitive behavior, not one accountable care organization
    has been challenged for anticompetitive conduct by the
    antitrust agencies. What is your response to this approach to
    provider collaborations in the health care marketplace?
        Dr. McAneny. I think the antitrust laws are very confusing
    to people, with or without an affordable care organization, to
    try to create an organization that allows us to collaborate as
    physicians, take economic risk together, and to do clinical
    integration. And I can't speak as a physician since I am not a
    lawyer to what the FTC and DOJ are doing with that, but we feel
    that if we could release some of those barriers and make those
    laws much more clear so that physicians could understand them
    and stay within the confines of the law but still be able to
    collaborate together, we wouldn't have to become employees or
    consolidate the industry in order to create a lot of new
    mechanisms that could deliver better care at a lower cost.
        Mr. Johnson. Thank you. In your written testimony you argue
    that Medicare and Medicare Advantage are distinct product
    markets. Why is Medicare not an adequate substitute for
    Medicare Advantage, and what effect would consolidation in the
    Medicare Advantage market have on physicians and seniors?
        Dr. McAneny. Thank you, sir, for that question. The AMA has
    found that very few patients will switch back and forth from
    Medicare Advantage programs to plain fee-for-service Medicare,
    in part because of the concerns of being able to pay the 20
    percent co-pay with fee-for-service Medicare. The Medicare
    Advantage programs have been given extra money to be able to
    provide better benefits, and patients respond to that.
        What we find is that when those patients consolidate into
    fewer and fewer Medicare Advantage plans, that if the benefits
    are not what the patient wants, if a physician, for example, is
    not on the panel of that Medicare Advantage program, that they
    have a distinct disadvantage in being able to get care and they
    are often forced to pick between their primary care doctor, who
    is on one, and their specialist is on another, and they need
    both of us. So we look at the managed care Medicare Advantage
    market as being distinct from fee-for-service Medicare for
    those reasons.
        Mr. Johnson. All right. Thank you.
        Mr. Greaney, in their testimony, both Mr. Pollack and Dr.
    Gottlieb observed that consolidation in the health care
    marketplace was hastened by the ACA. What is your response to
    that?
        Mr. Greaney. I think that is a bit misleading. Surely the
    Affordable Care Act encourages providers to get together, to
    consolidate, to form efficient delivery systems, and that is
    certainly true. But nothing in the ACA encourages consolidation
    to monopolies and oligopolies. In fact, just to give you an
    example, your doctor probably tells you a glass of wine with
    dinner every night is probably a good thing, but he would
    counsel against two bottles of wine, and I think that is what
    we are talking about here. We are talking about consolidation
    that is excessive.
        As I have said in my testimony, the Affordable Care Act is
    premised on having competitive units at the delivery level and
    at the insurance level so that the ACA relies on competition
    and relies on healthy enforcement of the antitrust laws. If you
    look to the string of victories the FTC has achieved, both in
    hospital markets and in challenging physician mergers, it is
    doing its job. So to that extent, blaming the ACA for
    consolidation is misleading because you would be hard pressed
    to find a health care economist or policy person who thought
    what was needed was anything but the fragmentation that we have
    had heretofore.
        Mr. Johnson. Thank you, and I yield back.
        Mr. Marino. The Chair recognizes the Chairman of the full
    Committee, Congressman Goodlatte.
        Mr. Goodlatte. Thank you, Mr. Chairman.
        Dr. Gottlieb, I think you wanted to explain your answer of
    trends with regard to insurance premiums, and I think you
    should be afforded that opportunity, so I will give that to you
    now.
        Dr. Gottlieb. Thank you, Congressman. What we have seen in
    the market and what the Administration often talks about is the
    cost of coverage, of providing coverage for employers to their
    employees and premium growth, and it is true that premium
    growth, at least in the recent years, has moderated, although
    we are seeing it accelerate quite dramatically.
        But what has happened is we have seen a very dramatic shift
    of cost to consumers. We have seen the advent of very narrow
    plans, closed drug formularies, closed networks, exclusive
    provider organizations, and all of that has served to shift
    costs onto consumers. I think that that is a big component----
        Mr. Goodlatte. Things that aren't covered by the insurance,
    in other words?
        Dr. Gottlieb. Exactly.
        Mr. Goodlatte. So the opposite of what is purported to be
    the benefit of Obamacare?
        Dr. Gottlieb. Well, closed drug formularies in particular
    is a real new phenomenon in the market. The only place where we
    had seen closed drug formularies prior to implementation of the
    Affordable Care Act was in Medicare Advantage. But Medicare
    Advantage had the protected classes which made sure that the
    formularies were robust.
        What is happening in the Affordable Care Act in the
    exchange-based plans is there are closed drug formularies where
    if the drug isn't on the plan's formulary, you are completely
    out-of-pocket and what you spend doesn't count against your
    deductible.
        Mr. Goodlatte. I need to take my time for other things. So
    what you are saying is that whether or not insurance premiums
    are moderating, that doesn't necessarily mean that the overall
    cost to the consumer and overall cost to society----
        Dr. Gottlieb. Exactly.
        Mr. Goodlatte [continuing]. The overall cost to taxpayers
    has moderated.
        Dr. Gottlieb. It has gone up quite a bit to the consumer.
        Mr. Goodlatte. Right. Thank you.
        Dr. McAneny, I may come back to Dr. Gottlieb if I have
    time, but he said that health system ownership of medical
    practices is an undesirable trend. You said that you wanted to
    make sure that they had choice. In a moment I will go to Mr.
    Pollack and give him an opportunity to respond as well. But one
    of the things that I see and one of the things I hear from my
    physicians is that they are actually in competition with the
    employees who are at the hospital, and it is very difficult to
    compete with them when there are such disparate reimbursement
    rates that take place in the hospital compared to what the
    physician may get in their private practice. What is your
    observation about that?
        Dr. McAneny. Well, Mr. Chairman, I think you summarized it
    very well, that it is very difficult for individual physicians
    to be able to compete with hospital-based physicians because
    they have the leverage that we as individuals lack to be able
    to negotiate with insurance companies. We find that the
    regulatory burden is still there in the independent market and
    that hospitals are able to purchase a lot of the same supplies
    and everything else that we need to purchase at a lower price
    or a subsidized price.
        Mr. Goodlatte. Mr. Pollack, I take your point with regard
    to the cost of operating a hospital, but I also am concerned
    that if we are trying to promote competition and there is only
    one hospital in a community, and that hospital has people
    providing services in this area, how do the private
    practitioners successfully compete with the hospital
    practitioners, if you will, in that kind of marketplace, and
    what are the trends there? I see a lot of consolidation. I
    think Dr. McAneny said it is already at 70 percent, perhaps, of
    physicians going in to work at hospitals. Where do you get the
    competition if they all go into the hospital and nobody is out
    there providing that competition?
        Mr. Pollack. I think some of the competition is among
    hospital systems, and I think what we have to remember here is
    that we have a new way of paying for a lot of care in terms of
    different mechanisms that require payment for taking care of
    people.
        Mr. Goodlatte. What if there is only one hospital in the
    community?
        Mr. Pollack. By the way, you made an eloquent point at the
    very beginning, Mr. Chairman, about how health care is a unique
    kind of market.
        Mr. Goodlatte. I agree with that.
        Mr. Pollack. There are 13----
        Mr. Goodlatte. But I am still not going to let you off the
    hook with that. We still have to find ways to compete.
        Mr. Pollack. No, no, your point is very well taken. There
    are 1,300 critical access hospitals in this country in areas in
    which there really is not competition. There are another 500 or
    so sole community providers or rural referral centers. So
    inherently, it is hard to say that competition plays out in a
    very even----
        Mr. Goodlatte. Competition amongst hospitals is an
    important issue, and we are going to get to that as a part of
    this series of hearings that we are going to hold. But right
    now I want to talk about competition between doctors working in
    the hospital and doctors who are working outside the hospital.
    How do we promote that? How do we assure that we continue to
    have competition from physicians who want to practice on their
    own; or, from a societal standpoint, from an economic
    standpoint, is it important that they be outside the system and
    practice on their own?
        Mr. Pollack. And I think that pluralistic approach still
    exists today. But I think what is important to recognize is
    that there are a lot of physicians that want to be in practices
    that are group practices, whether they are on their own or
    whether they are employed arrangements. There are a lot of
    physicians in the next generation that are coming out of
    medical school that actually want to be a part of these groups
    because they don't want to take calls 24/7 and they want to be
    part of these teams.
        Mr. Goodlatte. Mr. Chairman, if I might, I would like to
    let Dr. Gottlieb answer this same question that I just asked
    Mr. Pollack.
        Mr. Marino. Without objection.
        Dr. Gottlieb. What was the question?
        Mr. Goodlatte. The question is how do we assure continued
    competition in communities that have only one hospital system
    when the fact of the matter is more and more physicians go to
    work in the hospital and take up that competition?
        Dr. Gottlieb. I think we don't, and I practice in one such
    community. I think when the hospital monopolizes most of the
    local physicians, it is very hard to have provider-based
    competition. I do believe that provisions in the Affordable
    Care Act have skewed the market in this direction, quite
    deliberately so. I think it is part of a broader political
    philosophy that I think, to date, hasn't been successful.
        Mr. Goodlatte. Thank you, Mr. Chairman.
        Mr. Marino. The Chair now recognizes the Ranking Member of
    the full Judiciary Committee, Congressman Conyers from
    Michigan.
        Mr. Conyers. Thank you, Mr. Chairman.
        I welcome the witnesses, apologize for my late arrival.
        I would like to start off with Professor Greaney by asking
    him what he has heard or observed here today that you think we
    ought to be most cautious about in terms of this analysis
    between competing aspects of providers for the Affordable Care
    Act.
        Mr. Greaney. Thank you, Mr. Chairman. I think several of
    the things that have been mentioned today----
        Mr. Conyers. Pull that mic a little closer.
        Mr. Greaney. Several of the things that have been brought
    up today I think are absolutely valid criticisms of the current
    state of the law. I think the disparate payments between site
    of payment really makes no sense. MedPac has put out studies
    showing that those payments should be adjusted appropriately.
    That is the kind of change where I think Congress can step in
    and correct preexisting law, law that preexisted the ACA, and
    take steps.
        Chairman Conyers has been talking for many years about the
    McCarran-Ferguson Act. You heard Dr. McAneny's testimony about
    changing the fraud and abuse laws to permit and encourage
    greater cooperation short of mergers. There are many of those
    steps that can be undertaken, and I think Congress should
    devote its attention to those things because we have a lot of
    old law that is like barnacles on the hull here. There is old
    law that is dragging competition down, but they preceded the
    ACA, and Congress could and should step up to the plate and
    deal with them.
        Mr. Conyers. Thank you.
        I wanted to yield, if he needs time, to my friend from
    Georgia, Mr. Johnson.
        Mr. Johnson. Thank you, Mr. Chairman. I will go back to Dr.
    McAneny.
        You mentioned the narrowing of physician networks, which
    happens when insurance companies consolidate. Could you tell us
    a little bit more about that issue?
        Dr. McAneny. Thank you very much, Mr. Johnson, for that
    question. That is one of our major concerns. When a patient who
    has, in my field of cancer, a specific need, say a genomics
    test that says a certain drug is indicated, I have to be able
    to go to my insurance company and convince them to provide that
    medication or that service or that referral. The more
    consolidated the industry becomes, the further away it is from
    my individual patient, the harder it is for me to weave through
    the regulatory areas of the insurance company to be able to get
    to somebody who can approve that drug for that patient, and it
    often takes months.
        The more burdens that----
        Mr. Johnson. And, by the way, that is not the regulatory
    apparatus of the government. You are talking about the
    regulatory apparatus of the insurance companies.
        Dr. McAneny. Exactly, sir.
        Mr. Johnson. All right. Proceed.
        Dr. McAneny. Yes. It gets very difficult for me to be able
    to advocate appropriately for my patients. When the insurance
    company is small and local and they need me in their network,
    then they will listen to me when I try to get something for a
    patient. If I go to a national network or I am obviously always
    advocating for a patient, I become a disruptive physician and I
    am less inclined to be included in that network because I spend
    more money and I am a thorn in the side of insurance companies
    who don't want to buy those expensive drugs and processes that
    Dr. Gottlieb was talking about.
        So it is very intimidating to physicians. If you know in
    your practice that you can't do without a given payer, they
    know that they don't really have to pay attention to what you
    are requesting because you can't afford to leave.
        Mr. Johnson. And consolidation aggravates this situation.
        Dr. McAneny. It will make it far worse. Yes, sir.
        Mr. Johnson. All right. Well, let me ask Professor Greaney,
    contrary to reports that costs have gone up overall for
    consumers since the passage of the Affordable Care Act, a
    shifting of, say, premium increases to higher deductibles and
    co-pays and that kind of thing, what is your response to that,
    sir?
        Mr. Greaney. We have seen a number of studies where
    competition has lowered premiums, has lowered costs. The
    exchanges are a particularly good example where it has
    occurred, has had a very beneficial effect on cost. The
    individual markets experienced much better cost experiences,
    and I think the message here is that competition works.
        Mr. Johnson. Yes, 9.4 million seniors have saved more than
    $15 billion on prescription drugs since the passage of the
    Affordable Care Act, an average of $1,598 per senior.
        Mr. Greaney. Yes.
        Mr. Marino. You can finish, sir. The gentleman's time has
    expired, but you can finish your point.
        Mr. Greaney. Well, I was just going to mention that one
    important driver of cost is whether we get new entry into
    markets, and there is a particularly interesting example in
    Arkansas. When it expanded Medicaid, Arkansas said let's have
    the private option, let's have private insurers cover the new
    Medicaid beneficiaries. What happened there? Not only did the
    new beneficiaries get covered, but it increased competition in
    the marketplace in Arkansas, so everybody benefitted, including
    the private market. It went from two competitors to six. So
    private competition can be generated, and I think states that
    haven't expanded Medicaid are shooting themselves in the foot
    in the private market as well.
        Mr. Conyers. Chairman Marino?
        Mr. Marino. Yes, sir?
        Mr. Conyers. Could I ask unanimous consent for one question
    additional?
        Mr. Marino. Yes, sir, without objection.
        Mr. Conyers. I thank you so much.
        My last question is to Professor Greaney again, and it is
    about the implementation of the health insurance exchanges
    under the Affordable Care Act. Has it promoted competition, in
    your view?
        Mr. Greaney. Oh, most certainly. I think we have seen a lot
    of markets where there has been new entry and there has been a
    shakeup of the markets. But there are still plenty of markets
    where we haven't had much competition, new entry in exchanges,
    and that is why Congress is rightly concerned about the
    insurance mergers, because we want new entry. But if we have
    gone from five down to three, the most likely new entrants are
    going to disappear. So that is a concern on the horizon.
        Mr. Conyers. Thank you, Mr. Chairman.
        Mr. Marino. The Chair now recognizes the Congresswoman from
    California, Ms. Walters.
        Ms. Walters. Thank you, Mr. Chairman.
        I want to direct the question to Mr. Durham, and then give
    Mr. Pollack an opportunity to respond.
        Mr. Durham, your testimony raises concerns about hospital
    consolidations. The testimony cites an analysis that claims,
    ``Hospitals and acquisitions increased 44 percent between 2010
    and 2014, with a total of 442 transactions occurring during
    this timeframe.'' Surely not all of these mergers have an
    anticompetitive effect, and how do we differentiate between a
    consolidation that increases competition and one that decreases
    competition?
        Mr. Durham. A very good question, Congresswoman. I believe
    that is really a detailed analysis that the Department of
    Justice conducts. They look at data that is not publicly
    available and examine it at the local market. It is critical
    that this analysis be done in specific geographic areas to
    really determine the potential impact on competition.
        As I mentioned in my testimony and oral statement, DOJ sees
    that there are circumstances where mergers can create
    efficiencies and enhance competition. So it really depends on
    what they are seeing in the local geographic market.
        We are all about driving value, moving away from the
    antiquated fee-for-service model that pays for volume and
    providing value for patients, lower cost, and higher-quality
    care. And these mergers can certainly make that happen,
    particularly when two companies have different areas of
    expertise. One may have expertise and may have done a lot in
    chronic care management, while another has done more in value
    payment models in collaboration with providers. Bringing those
    two together can bring higher value to patients, and that is
    what we are focused on in terms of bending this cost curve.
        Ms. Walters. Thank you.
        Mr. Pollack?
        Mr. Pollack. Thank you very much for that question, I
    appreciate it. Mr. Durham's testimony has a litany of studies
    that talk about how consolidation increases prices. I think a
    lot of them are old. They are old data. They are incomplete.
    For example, there is one study that is mentioned in the
    testimony that looks at 12 states, but they say that they can
    only find a relationship in three out of the 12 states. The
    three states that they look at--Ohio, Georgia, and Missouri--
    have a lot of critical access hospitals, rural referral
    centers, and sole community providers, which we said inherently
    are a different situation.
        The newer studies that we have seen from JAMA show that, in
    fact, we have reduced costs. We have seen other studies that
    show that our price growth is at historic lows, and we have
    studies that I would be glad to submit to the record that do
    not show a correlation between consolidation and price
    increases.
        The last and very important point is that we also did a
    study that I would submit for the record by the Center for
    Health Transformation, and it looked at hospital deals, if you
    will, between 2007 and 2013. There were 607 in that period.
    That represents only 12 percent of our field. Of the 607 that
    occurred, all but 22 resulted in at least five hospitals still
    remaining after those consolidations. And of the 22 where there
    were less than five, if you go through the stories of each of
    those 22, some were to prevent a bankrupt hospital from going
    out of business entirely, and many were to reconfigure
    hospitals so they can exist to be an access point in
    communities that wouldn't have access to care.
        So I think in the hospital world, our arrangements are
    focused on a different objective, which is to move to the
    future in terms of rationalizing the system and finding ways to
    preserve access where many just wouldn't exist if we didn't
    have these arrangements. Thank you.
        Ms. Walters. I yield back.
        Mr. Marino. Thank you.
        The Chair now recognizes the congressman from Georgia, Mr.
    Collins.
        Mr. Collins. Thank you, Mr. Chairman.
        Mr. Greaney and Dr. Gottlieb, I have a question. I will
    frame the question and I would like, Mr. Greaney, if you would
    start; and, Dr. Gottlieb, if you would weigh in on this as
    well.
        One, I want to thank the Chairman for holding this series
    of hearings that we are going to be having looking at these
    issues and on similar topics, but I also want to focus a little
    bit today on one because I want to encourage that there be a
    hearing on this issue in particular, the effects of PBMs on
    competition in the health care market and how Obamacare may
    have affected the competition in that area.
        This summer the FTC approved CVS' acquisition of Omnicare
    without conducting a significant investigation into the
    combination of the largest long-term care pharmacy with the
    largest Part D PBM. The FTC's lack of action ties into other
    concerns I have heard from my constituents about the conduct of
    PBMs and their effect on competition.
        Independent community pharmacists play a vital role in
    Northeast Georgia, where I am from, a rural community, and
    across the Nation, but they are being crippled many times by
    burdensome regulations, and also the often, at times, abusive
    PBM practices. My constituents and I share a concern that the
    way Obamacare treats the PBMs will further harm independent
    community pharmacists.
        To that end, Mr. Greaney and Dr. Gottlieb, I would like to
    know, in your opinion, what can be done to ensure independent
    pharmacies and PBMs can compete on a level playing field? And
    in this post-Obamacare environment, has Obamacare really
    affected that? And do you feel like, aside from congressional
    action, in the PBM space, could the FTC be doing more in this
    area of PBMs and independent pharmacies, especially in the
    health care chain?
        So, Mr. Greaney, I will start with you.
        Mr. Greaney. Well, surely I agree, Congressman, that the
    PBMs are like other intermediaries in health care. They play an
    important role in containing costs and doing the bargaining.
    But if their size and their market structure is concentrated,
    we face the same problems we face in other industries. And I
    think, particularly in PBMs, there was the controversial
    decision of the FTC to allow the Express Scripts-Medco merger
    years ago----
        Mr. Johnson. Excuse me, sir. Can you pull the mic up? Thank
    you.
        Mr. Greaney. Sure. There was some question about the FTC's
    decision to let that merger go forward. At the time, the FTC
    was comforted by the fact that there would be new entry and
    smaller participants would generate more competition. The FTC
    has done retrospectives of its own decisions, and this might be
    a good time for it to do so, to look back and say how has that
    worked out. To the extent that their prior prediction has
    proven untrue, and I don't know that it has but I have heard
    talk that it has, maybe it would be time for a retrospective to
    see how the market is operating.
        Mr. Collins. Dr. Gottlieb?
        Dr. Gottlieb. I am less concerned, to be honest about it,
    about the vertical integration of PBMs trying to buy
    acquisitions outside their core space than the horizontal
    acquisitions that would increase their market concentration.
    The reality is we have a concentrated market of PBMs, and the
    Express-Medco merger would concern me more than the Omnicare
    acquisition because it is more of a vertical integration. What
    is happening is the PBMs are trying to sort of buy their way
    out of their current market to try to capture more margin from
    other market segments.
        I think that this would all be less concerning if it was
    easier for new PBMs to get started and existing PBMs that are
    small to continue to grow by trying to offer focused services
    and differentiate themselves in the marketplace. Quite frankly,
    I think the health plan consolidation will make it harder for
    smaller PBMs to continue to grow and will potentially give more
    market share to some of the existing large PBMs.
        Mr. Collins. One of the things right there that concerns me
    is there is a PBM market there, and we understand that, but my
    problem is concerning our independent pharmacies and others who
    are outside this who would provide a service in communities in
    the health care chain that are basically, because of many times
    the practices, small or large, are being worked out.
        I wasn't going to do this but, Dr. McAneny, do you all have
    anything to add on that, especially from--because I have heard
    from physicians as well who struggle with their patients to get
    drugs filled in a certain area because of restrictions,
    especially in my area, a rural area.
        Dr. McAneny. I would agree with you as another person from
    a rural area, sir. What we have found in practice is that the
    PBMs add another barrier because of their large consolidated
    structure that makes it hard for us to get patients what we
    want, and it has driven a lot of independent pharmacies out of
    business, and those were the pharmacies where, when somebody
    needs something at midnight, you can get the pharmacist to
    provide the drug. When it is a large consolidated company
    living a thousand miles away, they are not going to open a
    store to get patients something in the middle of the night.
        Mr. Collins. I am glad I am not one of the only ones that
    has actually been ringing this bell.
        This panel is great and our time is limited. Mr. Durham, I
    think we have had a chance to talk about this, how we deal with
    this in isolation. I appreciate you being here and the
    challenges of rural health care in a market in which
    consolidation is really not an aspect because you have a
    dominant player and you have a lot of smaller players due to
    many things. Obamacare, frankly, is one of them. They are
    struggling right now in many markets.
        So again, Chairman, great hearing. I think this is
    something we need to continue. Again, my folks a little bit
    more on that issue in the whole health care chain, along with
    our hospitals, because it has been effective there as well.
        With that, I yield back.
        Mr. Marino. Thank you.
        The Chair now recognizes the congressman from Texas, Mr.
    Ratcliffe.
        Mr. Ratcliffe. Thank you, Mr. Chairman.
        You know, during my time in Congress, already I have had to
    fight to protect the 700,000 Texans that I represent from the
    perversely named Patient Protection and Affordable Care Act
    because, let me assure you, the stories that I get from my
    constituents certainly confirm that the law does not protect
    them and that it is certainly not affordable. Time permitting,
    I could relate to you hundreds and hundreds and hundreds of
    examples like constituents of mine in Paris, Texas, a business
    owner who has seen his monthly cost go up $300 and his
    deductible go up $3,000; or another constituent in Gilmore,
    Texas who has seen his deductible go up over $7,000 this year.
    And now the news is even worse because we are told that the
    cost of insurance plans on healthcare.gov in Texas are expected
    to increase by another 25 percent next year. Does that sound
    affordable to anyone? I don't think so. It certainly doesn't
    seem that way to my constituents because survey after survey
    show that 80 percent of them are opposed to Obamacare and want
    to see me help get rid of it.
        And it is not just individuals. It is hospitals. The impact
    on hospitals in my district has been, frankly, gruesome. I have
    had hospitals in Gilmore and Linden and Mt. Vernon and
    Clarksville close in just the last 2 years alone. How do my
    constituents who live in those rural areas get access to life-
    saving care and treatment that they need? How is this improving
    access to my constituents?
        The simple truth is that it is not, that Obamacare has
    reduced access, it has increased the cost of health care, and
    it has lowered the quality of health care in my district. So I
    appreciate, Mr. Chairman, you having this hearing so we can
    learn from these witnesses on how we can keep insurance
    affordable, hospitals accessible, and health care competitive
    under this terrible law.
        So let me turn and start with you, Dr. Gottlieb. Do you
    believe that the heavy regulatory burden under this law is
    driving solo and small group practices out of the health care
    market?
        Dr. Gottlieb. Well, I absolutely do. I think the ACA
    provisions are biased in favor of consolidation of physicians
    into large systems. I think the arbitrage that we talked about
    today between the Medicare billing system, the inpatient-
    outpatient billing system is certainly one. But also if you
    look at the payment reforms, they are all structured around the
    idea of doctors practicing in integrated delivery systems, but
    they are biased in favor of a hospital owning that delivery
    system. For example, there is a need for physical
    infrastructure of the IT system. The anti-Stark provisions
    don't apply unless doctors are part of those new arrangements.
        I think there is a way to try to come up with policies that
    give an equal footing to doctors practicing independently but
    still practicing in an integrated way, but not requiring them
    to sell their practices.
        The other thing we need to keep in mind is that the law
    also increases medical practice costs quite substantially at
    the same time that physician reimbursement is being held flat
    under Medicare and probably declining commercially. So doctors
    are seeing their costs go up year over year, and they are
    seeing their revenues stay stagnant or decline. That is also
    forcing them into these arrangements.
        Mr. Ratcliffe. So, Dr. Gottlieb, what impact will this have
    on competition?
        Dr. Gottlieb. My view is--and I practice in a market that
    has a lot of doctors, but I believe in my market competition is
    declining because a handful of health systems are monopolizing
    the local providers.
        I think the bigger question before this Committee is also
    the issue of productivity. In these arrangements, there is no
    good data demonstrating that productivity actually improves
    among providers inside these arrangements and that medical
    practice itself benefits from scale. There are a lot of studies
    demonstrating the opposite. I am sure you could find one or two
    studies that demonstrate the counterpoint, but there is a body
    of literature now showing that productivity goes down, and that
    should worry us.
        Mr. Ratcliffe. Thank you, Dr. Gottlieb.
        Mr. Durham, can you comment on Obamacare's impact on access
    to mental health services and what is the insurance industry
    doing about it?
        Mr. Durham. Certainly, Congressman, I would be happy to
    talk about that. Our industry has long supported the Mental
    Health Parity Act, and health plans have been committed to
    implementing parity requirements to ensure that patients have
    access to high-quality, evidence-based treatments and care at
    affordable prices.
        Now, there is strong enforcement of parity laws, and health
    plan benefit and coverage options related to mental health
    services must be approved by state and Federal regulators.
    Health plan coverage decisions for mental health and substance
    abuse follow evidence-based guidelines and recommendations from
    leading medical and behavioral health specialists, and our
    plans are reviewing new evidence every day to make sure
    patients have access to safe and effective treatments.
        There is still more work to be done here to address the
    wide variation in clinical practice and the cost of health care
    that pose serious barriers to patient access. We are committed
    to improving the value of care for all patients, particularly
    those that are suffering from mental problems.
        Mr. Ratcliffe. Thank you, Mr. Durham.
        I see my time has expired. Mr. Chairman, I will yield back.
        Mr. Marino. Thank you.
        Seeing no other Members to ask questions, this concludes
    today's hearing.
        I want to thank all the witnesses for attending and for
    being present. You all contributed to answering questions that
    are important to us. Without objection, all Members will have 5
    legislative days to submit additional written questions for the
    witnesses or additional materials for the record.
        This hearing is adjourned.
        [Whereupon, at 11:29 a.m., the Subcommittee was adjourned.]

                                A P P E N D I X

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                   Material Submitted for the Hearing Record

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Response to Questions for the Record from Daniel T. Durham, Executive
    Vice President, Strategic Initiatives, America's Health Insurance Plans

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Question for the Record submitted to Scott Gottlieb, M.D.,
                 Resident Fellow, American Enterprise Institute

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        Response to Question for the Record from Scott Gottlieb, M.D.,
                 Resident Fellow, American Enterprise Institute