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










  AN OVERDUE CHECKUP: EXAMINING THE ACA'S STATE INSURANCE MARKETPLACES

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 29, 2015

                               __________

                           Serial No. 114-79




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]







      Printed for the use of the Committee on Energy and Commerce
                        energycommerce.house.gov
                        
                                    ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

98-525                         WASHINGTON : 2017 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001                       
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota

              Subcommittee on Oversight and Investigations

                        TIM MURPHY, Pennsylvania
                                 Chairman
DAVID B. McKINLEY, West Virginia     DIANA DeGETTE, Colorado
  Vice Chairman                        Ranking Member
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
LARRY BUCSHON, Indiana               JOHN A. YARMUTH, Kentucky
BILL FLORES, Texas                   YVETTE D. CLARKE, New York
SUSAN W. BROOKS, Indiana             JOSEPH P. KENNEDY, III, 
MARKWAYNE MULLIN, Oklahoma               Massachusetts
RICHARD HUDSON, North Carolina       GENE GREEN, Texas
CHRIS COLLINS, New York              PETER WELCH, Vermont
KEVIN CRAMER, North Dakota           FRANK PALLONE, Jr., New Jersey (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)
  

















                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Tim Murphy, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     3
Hon. Diana DeGette, a Representative in Congress from the state 
  of Colorado, opening statement.................................     4
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     8

                               Witnesses

Patrick Allen, Director, Oregon Department of Consumer and 
  Business Services, State of Oregon.............................    10
    Prepared statement...........................................    12
    Answers to submitted questions...............................   119
Allison O'Toole, Interim Chief Executive Officer, Minnesota 
  Health Exchange, State of Minnesota............................    20
    Prepared statement...........................................    22
    Answers to submitted questions...............................   124
Louis Gutierrez, Executive Director, Massachusetts Health 
  Connector, State of Massachusetts..............................    25
    Prepared statement...........................................    27
    Answers to submitted questions...............................   128
Jeffrey M. Kissel, Chief Executive Officer, Hawaii Health 
  Connector, State of Hawaii.....................................    31
    Prepared statement...........................................    33
    Answers to submitted questions \1\...........................   133
Peter Lee, Chief Executive Officer, Covered California, State of 
  California.....................................................    40
    Prepared statement...........................................    42
    Answers to submitted questions...............................   135
James R. Wadleigh, Sr., Chief Executive Officer, Access Health 
  CT, State of Connecticut.......................................    53
    Prepared statement...........................................    55
    Answers to submitted questions...............................   138

                           Submitted Material

Subcommittee memorandum..........................................    84
Newspaper articles submitted by Mr. Walden.......................    93

----------
\1\ Mr. Kissell's response to the questions for the record can be 
  found at: http://docs.house.gov/meetings/IF/IF02/20150929/
  103791/HHRG-114-IF02-Wstate-KisselJ-20150929-SD003.pdf.

 
  AN OVERDUE CHECKUP: EXAMINING THE ACA'S STATE INSURANCE MARKETPLACES

                              ----------                              


                      TUESDAY, SEPTEMBER 29, 2015

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:07 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Tim Murphy 
(chairman of the subcommittee) presiding.
    Members present: Representatives Murphy, Blackburn, 
Griffith, Bucshon, Flores, Brooks, Mullin, Collins, Cramer, 
Upton (ex officio), DeGette, Castor, Tonko, Yarmuth, Kennedy, 
Green, Welch, and Pallone (ex officio).
    Also present: Representatives Capps, Matsui, and Walden.
    Staff present: Noelle Clemente, Press Secretary; Jessica 
Donlon, Counsel, Oversight and Investigations; Brittany Havens, 
Oversight Associate, Oversight and Investigations; Charles 
Ingebretson, Chief Counsel, Oversight and Investigations; Emily 
Martin, Counsel, Oversight and Investigations; Jessica 
Wilkerson, Oversight Associate, Oversight and Investigations; 
Christine Brennan, Press Secretary; Jeff Carroll, Staff 
Director; Ryan Gottschall, GAO Detailee; Tiffany Guarascio, 
Deputy Staff Director and Chief Health Advisor; Ashley Jones, 
Director of Communications, Members Services, and Outreach; 
Chris Knauer, Oversight Staff Director; Una Lee, Chief 
Oversight Counsel; Elizabeth Letter, Professional Staff Member; 
and Arielle Woronoff, Health Counsel.

   OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Murphy. Good morning. The subcommittee on Oversight and 
Investigation convenes this hearing today to examine the state 
health insurance marketplaces established under the Affordable 
Care Act.
    We seek to understand the sustainability challenges these 
state exchanges continue to face. The Centers for Medicaid and 
Medicare Services has awarded $5.51 billion to the states to 
help them establish their exchanges. Let me repeat that. The 
states received $5.51 billion in Federal taxpayer dollars to 
set up their own exchanges. Yet the ACA had no specific 
definition of what a state exchange was supposed to do, or more 
importantly, what it was not supposed to do. This is 
compensation without limitation.
    Since the funding for these exchanges came from the 
entitlement side of the budget, there was no oversight 
throughout the appropriations process. There was no budget for 
state exchanges; rather, grant money flowed freely and rewarded 
bureaucratic ``innovation.'' Of course, no one bothered to 
ensure that more money and more innovation didn't wind up 
creating more government bloat.
    In fact, the states represented on our panel today--
California, Connecticut, Hawaii, Massachusetts, Minnesota, and 
Oregon--were awarded over $2 billion of federal grant program 
dollars. Notably, Oregon has already pulled the plug on its 
state exchange, and Hawaii is in the process of doing so.
    The faucet of establishment grant money finally turned off 
at the end of 2014, when the states' exchanges were supposed to 
be self-sustaining. Despite this enormous taxpayer investment, 
state exchanges are still struggling. They continue to face IT 
problems, lower-than-expected enrollment numbers, and growing 
maintenance costs.
    Here are just a few more recent headlines from news 
articles on the state exchanges: ``Obamacare Exchanges Are a 
Model of Failure,'' ``Nearly Half of Obamacare Exchanges Face 
Financial Woes,'' and another one, ``Obamacare's Failed State 
Exchanges.''
    The alarm bells are not only being sounded in the media. 
Earlier this year, the Department of Health and Human Services 
Office of Inspector General alerted CMS Acting Administrator 
Andy Slavitt that the state exchanges may be using federal 
establishment grant funds for operational expenses, which is 
prohibited by law. HHS OIG urged Administrator Slavitt to 
develop and issue clear guidance to the state exchanges on the 
appropriate use of establishment grant funds.
    The guidance that followed, however, was still vague, 
permissive and lacked real-world examples. In fact, CMS has 
seemed more focused on doling out taxpayer dollars rather than 
overseeing how those dollars are spent.
    The U.S. Government Accountability Office just issued a 
report demanding CMS conduct more oversight over states' health 
insurance marketplace IT projects. GAO found that CMS did not 
clearly document, define, or communicate its oversight roles 
and responsibilities to the states. Further, CMS often did not 
involve relevant senior executives to approve federal funding 
for states' IT marketplace projects, and although CMS 
established a process for testing state marketplace systems, 
these systems were not always fully tested.
    We have a panel of witnesses today representing state 
exchanges, each with its own set of challenges and 
circumstances. The State of Hawaii was awarded $205 million, 
but this past June, the Governor announced that its Hawaii 
Health Connector does not generate ``sufficient revenues to 
sustain operations'' and will shut down.
    The Commonwealth of Massachusetts accepted $234 million for 
its Health Connector, but enrolled only 13 percent of its goal 
the first year, temporarily placed individuals in Medicaid 
because it couldn't determine eligibility, and cost 
Massachusetts an estimated $1 billion in additional funds.
    The State of Minnesota initially received $155 million to 
launch its state exchange. Its exchange received an additional 
$34 million from CMS, in part to fund ongoing fixes to the IT 
system. Despite this infusion of funds, Minnesota has announced 
that it would revert to an old system next year for 
MinnesotaCare premiums because of the continued exchange 
problems.
    The State of California received over $1 billion in federal 
grant dollars to establish its exchange, Covered California, 
the most of any state. Despite call center and Web site woes, 
California had the highest enrollment in 2014, but only 
retained 65 percent of its 2014 enrollees. This year, 
California's enrollment numbers reached 1.4 million, falling 
300,000 short of expectations.
    CMS awarded the State of Connecticut approximately $176 
million in federal establishment grants, and as of September 
2015, approximately 96,000 individuals were enrolled in a plan. 
Only 50 percent of enrollees were previously uninsured.
    The State of Oregon received $305 million in federal grant 
dollars for an exchange called Cover Oregon. Despite this heavy 
investment, Cover Oregon was dissolved early this year and 
transferred its responsibilities to the Department of Consumer 
and Business Services. The state is currently operating as a 
Federally Supported State-based Marketplace and relies on 
healthcare.gov.
    So we are here today to understand the challenges these 
state exchanges face. Why are they struggling to become self-
sustaining, especially given the extraordinary taxpayer 
investment? Is it a lack of accountability or oversight? Where 
has CMS been during this whole process, and is CMS encouraging 
fiscal restraint, or instead, taking a hands-off approach, 
which has allowed money to be spent uncontrollably? And where 
an exchange has decided to shut down, has CMS tried to recoup 
any of the federal grant dollars? Lastly, are the exchanges 
doomed to fail? Hopefully we will get answers to these 
important questions.
    So I thank all the witnesses for testifying today.
    [The prepared statement of Chairman Murphy follows:]

                 Prepared statement of Hon. Tim Murphy

    The subcommittee convenes this hearing today to examine the 
state health insurance marketplaces established under the 
Affordable Care Act. We seek to understand the sustainability 
challenges these state exchanges continue to face.
    The Centers for Medicaid and Medicare Services has awarded 
$5.51 billion dollars to the states to help them establish 
their exchanges. Let me repeat that. The states received $5.51 
billion in federal taxpayer dollars to set up their own 
exchanges. Yet, the ACA had no specific definition of what a 
state exchange was supposed to do, or more importantly, what it 
was not supposed to do.
    Since the funding for these exchanges came from the 
entitlement side of the budget, there was no oversight through 
the appropriations process. There was no ``budget'' for state 
exchanges, rather grant money flowed freely and rewarded 
bureaucratic ``innovation.'' Of course, no one bothered to 
ensure that more money and more ``innovation'' didn't wind up 
creating more government bloat.
    In fact, the States represented on our panel today--
California, Connecticut, Hawaii, Massachusetts, Minnesota, and 
Oregon--were awarded over $2 billion of federal grant dollars. 
Notably, Oregon has already pulled the plug on its State 
exchange and Hawaii is in the process of doing so.
    The faucet of establishment grant money finally turned off 
at the end of 2014, when the states' exchanges were supposed to 
be self-sustaining. Despite this enormous taxpayer investment, 
state exchanges are still struggling. They continue to face IT 
problems, lower than expected enrollment numbers, and growing 
maintenance costs. Here are just a few more recent headlines 
from news articles on the state exchanges: ``ObamaCare 
Exchanges Are a Model of Failure,'' ``Nearly Half of ObamaCare 
Exchanges Face Financial Woes,'' and ``ObamaCare's Failed State 
Exchanges.''
    The alarm bells are not only being sounded in the media. 
Earlier this year, the Department of Health and Human Services 
Office of Inspector General alerted CMS Acting Administrator 
Andy Slavitt that the state exchanges may be using federal 
establishment grant funds for operational expenses, which is 
prohibited by law. HHS OIG urged Administrator Slavitt to 
develop and issue clear guidance to the state exchanges on the 
appropriate use of establishment grant funds. The guidance that 
followed, however, was still vague, permissive, and lacked 
real-world examples.
    In fact, CMS has seemed more focused on doling out taxpayer 
dollars rather than overseeing how those dollars are spent. The 
U.S. Government Accountability Office just issued a report 
demanding CMS conduct more oversight over states' health 
insurance marketplace IT projects. GAO found that CMS did not 
clearly document, define, or communicate its oversight roles 
and responsibilities to the states. Further, CMS often did not 
involve relevant senior executives to approve federal funding 
for states'' IT marketplace projects. And although CMS 
established a process for testing state marketplace systems, 
these systems were not always fully tested.
    We have a panel of witnesses today representing state 
exchanges, each with its own set of challenges and 
circumstances. The State of Hawaii was awarded $205 million, 
but this past June, the Governor announced that its Hawaii 
Health Connector does not generate ``sufficient revenues to 
sustain operations'' and will shut down.
    The Commonwealth of Massachusetts accepted $234 million for 
its Health Connector, but enrolled only 13% of its goal the 
first year, temporarily placed individuals in Medicaid because 
it couldn't determine eligibility, and cost Massachusetts an 
estimated $1 billion in additional funds.
    The State of Minnesota initially received $155 million to 
launch its state exchange. Its exchange, received an additional 
$34 million from CMS, in part to fund ongoing fixes to the IT 
system. Despite this infusion of funds, Minnesota has announced 
that it would revert to an old system next year for 
MinnesotaCare premiums because of the continued exchange 
problems.
    The State of California received over $1 billion in federal 
grant dollars to establish its exchange, Covered California, 
the most of any state. Despite call center and Web site woes, 
California had the highest enrollment in 2014, but only 
retained 65 percent of its 2014 enrollees. This year, 
California's enrollment numbers reached 1.4 million, falling 
300,000 short of expectations.
    CMS awarded the State of Connecticut approximately $176 
million in federal establishment grants, and as of September 
2015, approximately 96,000 individuals were enrolled in a plan. 
Only 50 percent of enrollees were previously uninsured.
    The State of Oregon received $305 million in federal grant 
dollars exchange, Cover Oregon. Despite this heavy investment, 
Cover Oregon was dissolved early this year and transferred its 
responsibilities to the Department of Consumer and Business 
Services. The state is currently operating as a ``Federally 
supported State-based Marketplace'' and relies on 
healthcare.gov.
    We are here today to understand the challenges these state 
exchanges face. Why are they struggling to become self-
sustaining, especially given the extraordinary taxpayer 
investment? Is it a lack of accountability or oversight? Where 
has CMS been during this whole process? Is CMS encouraging 
fiscal restraint, or instead, taking a hands-off approach, 
which has allowed money to be spent uncontrollably? And where 
an exchange has decided to shut down, has CMS tried to recoup 
any of the federal grant dollars? Lastly, are the exchanges 
doomed to fail? Hopefully, we will get answers to these 
important questions today.

    Mr. Murphy. And I now recognize the Ranking Member from 
Colorado, Ms. DeGette, for 5 minutes.

 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you, Mr. Chairman.
    I think we can all stipulate that some states have 
struggled with the technological hurdles of setting up their 
own marketplaces. We all knew that the Affordable Care Act 
would face challenges in some aspects of implementation, and I 
have been saying for a long time that it is this committee's 
role to conduct oversight and to improve that process, and so I 
am glad that we are having this hearing today, and I hope we 
have that goal in mind. I hope we are not hoping that the state 
exchanges fail. I hope we are hoping that we can improve it and 
we can make it better.
    I think that despite the fact that we had a rough start in 
many places, the ACA is working and has greatly improved access 
to affordable, high-quality health insurance coverage.
    In the last 5 years, we have made tremendous progress in 
helping millions of Americans throughout the country gain 
access to quality healthcare. Here are some notable statistics.
    Since passage of the law more than 5 years ago, 17.6 
million previously uninsured individuals have gained health 
coverage through the ACA's various provisions. Nearly 10 
million consumers have enrolled in state and Federally 
Facilitated Exchanges. About 2.7 million of those individuals 
use state exchanges to select private plans. According to newly 
released data, the uninsured rate fell from 13.3 percent to 
10.4 percent from 2013 to 2014, representing the largest single 
year reduction in the uninsured rate since 1987.
    In 2014, hospital uncompensated care costs were $7.4 
billion lower than 2013 levels as a result of exchange coverage 
and Medicaid expansion. The ACA also improved healthcare 
delivery systems, hospital readmissions are down, and 
indicators of patient safety like hospital-acquired conditions 
have improved significantly.
    All of the states before us today have taken significant 
steps to improve health coverage for their residents. Their 
uninsured rates have plummeted due to their efforts to 
implement the Affordable Care Act.
    Despite the technical and financial challenges that 
confronted Hawaii's exchange, for example, its uninsured rate 
has fallen and it now stands at only 5.2 percent. In just a few 
years since 2013, Minnesota has reduced the number of people 
without health insurance by more than 50 percent. Their 
uninsured rate is now one of the Nation's lowest at 4.6 
percent. Massachusetts, which already had one of the Nation's 
lowest uninsured rates in the country, is down to just 3 
percent in 2015, which is a 38 percent decrease since 2013. 
Connecticut, which now has a robust state-based marketplace, 
cut its uninsured rate by more than 60 percent since 2012. In 
Connecticut, the uninsured rate is 5 percent. And California, 
which also had one of the highest uninsured rates in the 
country--it was 21.6 percent--has also managed to drop its rate 
by 45 percent since 2013. Now the uninsured rate in California 
is 11.8 percent. And finally, Oregon, which had one of the 
Nation's highest uninsured rates of 20 percent in 2013, also 
reduced its uninsured rate by 55 percent to 8.8 percent today.
    How did this all happen? How did states manage to insure so 
many millions of people? The Affordable Care Act has really 
provided these tools.
    So as we discuss call centers, Web-based portals, and all 
these other things, let's not forget that the Affordable Care 
Act is really working to achieve its goals, and let's work 
together to try to make it better.
    I want to thank you for having this hearing. I want to 
thank our Californians for joining us, Mr. Chairman, and I want 
to yield the balance of my time to Ms. Matsui from California.
    Ms. Matsui. Thank you very much for yielding.
    Peter Lee, thank you for coming here to testify today. And 
let me reiterate, the Affordable Care Act is working. 
California is an early adopter in so many areas, not the least 
of which is healthcare.
    We have embraced the opportunities provided by the ACA to 
move our system from paying for volume to paying for value, and 
to reform our system to ensure that everyone has access to 
quality, affordable healthcare. Covered California has been an 
integral part of that, and I am happy to say that as of the 
most recently released census data, over 41,000 in my district 
of Sacramento and nearly 2 million Californians obtained health 
coverage from 2012 to 2014. That is an average of 5 percent 
reduction in the rate of uninsured. In Sacramento in 2012, 18 
percent of the population was uninsured. In 2014, it was down 
to 12 percent. That rate is likely to be lower in 2015.
    We need to continue to work to bring those numbers of 
uninsured down by supporting the advancements made by Covered 
California and other exchanges, not by moving backward.
    Thank you, and I yield back.
    Mr. Murphy. The gentlelady yield back.
    And now on our side, if any members want to speak, I know 
Mr. Walden, who is not a member of this committee who wanted to 
sit in on this hearing, has the right to do so if you would 
like to be recognized for 2 minutes. Or first a member first 
and then you can yield to Mr. Walden for 2 minutes. Thank you.
    Mr. Bucshon. Hi. I was a practicing physician before, and I 
want to just talk about the focus on insurance rates, people 
getting insurance. Coverage does not guarantee access to 
healthcare.
    Deductibles are up. Premiums are up. The cost is being 
shifted to the people. The uninsured rate may be down but the 
access, I would argue, has not improved dramatically. If you 
are a schoolteacher, a factory worker or other middle-class 
employee, if you have a $5,000 family deductible, maybe as high 
as $10,000, do you have affordable health insurance? I would 
argue that you do not.
    In many states, physicians aren't taking new Medicaid 
patients. I know this because I am a physician and I talk to 
physicians all the time. In fact, many physicians aren't taking 
new Medicare patients, let along Medicaid patients, so I just 
wanted to clarify that in focusing only on uninsured rates is 
not the only parameter to look at when you are looking at the 
ability of our citizens to access quality, affordable 
healthcare, and I yield to Mr. Walden.
    Mr. Walden. I thank the gentleman, and I thank the 
committee for letting me participate in this hearing.
    When I was in the state legislature, the Oregon Health Plan 
itself was passed, and when I became Majority Leader, we 
realized there had to be a lot of work done to implement the 
Oregon Health Plan, and I put together a select committee that 
did that, and I chaired it, so I concur with those who think we 
need to do more to reform delivery of healthcare and access to 
it. I have a pretty good record on doing both.
    Mr. Chairman, I want to thank you for holding this hearing 
on this issue, though. Mr. Allen, thank you for coming out from 
Oregon to attend, and as you know, Oregon received $305 million 
in federal grants to build Cover Oregon. Only California and 
New York, states with about nine and four times the population, 
respectively, received more. So we have got a lot of money out 
there.
    The exchange was launched with much fanfare. As an 
Oregonian, I heard the sort of kitschy ``Long Live Oregon'' 
jingle to encourage Oregonians to sign up. The problem was, 
when the lights came on and the curtain went up on Cover 
Oregon, it failed to sign up a single person online in one 
sitting. Not one person was able to sign up that way. 
Oregonians were forced to sign up using paper applications. The 
state then decided to abandon the state-run exchange IT 
platform and move on to healthcare.gov, the federal exchange. 
Eventually, the legislature voted to shut down the entire 
program, which it did on June 30th. Hundreds of millions of 
taxpayer dollars apparently down the drain.
    Last February, Chairman Upton, Chairman Pitts, Chairman 
Murphy and I requested an independent federal investigation 
into the failure of Cover Oregon. While the GAO did some good 
work on state exchanges generally, many questions about Oregon 
remain unanswered. How did this happen? Who was in charge? What 
could be done to make sure this never happens again anywhere in 
the country? We are still awaiting the answers, frankly.
    Moving forward, the move to the federal exchange poses a 
whole new set of questions. Mr. Allen, I understand you weren't 
there running this thing so, you know, we are not here to point 
fingers; we are here to get answers to how this happened and 
what we do now and how we are going to fund the next phase of 
this. I still don't have a clear understanding what happened to 
$305 million establishment in grants, and did CMS even try to 
recoup this? What was the role of CMS in all this to observe 
how this money, taxpayer money, was being spent? Did they do 
their due diligence?
    In spite of your repeated assurances that the Oregon 
exchange is financially self-sustaining, I think there are 
still questions over how the state will pay the Federal 
Government for using healthcare.gov when it is required to do 
so in 2017. There are also concerns with significant insurance 
rate increases. I know in your testimony you state the rate 
increases are a result of the market rebalancing itself. 
Whether or not it is rebalance or whether it is indicative of 
future rate hikes, I think remains to be seen.
    The collapse of Cover Oregon, though, is clearly an epic 
disaster for Oregonians and for taxpayers across the United 
States. Frankly, the aftermath hasn't inspired additional 
confidence in our state government or CMS. I am deeply 
disturbed about the role of the former governor, who has had to 
resign, and the role of his campaign consultants in calling the 
shots.
    So I hope the hearing will help us learn more about what 
happened, why it happened, and what steps can be taken to make 
sure that this sort of debacle never happens again.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    Mr. Bucshon. I yield back.
    Mr. Murphy. The gentlemen yield back.
    I now recognize the Ranking Member of the full committee, 
Mr. Pallone, for 5 minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman.
    Over 5 years ago, we passed the Affordable Care Act and 
fundamentally changed the health care system in this country. 
We expanded access to healthcare for millions of Americans and 
ensured that no individual could be denied coverage for 
arbitrary or discriminatory reasons. We guaranteed that 
insurance companies were in the business of making our citizens 
healthier, not just making a profit. And we strengthened 
Medicare and put the program on sounder financial footing to 
preserve and protect it for generations of Americans to come.
    Today, my Republican colleagues will tell a different 
story. We will hear a lot about technical glitches, 
inefficiencies, and broken IT systems. If we just listen to the 
Republicans' side, we are led to believe we have poured money 
down the drain and seen no benefit.
    The reforms of the Affordable Care Act are a complex 
undertaking and no doubt there are lessons to be learned from 
its implementation, and we should learn those lessons and use 
them to improve going forward. But that doesn't mean we should 
lose sight of the bigger picture.
    Make no mistake: the Affordable Care Act is working. We are 
seeing its successes throughout the country, and the data is 
there to prove it. Recent census data shows that the uninsured 
rate has significantly declined in every state. Seventeen point 
six million Americans who didn't have coverage before the law 
went into effect now have insurance. States that chose to 
embrace the full measure of the law and expand their Medicaid 
programs and establish state-based marketplaces have seen the 
greatest gains for their citizens, and this success is true for 
the six states we have joining us here today.
    Despite early technological challenges in some of these 
states, everyone here today has expanded access to care and 
significantly lowered their numbers of uninsured.
    Now, it is of course also important that we look at how 
state-based marketplaces could be run more efficiently and 
effectively, and how we can continue to enhance the health care 
delivery system in this country. But let's do this with an eye 
for improvement. Let's not use this hearing merely as an 
opportunity to score political points. Let's have a discussion 
about how to reach our remaining uninsured, how to continue to 
improve the consumer experience in year three of exchange 
enrollment, and how to best address the challenges that remain.
    With that, I would like to yield my remaining time to split 
between Congressman Kennedy and Representative Capps. I will 
initially yield to Mr. Kennedy.
    Mr. Kennedy. I want to thank the Ranking Member for 
yielding.
    It is always nice to see a familiar face among our 
witnesses at hearings, and I am pleased to have a chance to 
welcome Louis Gutierrez this morning. Mr. Gutierrez throughout 
his career has championed the use of technology to help 
government do its job better, smarter and more efficiently 
whether it is as our Commonwealth's Chief Information Officer, 
Principal of the Exeter Group, or now as the Executive Director 
of the Massachusetts Health Connector. He has pursued 
innovative strategies to improve the delivery of critical 
services to people who need them most, particularly when it 
comes to health care.
    In his latest role, he has worked diligently to ensure that 
Massachusetts maintains its proud status as a state with one of 
the lowest uninsured rates in the country. As our Nation's 
uninsured rate continues to fall nearing single digits, thanks 
to the Affordable Care Act, I believe it is critical that we 
replicate the successes we have seen in our Commonwealth across 
the country.
    I am looking forward to hearing more about your efforts to 
make our system more effective and more efficient, sir, as well 
as any best practices that you have encountered that could be 
applied across this country.
    Thanks very much for being here. Yield back.
    Mr. Pallone. I yield the remaining time to Mrs. Capps.
    Mrs. Capps. Thank you to the Ranking Member for yielding 
and also letting me waive on to this subcommittee today for 
what I know to be a very important discussion.
    I wanted to come and personally welcome Mr. Lee, the 
Executive Director of Covered California, which is my state's 
health insurance marketplace, which has helped connect so many 
of my constituents with health insurance. California made a 
conscious decision to be an active player with the Affordable 
Care Act implementation, and when there are problems, they have 
been responsive, holding insurance companies accountable and 
focused on making Covered California a national leader. Thanks 
to their efforts, we have cut our state's uninsurance rate by 
28 percent, pretty remarkable, in my opinion.
    California shows that when a state is invested and buys 
into the goals of the Affordable Care Act, prices can be held 
under control, and quality plans can be made available for 
purchasers.
    I look forward to hearing more about how Covered California 
could perhaps serve as a role model for other states looking to 
get the best value for their residents while promoting high-
quality care, and I'll yield back to the Ranking Member.
    Mr. Pallone. I yield back.
    Mr. Murphy. Thank you. The gentlelady yields back.
    I now ask unanimous consent that written opening statements 
of members of the subcommittee will be introduced into the 
record. I know Mr. Upton will have something. We will leave it 
open for other members if they wish to do so. So without 
objection, the documents will be entered for the record.
    To our witnesses, you are aware that the committee is 
holding an investigative hearing, and when doing so has the 
practice of taking testimony under oath. Do any of you have any 
objections to testifying under oath? All the witnesses say no.
    The Chair then advises you that under the rules of the 
House and the rules of the committee, you are entitled to be 
advised by counsel. Do any of the witnesses desire to be 
advised by counsel today? And all the witnesses declined.
    In that case, would you all please rise, raise your right 
hand, and I will swear you in.
    [Witnesses sworn.]
    Mr. Murphy. You are now under oath and subject to the 
penalties set forth in Title XVIII, section 1001 of the United 
States Code. We will have you each give a 5-minute summary of 
your statement. We are not trying to rush you.
    We will begin with Mr. Allen. You are recognized for 5 
minutes. Please make sure your microphone is on. Pull it very 
close to you so we can hear you. Thank you.

  TESTIMONY OF PATRICK ALLEN, DIRECTOR, OREGON DEPARTMENT OF 
   CONSUMER AND BUSINESS SERVICES, STATE OF OREGON; ALLISON 
  O'TOOLE, INTERIM CHIEF EXECUTIVE OFFICER, MINNESOTA HEALTH 
   EXCHANGE, STATE OF MINNESOTA; LOUIS GUTIERREZ, EXECUTIVE 
      DIRECTOR, MASSACHUSETTS HEALTH CONNECTOR, STATE OF 
  MASSACHUSETTS; JEFFREY M. KISSEL, CHIEF EXECUTIVE OFFICER, 
  HAWAII HEALTH CONNECTOR, STATE OF HAWAII; PETER LEE, CHIEF 
EXECUTIVE OFFICER, COVERED CALIFORNIA, STATE OF CALIFORNIA; AND 
JAMES R. WADLEIGH, SR., CHIEF EXECUTIVE OFFICER, ACCESS HEALTH 
                    CT, STATE OF CONNECTICUT

                   TESTIMONY OF PATRICK ALLEN

    Mr. Allen. Thank you, Chairman Murphy, Ranking Member 
DeGette, members of the subcommittee. My name is Patrick Allen, 
and I'm the Director of the Oregon Department of Consumer and 
Business Services. We're the state's largest consumer 
protection and business regulatory agency. Our mission is to 
serve and protect consumers and workers in Oregon while 
supporting a positive business climate in the state. My agency 
is responsible for regulating the financial services industry 
including banks, credit unions, mortgage lenders, and other 
non-depository programs; all aspects of insurance including 
life, health, property and casualty; our system of worker 
health and safety including Oregon OSHA and the state system of 
workers' compensation insurance; as well as statewide 
construction standards.
    As of 90 days ago, after a brief transitional period, the 
department assumed responsibility for Oregon state-based health 
insurance marketplace. I appreciate the opportunity to be here 
today and to talk to you about the marketplace services in 
Oregon and my agency's plans going forward.
    You have my written statement so I will just briefly 
summarize with three points. First, Oregon's marketplace is 
successful. Nearly 70,000 Oregonians enrolled in coverage 
during open enrollment for 2014 despite needing to navigate a 
hybrid paper and automated system. Using healthcare.gov, that 
number increased to over 100,000 for 2015 open enrollment. 
Between those private health insurance results and expansion of 
the Oregon Health Plan, our state's Medicaid program, the rate 
of uninsured in Oregon declined from over 14 percent to under 9 
percent, one of the largest decreases in the country.
    Second, Oregon's health insurance marketplace is healthy, 
competitive, and sustainable. For 2016, 11 companies will offer 
Oregonians 120 individual plans at various coverage levels. 
Oregon's individual insurance market was one of the lowest 
priced in the Nation in 2015. We're in the process of 
rebalancing that market to ensure its long-term sustainability, 
and while the percentage increases in rates have been 
significant, the resultant rates are very comparable to those 
available in neighboring markets in California and Washington 
and remain very affordable.
    Third, the marketplace is run by the State of Oregon is 
efficient, financially sustainable, and subject to ongoing 
oversight. Because of economies of scale and other 
efficiencies, we as a state agency are able to operate the 
marketplace with about 60 percent fewer staff than the previous 
organization. We're completely financed by an assessment on 
participating insurers with no state taxpayer or federal grant 
funding involved. While we have access to the federal platform 
currently at no direct cost for the 2015 and 2016 plan years, 
we have adequate financial capacity to pay a reasonable 
technology cost to the Federal Government, another state in a 
partnership arrangement, or to a private vendor should that be 
necessary.
    I'd be happy to answers questions that you might have. 
Thank you very much.
    [The prepared statement of Mr. Allen follows:]
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
    
    Mr. Murphy. Thank you.
    Now, Ms. O'Toole, you are recognized. I am sorry I didn't 
introduce you before, Mr. Allen, the Department of Consumer and 
Business Services, the State of Oregon, but this is Allison 
O'Toole, the Interim Chief Executive Officer for MNsure, State 
of Minnesota. You are recognized for 5 minutes. You know the 
drill with the microphone.

                  TESTIMONY OF ALLISON O'TOOLE

    Ms. O'Toole. Thank you. Good morning, Chairman Murphy, 
Ranking Member DeGette, and distinguished members of the 
subcommittee. My name is Allison O'Toole, and I'm the interim 
CEO of MNsure, which is Minnesota's online health insurance 
marketplace. Thank you for inviting me here today. I'm honored 
to have this chance to share with you some of the success we're 
seeing in Minnesota.
    Let me begin with an update on how MNsure is positively 
impacting Minnesotans. Building the MNsure marketplace was no 
easy task. However, we've made tremendous progress providing 
hundreds of thousands of Minnesotans with affordable, 
comprehensive coverage.
    For the purposes of background, I want to provide the 
committee with a full picture of where we are today. Since 
October 1st of 2013, more than 500,000 Minnesotans have used 
MNsure to shop, compare and enroll in quality, affordable 
coverage. As a result, Minnesota has the lowest rate of 
uninsured in state history. In our first year, the state's 
uninsured rate dropped by a whopping 40 percent, and now, 
nearly 95 percent of Minnesotans are covered, and they're 
saving money, more than $31 million in premium payments through 
tax credits in 2014 alone.
    And I'm pleased to report that MNsure is financially 
sustainable. We have a balanced, conservative, sustainable 
budget that's based on real numbers and real experience.
    And we've come a long way since our launch 2 years ago. The 
last 18 months have brought measurable progress along with a 
deep commitment to transparency and accountability. And most 
importantly, we're making a difference in the lives and the 
health of Minnesotans. Minnesotans like Richard Handeen, a 
cattle farmer in rural Minnesota, who with his newly purchased 
coverage through MNsure went to the doctor for the first time 
in years, discovered he had cancer, and was able to 
successfully treat it. Today, Richard's cancer free. And 
Minnesotans like Jake Sanders. Jake is a small business owner. 
He and his wife have three small children, one who's had a 
preexisting condition since birth. MNsure allowed Jake to find 
a lower-cost policy for his family, and today he knows his son 
will be covered.
    Covering more Minnesotans has always been our foundational 
goal since day one, and MNsure's technology performance has 
improved dramatically since then. After lots of hard work, 
there is a night-and-day difference between the first and 
second open enrollment periods. Call center wait times dropped 
dramatically in year two. Minnesotans were able to complete the 
enrollment process with relative ease, and our dedication to 
improving MNsure continues today.
    This is important to us because we think no one should 
struggle to find a health insurance plan that fits their needs. 
It's also part of making sure that Minnesotans can live their 
lives and focus on the important things like going to work, 
taking care of their families, and starting a business instead 
of worrying about how they're going to pay for big medical 
bills.
    As we approach MNsure's third open enrollment period, 
there's plenty of work ahead. Our IT teams are hard at work 
adding functionality, improving Web site performance, and 
ensuring a positive consumer experience. There is also a strong 
focus on improving MNsure's functionality for Medical 
Assistance and Minnesota Care.
    One final point that sets us apart. In Minnesota, our state 
recently created a 29-person bipartisan healthcare task force 
of healthcare and community leaders who will help address 
questions like access to care and financing. Minnesota is 
taking oversight and accountability seriously, and I am 
thankful to these people for their thoughtful approach to 
addressing many tough questions that remain for our healthcare 
programs.
    Thank you again for inviting me here today. As MNsure's 
Interim CEO, my eyes are squarely focused on preparing for the 
third open enrollment period, improving the consumer experience 
for Minnesotans, setting and implementing a smart budget, and 
making sure as many people as possible take advantage of the 
products MNsure has to offer. We want to see people like 
Richard and Jake and their families get the care they need and 
deserve. I look forward to your questions, and thank you again 
for having me.
    [The prepared statement of Ms. O'Toole follows:]
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
    
     Mr. Murphy. Thank you, Ms. O'Toole.
    And now we recognize Mr. Louis Gutierrez, Executive 
Director of Massachusetts Health Connector from the State of 
Massachusetts. You are recognized for 5 minutes.

                  TESTIMONY OF LOUIS GUTIERREZ

    Mr. Gutierrez. Chairman Murphy, Ranking Member DeGette, and 
distinguished members of the subcommittee, good morning. Thank 
you for the opportunity to testify regarding the Massachusetts 
Health Connector Authority, our state-based marketplace. My 
name is Louis Gutierrez and I have served as the Executive 
Director of the Health Connector since February of this year 
following the election of Massachusetts Governor Charlie Baker.
    As the new State Administration took office this year, 
Massachusetts was partway through a second attempt to implement 
a health insurance eligibility and enrollment system to enable 
Affordable Care Act access to our residents.
    While a proficient eligibility determination front-end was 
completed for this year's open enrollment, a range of back-
office enrollment functions remained under development. Much of 
this year has been devoted to stabilizing operations and 
completing the system foundations to support Massachusetts' 
state-based marketplace.
    Upon taking office, the Baker Administration moved to 
effect several substantial changes in approach to the Connector 
Authority. First, it altered the governance structure, placing 
its Secretary for Health and Human Services as chair of the 
Health Connector Board of Directors. The Secretary for Health 
and Human Services also oversees the state's Medicaid 
organization, and this change reflects the importance of 
successful coordination between the exchange and the state 
Medicaid agency. Second, it replaced executive management at 
the Health Connector, hiring for experience in large-scale 
systems implementations along with a new Chief Operating 
Officer, a woman distinguished in Massachusetts payer 
operations. Third, it appointed an outstanding program 
management lead to lead the combined health insurance exchange/
Medicaid integrated eligibility systems implementation effort. 
Fourth, because the health insurance exchange and integrated 
eligibility initiative is shared between the Health Connector 
and the state's Medicaid organization, it reestablished a 
formal governance structure for the project, led by the state 
Medicaid agency, the Health Connector, and the state's central 
Information Technology Division. Fifth, it undertook a 6-week 
intensive examination of operational processes to assess the 
state of Health Connector operations, and to lay a path for 
resolving existing problems; and finally, it completed the 
process for transferring individuals from temporary coverage 
where they had been placed in 2014 to appropriate placement in 
either Qualified Health Plans or Medicaid.
    The Health Connector is now better situated to service the 
needs of the residents of Massachusetts. For 2016, we have 11 
issuers presenting 83 Qualified Health Plans on the Connector 
and 25 plans across five issuers with Qualified Dental Plans. 
Our enrollment totals over 175,000 Qualified Health Plan 
enrollees, and 40,000 Qualified Dental Plan enrollees. 
Massachusetts, as noted earlier, is one of 5 states with less 
than 5 percent underinsured. We have significantly expanded 
customer service components for this fall's open enrollment 
period, with 200 additional customer service hours, including 
later evenings, Saturdays and Sundays, four additional walk-in 
centers, and new access to online customer self-service so that 
users may update their applications and make changes to their 
accounts without needing to call the call center.
    Massachusetts believes that states need flexibility to 
continue to innovate in healthcare reform and meet local needs. 
We could not continue to provide Massachusetts-specific 
benefits to low-income populations without the flexibility of a 
state marketplace. For example, our ConnectorCare program, 
which adds subsidies for individuals earning less than 300 
percent of the federal poverty level. We desire the ability to 
recognize local market conditions and the definition of small 
business size.
    Going forward, there are potentially more seamless ways to 
integrate Medicaid and exchange eligibility and subsidies. It 
is important that states be offered that chance to make this 
law work better for everyone. Massachusetts remains committed 
to making sure that those who need health insurance can obtain 
it both now and in the future with the state-based marketplace 
as one component of that strategy. Thank you.
    [The prepared statement of Mr. Gutierrez follows:]
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
  
    Mr. Murphy. Thank you, Mr. Gutierrez.
    We now turn towards Mr. Jeff Kissel, the Executive Director 
of the Hawaii Health Connector from the State of Hawaii. You 
are recognized for 5 minutes.

                 TESTIMONY OF JEFFREY M. KISSEL

    Mr. Kissel. Thank you. Good morning, Chairman Murphy, 
Ranking Member DeGette, honorable members of the Oversight and 
Investigations Subcommittee. It's a pleasure to come before you 
to report on the activities of the exchange, but before doing 
so, I'd like to explain the healthcare environment in Hawaii to 
help you understand the context of my remarks.
    Yes, Hawaii has among the lowest insurance rates in the 
Nation. This is, however, because of the passage of the Hawaii 
Prepaid Healthcare Act of 1974. At that point the state 
undertook as a matter of policy the responsibility for 
providing access to healthcare and wellness resources for 
virtually every employed resident of our state. Over the past 
half-century, both Democratic and Republican administrations in 
Hawaii have not only supported the provisions of the Act, 
they've developed substantial resources and focused on leading 
the insurance and healthcare industry to actually delivering 
these services to an ever-increasing percentage of our 
population.
    The evidence of our success is clear. Hawaii is not ranked 
among the states with the lowest rates of diabetes, obesity, 
infant mortality, and other critical public health metrics. Our 
population; however, enjoys a longer lifespan, and, by any 
measure, healthier outcomes from the diseases and other health 
issues faced by a diverse ethnic and cultural mix. I believe 
that this is a direct result of our community's ability to 
develop excellent healthcare access and secure its viability 
through the Prepaid Healthcare Act with its employer mandate to 
provide insurance.
    In this context, the passage of the Affordable Care Act was 
widely viewed as an opportunity to extend access to healthcare 
and wellness resources to even more of Hawaii's population. For 
the most part that effort has been successful. Taken together, 
the expanded Medicaid program and the Affordable Care Act 
insurance policies have reduced the Hawaii uninsured rate, 
already low, by more than half.
    Unfortunately, however, a lack of planning, unclear 
business process design, and utterly inadequate program 
management as the technology systems were implemented, resulted 
in both excessive spending and delays in delivering these 
important services to the people who most needed it in our 
state. Since I became Executive Director, however, the team at 
the Hawaii Health Connector have come a very long way toward 
achieving the goal of harmonizing the benefits of Hawaii's 
forward-thinking Prepaid Healthcare Act with the provisions of 
the Affordable Care Act.
    Our business processes now utilize technology to support a 
well-trained outreach team of workers as they assist our 
customers with the enrollment process. This change in approach 
converted our computer systems to a resource rather than a 
barrier to entry.
    In December of 2014, we produced a comprehensive 10-year 
strategic business plan, a copy of which is attached to this 
testimony. It detailed a report on our condition, the 
activities, and sustainability required by both the Affordable 
Care Act and state enabling legislation. It also presented both 
the advantages and the challenges as the Exchange commenced its 
second full year of operations. In that plan we explained to 
CMS and our State Administration how we would meet the 
sustainability and other important requirements of the 
Affordable Care Act. We recommended a financial approach that 
relied on debt financing and generating enrollment--revenue 
from about 70,000 enrollees at the rate of about $12 million a 
year.
    I'm pleased to say that our enrollment in 2014 and 2015 
increased by more than 400 percent. It is nearly now 40,000. 
Moreover, the Hawaii Health Connector was able to add thousands 
of individuals to the expanded Medicaid program, further 
reducing the impact of uncompensated costs in our community.
    Even though we were able to overcome first-year technology 
challenges, it became clear to all of us that the cost of 
maintaining, upgrading and ultimately replacing the technology 
had the potential to exceed its initial cost. While the Federal 
Government funded the initial costs, the people of Hawaii are 
responsible for the ongoing costs. After consulting with CMS, 
our State Administration elected to migrate to healthcare.gov 
as a supported state-based exchange to assure continued access 
to Qualified Health Plans for our residents. I fully understand 
the basis for that decision as the risks of operating 
independently are greatly mitigated by the assistance of 
Healthcare.gov technology and support from CMS.
    We're continuing to work to harmonize the provisions of the 
Affordable Care Act with Hawaii's legislative framework to 
continue to provide outstanding access to healthcare and 
wellness resources to virtually every resident and, when 
necessary, any of the many millions of visitors we welcome to 
our state each year.
    Honorable members, we thank you for your time, dedication 
and your interest in improving the quality of life in our 
country by addressing this important issue before the people of 
the United States. I look forward to any questions you might 
have.
    [The prepared statement of Mr. Kissel follows:]
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
    
    
    Mr. Murphy. Thank you.
    I now recognize Mr. Peter Lee, the Executive Director of 
Covered California from the State of California. Mr. Lee, you 
are recognized for 5 minutes.

                     TESTIMONY OF PETER LEE

    Mr. Lee. Good morning, Chairman Murphy, Ranking Member 
DeGette, and distinguished members of the committee, and the 
members from California, Matsui and Capps, who were able to 
join you. It's an honor for me to be here in front of you 
before the subcommittee to speak about the success we've had in 
California in implementing the Affordable Care Act.
    This landmark legislation has dramatically changed 
healthcare in California and the Nation by expanding needed 
coverage but also by putting in place new protections that 
benefit all Americans. Today I'm pleased to address how Covered 
California is working, what we consider to be the keys to our 
success, and how we are actively working to improve what we are 
doing in California.
    First, let me note that California is a state that embraced 
the Affordable Care Act from day one. We were the first state 
to establish legislation to establish a state-based exchange. 
That legislation was passed with a Republican Governor and a 
Democratic legislature.
    Since then, some of the tools we put in place to build on 
are being an active purchaser. Covered California chooses which 
plans to participate. We negotiate with them to make sure the 
rates, their quality, their networks provide the best value to 
consumers.
    Second, we provide standard benefit designs. Covered 
California sets the benefits so they benefit consumers. In 
California, in the individual market, you will not see 
consumers surprised by not getting access to primary care 
because they need to pay a deductible first. That's a standard 
that we have in place that primary care access is not subject 
to a deductible for any Californians at Silver and above. We 
have tools, but that also means that the health plans are 
competing on an apples-to-apples basis.
    Third, California has expanded its Medicaid program. Under 
Governor Jerry Brown and our legislature, deciding to expand 
Medicaid has meant that millions of Californians have had the 
benefit of coverage they would not otherwise have.
    So in California, the Affordable Care Act is working. 
Covered California is working. Sixty-eight percent of 
California's voters recognize that and say that they've seen 
the Affordable Care Act working in our state. First and 
foremost, that's because of strong enrollment. Today we have 
over 1.3 million Californians covered by Covered California but 
there's an additional 500,000 that had coverage in the last 
year and a half that aren't covered today. That's not because 
they're uninsured. They're now with employer-based coverage or 
Medicaid or Medicare coverage. But exchanges across the Nation 
are providing a safety net and a way station of individuals 
moving into the employer-based coverage with other options they 
did not have before. This is part of why all of us will have 
about one-third of our population turn over every year. We are 
now the glue that is holding together the employer-based system 
and public programs.
    In California, insurance rates are under control. For 2016, 
the average rate increase in California will be 4 percent. In 
2015, the average rate increase was 4.2 percent. Two years in a 
row, we've proven the naysayers wrong. This comes on the heels 
of years of double-digit rate increases in the individual 
market.
    Now, let me make clear that in California, the 
beneficiaries of those low rates are not just those in Covered 
California but the entire individual market. We have about 1 
million individuals that buy insurance not through Covered 
California. They benefit from our negotiating on behalf of 
consumers.
    How did we get there? We have a good risk mix. We have a 
young mix, a diverse mix that reflects the population of 
California, and we take that data and we meet with our health 
plans to the tune of $300 million of premium savings by showing 
the plans the data that there's a good risk mix. They've 
demonstrated that in the rates they've put before Californians.
    Coming forward in 2016, there's going to be more plan 
choices. We're going to be expanding from the 10 plans we have 
today to 12 health plans. We're adding Oscar and 
UnitedHealthcare. This means that for virtually every 
Californian, they will have at least three health plans to 
choose, and the vast majority will have four, five, six plans 
to choose. But we don't think more is always better. We pick 
plans. We make sure that they're delivering value and they're 
building on the platform that Congresswoman Matsui noted of 
making sure that we're changing the delivery system and 
lowering costs for everybody over the long term. That's the 
future that we all need to be looking for of building a 
delivery system that puts patients first, that makes sure that 
care is delivered when they need it. Covered California is 
delivering on that promise.
    We still have work to do, and I look forward to taking your 
questions as we talk about our path forward in the future.
    Thank you very much.
    [The prepared statement of Mr. Lee follows:]
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
   
    
    Mr. Murphy. Thank you, Mr. Lee.
    And now, finally, we turn to Mr. Jim Wadleigh. Am I 
pronouncing that correctly?
    Mr. Wadleigh. Yes, you are, sir.
    Mr. Murphy. The Chief Executive Officer of Access Health 
Connecticut for the State of Connecticut. You are now 
recognized for 5 minutes.

              TESTIMONY OF JAMES R. WADLEIGH, JR.

    Mr. Wadleigh. Good morning, Chairman Murphy, Ranking Member 
DeGette, and members of the subcommittee. Thank you for this 
opportunity to offer testimony as you examine the condition of 
several state-based health insurance marketplaces.
    My name is Jim Wadleigh, and I'm the Chief Executive 
Officer of Access Health Connecticut, one of the Nation's best 
and healthiest state marketplaces.
    Access Health Connecticut was established in 2012 by 
Governor Malloy, Lieutenant Governor Wyman, and the Connecticut 
General Assembly to expand access to health insurance. Their 
leadership, and the support of our Board of Directors and many 
public and private partners, has been critical to our success. 
So, too, has the commitment of the Access Health Connecticut 
team.
    Since we launched our state-based marketplace 2 years ago, 
we've worked together to meet the unique needs of our citizens 
while staying focused on innovation, collaboration and expanded 
coverage.
    Today, I am pleased to report that 760,000 state residents 
and small business owners have used the exchange to enroll in 
qualified health plans and Medicaid. We have exceeded federal 
enrollment goals by more than 200 percent. We've cut 
Connecticut's uninsured rate in half, from 8 percent to less 
than 4 percent. That's 128,000 people who are now more likely 
to go to a doctor.
    We have worked with Connecticut's Insurance Commissioner to 
keep costs down. Rates for our most affordable plans have 
remained flat for the last 2 years. We have become a self-
sustaining exchange well ahead of next year's deadline, and we 
no longer use state or federal funding for our operating costs.
    How did we achieve this success? We heeded the old adage: 
``An ounce of prevention is worth a pound of cure.'' From the 
very beginning, we kept things simple and stayed true to our 
mission. Our exchange is considered a national model because of 
its straightforward design and ease of use. Over 96 percent of 
Access Health Connecticut customers say they are satisfied. The 
development of this stable, user-friendly Web site was overseen 
by an executive leadership team with a passion for health care 
and decades of experience in the industry. We set priorities, 
established clear business requirements, and tightly managed 
the scope of this project.
    To reduce the number of uninsured residents, we conducted 
extensive research and partnered with numerous state- and 
community-based organizations. This helped us better understand 
and reach those individuals and families most in need. We used 
creative, award-winning marketing tactics, while sticking to a 
simple enrollment message.
    In addition to putting feet on the street, we opened a 
store on Main Street. It's actually one of two brick-and-mortar 
storefronts we operate. Taking a page from Apple's customer 
service playbook, we provide free, professional guidance and a 
personal touch to help consumers navigate the complexities of 
health insurance.
    The success of these stores has exceeded expectations. Not 
even the blizzard of 2015, which dumped two-and-a-half feet of 
snow across the state, could keep people away. Our year-over-
year foot traffic in the month of January more than doubled.
    Access Health Connecticut is the first state-based exchange 
to implement a mobile platform that integrates closely with our 
backend systems. This nationally recognized, award-winning 
mobile app allows customers to create accounts, comparison 
shop, submit documentation, and purchase plans all from the 
palm of their hand.
    Our ability to collaborate across boundaries and streamline 
the enrollment process for both health insurance and state 
human services has also been recognized by our peers. Last 
year, Access Health Connecticut and the Connecticut Department 
of Social Services were honored for creating a multi-channel, 
``no wrong door'' experience for consumers.
    Solid technology and a commitment to exceptional customer 
service have made Access Health Connecticut a model for other 
states. As one Forbes columnist wrote, ``Connecticut isn't just 
ahead of every other state; it's in its own league entirely.''
    We intend to strengthen and grow that league. We will 
continue to collaborate with other state-based exchanges, as we 
did with Maryland, to share our expertise, business practices, 
and technology. We will continue to innovate and develop new 
strategies that expand access to health care, promote health 
and wellness, and eliminate health disparities. We will 
continue to explore new opportunities to reduce costs, 
safeguard our long-term financial stability, and keep premiums 
affordable for all consumers.
    And we will never lose sight of why we do this. It's for 
hardworking people like Walter Gualteri, who operates a small 
tailoring and dry cleaning shop in Newington, Connecticut. Once 
Walter hit 50 and developed a chronic health issue, his 
insurance company began raising his rates on a regular basis. 
Month after month, year after year, Walter lived in fear of 
losing his coverage. Through Access Health Connecticut, Walter 
found a cheaper plan that lets him keep his own doctors and 
afford his prescriptions. Today, at age 60, Walter says he's 
living the American dream and has the peace of mind that comes 
with knowing he can't be dropped because of age or preexisting 
condition.
    Thank you for the privilege of appearing before this 
subcommittee. I welcome the opportunity to answer any questions 
you may have.
    [The prepared statement of Mr. Wadleigh follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

   
    
    Mr. Murphy. Thank you, Mr. Wadleigh.
    I now recognize myself for 5 minutes of questions. I'm 
going to ask a number of questions, so please answer them 
quickly if you could.
    First, I want to ask each of you if your state has spent 
any federal establishment grant dollars on operational costs 
this year for your state exchange.
    Mr. Allen?
    Mr. Allen. We do not believe so.
    Mr. Murphy. Ms. O'Toole?
    Ms. O'Toole. No.
    Mr. Murphy. Mr. Gutierrez?
    Mr. Gutierrez. We have----
    Mr. Murphy. Microphone, please.
    Mr. Gutierrez. We have not spent outside any written 
authority from CMS.
    Mr. Murphy. Mr. Kissel?
    Mr. Kissel. We have one item that we are trying to 
reconcile with our auditors before engaging in spending it. 
It's in a segregated account.
    Mr. Murphy. Mr. Lee?
    Mr. Lee. We are spending establishment funds to continue 
the final establishment of our exchange, federal dollars but no 
operational funds.
    Mr. Murphy. Mr. Wadleigh?
    Mr. Wadleigh. No.
    Mr. Murphy. Can I ask each of you what your operational 
costs are this year for the exchange?
    Mr. Allen?
    Mr. Allen. For the current state fiscal year, which began 
July 1st, our operational costs are about $12 million.
    Mr. Murphy. Ms. O'Toole?
    Ms. O'Toole. Thank you, Mr. Chair. Sorry, I'm having 
trouble with the microphone.
    Mr. Murphy. OK.
    Ms. O'Toole. We are about the same, and I'm happy to 
provide the committee with a full balance sheet on the project.
    Mr. Murphy. Thank you. We'll get that.
    Mr. Gutierrez?
    Mr. Gutierrez. We are still in very much a build year. Our 
operation and build expenses within the Connector are on the 
order of about $65 million.
    Mr. Murphy. Mr. Kissel?
    Mr. Kissel. A little over $8 \1/2\ million.
    Mr. Murphy. Thank you.
    Mr. Lee?
    Mr. Lee. Our current fiscal year total budget is about $330 
million. Segregating which part of that is operational versus 
establishment, I don't have off the top of my head.
    Mr. Murphy. And Mr. Wadleigh, would you know?
    Mr. Wadleigh. Our total budget for the year is $28 million, 
and roughly $18 million of that is dedicated to operational 
costs.
    Mr. Murphy. So with all this--and this committee would 
appreciate if we got more detailed audited information in terms 
of what your costs are for establishment and operational.
    I am curious. Have any of your states worked out what its 
costs per enrollee, which you have done in terms of operation 
and establishment?
    Mr. Allen, do you know?
    Mr. Allen. Yes. Our exchange is funded entirely through an 
assessment on----
    Mr. Murphy. No, I mean in terms of how many enrollees does 
your state have now?
    Mr. Allen. Yes, right now we have about 107,000.
    Mr. Murphy. A hundred and seven thousand, and how much have 
you spent so far for operational and establishment expenses, 
state and federal money?
    Mr. Allen. Are you referring to since the beginning of the 
program?
    Mr. Murphy. Yes.
    Mr. Allen. I believe that's on the record at $305 million--
--
    Mr. Murphy. And Ms. O'Toole?
    Mr. Allen [continuing]. In federal grants, and there's a 
bit more now in the assessment----
    Mr. Murphy. If you added state to that as well, you could--
--
    Mr. Allen. I would have to add state to that as well.
    Mr. Murphy. You could get that information for us?
    Mr. Allen. We can.
    Mr. Murphy. Ms. O'Toole, do you know?
    Ms. O'Toole. Thank you, Mr. Chairman.
    Mr. Murphy. You have to keep your microphone on. It's OK.
    Ms. O'Toole. I'm very sorry.
    Mr. Chairman, I'm happy to provide you a balance sheet. We 
can send that to the committee right away.
    Mr. Murphy. Mr. Gutierrez, would you know what you spent 
for establishment and operational costs per enrollee? How many 
enrollees?
    Mr. Gutierrez. Not offhand. We'd be happy to provide that 
in written response.
    Mr. Murphy. Mr. Kissel, do you know?
    Mr. Kissel. I do. It's a very large number. It's over 
$50,000. But I want to point out with respect, Chairman Murphy, 
it's like saying that the first year's use of a freeway is only 
for the people--the cost of the entire freeway is only for the 
people who use for the first year versus a----
    Mr. Murphy. I got that.
    Mr. Lee?
    Mr. Lee. We have not done a per-enrollee cost but I note 
that we have managed over $10 billion of premiums in the first 
year and a half and we anticipate over $7 billion in premiums 
next year, and the $1 billion received from the Federal 
Government have established the infrastructure----
    Mr. Murphy. Right. So I need to know in terms of your 
establishment operational costs and per enrollee. Do you know 
that number offhand?
    Mr. Lee. No, I do not.
    Mr. Murphy. Mr. Wadleigh?
    Mr. Wadleigh. No, I do not.
    Mr. Murphy. But if you could get that information for us--
and I understand different costs up front but now, of your 
states, who is keeping it and who is turning it over to the 
federal? Who is turning it over to--who is maintaining your 
state exchange? Oregon, you are getting rid of yours, right?
    Mr. Allen. We're operating the marketplace in Oregon and 
using the federal platform as----
    Mr. Murphy. You are using the federal platform?
    Ms. O'Toole, are you using the federal or are you keeping 
Minnesota?
    Ms. O'Toole. We're keeping Minnesota.
    Mr. Gutierrez. Retaining Massachusetts.
    Mr. Murphy. Retaining?
    Mr. Kissel. Moving to healthcare.gov.
    Mr. Murphy. OK. So you're switching.
    Mr. Lee?
    Mr. Lee. California is managing our systems in all facets.
    Mr. Murphy. And Mr. Wadleigh?
    Mr. Wadleigh. Connecticut is keeping our system.
    Mr. Murphy. But over time, what happens is, you are getting 
less and less federal subsidy, right? So that will mean more 
and more to the states, and so that's going to continue on.
    Mr. Kissel, I want to ask you, in your testimony, you were 
critical of project management of Hawaii Health Connector. Can 
you be a little more specific?
    Mr. Kissel. Yes. When I joined the Health Connector in 
October 2014, I examined the project which had had a miserable 
track record, and I admit that, and I looked at the project 
management tracking tools, and they were virtually nonexistent. 
The project was not tracked with a project plan that had a 
critical path. It didn't have hours tracked. It didn't really 
define what the end game and goals were, and I was very 
disappointed because I came out of the infrastructure business, 
and I worked for companies that built projects. We built roads, 
bridges, bases of bombs for the Departments of Transportation 
and the Department of Defense, and these departments had 
extensive resources for tracking, monitoring and verifying 
project progress.
    Mr. Murphy. I just want to say, and I read the GAO report 
on this too, clearly there were a lot of problems. I mean, from 
some of the testimony, it sounds like it is all rainbows and 
unicorns. And look, one of the things this committee thrives on 
is just honest testimony. It is not rainbows and uniforms. 
There was a mess, and Mr. Kissel, I appreciate your honestly.
    Mr. Gutierrez, the Governor came in. He made some 
substantial changes. I appreciate that too. That is what we 
want to hear.
    There was some mess-ups here, some big ones that cost 
taxpayers billions of dollars, and we would much rather hear 
from people that say yes, let me tell you the problems and here 
is how we addressed it. That helps us a great deal.
    I now yield to Ms. DeGette for 5 minutes.
    Ms. DeGette. Thank you, Mr. Chairman.
    Mr. Allen, yes or no. Are you denying that your exchange 
had problems?
    Mr. Allen. No.
    Ms. DeGette. Ms. O'Toole?
    Ms. O'Toole. No, I'm not.
    Ms. DeGette. Mr. Gutierrez?
    Mr. Gutierrez. No, I am not.
    Ms. DeGette. Certainly not you, Mr. Kissel.
    Mr. Lee, did your exchange have problems?
    Mr. Lee. Absolutely. Our exchange had some problems along 
the way.
    Ms. DeGette. Now, Mr. Wadleigh, I don't know, it might be 
rainbows and unicorns for you but have even you had problems?
    Mr. Wadleigh. Yes, we did.
    Ms. DeGette. Everybody has had problems. What we are 
thinking about here is how did we recognize those problems and 
then move forward to try to fix it, and so I guess I would 
start with you since you are our model student, Mr. Wadleigh. 
If you want to talk about what Access Health Connecticut very 
briefly, what problems you saw and what you have done to move 
through those, I think that would be very instructive for us.
    Mr. Wadleigh. Thank you for the question. So I think as we 
looked at the challenges from the onset of this very large 
project, which it really was, we saw some of the challenges 
being tight timelines. We saw some of the challenges being 
management of scope, could we deliver everything that we needed 
to deliver for me in a 10-month period? No, the answer was we 
couldn't. And so we went back to the drawing board a number of 
times to review everything that we needed to implement for the 
October 1st, 2013, time frame and deferred functionality out to 
later months for us that we knew would not impact our 
customers, and ultimately that came back around as some of our 
key decisions that we made. Unbeknownst to us, that's really 
where we----
    Ms. DeGette. And are you continuing to try to refine and 
improve the efficiencies in your system?
    Mr. Wadleigh. Every day we look to do that.
    Ms. DeGette. Thank you.
    Mr. Lee, I only have 2 minutes and 57 seconds left so could 
you answer the same question?
    Mr. Lee. Yes, very briefly. First, very tight timelines for 
a big IT build that we addressed by being focused on----
    Ms. DeGette. Timelines were a big issue, weren't they?
    Mr. Lee. Absolutely, a huge issue.
    Ms. DeGette. Were they a big issue for everybody else?
    Ms. O'Toole. Yes.
    Ms. DeGette. Mr. Allen?
    Mr. Allen. Yes.
    Ms. DeGette. Mr. Gutierrez?
    Mr. Gutierrez. I was not there but it's my understanding, 
yes.
    Ms. DeGette. OK.
    Mr. Lee. The other big issue that I know we all had to 
address is consumer misinformation and disinformation. Is it 
the fact of the availability of affordable subsidies that makes 
care affordable is a huge challenge, one that we are continuing 
to address because many Californians are now informed but some 
still are not, and so this is an educational message. I think 
it's a huge challenge. We're working with literally 12,000 
insurance agents, faith-based groups, clinics, but that 
outreach challenge is something we address, but it continues to 
be a challenge.
    Ms. DeGette. That is true in my State of Colorado too, by 
the way.
    Now, Mr. Kissel, you have been there, what, about a year 
now?
    Mr. Kissel. Yes.
    Ms. DeGette. And what did you do before that?
    Mr. Kissel. I was in the infrastructure business. Most 
recently I ran the gas utility in Hawaii.
    Ms. DeGette. So have you ever seen a utility or a system 
like this that didn't have issues that continually had to be 
addressed and updated?
    Mr. Kissel. Absolutely not, and the way you do it is, you 
take the Connecticut model and perhaps the California model and 
you roll it out gradually. You increase functionality.
    When we first started to make airline reservations, we 
couldn't even get a seat assignment online. Today we can order 
everything down to an umbrella in our drinks.
    Ms. DeGette. It costs extra for those umbrellas, I just 
want to tell you.
    Mr. Gutierrez, your state had a lot of issues. What are you 
doing to remedy those issues and move forward?
    Mr. Gutierrez. Partly because of my background, I have a 
belief that large IT projects really need strong governance, 
and we really tried to address governance not just for the 
project but for the overall business.
    Ms. DeGette. Ms. O'Toole?
    Ms. O'Toole. Thank you. Some of the same things that you've 
heard already. We actually in Minnesota early on took on two 
self-evaluations to make sure we identified problems and could 
focus resources where they needed to be, and we have made 
tremendous progress in 2 years, and hundreds of thousands of 
Minnesotans have enrolled with relative ease now.
    We also put a much stronger governance process and 
procedure in place.
    Ms. DeGette. Mr. Allen?
    Mr. Allen. Thank you. As I mentioned earlier and as 
Congressman Walden observed, I've had direct responsibility for 
the exchange functions in Oregon for about 90 days, and----
    Ms. DeGette. So you fixed the whole thing?
    Mr. Allen. Right.
    Ms. DeGette. Perfect.
    Mr. Allen. Really, the assignment of those functions, 
transferring them from a public corporation to a state agency 
was, I think, the single most significant step policymakers in 
Oregon did to put this on a different path. We're now laser-
focused on delivering marketplace services in an efficient and 
functional way and moving forward that way.
    Ms. DeGette. Thank you.
    Thank you very much, Mr. Chairman. I yield back.
    Mr. Murphy. Mr. Griffith, you are recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. I appreciate it. I 
know we are talking about state exchanges today. About this 
time 2 years ago, we were arguing whether the federal system 
was ready to be unrolled with its plan and so forth, and I 
noted with some interest, Mr. Kissel, in your written 
testimony: ``I'm pleased to say that as of June 2015, according 
to Turning Point, our independent validation and verification 
contractor, we were the only state-based exchange to have 
successfully passed its IT blueprint testing scenarios 
providing third-party validation that we have a working IT 
system.''
    Mr. Chairman, we might want to get the federal folks in 
here and see if they can pass that same kind of test, and I do 
think it is interesting that Hawaii is the one that has passed 
it.
    Notwithstanding that success, notwithstanding a 10-year 
plan to get the finances in order in June, the Governor decided 
to shut down Hawaii Health Connector and also notwithstanding, 
I should note, $205 million in federal establishment grant 
dollars. Now, for folks back home who may not have been paying 
attention to the whole hearing, that is the money that gets 
started on the program. Isn't that correct, the state health 
exchange?
    Mr. Kissel. That is correct. Now, we've committed or spent 
only $140 million of that and don't have plans to spend the 
full $205 million, of course.
    Mr. Griffith. OK. So as of June, you had spent about $140 
million of the $205?
    Mr. Kissel. That is correct.
    Mr. Griffith. And you are not going to spend the rest of it 
on establishment. Where does the money go? Does it go back to 
the Federal Government?
    Mr. Kissel. Some of it we don't plan to spend. About $5 
million to $7 million will be spent in decommissioning and 
shutting down the system, and then we'll spend some additional 
money on new enrollments for policy year 2016.
    Mr. Griffith. For enrollment?
    Mr. Kissel. It's establishment, the outreach for 
establishment to greater increase the enrollment as we use 
healthcare.gov.
    Mr. Griffith. And how much do you anticipate that will be?
    Mr. Kissel. I'll provide the exact amount, but it's about 
$7 million.
    Mr. Griffith. OK. So you are going to have tens of millions 
leftover. What happens to that money? Does that come back to 
the Federal Government or the State of Hawaii?
    Mr. Kissel. That remains unspent. It's not drawn from the 
Federal Government.
    Mr. Griffith. It's not drawn from the Federal Government? 
All right. I appreciate that. Thank you very much.
    Is Hawaii undergoing a rate increase for health insurance 
plans?
    Mr. Kissel. Yes, they are. The two main providers, the Blue 
Cross Blue Shield provider has announced a rate increase for 
Qualified Health Plans of about 46 percent.
    Mr. Griffith. Wow.
    Mr. Kissel. And Kaiser has announced an 8 percent increase.
    Mr. Griffith. So one has a 40 percent and one has got an 8 
percent. Which one is dominant in the market?
    Mr. Kissel. Blue Cross Blue Shield has about an 85 percent 
market share.
    Mr. Griffith. And do they cover the entire state?
    Mr. Kissel. Yes.
    Mr. Griffith. Does Kaiser cover the entire state?
    Mr. Kissel. Virtually the entire state. Some of the rural 
areas, they don't.
    Mr. Griffith. And do you have any other players in your 
marketplace? Because we have had previous testimony that, 
except for some rural areas, and I guess Hawaii would qualify 
as a rural area for most of it, there just aren't that many 
players.
    Mr. Kissel. That's correct. Now, the Medicare Advantage 
people are all there, but for the normal health plan for the 
average working person, it's those two players.
    Mr. Griffith. Do you know of any states that have people 
higher than a 46 percent increase?
    Mr. Kissel. I do not, but the reason for this is, we have a 
really well-balanced insurance community and it's been 50 years 
in the making, and when the Affordable Care Act policies were 
introduced, the insurance companies experienced a lot of 
negative selection. The sickest people enrolled first. We're a 
tiny little state with a very fragile economy. Many of our 
businesses--and we don't have national players in Hawaii--need 
that extra protection to provide the safety net that we have 
against SARS outbreaks and other--the swine flu and other kinds 
of things that are devastating to a small economy like ours.
    Mr. Griffith. I appreciate that.
    I noticed in the testimony, I believe Mr. Wadleigh, that 
you had indicated that the rates for our most affordable plans 
have remained flat, and that raises a question in my mind as a 
former practicing attorney, if your most affordable plans had 
remained flat and you don't tell me about the others, does that 
mean everybody else is getting a big increase?
    Mr. Wadleigh. So all of our plans both on and off the 
exchange have to have the same rates so the benefit the state-
based marketplace has created has allowed for the off-exchange 
plans to fall in line and have to be more competitive as well.
    Mr. Griffith. OK. So your affordable plans have remained 
flat but you have some other plans that have not remained flat? 
Is that what I'm reading? Because that's the way I read that.
    Mr. Wadleigh. Sure, sure. So there are always going to be 
plans when you get into the Platinum Group that are much 
richer.
    Mr. Griffith. And I apologize, because I see that my time 
is up, but I will note that you are not claiming that the plans 
went down $2,500 from what people were paying before.
    I yield back.
    Mr. Murphy. The gentleman yields back.
    I now recognize Mr. Yarmuth for 5 minutes.
    Mr. Yarmuth. Thank you very much, Mr. Chairman, and I thank 
all the witnesses for their testimony.
    I am not going to talk about rainbows and unicorns. In 
Kentucky, we prefer to talk about thoroughbreds. So I am going 
to talk about rainbows and thoroughbreds because Kentucky has 
had one of the truly successful and mostly problem-free 
experiences with the Affordable Care Act and our exchange 
called Kynect, and our Governor, Steve Basheer, and his team 
deserve an awful lot of credit.
    We had a glitch the first morning of the operation of the 
exchange for about 2 hours, and access was limited. Beyond 
that, we have been pretty much problem-free. And our experience 
is that we have insured now more than 500,000 people under the 
Affordable Care Act through our exchange and expansion of 
Medicaid in the 2 years of operation, and that's in a state of 
4.4 million. We have reduced the uninsured rate by 50 percent 
statewide. In my district, we have reduced the uninsured rate 
by 81 percent. There are only slightly less than 20,000 
uninsured citizens in my community of 750,000, which is a 
little less than 3 percent uninsured rate.
    So how has that happened? It is because of the outreach 
that we all talked about. Kynect had people at every county 
fair and every neighborhood association meeting, at the 
community health centers, you name it, where people gathered. 
They were there explaining and helping people enroll.
    So I am very proud of that. As a matter of fact, it has 
been so successful in Kentucky that one Republican state 
Senator has suggested that we try to expand the exchange to 
other states. So we may be coming after your business pretty 
soon.
    Additionally, just since I get to act like a witness here 
and talk about our experience. We do have this year three new 
insurance companies coming in to the exchange, which is 
positive. Now our consumers will have, I think, either six or 
seven choices of providers. There are three new insurance 
companies in the private marketplace so the market is actually 
expanding in a lot of ways.
    And I think most importantly, earlier this year our 
Governor commissioned the Deloitte firm to do an assessment of 
what the economic impact of the Affordable Care Act would be 
over the next 5 years, and Deloitte came back and said that 
over the next 5 years, the Affordable Care Act would create 
40,000 new jobs in Kentucky, would have created additional 
economic activity of $32 billion, and have a positive impact on 
the state budget of over $800 million.
    So I think in virtually every sense of the word, the Kynect 
operation and our experience in Kentucky has been very, very 
positive. We are getting an incredible increase in preventive 
medicine. We have had screenings for breast cancer increase by 
111 percent, cervical cancer screenings by 88 percent, 
colorectal cancer screenings 108 percent, and physical exams 
are up 187 percent.
    But all of this is really not as important as the human 
impact, and as Ms. O'Toole mentioned, a couple of her clients. 
I would like to read a letter from one of my constituents, a 
woman named Kim Atkins, and she wrote, ``My daughter, Sarah 
Atkins, is one of the several young adults that are on our 
insurance policy until she is 26 years old. She is still 
unemployed and looking for employment. On January 9th, 2011, 
that bill, the ACA, saved her life. One of her kidneys shut 
down and almost went septic. If she wasn't on our insurance, 
she would have waited or not gone to the hospital at all. The 
doctor told her if she would have waited an hour later, she 
would have lost a kidney or died.'' And that is what this is 
all about. This is providing quality, affordable care to our 
citizens, and I think--I am very proud once again of Kentucky 
and the experience we have had there, the progress we have 
made, and I thank you for the work that you all are doing in 
your respective states as well because this is one of our, I 
think, can ultimately be one of the true success stories of 
Congress and the Federal Government that we have created this 
new way to insure Americans.
    So I thank you all for your work and your testimony, and I 
yield back.
    Mr. Murphy. The gentleman yields back.
    I now recognize Dr. Bucshon for 5 minutes.
    Mr. Bucshon. First of all, I would like to thank all of you 
for doing what you can on behalf of the citizens in the state 
that you represent. I think all of us want everyone to have 
access to quality, affordable care. That is not in question.
    And I also agree that states have should more flexibility. 
Indiana used Healthy Indiana plan as a way to cover our low-
income Medicaid patients, and using a combination of federal 
funds as well as state funds from hospitals across the state 
that agreed to kick in so that we could expand coverage in a 
state-based program that is actually HSA-based that is working.
    Mr. Allen, the State of Oregon was awarded $305 million in 
federal tax dollars, correct?
    Mr. Allen. Yes.
    Mr. Bucshon. And did they spend all the money?
    Mr. Allen. A little bit less than the full amount but there 
was some unused grant funding at the end of Cover Oregon's 
term.
    Mr. Bucshon. OK. And all of that went for Cover Oregon? All 
the money spent went for Cover Oregon?
    Mr. Allen. All of the money was used to establish the 
health insurance exchange in Oregon, which was actually--the 
grants were partially to Cover Oregon and partly to the Oregon 
Health Authority.
    Mr. Bucshon. OK. So none of the money was spent on anything 
else other than attempting to establish Cover Oregon?
    Mr. Allen. Correct.
    Mr. Bucshon. OK. So could you provide us with an itemized 
accounting of all the expenditures, the $305 million that was 
spent? Is that possible?
    Mr. Allen. I can.
    Mr. Bucshon. So let it be noted, he has agreed to provide 
the committee with an itemization of expenditures, and from 
past history frequently we get one page from people with about 
four things on there. We would like to have a really in-detail 
itemization of where the money went. That would be great.
    Also, there are a lot of good things happening out there, 
and a lot of things that need to be changed.
    Mr. Lee, what percentage of your people are on Silver plans 
or above, approximately?
    Mr. Lee. About 75 percent.
    Mr. Bucshon. OK. So 75 percent of the people then have no 
deductible for primary care and 25 percent still have----
    Mr. Lee. But even at the Bronze plan in California, 
everyone in Bronze, which is a 60 percent actuarial value, have 
three visits to primary care or specialty care starting in 2016 
not subject to a deductible in addition to the preventive care, 
which is never subject to a deductible.
    Mr. Bucshon. OK. Thanks for that clarification because in 
your testimony you said Silver and above, and so that was 
interesting.
    And also, I would like to point out that I understand that 
the private sector plans are still there but federal 
subsidization of healthcare plans competing with the private 
sector makes it pretty hard for the private sector to compete. 
That is part of the issue.
    Mr. Wadleigh, in May, the board of Connecticut's health 
insurance exchange approved a 22 percent hike in the fee it 
charges insurers to help fund its operations. Is that correct?
    Mr. Wadleigh. Yes, it is.
    Mr. Bucshon. OK. So insurance companies got a higher fee.
    Mr. Gutierrez, is it true that at some point Massachusetts 
had to temporarily put 300,000 people on the Medicaid program 
are all those people still there when you were working to 
establish the exchange, that there was a template--your Web 
site had issues, and I am assuming all of that has been 
resolved and the people that went into Medicaid temporarily CMS 
approved are now out of that?
    Mr. Gutierrez. All of those temporary Medicaid members have 
been redetermined into either Qualified Health Plans or 
Medicaid.
    Mr. Bucshon. Great.
    And Ms. O'Toole, do you still have a backlog of about 
180,000 public insurance renewals in the system?
    Ms. O'Toole. Thank you for the question, Congressman. We do 
not. That has been resolved.
    Mr. Bucshon. OK. And it says despite additional funds, 
MNsure--you do continue to struggle some obviously, and again, 
I applaud all of you for what you are doing. The goal of our 
committee is to find out where we can make improvements, right?
    But Minnesota announced that they are going to revert to 
the old system for MinnesotaCare because of MNsure's problems. 
Is that true?
    Ms. O'Toole. Congressman, that is true just for a short 
period of time and we have prioritized that functionality for 
the very beginning of 2016.
    Mr. Bucshon. OK. Great.
    And in Hawaii, I guess you have totally turned yours over 
to the federal exchange now because it says in the information 
I have, you extended it until October of 2016. You originally 
announced Health Connector would shut down due to insufficient 
funds but recently has extended it through October 2016. Is 
that true or not true?
    Mr. Kissel. The outreach will extend through open 
enrollment and then the corporate affairs of our independent 
nonprofit will wrap up and it'll take until October to do the 
accounting and the like.
    Mr. Bucshon. OK. Great.
    Mr. Chairman, I yield back. Thank you.
    Mr. Murphy. Mr. Tonko, you are recognized for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair. And let me thank all of 
our witnesses for joining us today and presenting good 
information.
    I know that some state-based marketplaces have faced 
challenges in building and managing their IT platforms. These 
challenges are well publicized. What is less well known perhaps 
are the efforts that state-based marketplaces have been 
implementing and tailoring the ACA to their own citizens. So I 
would like to ask our witnesses, what is your state-based 
marketplace doing to ensure that consumers in your state are 
receiving culturally and linguistically appropriate outreach as 
well as healthcare?
    Mr. Allen, we might start with you and we will go across 
the table.
    Mr. Allen. Thank you for the question, Congressman. 
That's--in taking over responsibility for the marketplace, that 
was exactly the number one question that landed with us was, 
given the success we've had in Oregon in driving down the rate 
of uninsured, the remaining population is relatively small but 
relatively harder to reach, and so we have made the decision to 
move from a wide media broadcast advertising kind of an 
outreach approach to something that is much more tailored that 
works through community partners, organizations that work in 
communities of color, and other areas, much more targeted kinds 
of technology outreach to try to work hard to get to those 
geographic and demographic populations that are amongst the 
hardest to get insured.
    Mr. Tonko. Thank you.
    Ms. O'Toole, please?
    Ms. O'Toole. Thank you, Congressman. I'm happy to answer 
that. And hat we've learned in Minnesota is that with the 
remaining uninsured like Mr. Allen said, they're harder to 
reach. We have 26 statewide grantees who work in every 
committee around Minnesota to help reach out to these 
populations and enroll them. We're really proud of that. And we 
pair them also with enrollment centers around the state that 
are sponsored by brokers and so we're trying to come at it from 
all angles, and we've learned this is not an easy decision for 
people, so they need help and they need in-person assistance, 
so we focused resources there.
    Mr. Tonko. Thank you.
    And Mr. Gutierrez?
    Mr. Gutierrez. Three principal items. This year our media 
strategy is very focused on ethnic media dealing with the 
Hispanic, Portuguese, and Asian communities and pockets 
throughout the state that are underinsured. Secondly, our 
selection of navigators and walk-in centers for this fall is 
specifically targeted toward underinsured communities. And 
thirdly, there's an innovative program where because 
Massachusetts has a state insurance mandate, our Department of 
Revenue knows who does not have insurance. Now, they would 
never share data with us. That's out of bounds. But they are 
able on our behalf to notify uninsured residents of their 
opportunity to become insured through the state-based 
marketplace.
    Mr. Tonko. Thank you very much.
    Mr. Kissel?
    Mr. Kissel. We changed our outreach model from a media-
driven model to a personal model. We added marketplace 
assisters to speak the 15 or 20 languages and dialects of the 
people of the nations of the Pacific Rim in addition to the 
cultures of America. We went from a call center to a personal 
outreach, although we still operated the call center, and we 
went into the areas where, for example, there are people who've 
lost their homes due to economic conditions. We find that more 
than half of those families have one or two working members, 
and we help them enroll in coverage. We also moved forward with 
essentially what was a--I'm not a rocket scientist--with the 
Social Security model where you have multi layers of aid 
depending on the needs of the individual. You can call, if 
you're sophisticated, you can log on to the computer, and if 
you need help, we in fact make house calls. My telephone number 
and personal contact information is on the Web site.
    Mr. Tonko. Wonderful.
    Mr. Lee?
    Mr. Lee. From day one, we've done outreach which is 
anchored in local communities in a wide range of languages. We 
continue to do that. The other thing, I want to appreciate your 
question. It's not just about outreach. It's about making sure 
care is delivered that is culturally appropriate and addresses 
health equity. We have contract requirements in our 
negotiations with the plans to hold the plans to account. Three 
of our 12 plans are among nine nationally recognized by NCQA 
for providing culturally appropriate care. It's something we're 
going to hold our plans to account to.
    Mr. Tonko. Thank you so much.
    And finally, Mr. Wadleigh, please.
    Mr. Wadleigh. Thank you for the question. We too have been 
focusing all of our outreach into our communities where we know 
that from--in Connecticut that our uninsured reside in 
basically 10 zip codes and so we can go right into those 
communities and work with those residents.
    Mr. Tonko. Thank you very much. I yield back.
    Mr. Murphy. Thank you. The gentleman yields back.
    I now recognized Mr. Flores for 5 minutes.
    Mr. Flores. Thank you, Mr. Chairman. I just wish we had 
invited the D.C. exchange because it still shows I am 
ineligible for coverage.
    Anyway, states continue to opt out of setting up their 
state exchanges and they are migrating to the federal exchange, 
as we all know. We need to try to understand the impact on 
that. In order to do that, we need to know how sustainable the 
state exchanges are that are still in existence.
    So Ms. O'Toole, would you tell me what taxpayers can expect 
from your state exchange over the next 5 to 10 years, and will 
it be sustainable somewhere during that time period?
    Ms. O'Toole. Congressman, thank you for the question. I'm 
happy to answer it.
    Like I said in my opening testimony, we are financially 
sustainable at this point. Our budget is balanced. It's based 
on real numbers and real experience, and the board of directors 
in March of this year has passed a 3-year financial plan that 
looks out. So we keep a close eye on this. It's something we're 
concerned about. And our board and our team is committed to 
living within our means. So if we have to--you know, revenue 
has to match expenditures, and we have to make hard decisions, 
we will.
    I also mentioned in my testimony that we have a task force, 
a bipartisan task force, in Minnesota that's looking into some 
of these issues that took it out of the legislative arena to 
have a more in-depth conversation throughout this fall, and we 
look forward to that work continuing.
    Mr. Flores. OK. Mr. Gutierrez?
    Mr. Gutierrez. Our current expense profile, because it's 
still a buildout year, is high and we'll need to reduce it, 
making some hard choices along the way. But Massachusetts is 
fortunate in that the Connector Authority was initially 
instantiated with a reserve fund. It also has dedicated revenue 
sources from our cigarette tax and from the state insurance 
mandate penalties as well as the carrier administrative fees. 
So we have a very diverse set of funding sources and bipartisan 
commitment to the effort.
    Mr. Flores. Mr. Lee?
    Mr. Lee. From day one, Covered California has been putting 
money in the bank from our plan assessments while we were going 
through establishment funds. We have over $200 million in the 
bank, a very strong balance sheet. We have a wholly sustainable 
model over the long term.
    Mr. Flores. You talked about these assessments. What impact 
has that had on premiums in your state?
    Mr. Lee. Well, it's actually--compared to what health plans 
were spending to enroll people in the individual market 
previously, we think it reduces overall effect on the premium 
dollars. It's about 3 \1/2\ percent of premium. But enrolling 
people in the individual market is very expensive, and prior to 
the exchange coming along, plans were spending as much as 12 
percent on commissions and a whole range of acquisition. I like 
to think we're the cheapest date in town, Congressman.
    Mr. Flores. Mr. Wadleigh?
    Mr. Wadleigh. We too have a fully balanced budget that also 
right now we have about $12 to $15 million in reserves within 
our budget as well.
    Mr. Flores. OK. And what has the impact been on premiums in 
your state?
    Mr. Wadleigh. The impact on our premiums related to the 
assessment has been similar to California. We feel that it has 
allowed the marketplace to level off and compete evenly across 
the state.
    Mr. Flores. Mr. Kissel, what has been the impact--excuse 
me, not Mr. Kissel. Mr. Gutierrez, what has been the impact on 
premiums in your state from the assessments?
    Mr. Gutierrez. If I made a statement on that, I think I 
would be speaking without firsthand knowledge, so I'd like to 
respond to that more fully in writing.
    Mr. Flores. That's fine. OK.
    Ms. O'Toole?
    Ms. O'Toole. Thank you, Congressman. Last year we saw rate 
increases on average of about 4 percent. Our Department of 
Commerce in Minnesota reviews that so that we don't--that's an 
independent review process aside from our organization. They 
have not released rates for this year. That happens later this 
week.
    Mr. Flores. OK. Would you advise us after that happens?
    Ms. O'Toole. I'm happy to do so.
    Mr. Flores. OK. Thank you.
    Given the short amount of time, I don't have time for 
another question so I will yield back the balance of my time. 
Thank you, Mr. Chairman.
    Mr. Murphy. The gentleman yields back and I recognize Ms. 
Castor for 5 minutes.
    Ms. Castor. Well, thank you, Mr. Chairman, for calling this 
hearing on the substantial reductions in the rate of uninsured 
Americans under the Affordable Care Act, and thank you to all 
the witnesses here today and what you are doing for families 
across the country.
    When I think of the Affordable Care Act, I think it is 
helpful to break it up into its pieces. First, you have the 
consumer protections the Affordable Care Act brought. You have 
a piece on Medicare--we strengthen Medicare. And then you have 
the policies and strategies to reduce the rates of uninsured 
all across the country. So for consumer protections, the ACA is 
working. We no longer have discrimination based upon a 
preexisting condition like a cancer diagnosis or diabetes. That 
has been a godsend to families. The consumer protections that 
allow young adults to stay on their parents' policies, I've 
heard directly from many friends back home what a benefit that 
has been. And then insurance companies can no longer cancel you 
if you get sick, and there are others, but that is an important 
piece.
    Then under Medicare, Medicare is stronger. We invested 
savings into lengthening the life of the Medicare Trust Fund. 
We also are closing the donut hole, put money back in the 
pockets of our parents and grandparents through less costly 
prescription drugs, and then Medicare is undergoing reform so 
that care is provided in a smarter way.
    But then it comes to the rates of uninsured, and it is 
pretty remarkable, and this is important as well when you think 
about it for people who already have insurance because what the 
Affordable Care Act has done is helped people take personal 
responsibility for themselves and make insurance more 
affordable. That way you don't have this cost shifting to 
people that do have insurance.
    So the recent Census Bureau report said that since the 
passage of the Affordable Care Act 5 years ago, 17.6 million 
Americans have gained coverage, and that from 2013 to 2014, we 
have had the largest reduction in the uninsured rate in America 
in 25 years, and it is important to note that at the same time, 
the rate of employer-sponsored health insurance has remained 
constant because that was kind of a--that was a question mark 
going on, so, so far, so good.
    And I would really like to thank you all for--I heard today 
a little healthy competition among the states, how proud you 
are of some of the things you have been able to do. I certainly 
heard it from my colleague, Mr. Yarmuth from Kentucky, where 
they have done a fantastic job.
    Mr. Lee, congratulations. Since opening of the exchanges, 
California has provided a lifeline to so many families in 
California through Covered California, Medi-Cal. What has 
happened to the uninsured rate in California?
    Mr. Lee. The uninsured rate, depending on census figures, 
has dropped to about 12 percent, a huge reduction, one of the 
fifth largest reductions in the Nation, but it's also, if I 
may, Congresswoman, your note that it's also for people that 
have insurance are seeing the benefit of lower rates. A million 
Californians in the individual market that don't buy through us 
benefit from our 2 years holding rates down, so I think your 
note on those benefits aren't just for the uninsured but it is 
also for insured people that are in jobs, that have insurance 
that have now rates kept in check.
    Ms. Castor. Well, I am glad Mrs. Capps came in at this 
point so she can hear that directly after she worked so hard on 
the Affordable Care Act and passage.
    How are you working to ensure that coverage remains 
affordable from this point forward and meaningful for families?
    Mr. Lee. Well, one of the things we are doing at Covered 
California as an active purchaser, we are working with our 12 
health plans to say how do we actually affect care where it's 
delivered. In the end, affordability is about delivering the 
right care at the right time every time, and the movement that 
we've seen in Congress, a common movement, a moving from volume 
to value is something we are working with all of our health 
plans to change payment to promote primary care to make sure 
people with chronic illnesses get the right care at the right 
time, and that needs to be the focus I think all of around this 
table have is, as one of the other Congress people noted, it's 
not just about giving people an insurance card; it is making 
sure people get the right care and that right care is delivered 
at the right time, and that's going to be the key for all of us 
in reducing costs over the long term.
    Ms. Castor. Thank you.
    Mr. Wadleigh, on behalf of Access Health--you are here on 
behalf of Access Health Connecticut. Congratulations, and thank 
you for what you've done in lowering the rate of uninsured.
    Tell us what has happened to the uninsured rate in 
Connecticut and what this has meant for your citizens.
    Mr. Wadleigh. Thank you, Congresswoman. The uninsured rate 
in Connecticut has been cut in half just in the last 2 years. 
We see that it will continue to go lower, so that has been very 
exciting.
    What I would also say is, it's really what our next step, 
so similar to Mr. Lee had said, it really comes down to, how do 
we start working through health disparities, wellness, access 
to primary care physicians. Those are some of the goals that we 
are working on right now with the residents of Connecticut.
    Ms. Castor. Thank you very much, and I yield back.
    Mr. Murphy. The gentlelady yields back.
    We are in agreement that Mr. Walden will be able to go 
next, so without objection. Thank you, Mr. Walden.
    Mr. Walden. I thank the chairman. I thank my colleagues for 
that.
    I know Ms. DeGette asked each of you if there were trouble 
with your exchanges, and you all wisely answered ``yes'' 
because it is never easy to roll one of these out. I have just 
got to go to an Oregon-specific issue, though, but I am going 
to ask each of you to put a highlight on this. Did the 
Governors in your states use their paid campaign political 
advisors to craft official communication and management 
strategies for the rollout or the termination of your exchange? 
Yes or no.
    Mr. Wadleigh?
    Mr. Wadleigh. I don't know the answer if our Governor did 
that or not.
    Mr. Walden. All right.
    Mr. Lee?
    Mr. Lee. I have no information about how my Governor uses 
his staff.
    Mr. Walden. All right.
    Mr. Kissel?
    Mr. Kissel. Not to my knowledge, but the Governor has very 
courageously taken on the burden of this exchange by embedding 
it in all of the departments.
    Mr. Walden. Mr. Gutierrez?
    Mr. Gutierrez. Not under the current administration.
    Mr. Walden. Ms. O'Toole?
    Ms. O'Toole. Thank you, Congressman. I have no information 
about that.
    Mr. Walden. I think Mr. Allen knows potentially the answer 
to this question in Oregon.
    Mr. Allen. Well, Congressman, I was not directly involved 
in the management or operation of the exchange at that point 
and have no direct experience with that kind of involvement.
    Mr. Walden. All right. Good answer on your part. However, I 
want to introduce into the record, Mr. Chairman, a series of 
newspaper articles that were acquired, investigative reporting 
that was done that clearly indicated that our Governor at the 
time used his outside political campaign staff to manage and 
coordinate the messaging on Cover Oregon. It may be worse than 
that based on e-mails that have been made available from FOIA. 
I just think it is important for the committee to know as we 
investigate what happened to this money what happened behind 
the scenes apparently in our State of Oregon, and so Mr. 
Chairman, without objection, I'd like to have those entered 
into the record. I will be happy to provide them.
    Mr. Murphy. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Walden. Mr. Allen, do you know how close to completion 
Cover Oregon was when they pulled the plug on it?
    Mr. Allen. Congressman, I don't have direct knowledge of 
how close it was to completion. There is on the record a 
technology assessment report provided to the Cover Oregon Board 
at the time that the decision was made whether to move forward 
with that infrastructure or move to the federal marketplace 
that indicated that were they to choose to maintain the 
existing infrastructure, it was already failing to meet 
benchmarks necessary to be available for open enrollment in 
2015.
    Mr. Walden. So my understanding is, it was about 90 percent 
done.
    Mr. Allen. I would have no knowledge of that.
    Mr. Walden. You don't know? You haven't asked? OK. How did 
Oregon inform CMS of its decision to migrate to healthcare.gov? 
Do you have any knowledge of that?
    Mr. Allen. Sorry for this to be a theme, but I don't have 
direct knowledge. My understanding----
    Mr. Walden. No, I know you have only been on it 90 days, 
but I assume at some point these--well, then, do you know who 
Oregon worked with or is currently working with at CMS either 
during this transition?
    Mr. Allen. Sure. We've been mostly closely working with 
Myra Alvarez, who just recently departed CMS. I've been in 
close contact with Kevin Counihan as we've dealt with this 
transition issues, updating them on transition as well as 
dealing with site visits and those kinds of things.
    Mr. Walden. And what did CMS require of Oregon before 
allowing it to migrate to healthcare.gov? Do you know that?
    Mr. Allen. I don't know the answer to that.
    Mr. Walden. Did CMS conduct any forensic analysis on Cover 
Oregon or are they now? Did they conduct an audit of their own?
    Mr. Allen. We did recently have an audit on the ground by 
CMS about 3 months ago, and I should make a comment. In that 
context earlier, I said we have not used grant money for 2015 
operations. There are actually two very minor elements that 
were identified in that audit that we are working to resolve 
with them now. I would not be able to characterize anything 
that I'm aware of as forensic.
    Mr. Walden. All right. And will that audit be made public 
by the state when it is completed or by CMS?
    Mr. Allen. I believe it will be made public by CMS.
    Mr. Walden. All right. I am sure the committee would like 
to have access to that either from CMS or Oregon.
    Do you know if CMS required Oregon to return any of the 
$305 million originally awarded for the establishment of the--
--
    Mr. Allen. Other than the potential couple of minor items I 
just mentioned that we're in discussions with them about, no, 
I'm not aware of that.
    Mr. Walden. OK, and did Oregon incur any additional costs 
when it migrated to healthcare.gov? Do you know that? Or do you 
want to get back to me?
    Mr. Allen. I can get back to you on that.
    Mr. Walden. I realize you have only been at that--but this 
has been going on a long time, and it has, as you know, 
dominated certainly the minds of Oregonians out there.
    Now that Oregon has elected to switch over to the federal 
exchange, will there be an attempt to recoup any of the money 
that was granted to the state to establish the state exchange? 
Are you in any discussions about that?
    Mr. Allen. To recoup from whom by whom? I'm not----
    Mr. Walden. Well, the $305 million.
    Mr. Allen. Well----
    Mr. Walden. Is CMS going to come back on the state?
    Mr. Allen. Yes. What I am in a position to know is that 
we've been able to review the grant documents. The $300 million 
went for the entire operation of setting up a health insurance 
exchange. Technology is certainly a piece of that. I think you 
have a GAO report----
    Mr. Walden. Right.
    Mr. Allen [continuing]. That identifies $78 million of the 
$304 of that function. It is my understanding that we are in 
compliance with and have delivered the deliverables required 
under the terms of the various grants for the $305 million. So 
I don't think there's discussion about a return because we've 
complied with the terms of the grant.
    Mr. Walden. Wow. Even though the exchange never was 
functional or on----
    Mr. Allen. Congressman, the technology didn't launch but we 
were able to cover 70,000 people in the first year despite 
that, 100,000 people most recently----
    Mr. Walden. Did you actually use the exchange behind the 
curtain with paper input?
    Mr. Allen. It was a hybrid paper-automated process.
    Mr. Walden. I am sorry, Mr. Chairman. I have gone over 
time.
    Mr. Murphy. I do want to know as a follow-up in terms of an 
audit, Mr. Allen, I want to know, does HHS or CMS require an 
audit of any of you in terms of how you spent the money?
    Mr. Allen?
    Mr. Allen. We're required----
    Mr. Murphy. You are required to report?
    Ms. O'Toole? Is any of you required by the federal plans to 
do an audit of how you spent the money?
    Mr. Gutierrez. It's my understanding that we are required 
in Massachusetts. We've had three straight years of clean, 
third-party audits----
    Mr. Murphy. I am just curious. Are you required by the 
state or the Federal Government? Is it the Federal Government?
    Ms. O'Toole?
    Ms. O'Toole. Congressman, we are subject to comprehensive 
oversight both in Minnesota by our state----
    Mr. Murphy. No, no, I just want to know, yes or no.
    Ms. O'Toole [continuing]. And the Federal Government.
    Mr. Murphy. And Mr. Gutierrez, yes.
    Mr. Kissel?
    Mr. Kissel. It's a yes but there is detailed self-reporting 
and certification and auditing, but it relies on our records so 
that they don't go to the next level and look at our 
contractors' records to be sure that what we say has actually 
been done.
    Mr. Murphy. There is limits to it.
    Mr. Lee?
    Mr. Lee. Yes, there's reviews both by CMS as well as by 
state level of our spending.
    Mr. Murphy. Mr. Wadleigh?
    Mr. Wadleigh. Same thing.
    Mr. Murphy. Same thing. We will have to go those records.
    Mrs. Capps, you are recognized for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman.
    States that created and run their own state-based 
marketplaces are testing new models for enrollment, insurance 
market oversight and consumer protection serving as Hubs of 
Innovation. The work being done there can serve as a model for 
other states and the Federal Government as the ACA continues to 
be implemented.
    Mr. Lee, California has been a leader in the ``active 
purchaser model.'' Can you explain what this is and how that 
has helped Covered California ensure access to high-quality, 
affordable health insurance coverage?
    Mr. Lee. Great. Thank you very much, Congresswoman Capps. 
Thanks for your leadership.
    Three things that underscore about being an active 
purchaser. First, we don't take every plan that wants to knock 
on our doors and be part of the marketplace. We review them 
critically and make sure they have the networks in place, the 
system to deliver quality care. Second, we look very closely at 
their rates and make sure that the rates align with the quality 
of care we expect of them. And finally, we hold them to account 
for delivering quality care, and that's all in the context of 
what we have, which we think is critical, and some of my 
colleagues up here have similar things, which is standard 
benefit designs where right now in many parts of the Nation, 
consumers may buy the lowest-cost plan and then find out they 
need to spend a $3,000 deductible before they get care. That 
doesn't happen in California, and that's because standard 
benefit designs for both on and off exchange in the individual 
market, we're reshaping the market so benefit designs are 
designed for consumers, not for a health plan.
    Mrs. Capps. Thank you.
    Mr. Wadleigh, similar question. Does Access Connecticut 
have a standardized benefit package? How does it help consumers 
make informed purchasing decisions?
    Mr. Wadleigh. We do. Thank you for the question. We have 
standard plan designs for all of our individual metal tiers, 
and what we have found is that it makes it easy for our 
residents to compare apples to apples whereas prior to this it 
was much more difficult to compare plans.
    Mrs. Capps. Thank you.
    One of the focuses of the ACA is to transform the delivery 
system and improve quality of care. As a nurse, I find this 
goal to be incredibly important, bottom line, really, 
especially as we reach the goal of transitioning from a sick 
care system to one that promotes wellness.
    Mr. Lee, what efforts has Covered California taken to 
improve the quality of care through better coordination, 
payment reform or other initiatives?
    Mr. Lee. Thank you very much for that question. When we 
released our rates this year, which were only a 4 percent 
increase, we didn't just release the rates, we released 
background on how our 12 plans are doing better coordinated 
care, using tele-health, addressing wellness and prevention, 
addressing health disparities and health equity. These are 
requirements in our contracts with our health plans. They 
aren't just putting products on the shelf and having people get 
insurance cards. They need to deliver on that promise of care, 
and we think that's something that all exchanges should be 
looking at to make sure it's not just a card in the pocket but 
actually people are getting access to care that's being 
improved over the long term.
    Mrs. Capps. Let me put that to each of you briefly. If you 
have something to add, just so we get it on the record, about 
initiatives going on in your individual states if you want to 
add, go ahead.
    Ms. O'Toole?
    Ms. O'Toole. Congresswoman, yes, thank you. A lot of this--
a similar experience but one thing that we're doing differently 
in Minnesota this year is, we're adding a comparison tool. I 
think someone mentioned it earlier about, premiums are just one 
part of the cost of care and so we're trying to give consumers 
a more robust picture of like out-of-pocket costs and other 
costs that go into their care so they make better choices for 
themselves, so that will be a new feature on our Web site for 
open enrollment this year.
    Mrs. Capps. Great. And the other examples of initiatives?
    Mr. Allen. I would just add very quickly, I mentioned that 
we have 120 different plan options available for consumers 
through 11 companies in a market as relatively small as Oregon.
    Mrs. Capps. Wow.
    Mr. Allen. It's actually an incredible range of choice, 
which actually becomes a problem for consumers.
    Mrs. Capps. Yes.
    Mr. Allen. We're relying quite heavily on agents and 
assisters to actually help people through that decisionmaking 
process so that they don't just immediately go to the lowest 
price plan when in fact their own circumstances may really 
dictate that a higher monthly premium but lower deductibles or 
copays would be a better option for them.
    Mrs. Capps. Are individuals opting to use those assisters?
    Mr. Allen. Yes.
    Mrs. Capps. Anything else?
    Mr. Wadleigh. So I would say Connecticut very similar to 
the rest of my peers. We are doing something new this year 
working with all of our carriers. We've met with them to start 
collaborating on how we can help improve health literacy with 
all of our new customers who have previously been uninsured, 
and similarly, we have found that we needed a comparison tool 
to help our customers pick the right metal tier versus the 
lowest price.
    Mrs. Capps. In 17 seconds, Mr. Lee, what, if anything, has 
Covered California done to encourage this right care at the 
right time? That is such an important area.
    Mr. Lee. The one thing that I'd highlight is, we have a 
partnership with all of our plans to promote what's called the 
Choosing Wisely Initiative, which is an initiative led by the 
clinician community to help make sure patients don't get 
unnecessary care but always get the right care, so that's the 
one that I'd highlight.
    Mrs. Capps. Thank you.
    Mr. Lee. Thank you.
    Mrs. Capps. I yield back.
    Mr. Murphy. Thank you.
    I now recognized Mr. Collins for 5 minutes.
    Mr. Collins. Thank you, Mr. Chairman.
    I want to thank the witnesses too. It has been very 
educational. I think we all know that everything we are all 
working on is a work in progress, and with differing results, 
and not being from any of your states, it's interesting to hear 
what you are saying.
    I am from New York. We received $575 million to set up our 
state exchange, but somewhat disappointedly--well, quite--the 
Inspector General of HHS last week revealed that of a randomly 
selected number of applicants on our state exchange that it 
investigated 62 percent were either improperly granted 
subsidies or the application was deficient in some other 
meaningful way.
    The most prevalent problems were inconsistencies in 
reporting their eligibility data and their income. The Web site 
didn't seem to question those, and applicants received 
subsidies that frankly they weren't entitled to.
    So before I get back to some questions on that, we also 
just last week, an insurer called Health Republic of New York, 
which is a New York City-based insurance cooperative and a very 
significant player in our state exchange, especially up in 
western New York that I represent, was directed by state and 
federal officials to stop writing health plans, effectively 
shut down because they were not solvent, which means over 
12,000 people in western New York, which I represent, are going 
to lose their health plans.
    Here was the problem with Health Republic of New York. As a 
new insurer under the ACA, that company received government 
assistance to cover startup costs in return for providing more 
competition in the marketplace, but as you might suspect, their 
policies were not what the market could sustain. They cost too 
little and gave away too many benefits. These plans sucked in 
unsuspecting New Yorkers by wasting taxpayer money and 
distorting the health insurance marketplaces. These New Yorkers 
now have to find a new plan with staggering price increases 
that reflect the real rate of coverage for the ACA-mandated 
benefits.
    So while I know none of you represent New York, I would 
like to know, have your state exchanges been audited like New 
York just was by HHS where we found this 62 percent error rate 
and again subsidies being given that were not based on 
eligibility or income, and if so, what did your states--I know, 
Mr. Allen, you may not----
    Mr. Allen. We used the federal platform so we----
    Mr. Collins. We will just skip you, all right? There we go. 
Sorry about that.
    Ms. O'Toole?
    Ms. O'Toole. Thank you, Congressman. Not to my knowledge. I 
did see that report so I'm generally familiar with what you're 
talking about. Not to my knowledge. I just want to note that we 
obviously take compliance very seriously. We have a robust team 
that's working on that, and making sure that only eligible 
Minnesotans are enrolled through MNsure. So it's a focus for 
us.
    Mr. Collins. Well, that is what we would certainly hope 
for. Thank you.
    Mr. Gutierrez?
    Mr. Gutierrez. Not to my knowledge on the formal audit but 
we also have an in-depth validation program for our eligibility 
system.
    Mr. Collins. I am glad to hear that as well.
    Mr. Kissel?
    Mr. Kissel. We have not been audited but we have--we're a 
small community, and since everybody has my phone number, we're 
self-audited in that respect.
    The inquiries to us went from the thousands in 2014 down to 
a few dozen in 2015. We did have a problem, and I think it has 
largely been resolved. The 1095 IRS reporting process for us 
went very smoothly with fewer than 100 overall issues and fewer 
than two dozen financial issues.
    Mr. Collins. Thank you.
    Mr. Lee?
    Mr. Lee. Covered California has been the subject of a range 
of both OIG, GAO, HHS audits and reviews of enrollment 
practices. Pretty much all of them will find options for 
improvement but by and large have found that we've been 
complying with the rules and setting them in place better and 
better each year.
    Mr. Collins. I am glad to hear California is doing better 
than New York.
    Mr. Wadleigh?
    Mr. Wadleigh. Thank you for the question. We too have had 
multiple audits from the GAO, OIG, and we also take all those 
opportunities to improve our system.
    Mr. Collins. Thank you. I don't think I have time for my 
other question, Mr. Chairman, so I yield back.
    Mr. Murphy. The gentleman yields back.
    So I recognize Mrs. Brooks for 5 minutes.
    Mrs. Brooks. Thank you, Mr. Chairman. I apologize. I was at 
another hearing.
    Mr. Allen and Mr. Kissel, I guess I have a question for 
both of you. Do you know whether CMS permits establishment 
grant dollars to be spent on the transitional costs to 
healthcare.gov, and if you could tell me what transitional 
costs are? Mr. Allen?
    Mr. Allen. I do not know the answer to that directly. We 
need to respond directly to the committee later.
    Mrs. Brooks. Mr. Kissel?
    Mr. Kissel. Yes. We have submitted a transition budget, and 
I've got to check on its status. I believe it has been 
approved. And these are for the enrollment of new members in 
healthcare.gov. It is for the decommissioning and archiving of 
our existing technology and certain other items including 
approximately $225,000 for the program management organization 
that the state has retained to manage the transition of our 
functions into both healthcare.gov and into the state 
departments, the operating departments.
    Mrs. Brooks. And was this a written policy, if you know, 
that Hawaii is using--you are using your money, correct, from 
establishment to transition?
    Mr. Kissel. Correct.
    Mrs. Brooks. Was this a written policy or was this 
something you negotiated?
    Mr. Kissel. I don't know whether it is written but I do 
know that we agreed on it with CMS.
    Mrs. Brooks. And do you know what was the basis for that 
agreement? Why did CMS say that you could use your 
establishment dollars to transition, and what was the 
rationale?
    Mr. Kissel. I can't speak for all of their decisions 
because it covered technology, it covered outreach, it covered 
a large number of issues. Insofar as outreach, it is only to 
enroll new members in healthcare.gov. We are bearing the cost 
of re-enrolling our 38,000 existing members into 
healthcare.gov. That's coming from internal state funds.
    Mrs. Brooks. And do you believe that this should be 
permitted? Obviously it is beneficial to Hawaii, correct?
    Mr. Kissel. Let me answer the question by saying in 
hindsight, we are learning an awful lot. Had the regulations 
relating to small business health options been in place then 
that are in place now, Hawaii never would have had to undertake 
to build the exchange to support our Prepaid Healthcare Act and 
harmonize it with the Affordable Care Act. This is the kind of 
issue that I think this transition will be later.
    Mrs. Brooks. And I apologize if these questions were asked, 
but why did your Governor choose to shut down the Hawaii Health 
Connector?
    Mr. Kissel. He worked extensively with CMS Administrator 
Slavitt, and they came to the conclusion jointly that because 
we were an independent, reliable agency relying solely on 
issuer fees for revenue, we couldn't get to critical mass to be 
self-sustaining. The Governor decided to embed these functions 
into state departments--our Department of Labor, our Department 
of Human Services--and bear the cost of essentially the deficit 
because we were not financially sustainable. Administrator 
Slavitt encouraged us to do this so that we could maintain 
insurance for Qualified Health Plan recipients indefinitely in 
compliance with the Affordable Care Act.
    Mrs. Brooks. What was your role in that decision?
    Mr. Kissel. Because we're not a part of the administration, 
we're an independent corporation with separate board of 
directors, our role was to make the Hawaii Health Connector 
work, and we developed plans that did, we believe, make it 
work. We fixed the technology, and we went forward with a 
financing plan that we thought would be workable. CMS and the 
state decided that that had too high a risk for our small and 
fragile economy, and they decided it was better to continue on 
the basis of moving to healthcare.gov.
    Mrs. Brooks. Was there a contractor involved in that 
transition?
    Mr. Kissel. There are contractors involved in the 
transition on behalf of the Hawaii Health Connector, the state, 
and the Medicaid agency to build the interface with 
healthcare.gov.
    Mrs. Brooks. So how many contractors are involved and how 
were those contracts awarded?
    Mr. Kissel. We have two contractors involved, two principal 
contractors involved at the Hawaii Health Connector, mostly in 
the archiving and decommissioning of the process. There are--
there is a sole source contract with KPMG for building the 
interface. That's done in accordance with state procurement 
regulations.
    Mrs. Brooks. Are there other contractors involved?
    Mr. Kissel. Yes, there are. Health Management Associates is 
providing the PMO, the project management, for the transition.
    Mrs. Brooks. And do you have any sense of the transition 
cost?
    Mr. Kissel. I know that their initial contract is for 
$400,000. The state is going to have to spend its own money to 
embed these functions in the various departments.
    Mrs. Brooks. Thank you. I yield back.
    Mr. Murphy. The gentlelady yields back.
    There will be other questions. I know, Mr. Kissel, you had 
just mentioned about other costs that have been identified for 
different departments. Your Governor directed the Department of 
Labor, we will be sending other questions. I would love to know 
about other costs and what you anticipate future costs and how 
your states are going to absorb those additional costs. It is 
important for us to know that.
    So I want to thank you all for being here today and 
participating. Members, I want to remind you, have 10 business 
days to get other questions for the record, and I ask all 
witnesses to agree to respond quickly and promptly to those 
questions.
    And with that, this committee hearing is adjourned.
    [Whereupon, at 12:03 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
 
    
    [Mr. Kissell's response to the questions for the record has 
been retained in committee files and can be found at: http://
docs.house.gov/meetings/IF/IF02/20150929/103791/HHRG-114-IF02-
Wstate-KisselJ-20150929-SD003.pdf.]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                 [all]