[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
INNOVATIONS IN HEALTH CARE: EXPLORING
FREE MARKET SOLUTIONS FOR A
HEALTHY WORKFORCE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR, AND PENSIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, APRIL 14, 2016
__________
Serial No. 114-45
__________
Printed for the use of the Committee on Education and the Workforce
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Duncan Hunter, California Ranking Member
David P. Roe, Tennessee Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Matt Salmon, Arizona Joe Courtney, Connecticut
Brett Guthrie, Kentucky Marcia L. Fudge, Ohio
Todd Rokita, Indiana Jared Polis, Colorado
Lou Barletta, Pennsylvania Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada Northern Mariana Islands
Luke Messer, Indiana Frederica S. Wilson, Florida
Bradley Byrne, Alabama Suzanne Bonamici, Oregon
David Brat, Virginia Mark Pocan, Wisconsin
Buddy Carter, Georgia Mark Takano, California
Michael D. Bishop, Michigan Hakeem S. Jeffries, New York
Glenn Grothman, Wisconsin Katherine M. Clark, Massachusetts
Steve Russell, Oklahoma Alma S. Adams, North Carolina
Carlos Curbelo, Florida Mark DeSaulnier, California
Elise Stefanik, New York
Rick Allen, Georgia
Juliane Sullivan, Staff Director
Denise Forte, Minority Staff Director
------
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
DAVID P. ROE, Tennessee, Chairman
Joe Wilson, South Carolina Jared Polis, Colorado,
Virginia Foxx, North Carolina Ranking Member
Tim Walberg, Michigan Joe Courtney, Connecticut
Matt Salmon, Arizona Mark Pocan, Wisconsin
Brett Guthrie, Kentucky Ruben Hinojosa, Texas
Lou Barletta, Pennsylvania Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada Northern Mariana Islands
Luke Messer, Indiana Frederica S. Wilson, Florida
Bradley Byrne, Alabama Suzanne Bonamici, Oregon
Buddy Carter, Georgia Mark Takano, California
Glenn Grothman, Wisconsin Hakeem S. Jeffries, New York
Rick Allen, Georgia
C O N T E N T S
----------
Page
Hearing held on April 14, 2016................................... 1
Statement of Members:
Polis, Hon. Jared, Ranking Member, Subcommittee on Health,
Employment, Labor, and Pensions............................ 4
Prepared statement of.................................... 5
Roe, Hon. David P., Chairman, Subcommittee on Health,
Employment, Labor, and Pensions............................ 1
Prepared statement of.................................... 3
Statement of Witnesses:
Corlette, Ms. Sabrina, Senior Research Professor, Center on
Health Insurance Reforms, Georgetown University's Health
Policy Institute, Washington, D.C.......................... 23
Prepared statement of.................................... 25
Franklin, Ms. Tresia, Director, Rewards and Employee
Relations, Hallmark Cards, Inc., Kansas City, MO........... 31
Prepared statement of.................................... 33
McDonough, Ms. Amy, Vice President and General Manager,
Corporate Wellness, Fitbit, Inc., San Francisco, CA........ 7
Prepared statement of.................................... 10
Zern, Mr. John, Member, Executive Vice President and Global
Health Leader, AON, Chicago, IL............................ 16
Prepared statement of.................................... 18
Additional Submissions:
Courtney, Hon. Joe, a Representative in Congress from the
State of Connecticut:
Report: Bureau of Labor Statistics....................... 58
Dr. Roe:
Letter dated June 19, 2015, to Ms. Bernadette Wilson,
Acting Executive Officer, Executive Secretariat, U.S.
Equal Employment Opportunity Commission................ 89
Letter dated January 28, 2016, to Ms. Bernadette Wilson,
Acting Executive Officer, Executive Secretariat, U.S.
Equal Employment Opportunity Commission................ 98
Letter dated March 18, 2016, from National Coalition on
Benefits............................................... 104
Letter dated April 13, 2016, from Society for Human
Resource Management, SHRM.............................. 106
Prepared statement of the ERISA Industry Committee....... 108
Letter dated April 15, 2016, from National Association of
Manufacturers.......................................... 110
Letter dated April 21, 2016, from Hallmark Cards......... 111
Prepared statement of the National Association of
Worksite Health Centers................................ 112
Prepared statement of the U.S. Chamber of Commerce....... 115
Prepared statement of Ms. Heidi B. Capozzi, Senior Vice
President, Human Resources, The Boeing Company......... 119
Scott, Hon. Robert C. ``Bobby'', a Representative in Congress
from the State of Virginia:
Letter dated July 13, 2015, to Hon. Jenny R. Yang, Chair,
U.S. Equal Employment Opportunity Commission........... 48
Letter dated February 2, 2016, to Hon. Jenny R. Yang,
Chair, U.S. Equal Employment Opportunity Commission.... 51
INNOVATIONS IN HEALTH CARE: EXPLORING
FREE-MARKET SOLUTIONS FOR A
HEALTHY WORKFORCE
----------
Thursday, April 14, 2016
U.S. House of Representatives
Committee on Education and the Workforce
Subcommittee on Health, Employment, Labor, and Pensions
Washington, D.C.
----------
The Subcommittee met, pursuant to call, at 10:30 a.m., in
room 2176, Rayburn House Office Building. Hon. David P. Roe
[chairman of the subcommittee] presiding.
Present: Representatives Roe, Walberg, Salmon, Guthrie,
Messer, Carter, Grothman, Allen, Polis, Courtney, Pocan,
Hinojosa, Bonamici, and Takano.
Also Present: Representatives Kline and Scott.
Staff Present: Bethany Aronhalt, Press Secretary; Andrew
Banducci, Workforce Policy Counsel; Janelle Belland, Coalitions
and Members Services Coordinator; Ed Gilroy, Director of
Workforce Policy; Callie Harman, Legislative Assistant;
Christie Herman, Professional Staff Member; Nancy Locke, Chief
Clerk; Dominique McKay, Deputy Press Secretary; Michelle
Neblett, Professional Staff Member; Brian Newell,
Communications Director; Krisann Pearce, General Counsel;
Alissa Strawcutter, Deputy Clerk; Juliane Sullivan, Staff
Director; Olivia Voslow, Staff Assistant; Joseph Wheeler,
Professional Staff Member, Tylease Alli, Minority Clerk/Intern
and Fellow Coordinator; Austin Barbera, Minority Press
Assistant; Pierce Blue, Minority Labor Detailee; Denise Forte,
Minority Staff Director; Christine Godinez, Minority Staff
Assistant; Carolyn Hughes, Minority Senior Labor Policy
Advisor; Eunice Ikene, Minority Labor Policy Associate; Brian
Kennedy, Minority General Counsel; Veronique Pluviose, Minority
Civil Rights Counsel; and Elizabeth Watson, Minority Director
of Labor Policy.
Chairman Roe. A quorum being present, the Subcommittee on
Health, Employment, Labor, and Pensions will come to order.
Good morning, everyone. I want to welcome our witnesses. We
appreciate you joining us today for an important conversation
on health care and the future of employer-sponsored coverage.
This hearing furthers the goals of the Task Force on Health
Care Reform which was established to develop a plan to replace
ObamaCare's one-size-fits-all with free-market, patient-
centered solutions.
We have already held a number of meetings to take input
from members, policy experts, and stakeholders, and to build
consensus around policies that will deliver the results the
American people want and deserve.
Our vision is clear. It is time to modernize our health
care system so we can empower every American with affordable
coverage, provide more choice, promote quality for all
patients, and strengthen health care security for retirees.
Finally, as we will discuss today, we want to encourage
innovation and harness the power of new technologies in order
to foster lower prices and better treatment for patients.
As a physician with more than 30 years of experience, I
have personally seen the need for common sense reforms to
strengthen our health care system, a system that is too costly
and bureaucratic. As an elected official, I am constantly
hearing from families who are struggling to access the care
they need or keep up with their premiums that rise year, after
year, after year.
Unfortunately, the President's government takeover of
health care is making these problems worse. Health care costs
are going up, not down. Americans are seeing higher premiums.
Families are losing access to the coverage they like and the
doctors they trust. Small business owners are being forced to
choose between providing costly government-approved health
insurance and hiring new workers as they have struggled to
navigate a web of burdensome mandates and regulatory
requirements.
Just to give you an example, the city where I was mayor,
Johnson City, Tennessee, had to hire a person to navigate all
this so they could figure out whether they were complying with
the law or not, a city with a fairly extensive HR department.
The American people cannot afford this fundamentally flawed
law, and that is why House Republicans are determined to
deliver meaningful reform. We have a responsibility to put our
health care system on a better course, one that is patient-
centered, not government driven.
As part of that effort, we need to understand the vital
importance of employer-sponsored coverage, which insures
roughly 155 million Americans, and take a closer look at what
is being done in the private sector to improve care.
Employers have played a critical role in driving health
care innovation. Despite unprecedented uncertainty in the
health insurance market and drastic changes in employer-
sponsored coverage, employers of all sizes are still developing
creative strategies to help control costs and meet the changing
needs of the workforce.
These strategies include wellness programs, which are now
an essential tool to help control costs and encourage healthy
lifestyles. The Kaiser Family Foundation reported in 2015 that
50 percent of employers offering health benefits also offer
wellness programs.
That same year, I joined Chairmen Kline and Walberg in
introducing legislation that would eliminate regulatory hurdles
to implementing these programs, and I look forward to hearing
from experts today on how we can make that goal a reality.
Some employers have responded to costly mandates and rigid
reporting requirements under current law by putting in place
private exchanges. This, too, will reign in costs through
competition, and unlike public exchanges, serve individuals,
and both large and small employers.
Accountable care organizations are another concept
employers have adopted in recent years to improve the health of
their employees and make coverage more affordable. ACOs improve
patient experience by coordinating their care between doctors
and hospitals and focusing on prevention and management of
chronic disease.
Employers are also incorporating telemedicine into their
health insurance plans, providing patients more access to care
at lower costs and much greater convenience.
We are here today to examine how innovations in employer-
provided coverage are improving health care for workers and
their families, and how Federal policies can support rather
than discourage free-market solutions.
I hope our conversation will bring us one step closer to
achieving responsible reforms the American people desperately
need.
With that, I will now recognize the ranking member of this
subcommittee, Chairman Polis, for his opening remarks. You are
recognized.
[The statement of Chairman Roe follows:]
Prepared Statement of Hon. David P. Roe, Chairman, Subcommittee on
Health, Employment, Labor, and Pensions
This hearing furthers the goals of the Task Force on Health Care
Reform, which was established to develop a plan to replace ObamaCare's
one-size-fits-all approach with free-market, patient-centered
solutions. We've already held a number of meetings to take input from
members, policy experts, and stakeholders, and to build consensus
around policies that will deliver the results the American people
deserve.
Our vision is clear: It's time to modernize our health care system
so we can empower every American with affordable coverage, provide more
choice, promote quality care for all patients, and strengthen health
care security for retirees. Finally, as we will discuss today, we want
to encourage innovation and harness the power of new technologies in
order to foster lower prices and better treatment for patients.
As a physician with more than 30 years of experience, I've
personally seen the need for commonsense reforms to strengthen our
health care system, a system that is too costly and bureaucratic. As an
elected official, I constantly hear from families who are struggling to
access the care they need or keep up with premiums that rise year after
year.
Unfortunately, the president's government takeover of health care
is making these problems worse. Health care costs are going up, not
down. Americans are seeing higher premiums and a lower quality of care.
Families are losing access to the coverage they like and the doctors
they trust. Small business owners are being forced to choose between
providing costly, government-approved health insurance and hiring new
workers, and they're struggling to navigate a web of burdensome
mandates and regulatory requirements.
The American people cannot afford this fundamentally flawed law,
and that's why House Republicans are determined to deliver meaningful
reform. We have a responsibility to put our health care system on a
better course--one that is patient-centered, not government-driven. As
part of that effort, we need to understand the vital importance of
employer-sponsored coverage--which insures roughly 155 million
Americans--and take a closer look at what's being done in the private
sector to improve care.
Employers have played a critical role in driving health care
innovation. Despite unprecedented uncertainty in the health insurance
market and drastic changes in employer-sponsored coverage, employers of
all sizes are still developing creative strategies to help control
costs and meet the changing needs of the workforce.
These strategies include employee wellness programs, which are now
an essential tool to help control costs and encourage healthy
lifestyles. The Kaiser Family Foundation reported in 2015 that 50
percent of employers offering health benefits also offer wellness
programs. That same year, I joined Chairmen Kline and Walberg and
introduced legislation that would eliminate regulatory hurdles to
implementing these programs, and I look forward to hearing from experts
today on how we can make that goal a reality.
Some employers have responded to costly mandates and rigid
reporting requirements under current law by putting in place private
exchanges. This tool helps rein in costs through competition, and
unlike public exchanges, serves individuals and both large and small
employers. Accountable Care Organizations are another concept employers
have adopted in recent years to improve the health of their employees
and make coverage more affordable. ACOs improve the patient experience
by coordinating care between doctors and hospitals and focusing on
prevention and management of chronic diseases. Employers are also
incorporating telemedicine into their health insurance plans, providing
patients more access to care at lower costs and greater convenience.
We are here today to examine how innovations in employer-provided
coverage are improving health care for workers and their families and
how federal policies can support--rather than discourage--free-market
solutions. I hope our conversation will bring us one step closer to
achieving the responsible reforms the American people desperately need.
______
Mr. Polis. Thank you. You referred to me as ``Chairman
Polis.'' I do not know if we are expecting a change or not.
Ranking Member Polis and someday chair, perhaps.
But I want to thank the chairman for convening this. This
is a great conversation. I think we are all interested in the
role of employers, the role of wellness. The discussion that
has occurred in Congress and will continue to really runs the
gamut from should employers even be involved with the provision
of health care to what can employers do to encourage wellness
among employees and share in the benefits of reduced costs that
can accrue from the right kinds of wellness programs.
I was in Congress when we passed the Affordable Care Act. I
remember various predictions that occurred, many of them were
about many employers dropping health care coverage or
skyrocketing costs. I am glad to say that many of those
doomsday predictions have not occurred.
Of course, we can find instances of employers who made
decisions to drop, employers that made decisions to add health
care, but in the aggregate, for better or worse, there has not
been a market shift from the employer-based system of health
care.
In fact, there has been a delay in the tax provisions that
would have encouraged that shift to occur, namely a tax
referred to as the ``Cadillac tax,'' which I think was in part
designed to transition from an employer-based health care
system to an individual or exchange-based health care system.
I have started several businesses myself as an employer
before the ACA. I knew how frustrating health care costs were.
Health care choices were difficult, expensive for small
businesses. The administrative burden to small businesses it
was and is large. I certainly think anything we can do through
the exchanges to reduce the administrative burden of
administering health care programs for small- and mid-sized
businesses would be greatly beneficial.
The fact is that receiving health care through an employer
is still the most popular option. In my own state, the
proportion of Coloradoans with large employer coverage is
actually increasing, and it increased about 3 percent over the
last five years, and currently 156 million Americans are
covered by their employers.
The ACA made a number of changes to improve access to
insurance. I think it is a baseline of having insured more than
10 million people, 10 million more people that we can build
upon. I think we are also very interested in cost reduction
measures. Wellness initiatives can certainly be among those.
Last fall, as an example, my State legislature in Colorado
passed a law allowing physicians to write prescriptions using
remote telemedicine technology. In instances like that,
examples like that can be used to reduce costs.
Additionally, we can share findings on things to reduce
costs through the Division of Insurance and use data in pursuit
of more innovative solutions to control costs. I think that
will be the key with regard to measuring the effectiveness of
wellness programs at employers.
There is a lot of hype, and we really have to see what
actually accrues in cost savings, to the shared benefit, one
would hope, of the employee and the company that offers the
wellness program with, of course, room for private contractors
to make a profit as well who actually provide those types of
wellness programs.
I hope that we can find a better, more streamlined way to
deliver care. It is also important that we do not forget the
importance of policies like paid sick leave and paid family
leave that are very important to employees and important to
overall wellness and job satisfaction.
Remind, I want to use this occasion to remind our chair
that over 40 million workers do not have access to paid sick
days and paid family leave, which I think are really helpful
and the basis of some of the important wellness policies that
we need to initiate.
I look forward to hearing from our witnesses, look forward
to a thoughtful discussion about how we can control health care
costs through innovative partnerships between the government
and the private sector, and hearing a little bit more about the
role of employer-based health care now and in the future, and I
yield back the balance of my time.
[The statement of Ranking Member Polis follows:]
Prepared Statement of Hon. Jared Polis, Subcommittee on Health,
Employment, Labor, and Pensions
I thank the chairman for yielding to me, and I thank all of our
witnesses for providing us with their time and expertise this morning.
Since the passage of the Affordable Care Act in 2010, over 20
million uninsured Americans have gained access to health coverage.
In Colorado, 15.8 percent of folks in our state lacked insurance
before the ACA. Last year that number fell to 6.7 percent, a historic
low.
The ACA is working, despite some flaws, and this is largely due to
a shared push by individuals, federal and state governments, and
employers to increase coverage nationwide.
I was in Congress when we passed the ACA, and I remember the
doomsday predictions that were being thrown around at the time, about
workers losing coverage or about costs skyrocketing.
But thankfully, many employers have stepped up to the plate and the
pundits have been proven wrong.
I have started several businesses myself. And as an employer I know
that before ACA, health care costs were climbing at an out-of-control
rate for employers and employees. Health care choices were slim to none
in many states, and people had to choose health insurance over
strategic career moves when considering job opportunities.
The six years since the ACA has been implemented have not always
been perfect, but premiums are down and choices are up for employees
and businesses.
In fact, ACA has lowered costs and spread the responsibility among
everyone - both employers and employees. Before the passage of the ACA,
the annual premium increase for employer-sponsored family insurance
hovered at 9.5%. By 2015 it had fallen to 2.7%.
The fact is that receiving health insurance through your employer
is still a really popular option for many people. In my home state, the
proportion of Coloradans with large-employer coverage is actually
increasing, growing by 3.5 % over the past two years. Currently, 156
million Americans are currently covered by their workplace.
In a tightening job market, health insurance benefits are one way
that employers can attract top talent. I don't see how the ACA dampened
that fact.
Furthermore, under the ACA, employer-sponsored insurance plans are
required to be more comprehensive. And everyone benefits from the
coverage of preventive services without cost sharing, such as free
access to flu shots or mammograms.
The ACA improved access to insurance, and we must move forward from
that baseline. We cannot return to a time when these basic health
services were not guaranteed.
Of course, we can always do better. As members of Congress, we have
a responsibility to improve upon the model of health insurance we put
in place six years ago, and to support innovations that may produce
healthier outcomes for Americans across the country.
I am proud to say that my home state of Colorado is leading the way
in terms of collaboration to bend the cost curve of health care.
Last fall, the state legislature passed a law allowing physicians
to write prescriptions using remote telemedicine technology. Not only
does this boost convenience by saving an employee a trip to the doctor
during work hours, telemedicine can actually lower costs. Certain
insurers have started allowing calls or emails directly between a
patient and physician, which ends up being less expensive than a full
visit. I am enthusiastic about the ways that technology can empower
consumers with information, support, and near-immediate access to care.
Colorado has also been doing some fascinating work in health care
data transparency. We were one of the earliest states to adopt an all-
payer claims database. The Center for Improving Value in Health Care
(CIVHC:: pronounced ``civic'') has a mandate from the Governor to
collect and analyze claims from both private and public payers.
They track how Coloradans are spending their health care dollars,
and share this information with the general public. Workers deserve
full disclosure when it comes to health insurance, it's certainly a
common request I hear from constituents who call my office with
questions about their premiums. Organizations such as CIVHC are playing
an important role in educating people about their options.
Additionally, they also share these findings with researchers and
the Division of Insurance, who use this data in pursuit of more
innovative solutions to control costs and provide higher quality care.
This type of collaboration is precisely the kind of partnership that we
should see more of.
I personally recognize the ability of the private sector to
redesign outdated models with an agility that Congress simply does not
have. For health outcomes, this is particularly valuable.
I would issue a request, however, that in this insatiable hunt to
find a newer, more streamlined way to deliver care, we don't forget the
value of evergreen policies such as paid sick days and paid family
leave. These relatively simple investments have been linked to
healthier employees, higher rates of job satisfaction and lower
turnover overall, but currently, 40 million workers don't have access
to them.
I look forward to hearing from our witnesses, and discussing ways
that we might be able to control health care costs through innovative
partnerships between the government and the private sector.
______
Chairman Roe. I thank the gentleman for yielding. Pursuant
to Committee Rule 7(c), all subcommittee members will be
permitted to submit written statements to be included in the
permanent hearing record. Without objection, the hearing record
will remain open for 14 days to allow statements, questions for
the record, and other extraneous material referenced during the
hearing to be submitted into the official hearing record.
It is now my pleasure to introduce our distinguished panel
of witnesses. First, Ms. Amy McDonough, who is the vice
president and general manager of Corporate Wellness at Fitbit
in San Francisco, California. She works with employers and
partners in corporate wellness, supplying businesses with the
tools to effectively engage employees in corporate wellness
programs. You have a fun job, I think. Welcome.
Mr. John Zern is the executive vice president and global
health leader with Aon in Chicago, Illinois. Mr. Zern is
responsible for the strategic direction, client satisfaction,
revenue growth, and operational and professional standards of
Aon's health business. Welcome.
Ms. Sabrina Corlette, J.D., is the senior research
professor at the Center on Health Insurance Reforms with
Georgetown University's Health Policy Institute here in
Washington, D.C. Ms. Corlette directs research on health
insurance reform issues and has published many papers regarding
the regulation of private health insurance and the development
of health insurance marketplaces under PPACA. Welcome.
Ms. Tresia Franklin is the director of Total Rewards and
Employee Relations at Hallmark Cards, Inc. in Kansas City. I
think there is not anybody in here that has not used your
product.
Ms. Franklin oversees Hallmark's compensation and benefit
programs, human resource information systems, and employee
relations. Welcome to Washington.
I will now ask our witnesses to stand and raise your right
hands.
[Witnesses sworn.]
Chairman Roe. Let the record reflect that the witnesses
answered in the affirmative, and you may take your seats.
Before I recognize your testimony, let me briefly explain
our lighting system. You have five minutes to present your
testimony. When you begin, the light in front of you will turn
green. With one minute left, it will turn yellow. When your
time has expired, the light will turn red. At that point, I
will ask you to wrap up your remarks as best as possible, and
members will have five minutes also to ask questions.
We will begin with Ms. McDonough for five minutes. You are
recognized.
TESTIMONY OF AMY McDONOUGH, VICE PRESIDENT AND GENERAL MANAGER
OF CORPORATE WELLNESS, FITBIT, SAN FRANCISCO, CA
Ms. McDonough. Thank you, Chairman Roe and Ranking Member
Polis, for the opportunity to testify at today's hearing. As
the fifth member of Fitbit, Inc., and vice president and
general manager of Fitbit Wellness, I come today to share my
passion for innovating around engaging data driven health
solutions for employers.
Fitbit Wellness, our offering for corporate wellness, was
born in 2010 in response to market-stated need. We are driven
by a belief that the right data, tools, and guidance can
empower people to take charge of their health and fitness, and
that community is key to fostering healthy behavior.
With six years of experience behind us, we remain deeply
committed to helping companies innovate in this space. We have
a specific vision of wellness, one that addresses the diverse
needs of both organizations and the people that power them.
The fundamental goal of any wellness program should be to
provide opportunities for individuals to improve their health
and wellness. The need for wellness programs has never been
greater, and employers are uniquely positioned to improve
population health by starting right in the workplace. Wellness
should always be inclusive, voluntary, and should protect the
privacy of the people it is aiming to serve.
While the use of our technology in the corporate wellness
setting continues to evolve rapidly, the results our customers
have seen so far are significant. Let me briefly share a few
examples.
Indiana University Health, Indiana's most comprehensive
health care system, has been a Fitbit Wellness customer for
more than two years. They found that 40 percent of participants
decreased their BMI and 60 percent of program participants with
diabetes decreased their A1C levels.
For one of our other customers, BP, who we work with
through a partnership with StayWell, Fitbit data was a factor
in reducing their overall health care spending by 3.5 percent.
BP also saw that for employees who participated in a lifestyle
management program over a one year period, their health risks
declined by 11.1 percent.
Appirio, another Fitbit Wellness customer, cut its 2015
insurance premiums by 6 percent, a savings of $280,000, after
showing its insurer data about engagement with their wellness
program, including aggregate data from the 400 Fitbit devices
it had provided to its employees.
Fitbit Wellness is built around the understanding that
better people-oriented technology enables stronger results. We
focus on engaging people first, incentivizing health and
wellness through rewarding community driven experiences using
wearable devices that consumers love.
Companies have traditionally worried about investing in
wellness due to lack of participation. Traditional wellness
programs generally show about an average 24 percent
participation rate. Fitbit Wellness' participation rates vary
from company to company, but are often much higher, sometimes
more than 80 percent.
Across industries, we are seeing results that point to the
very real ways that wellness works to keep employees healthy,
reduce health care costs, and increase productivity. When
workplaces make the healthy choice, the easy choice, health
outcomes are profound.
Employers are uniquely positioned to improve population
health in the workplace by fostering wellness initiatives that
are inclusive, fun, voluntary, and protect the privacy of the
people they aim to serve.
Corporate wellness is evolving as we speak, and is
increasingly seeking to represent a more holistic picture of
what influences health. Wellness professionals are beginning to
look beyond tradition measures, like diet and exercise, to
everything from sleep and mental health to financial wellness
and stress management. Wellness programs aim to help people
live healthier, happier, and more active lives.
Inherent in that mission is the responsibility to implement
appropriate data security and privacy policies. As the leader
in the connected health and fitness market, Fitbit is committed
to protecting user data and ensuring that the health
information tools people turn to for help are used properly.
Fitbit believes that participation in wellness programs
should always be voluntary. Employees should be given the
choice to opt in to participate and there should be no
penalties for abstaining from participating in a program.
Companies should provide participants with an understanding
of how their data will be used. However, the regulations
governing wellness programs are not always clear, and this
confusion has left some employers on the sidelines.
We at Fitbit are supportive of efforts to clarify and
streamline the applicable laws and regulations that govern the
structure of wellness programs.
Thank you for inviting me to participate and to share
Fitbit's passion for data-driven, community-oriented health
solutions.
[The statement of Ms. McDonough follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Roe. Typical of Fitbit, you finished right on
time. Perfect.
Ms. McDonough. Thank you.
Chairman Roe. Mr. Zern, you are recognized for five
minutes.
TESTIMONY OF JOHN ZERN, EXECUTIVE VICE PRESIDENT AND GLOBAL
HEALTH LEADER, AON, CHICAGO, IL
Mr. Zern. Mr. Chairman and members of the subcommittee,
thank you for the opportunity to testify at this important
hearing on the value proposition that employer-sponsored
coverage brings to our Nation's health care system.
More than 150 million Americans receive their health
coverage through their employer.
Facing an increasingly diverse workforce and employees'
desire for greater choice and control over their health care,
employers are creating a more consumer driven experience for
their employees, arming them with the right balance of tools,
resources, and incentives to improve their health and their
choices, along with the guidance, advocacy, and support needed
for those individuals with serious and ongoing medical needs.
Aon is a leading global provider of risk and human services
solutions. We serve over 5,000 employers in the U.S., and we
administer benefits for over 10 million employees and retirees.
Employers are looking for new and innovative ways to change
the way health benefits are offered. These programs include
wellness, new technology, innovative delivery systems, private
exchanges, and greater transparency in the cost and quality of
health care services.
While we have experience in these and other types of new
and innovative programs that employers are offering, today I
will focus the discussion on one program in particular, Aon's
development of a private health exchange. Employers face a
significant challenge today of providing quality, affordable
health coverage for employees in our complex health care
system.
Employers are focused on promoting consumer engagement,
reducing health care spending, and continuing to ensure that
employees and their families have comprehensive coverage.
Our 2016 health care survey reveals that employers support
the value proposition of offering health benefits to their
employees, and only 5 percent of employers say they will stop
offering health benefits in the next three to five years.
But, healthcare costs continue to rise at rates higher than
CPI. Employers are evaluating better solutions that empower
consumers with more choices in their health plan and benefit
offerings. A private health exchange is a competitive retail-
based, Web-enabled marketplace offering employer-sponsored
group coverage.
Aon gives employers the ability to offer benefits through a
private health exchange. These private health exchanges combine
cost accountability with meaningful choice. The employer
remains a vital part of the health care delivery system.
Employers continue employer-sponsored coverage, pay the
employer premium for the group, and remain subject to ERISA.
Employers determine how much of the coverage costs to
subsidize, and employees use this subsidy to choose from a menu
of plans and insurance providers that best fit their needs and
their financial situation.
Employees select among varying out-of-pocket differences
and network requirements. It is a win-win for employer-based
sponsored coverage and for employees who have the ability to
select a plan that meets their needs and the needs of their
families.
What we have learned is that most employees will select a
plan based on their physician and provider network, their
experience with that insurance carrier, the coverage of
prescription drugs, and then price.
Many employers that currently offer their medical benefits
through the Aon Active Health Exchange are also pursuing other
workplace programs that encourage greater well-being and
management of chronic illnesses.
Employers using the private exchange experienced a 3.3
percent cost increase for 2016, compared to an average health
care cost increase of 5.5 to 6.5 percent.
We appreciate talking about private health exchanges as one
way to maintain affordable employer-sponsored health coverage
and expand the role of consumers in health care decision-
making. We are also eager to help employers find other
innovative ways to engage their employees, and we urge the
Committee to support these efforts.
Rising costs, recent market shifts, and health care reform
are challenges to maintaining coverage for Americans. Employers
are the key to the success and need flexibility in the design
and management of their benefit plans. They need congressional
support to preserve and enhance the value of benefit plans
offered to their employees and their families.
Thank you for permitting me the opportunity to testify
today. I will submit for the record more comprehensive
information about the development and growth of private health
exchanges and other innovations that employers are adopting to
engage their employees and their families.
Thank you.
[The statement of Mr. Zern follows:]
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Chairman Roe. Thank you, Mr. Zern. Ms. Corlette, you are
recognized for five minutes.
TESTIMONY OF SABRINA CORLETTE, SENIOR RESEARCH PROFESSOR,
CENTER ON HEALTH INSURANCE REFORMS, GEORGETOWN UNIVERSITY'S
HEALTH POLICY INSTITUTE, WASHINGTON, D.C.
Ms. Corlette. Thank you, Chairman Roe and Ranking Member
Polis, for inviting me to participate in today's hearing.
As has been said, over 150 million Americans receive their
health coverage through their employer. It is consistently
rated as one of the most popular benefits that employers
provide, second only to paid leave.
In my testimony today, I would like to emphasize two
primary points. Number one, our foundation of ESI is strong in
this country, but affordability remains a challenge. Number
two, to address affordability, requires a multi-stakeholder
effort that actively engages in local delivery system reform
efforts.
In spite of early fears, the ACA has not caused employers
to drop coverage for their workers, nor has it resulted in
reductions in employment. What is clear is that employers have
benefitted over the last few years in a significant slowdown in
health care price growth.
But even with these promising trends, affordability remains
a huge challenge for too many families. Worker contributions to
premiums grew an estimated 83 percent between 2005 and 2015,
and nearly one-quarter of people with ESI report problems
paying medical bills.
A report released just yesterday by the Kaiser Family
Foundation finds that between 2004 and 2014, average out-of-
pocket expenses for workers increased 77 percent, largely due
to high deductibles, and people with high deductible plans
report problems paying medical bills two times more than those
in low deductible plans.
Thanks to the ACA, there are some financial protections for
these families with high costs, but they are still significant
burdens. The bottom line is that employers and employees are
struggling under high health care costs, and tackling
affordability requires a multi-stakeholder effort, and
employers have a particularly important role to play.
Many employers, both on their own and in concert with other
local purchasers, are engaged in innovative efforts to push
back against high and rising health care prices, while not
sacrificing the quality of care provided to their employees.
The ACA has spurred activity in payment and delivery system
reform across public and private sectors, building momentum to
improve health care value. For example, a multi-payer
initiative in Arkansas is leveraging partnerships with
Medicare, Medicaid, state employees, and Walmart to expand
primary care medical homes.
Many of new models sparked by the ACA provide opportunities
for employers to partner with major government purchasers to
pressure providers to reduce inefficiencies and improve
quality.
For many employers, workplace wellness programs are
intuitively appealing, and these programs, if well designed,
communicated and executed, can make a big difference. Most of
us spend most of our waking hours at work, and there is much
that employers can do to support a working environment that
supports health.
However, some of these programs tie an employee's
achievement of a particular health outcome to their health
insurance premiums or cost-sharing, but there is very little
evidence that doing so actually improves health, increases
productivity, or lowers costs.
What they do instead, unfortunately, is raise the barriers
for many individuals to access the support they need to achieve
better health outcomes.
There is also disturbing evidence that some wellness
programs place employees' privacy at risk. Wellness vendors can
and do harvest vast amounts of personal health information, but
there is no Federal law that restricts what these companies
share with business partners for marketing purposes. Yet, many
employees face tremendous pressure to participate in these
programs, especially when up to 30 percent of the cost of a
family premium is at stake.
Just as with workplace wellness programs, some benefit and
network changes sound promising on the surface, but may
ultimately be more about cost shifting than actually improving
health outcomes.
For example, network tiering has been touted as a way to
encourage consumers to seek care from higher quality, lower
cost providers, but there is limited evidence to suggest that
providers in the lowest cost tiers are selected with quality
taken into account. Their ``preferred'' status is sometimes
just a function of price.
A fundamental challenge for employers and their workers
today is the cost of health care, but many proposed reforms do
not get at the primary cost drivers - providers, many of whom
use local market clout to demand reimbursement that is
disproportionate to the actual value they deliver. With
increasing consolidation among provider systems, this problem
may only get worse.
Ultimately, it is going to fall to employers in partnership
with other purchasers to drive reforms that will ultimately
reduce costs and achieve better health care outcomes.
Thank you so much for the opportunity to participate today.
[The statement of Ms. Corlette follows:]
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Chairman Roe. Thank you very much. Ms. Franklin, you are
recognized for five minutes.
TESTIMONY OF TRESIA FRANKLIN, DIRECTOR, REWARDS AND EMPLOYEE
RELATIONS, HALLMARK CARDS, INC., KANSAS CITY, MO
Ms. Franklin. Thank you, Chairman Roe and Ranking Member
Polis. I appreciate very much the opportunity to testify before
the Committee today on behalf of the American Benefits Council,
of which Hallmark is a member.
Briefly, Hallmark is a family owned $3.5 billion company,
and as you have acknowledged, mostly in the greeting card
business and other social expression products. We have about
5,000 benefits eligible employees and another 2,000 retirees
who are eligible for our programs.
Our culture strongly reflects the family ownership. Our CEO
is third generation. The average number of years of service at
Hallmark is 18 years. We are very planful and careful as we
offer these programs to our employees.
I want to start our conversation today focusing on our
wellness programs. Hallmark has a very long, rich history of
commitment to employee wellness. Hallmark even has a subsidiary
company that helps other companies develop their wellness
strategy and communication.
Our founder, J.C. Hall, started healthy onsite food
services in 1923. That tradition continues to this day. In
1956, we opened an onsite medical facility which provided
employees convenience and extra care for support.
These programs have evolved, and today, the Hallmark Health
Rewards Program is a program that rewards Hallmark employees
with points to be redeemed for gift cards, health care premium
credits, and HSA contributions for participating in activities
that encourage doing the right thing, getting a routine
physical, attending onsite health seminars, et cetera.
I next want to focus a little bit on what I believe has
been an innovative approach to our health care strategy. In
January 2015, Hallmark joined the Aon private exchange. This
was a strategic decision. As Hallmark evaluated its role in
health care, we adopted an approach of educating our employees
about their choices and how to make decisions to best meet
their individual needs.
The complexities of health care, the significant changes,
and the ever growing costs of health care benefits, resulted in
Hallmark seeking this innovative approach.
We had grown frustrated with increasing deductibles and
employee premiums, and sought an approach that leveraged market
competition between carriers, simplified programs, and could
change the dynamics of health care.
The new approach allows carriers to develop services to
compete in a geographic marketplace, standardizes plan design
across carriers, and provides our employees with state-of-the-
art decision-making tools. We moved from self-funded to a fully
insured model as part of this move, which we felt moved risk
and accountability to the carriers who are best equipped to
manage these complexities.
We are no longer in the middle of increasingly complex
decisions regarding formularies, network reimbursements,
reference-based pricing, or specific appeals by employees
around their coverage. We have left these issues to carriers to
structure their best approach and compete for our employees'
business.
This model also permits our employees to post public
comments about their experiences with the carrier in a true
consumer feedback model.
We continue to believe that employers play a critical role
in our employees' health care. I want to highlight three
specific aspects. First, we provide a significant contribution
to their premiums. However, we pay the same funding amount
whether an employee chooses the most expensive or the most
inexpensive or richest benefit. Employees who choose a gold
option pay more, from our standard contribution, employees who
choose a less costly bronze plan pay less.
Second, we provide onsite and online education facilities
and seminars for our employees, and finally, we provide Aon's
ongoing service support to answer employee questions and serve
as advocates for employees.
I have described for you the path Hallmark has chosen. We
have found that the previous one-size-fits-all approach that
put Hallmark in the middle of being a health care delivery
expert no longer worked for us. Rather, the private exchange
model provides employers with this innovation.
However, and this is very important, it is critical to
recognize that our path is not necessarily fit for every
employer. While this strategy has been right for Hallmark,
other employers may decide that more direct involvement with
administration and design of their benefits will result in the
innovation they seek.
And finally, I think it is very important to consider the
legislative framework that makes possible affordable and
meaningful benefits. I know tax issues are not within the
jurisdiction of this Committee, but within our written
testimony we have highlighted two very important elements.
First, the so-called ``Cadillac tax,'' should be repealed,
and we want to commend Congressman Courtney for his leadership
in authoring bipartisan legislation to do so, and I want to
thank you, Chairman Roe, and those members of the Committee
that have co-sponsored repeal legislation.
Finally, I want to mention the tax exclusion and how
critical that is. I would be happy to address this during
questions as well.
Thank you again for this opportunity.
[The statement of Ms. Franklin follows:]
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Chairman Roe. Thank you, all. You have been an amazing
panel. Everybody came in under five minutes. I hope the members
will be as good as you are.
I would like to take this opportunity to recognize Chairman
Walberg.
Mr. Walberg. Thank you, Mr. Chairman, and the heat is on,
right, to perform. I thank each of the panelists as well.
Ms. Franklin, appreciate your testimony. It is a Hallmark
testimony.
Ms. Franklin. Thank you, sir, appreciate it.
Mr. Walberg. We know that employer-based wellness programs
generally have two thrusts, one at least most of the employers
that I meet in my district truly care about their employees.
You might find an occasional one that is more materialistic.
For the most part, they really care about them and what to see
them be successful, healthy, and continue to work.
On the other side, there are certain cost savings to have
coverage for employees that are healthy as opposed to ones that
have repairable or preventable health issues. We understand at
least when you look at it in common sense, why would not an
employer want to encourage healthy employees in using wellness
programs to do that, but we are also understand more
importantly there are employers that are very fearful of what
EEOC is looking at, in direct contradiction to what is being
pushed in the Affordable Care Act, with the First Lady's
nutrition proposals, et cetera, and so with the liability
concerns that go on there, there are challenges.
I would like, if you would, to speak more fully on the
importance of employer-based wellness programs to a healthy
workforce, and then secondly, what are some of the hurdles that
you encounter as a result of what I believe is EEOC's
overreach?
Ms. Franklin. Well, as I said, our programs are part of our
culture. Today, as I sit here, in fact, it is the Hallmark
Health Week in Kansas City, and employees are having the
opportunity to do onsite biometrics screening and other
screenings.
It is an element where, I think, does send a message, that
this is part of our culture that we care about our employees.
You know, I often get asked, well, are you saving money as a
result. I have taken a different approach with that. Of course,
when my boss asks me that, I say yes, but I will say what we
have focused on is a program that really allows our employees
who do the right thing to reduce their health care costs
through these rewards.
So, when you get a physical and you get a paycheck credit
for doing that, it creates the incentive that we think is good
behavior for employees to do that.
You are right, Congressman. The myriad of legislation does
create a minefield for us to work through, whether it is EEOC,
whether it is GINA, whether it is other elements of this that
has created that.
In the end, I think our programs do send a message that we
care, and it does send a message that if you do the things that
make sense for your health, you will pay less for your health
care by these rewards.
Mr. Walberg. It does work, does it not?
Ms. Franklin. I believe so.
Mr. Walberg. Thank you. Ms. McDonough, as you well know,
the EEOC has recently become very engaged in employer sponsored
wellness programs, and will soon issue new regulations as it
relates to the ADA and GINA.
How has the EEOC's involvement chilled wellness programs
affected you specifically?
Ms. McDonough. Thank you for the question. Employers, who
you suggested this in your introduction, employers come to us
for a variety of reasons, a lot of them come to get more
participation, more engagement with their programs, some are
looking at health care savings, some are looking at
productivity, so they have a variety of reasons of they are
coming to work with Fitbit.
They are looking to bring something effective and engaging
and that has longevity into their workplace. In terms of how we
see the EEOC guidelines affect that, I think our goal and the
goal of all of our employers is to make programs voluntary, to
make them effective, to make them fun, but I think there is,
and as I stated in my testimony, some further clarity that
could allow them the ability to run more effective and engaging
programs.
I think clarifying those guidelines so they have a very
strong understanding of what is within the guidelines would be
very helpful for employers in developing greater wellness
programs or launching them to a greater population.
Mr. Walberg. Also, for the employee, it certainly makes it
feel more voluntary if they understand the benefits to them.
Ms. McDonough. Absolutely. Communication and transparency
up front is what leads to great participation rates. So, a
shared commitment to health, a culture of health or wellness,
and really understanding that the employer and employee what
data is being shared, how it is being used, and how that is
going to impact the culture within the organization.
Mr. Walberg. Thank you, I yield back.
Chairman Roe. I thank the gentleman for yielding. Mr.
Polis, you are recognized for five minutes.
Mr. Polis. Thank you. Real interesting testimony. I wanted
to address to Ms. McDonough and Ms. Franklin, obviously very
exciting ways to encourage wellness and health at the employer
level.
What mechanisms have you seen for incentivizing employees
to participate and for some of the savings to accrue to the
benefit of the employee as well as the employer? I will go to
Ms. McDonough first, and then Ms. Franklin.
Ms. McDonough. Sir, thank you for the question. So, in
terms of mechanisms for and incentives that we have seen, it
really does vary from employer to employer based on the
sophistication of their program. In our six years of history,
we have had the opportunity to work with thousands of small-
and medium-sized businesses as well as Fortune 500 companies.
The way they incentivize may be very different based on the
sophistication of their program. In general, I think they try
to align their incentives with the goals of the program. That
is where I think Fitbit can actually be very effective.
For example, if you want someone to take a health screening
or to get more active, running a collaborative or competitive
program that ties into social responsibility and other things
that are part of the culture of the organization actually has
everyone's incentives aligned that good health. So that's a
very common model.
Mr. Polis. In your case, they also get a free Fitbit,
right?
Ms. McDonough. There is a variety of models in which that
works. So, oftentimes, it is a cost-shared commitment between
the employer and the employee.
Mr. Polis. What is the typical cost of a Fitbit device?
Ms. McDonough. They range between $60 and $250, based on
the features set and . . .
Mr. Polis. So, the employee benefit might be half the cost
of a Fitbit, so it might be $50 or $100, something like that,
towards the cost of it?
Ms. McDonough. That is correct, or even less--
Mr. Polis. Or the whole cost?
Ms. McDonough. Exactly.
Mr. Polis. In any case that is great, Ms. Franklin?
Ms. Franklin. Thank you, Congressman. I want to emphasize
our program is voluntary, and so the way we encourage, the
dollars, the rewards themselves, are the biggest incentive. Our
employees can earn up to $400 in a year doing the various
activities.
As I said, we try to make it fun. We do challenges, whether
it is a thousand or a Walk to the Moon, we did a Walk to the
Moon once, and people accumulated steps as part of that. We did
Lose a Ton, people came together in teams. That was one of the
more exciting ones because I think the prize was a trip
somewhere.
It encourages people to have fun, to create networking
opportunities within the company.
Mr. Polis. Hopefully, where this will go, and maybe someone
will comment on this, you know is tying the data on the actual
savings back to what the incentive is and how that can earned
along with savings to the company. Does anybody want to address
that frontier of how we can tie data back to provide the right
incentive for employees and save money for employers? Mr. Zern?
Mr. Zern. I am happy to, thank you. So, there is no doubt
data analytics is becoming more prevalent in the health care
environment, and how do we tie it back to the return on
investment.
I think employers are certainly looking at health benefits
differently today. They are looking at it more as an investment
in their population and driving a healthier population as maybe
in the past where sometimes it was viewed more as an expense.
The engagement of the senior leaders of employers of all
shapes and sizes, they are asking those questions. They want to
tie data back, and they want to understand their population
across the healthiest parts of the population and those equally
that need assistance in getting healthier, so it is across the
board.
Mr. Polis. In a follow-up question, if there is a second
round we will go more into this, and I think there might be
depending on how many questions from the panel there are, but
how do we weed out wellness programs that do not increase
wellness?
And by the way Mr. Zern, there seems like there would be a
lot of those, because there are hundreds or thousands of folks
with various wellness programs, I do not know, maybe half of
them do, half of them do not, or 90 percent do not and 10 do,
whatever it is.
How do we actually make sure that--by the way, the ones
that do not enhance wellness may very well have other benefits
like employee morale, retention, or other things, but not
health care costs and wellness.
How do we weed out--not weed out. I guess how do we
differentiate between what a wellness program is or what is a
straight employee morale retention program?
Mr. Zern. There is no doubt the marketplace is a little
crowded. But most importantly, employers are looking at how do
they continue to communicate effectively what their goals are
with their benefit programs.
It could take on a variety of forms, healthy lifestyle,
better eating. There are a variety of them. The challenge, I
think, that employers face is how do they understand which ones
align with their corporate goals most effectively, and then how
do they communicate them. That is the big thing.
Mr. Polis. Thank you. I yield back the balance of my time.
Chairman Roe. I thank the gentleman for yielding. Mr.
Guthrie, you are recognized.
Mr. Guthrie. Thank you, Mr. Chairman. My first question
will be for Ms. McDonough. On Fitbit, employer benefits are
becoming more valuable to employees, and you described--I was
going to ask you specifically of a case, but you described a
case earlier of someone who said saved $280,000, I think you
said, because of Fitbit and the data.
I guess my question is are the insurance companies--you
have it for a year, you provide the data and they expect to
have lower health cost coverage because people are exercising
or taking care of their health more, or is it over a longer
period of time, you have to actually show the experience?
The one year they start the program, the next year, people
go to the hospital less, therefore, they know it is going to be
cheaper, or are they accepting the data and having an
expectation of better performance?
Ms. McDonough. Sure. Thank you for the question. Again,
employers come to us for a variety of reasons. So they will
come to us for return on investment in terms of health care
savings and costs. We did have the example of Appirio. I am not
sure if you are familiar with them. They are a small business,
700 employees or so, very distributed population.
They needed something virtual to bring their program
together.
We work with a lot of companies of that size.
There is also a ``value on investment'' termed VOI, which
includes the productivity and absenteeism and those kinds of
things.
Employers are actually looking really holistically across
that. There is not an expectation at this point for most
employers that there is going to be a direct health care
savings cost in the next year.
What is great is that the data will be able to show those
outcomes over a period of time.
Mr. Guthrie. How long did it take to get that $280,000 in
savings? Was that over a couple of years, five years?
Ms. McDonough. That was actually over just one year, so
they did a one year program in 2014, and then affected their
premiums in the following year.
Mr. Guthrie. That is fantastic. Yeah you're right in the
other values there. What kind of roadblocks if an employer
wants a Fitbit or a program such as this? What kind of
roadblocks are they facing? Do they get discouraged? Or is it .
. . Or are they always happy?
I know what they are trying to get to, but are there some
problems to get to that point that you have seen?
Ms. McDonough. Specifically, do you mean for the employee
or the employer?
Mr. Guthrie. For the employer bringing in a program, what
kind of roadblocks they may have and they say this is not worth
it, or is it worth it. What do they have to fight through?
Ms. McDonough. Sure. I think this is now the minority,
which I think is a great thing, but often times, they do need
to sell the program up to an executive suite, so there is a
financial commitment, and it has to be a culture commitment to
healthy employees and really wanting to make their employees
successful.
So that's when . . . I also think that the adoption rate,
so the 24 percent average participation, can sometimes be a
barrier, but again that is what is great about bringing
consumer technology into this, you're being able to capitalize
on a movement literally that is already happening in the
marketplace, and being able to bring that and increase those
participation rates.
I think that by bringing those technologies into the
corporate marketplace, we are able to push back a lot of those
objections.
Mr. Guthrie. Thank you very much. Mr. Zern, during an open
enrollment period, have you seen employees change coverage from
year to year? Do they shop around year to year? What kind of
drives them? Is it the network choice, the cost, or they had a
pleasant experience with a carrier or an unpleasant experience
with a carrier and wanted to just change insurance companies
because they did not want to deal?
Mr. Zern. Thank you for the question. It is all of the
above. In our active exchange, I think that is one of the
liberating things for the consumer, for the employee. What the
employer community really likes is that it gives a tremendous
amount of choice to the employee supported by very strong
decision support tools.
Left to their own devices, it can be overwhelming, but with
great decision support tools, you get employees that are--they
normally start with what is the right level of coverage for
their situation, whether they are an individual or a family
situation. Then they will go into looking at networks, their
experience with insurance companies.
Our survey results show that price is really kind of the
last determinant of their selection. It is plan design, then
network, experience with the insurer, and then its cost.
Mr. Guthrie. Thanks. I am in the manufacturing business or
I was, and in human resources involved in here is the health
insurance plan, and people just took it and you moved forward.
I understand you have to allow your employees to rate the
carrier. Has that changed the insurance companies' behavior by
actually having ratings from their customers?
Mr. Zern. It is one of our newer parts of our innovation of
our active exchange. Consumer ratings are certainly piquing the
attention not only of our insurance companies that are part of
our exchange, but also their employers. I think that is also
factoring into how they view their partners on the exchange.
It really kind of cuts across all the key stakeholders,
from the employer, provider, and the insurer.
Mr. Guthrie. It is really bringing the customer into the
mix.
Mr. Zern. Exactly.
Mr. Guthrie. That is innovative and appreciated. I have run
out of time, so I yield back.
Chairman Roe. I thank the gentleman for yielding. Ranking
Member Scott, you are recognized.
Mr. Scott. Thank you, Mr. Chairman. I think it is important
to remind people where we were when we passed the Affordable
Care Act. We were experiencing cost increase routinely in
double digits for thousands of people; at one point 14,000
people a month were losing their insurance. Those with
preexisting conditions, if they could get insurance, they paid
exorbitant rates. They usually could not get insurance, and
millions others did not have insurance.
The proposal for a government takeover single payer plan
could have solved these problems and reduced overall health
care budgets significantly, but the government takeover did not
pass. We instead passed a more modest market-based approach,
patterned after RomneyCare in Massachusetts, a Republican plan,
but that has been successful.
The costs have increased since the Affordable Care Act are
the lowest in decades, probably half a century. Those with
preexisting conditions can get insurance at the average rate.
We have the highest portion of people with insurance in
recorded history, children up to 26 years old can stay on their
parents' policies. Women are no longer paying more for
insurance than men. We are closing the doughnut, the
prescriptive drug doughnut hole, preventive services, annual
check-ups are without co-pays or deductibles.
Since the Affordable Care Act, those that had warned of job
loss, are forced to explain the longest continuous number of
months of job growth since records have been kept. So that's
where we are. That is where we are since the Affordable Care
Act.
Ms. Corlette, one thing that has not been completed is the
Medicaid expansion. Some states have not expanded Medicaid. Can
you comment on the effect that has had on the people who are in
the gap for insurance - in the Medicaid gap - that is caused by
the failure of some states to expand Medicaid?
Ms. Corlette. Certainly, Congressman, and thank you for the
question. I think this is something that I hope that Congress
will address soon in whatever way it can, and also for the
states that have not yet expanded Medicaid, this is a true
moral failing.
I believe we have I think an estimated three million people
who because their incomes are too low cannot get access to the
kind of help with premiums to buy health insurance that people
who have incomes above 100 percent of poverty have.
I think that kind of inequity is simply wrong and it is
also demonstrated that it is having not just an impact on the
families that cannot afford the insurance but actually on many
local providers, hospital systems and others that are really
suffering because the people that they serve cannot afford the
care.
Mr. Scott. The failure to expand Medicaid also affects
those with insurance because they have to cover the cost
shifting. People who are in the gap without insurance get sick,
go to the hospital. Can you make a comment on that concept of
cost shifting?
Ms. Corlette. Sure. That is a problem. I do not know that
it has been exactly quantified, but essentially the problem is
that just because you do not have insurance does not mean that
you do not ever have health problems.
So what happens is that many people because they cannot pay
for care, they wait until the last possible minute when the
problem has become perhaps even a crisis or much more severe
than it otherwise would have been. They must go to the
emergency room, and somebody has to pay for that care.
Typically, what the hospital does is shift those costs over
to other payers, privately insured, and other payers. We all
pay for it in some way, so it is penny wise and pound foolish
for these states that have not expanded it and continue to fail
to do so.
Mr. Scott. Ms. Corlette, can you make a comment on the
issue of privacy in the wellness plans, whether or not people
are coerced into revealing private information as a result of
participation in wellness plans?
Ms. Corlette. Sure, absolutely. I should just first of all
say that I think workplace wellness programs can be incredibly
important and effective. But you have identified one particular
area of concern, which is that under current Federal rules and
under the proposed EEOC rules, somebody making $50,000 a year
could be asked or told that if they do not complete a health
risk assessment or if they do not agree to have personal health
information turned over to a wellness vendor, as much as $5,000
of health care premiums could be at stake. In other words, they
could be asked to pay more in health premiums, as much as
$5,000 or more.
It is really hard for me to understand how that would not
be considered coercive for somebody making that amount of
money. I think they would feel under tremendous financial
pressure to complete that health risk assessment and
participate. So to me, that is not voluntary, and it does not
fall under anybody's common sense definition of what voluntary
means.
Mr. Scott. Thank you. Mr. Chairman, can I ask unanimous
consent to enter two documents for the record, one, a comment
to the EEOC regarding the proposed rule on wellness programs
and its effect on the Americans with Disabilities Act, and
another comment to the EEOC regarding the proposed rule related
to wellness programs and the Genetic Information Non-
Discrimination Act?
Chairman Roe. Without objection, so ordered.
[Additional submissions by Mr. Scott follows:]
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Mr. Scott. Thank you.
Chairman Roe. Mr. Carter, you are recognized.
Mr. Carter. Thank you, Mr. Chairman, and thank all of you
for being here. This is certainly an important subject that we
all need to be paying particular attention to, and I want to
thank Chairman Roe for his efforts in bringing this to light
before this subcommittee.
I am a small business owner. I am a pharmacist by trade. I
own three--excuse me--my wife now owns three independent retail
pharmacies with about 19 to 20 employees. We value that
relationship very much between with our employees, and some are
very long term, been with us for 28 years, and that is
certainly very important.
Their health is important. Their health is important to me
as an employer, I need them to show up for work. I depend on
them. Obviously, I could not do what I am doing here without
them being there. This is very important.
However, like all small business owners, I have been faced
with the dilemma of trying to reduce health care costs, and
that is something that has really been a struggle recently, as
you can imagine. I am not any different from any other small
business owner in that respect.
Ms. McDonough, I want to speak to you. First of all, I
think we are all familiar with Fitbit and what it does and the
benefit it can have. As we get to a more socially conscious
health care society, if you will, these are the type of things
that we are looking at. I am concerned because--not concerned,
inquisitive as to the collection methods.
As I understand it, if I were to provide my employees with
the Fitbit, if I wanted to get the information, I would have to
get their permission to get it first of all?
Ms. McDonough. Absolutely.
Mr. Carter. Okay. That data that is relayed to me, how can
we make sure that it is going to be private and it's going to
be secure? They are going to want to know that and they should.
If they do not want to know it, they should want to know it.
Ms. McDonough. Absolutely. Privacy and security of our
user's data and the trust of our customers is paramount at
Fitbit. We have a very clear, easy to read privacy policy that
we share with all the consumers. It is written in plain English
so that they can understand that. That is for all the consumers
who use Fitbit products.
When we work with an employer on an employer wellness
program, they actually have to opt in and give active explicit
consent to share data with their employer. And that is a subset
of the actual data that is collected by Fitbit overall.
Some of the devices collect things like heart rate or GPS
when you are out running if you are using that functionality.
That data is not shared with an employer when they work with
Fitbit directly.
The type of data that might be shared would be steps and
distance and active minutes. So data that would be beneficial
and useful for them to run an effective and engaging program.
The employee has the opportunity to--again, the programs are
voluntary, so they do not have to agree to share their data,
and they can also opt out at any time.
Mr. Carter. Okay. One final question for you, as a small
business owner, we have asked about the barriers the employers
have, but what about small business owners? What kind of
barriers do they typically have?
Ms. McDonough. I am so glad you asked this question because
I am really passionate about supporting small businesses, and I
actually think it is through the use of technology that small
and mid-sized businesses can actually have really effective
wellness programs.
There are a number of vendors who will only work with very
large employers. We work with and we are ourselves a small
business. I am very passionate about it and real excited about
it.
The barriers tend to be that it is one person who is
responsible for all of H.R. and benefits and staff--
Mr. Carter. That is usually the owner.
Ms. McDonough. Exactly. You have been there. What is great
about the advent of the technology that we can provide is we
make it very easy and streamlined, and we take a lot of pain
points for the small business owner and we also solve those for
them.
Mr. Carter. Great. Very quickly, Mr. Zern and Ms. Franklin,
I know that private exchanges, they offer a lot more
flexibility. I am just wondering--Ms. Franklin, I believe
Hallmark has recently changed to a private exchange. I am just
wondering about the experience you have had with that.
Ms. Franklin. It has--Thank you, Congressman. It has been a
very positive impact to our workforce. It has given employees
the opportunity to learn how to determine what health care
plans best meet their needs. It is not an one-size-fits-all
approach, as I mentioned.
It very much empowers the individual to be part of the
process. That has been very, very valuable. It gives our
employees choice. They can choose from a variety of national or
even local carriers. I think it introduces the opportunity to
truly make health care a consumer focused product.
Mr. Carter. Great. Thank you. Mr. Chairman, I yield back.
Chairman Roe. Hopefully, the H.R. director is doing okay at
your business.
Mr. Carter. You know I got problems with it, but I am
dealing with it.
Chairman Roe. Mr. Courtney, you are recognized.
Mr. Courtney. Thank you, Mr. Chairman. Thank you to the
witnesses for your outstanding testimony today.
Again, just to follow up on Mr. Scott's comments, I come
from the State of Connecticut, which is a State that fully
embraced the Affordable Care Act. In 2010, our uninsured rate
was about 9 percent. Last fall, the latest statistics that came
out, it is now 3.8 percent.
The exchange, which again I think has been touted as the
highest functioning exchange in the country by Forbes Magazine,
the individual policies, private policies, that were sold
through the exchange, the actual premium price went down by 5
percent. I am going to say that again, went down by 5 percent,
in terms of what was offered last year.
Again, like many of us, I am a former employer and believe
in the employment-based component of the system. Again, what we
are seeing in Connecticut is that despite some of the hysteria,
that employment-based benefits are alive and well and that some
of the really good solid initiatives like wellness programs or
private exchanges are totally free to operate, and that is all
good.
Like any measure, particularly one that had 440 sections,
there are provisions which even those of us who voted for it
had concerns with, and as was mentioned by Ms. Franklin, the
excise tax, which we pushed against the administration back in
2010 and got delayed til 2018, we again succeeded last year in
terms of delaying it to 2020.
H.R. 2050 has 186 co-sponsors, 70 percent of the House
Democratic caucus to strike this provision from the law, and
there is nothing, I think, contradictory about that. As I said,
any law always can use sprucing up and improvements.
The administration actually with their budget that came
over this year kind of acknowledged some of the criticisms that
we have been weighing against it because they at least tried, I
think, vainly, to come up with some actuarial adjustments,
which again, I just think at the end of the day is just not
really--no one is that smart and no one is that capable in
terms of coming up with those kinds of fixes. So, we should
strike from it.
But you know--Stepping back and looking at the big picture,
one of the things again that was predicted was it was going to
be this huge negative impact in terms of America's health care
sector.
Last month, the Bureau of Labor Statistics, which came out
with again another positive jobs report, 215,000 jobs added to
the U.S. economy, 37,000 of those jobs were in the health care
sector, 10,000 in hospitals, and about 27,000 in ambulatory
care. In the hospital sector in the last 12 months, the
employment in that sector has grown by 183,000 jobs in the last
year.
Mr. Chairman, I would ask that those figures from BLS be
entered into the record.
Chairman Roe. Without objection.
[Additional submission by Mr. Courtney follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Courtney. Again, we still have work to do to make
improvements, but there is no question that certainly when
people actually step up and figure out how to make it work, as
in Connecticut, both in terms of cost and access, I think we
can point to real tangible results.
Ms. Corlette, just to shift the conversation a little bit,
we are also a State that was the first to adopt paid sick
leave, of up to five days, very controversial when the State
legislature passed it. There was a business survey that was
just done recently. Three-quarters of employers now in the
State support it.
I just wonder if you could talk about that sort of feature
as a way of improving workplace coverage in health and
wellness.
Ms. Corlette. Thank you, Congressman. So, in full
disclosure, this is not my area of expertise, my area of
expertise is health insurance. But as I did note earlier in my
testimony, paid leave often - changes places year to year -as
the most popular employee benefit that employees cite as
something they appreciate about their employment.
I can really only speak as an individual about the
importance of paid leave, and also as a mother, and how
critically important it was to me after I had my children. I
would also say as a consumer of goods and services, I would
like to know that the people that serve me in restaurants and
establishments are not working because they are sick because
they cannot afford to take a day off to get better. So, that is
the best I can do. Unfortunately, it is outside my expertise.
Mr. Courtney. That is fine. I appreciate that. What is
interesting is the survey that took place that I mentioned a
moment ago. A third of employees who were eligible to use the
statutory paid leave did not even use it.
Again, the notion that it is just going to trigger this
huge utilization, in fact has not happened, people are
committed to their jobs, but like you said, they should not be
forced to be there when they are too ill to do it at the
highest level, and also to keep the public safe.
With that, I yield back, Mr. Chairman.
Chairman Roe. I thank the gentleman for yielding. Mr.
Allen, you are recognized.
Mr. Allen. Thank you, Mr. Chairman. Obviously, we have
tipped the scales with healthcare prevention toward healthcare
prevention. In fact, one of the early meetings with the most
recent president of our medical school in Augusta, I think he
said then we were spending about 25 percent of every healthcare
dollar on preventive, and about 75 percent on critical, and we
could cut health care costs tremendously if we could just move
that to 50-50. And he felt like that was possible.
Ms. McDonough, I have been very interested in what you have
had to say about that, and congratulate you on your work.
You know -- we--The public ObamaCare exchanges are failing,
as we all know. I actually introduced legislation, the
Transparency and Accountability of Failed State Exchanges, H.R.
4262, it requires failed State exchanges to return unused
Federal funds for deficit reduction, requires an audit of how
Federal taxpayer dollars were spent.
In our own State, our governor was criticized for not
opting to take the Federal dollars and to open up a State
exchange, but he obviously knew. In Georgia, we have to balance
our budget. He did not want to have to write a blank check. We
know that Oregon now is wanting to opt out as well as Kentucky.
Mr. Zern, can you talk about your free-market competitive
exchange and how it saves employers and employees money, and
how that might help having these private exchanges influence
employee choice for health care?
Mr. Zern. Sure. Thank you for the question, Congressman.
First I would start by establishing that our exchange is an
employer sponsored group plan, compliant with ERISA. It has
some core themes or governing areas to it that I would share.
First is standardized plan designs that really help the
employee navigate the various choices.
Secondly is multiple insurance companies offering networks,
so there is different network options for the consumer from
which to select. The third is around strong decision support
tools.
If you think about consistent plan designs, multiple
carriers with network options for the consumer, and strong
decision support tools, what those really lead to is an outcome
around the engaged consumer and the empowered consumer, making
a choice that works for them personally and their family
situation.
It addresses choice which all of our survey data shows that
employees and employers want to offer more choice around plan
designs, multiple networks, and then it gets to transparency
around costs and quality, which is kind of the third key
governing thought for me.
So, our exchange, as I mentioned in opening comments, is
driving a 100 to 200 basis point reduction over the standard
health care cost increase.
Mr. Allen. One thing I have found about the American people
is they want choice, and that is the big problem with the
mandatory government health care program.
We know in the business world and we talked about it--
Ms. Franklin. Congressman, could I just tag onto that very,
very quickly?
Mr. Allen. Yes.
Ms. Franklin. One other element that I think is fundamental
in the private exchange is that there are different geographic
markets. In our experience when we moved to the exchange, is
that not one carrier has the best price everywhere. By having
the localities compete, there is an opportunity for better
products and cost savings as well.
Mr. Allen. We are having problems in Georgia, frankly,
because of the status of health of a lot of our citizens there
and particularly in my district.
You know we know that the only way to bring down costs in
the business world, which I have been a small business owner
for years, is by competition. Of course, the health insurance
industry, they are consolidating as we speak. There are less
and less companies offering health insurance. There are
companies who are also saying they are going to get out, they
are not going to serve this area or this exchange. They are
just making calls.
How do we -- And Mr. Zern I will start with you and we have
just a few seconds How do we introduce competition back into
the marketplace? For example, ophthalmology. To get your vision
corrected, it used to cost $3,000. It is a couple hundred
dollars today. How do we do that real quickly? You got 25
seconds.
Mr. Zern. Sure. I would say that in our exchange absolutely
the fundamental piece is promoting market competition amongst
the insurers. Quickly, on behalf of our employers, when the
announcement was made about the potential consolidation, we did
two pretty significant surveys.
The information coming back from employers is they are kind
of on a wait and see as to if consolidation happens, what they
are going to, what that is going to mean, but none of them
stopped advancing their health care strategies, not a single
one.
Mr. Allen. Thank you very much, panel, and I yield back,
Mr. Chairman.
Chairman Roe. I thank the gentleman for yielding. Ms.
Bonamici, you are recognized.
Ms. Bonamici. Thank you very much, Mr. Chairman, and thank
you, Chairman Roe and Ranking Member Polis for holding this
hearing, and thank you all for your testimonies. It has been
great to hear about some of the innovative approaches and the
work that several companies are doing to make sure that they
have a healthy workforce.
My home State of Oregon has often been a leader in finding
more efficient and effective ways to deliver health care and
improve health outcomes. Following up on Mr. Courtney's
comment, our Oregon legislature did just pass paid sick days,
which is really important, to make sure that we have a healthy
workforce.
We also in Oregon expanded Medicaid. A year between 2013
and 2014 saw a 63 percent drop in the number of uninsured in
Oregon.
Recently, I visited a company called Provata Health in
Oregon. It is an Oregon based health technology company,
focused on workplace wellness, and they use digital
technologies. They have an evidence-based series of wellness
programs that are scientifically designed to create a healthier
and more productive workforce. They have been the subject of
peer reviewed studies and showed both increased cost savings
and improved health outcomes.
I wanted to ask first Ms. Corlette, can you talk a little
bit about how employers might evaluate the potential cost
savings, and what kind of methodologies could be used to
determine those?
Ms. Corlette. Thank you, Congresswoman. So, we are in an
interesting time when it comes to workplace wellness programs.
Right now, in the marketplace, it is like 1,000 flowers are
blooming.
That kind of innovation is both very exciting and provides
some great opportunities, but I also think it can be very
difficult both for employers as well as employees to sort of
tease out of this myriad of programs that exist, what are the
tools and incentives that really work both to change behavior,
get to better health outcomes, and ultimately get to a lower
cost growth trend.
The truth of the matter is that the research out there is
growing, but it can be very difficult to tease out what is
working and what is not. I will say what we are seeing is first
of all that wellness programs that are tied to some sort of
premium based or cost sharing based cost financial incentives
have really not been shown by themselves to change behavior.
What does seem to work in terms of cost reduction, of
course, are targeted disease management programs that really
target, for example, people with diabetes or a heart condition,
that kind of thing, with direct and personalized interventions.
Also, frankly, changing the environment. Google is a great
example of a company that has experimented with different
wellness things but one of the most effective things they found
was in their cafeteria, they moved all the healthy options up
front and took the unhealthy options and sort of hid them in
the corners, they reduced the sizes of plates and bowls, and
that has made a tremendous difference in people's nutrition and
overall health.
Those kinds of environmental changes sometimes are very
easy to do but can be incredibly cost effective.
Ms. Bonamici. I know just a few days ago the Center for
American Progress talked about some of the state initiatives.
Can you talk a little bit about some of the successful state
models that we have seen?
Ms. Corlette. Sure. The ACA has really sparked a number of
really innovative and exciting payment and delivery system
models that are happening at the State and local level.
Here is an area where I think employers are really
critically important participants in those models.
What the ACA has done is brought big government purchasers
like Medicare and Medicaid to the table, but from providers'
perspective, when you have Medicare telling them to do one
thing and the commercial carriers telling them to do something
else, and Medicaid yet another thing, those signals can get
very confusing and administratively, very burdensome.
When the signals are aligned and you are encouraging more
efficiency, higher quality, that can lead to both better health
outcomes and lower costs.
Ms. Bonamici. I am going to try to get one more question
in. We have a need for more healthcare literacy and the uniform
Summary of Benefits and Coverage that was created under the
Affordable Care Act, and I think it has made a difference.
Can you discuss how that tool for workers can help them
make more informed decisions, and are employees more confident
in selecting a health plan now that will fit their specific
needs?
Ms. Corlette. Thank you. So, polling does show that the SBC
or Summary of Benefits and Coverage, is consistently one of the
most popular provisions of the ACA. I think people are really
excited for sort of standardized, uniform information that just
says okay, what does this plan actually do for me.
Ms. Bonamici. Do the employers on the panel agree with
that?
Mr. Zern. Yes, very similar feedback.
Ms. Bonamici. Terrific, thank you.
Ms. Franklin. I would add that decision support tools that
are made available also encourage that kind of education as
well.
Ms. Bonamici. Terrific. Thank you. My time has expired.
Thank you, Mr. Chairman.
Chairman Roe. I thank the gentlelady for yielding. Mr.
Messer, you are recognized.
Mr. Messer. Thank you, Chairman. Fascinating conversation
today. You know, as we look at how we can control costs in the
world of health care, I think most of us would concede that one
of the most important things we can do is turn every American
who receives health care into a health care consumer, where
they are actually making consumer decisions.
At the same time, Mr. Zern, as you highlighted in your
testimony, you have over 150 million Americans getting employer
provided health care. That is an important part of our system.
You mentioned in your testimony that employers offering health
care benefits are genuinely driven to promote health care
awareness, reduce health care spending, ensure that employees
and their families have comprehensive coverage and the like.
There has been a lot of discussion lately about the overall
viability and future role of employer-based health care. I was
hoping you could just highlight for the panel, how do consumers
behave differently when coverage is provided by their employer
versus when they purchase health insurance on their own?
Mr. Zern. So, I will be able to speak from the employer
side certainly. Health care is complex. Employees look to their
employer to continue to educate and communicate with them
around a variety of issues, whether it is plan design, whether
it is network configuration changes, what type of wellness
programs I should be accessing or thinking about.
The employer is, to me, exceptionally critical to
continuing to advance the communication and the empowerment of
the consumer.
We have--The next stage, I think, that we really have to
tackle is how do we get information in the hands of the
consumer at the point of service. Right so, when you look at
the waste in our health care system, how do we start to address
that. I think that is the next set, and you can see that
innovation through mobility apps and different things of that
nature.
The education piece from the employer to the consumer is a
critical function for us.
Mr. Messer. Following up on that, what are some of the
obstacles preventing employers from signing up for private
exchanges that you can identify?
Mr. Zern. So I think, you know, to Ms. Franklin's comments
earlier, a private exchange is a great solution for a
particular client. I have been in health care consulting for
close to 30 years. I have seen lots of different plan designs,
and an active exchange, a private exchange is a really good one
that drives consumer engagement, transparency, and choice.
So, I think we are going to continue to see the evolution
of exchanges, both public and private.
Mr. Messer. I might open it to both Mr. Zern and others on
the panel, we are here obviously today in Congress, what could
Congress do to enhance the opportunities or to eliminate
barriers for employers to be engaged in private exchanges?
Mr. Zern. I am happy to jump in on that one, representing
our the employers who are our clients. I think there is a
desire for trying to drive a little more simplicity in the
system. So, that would be an area that we would be happy to
work with Congress on behalf of our employer community, too.
How do we simplify some of the regulatory issues that our
employers have to face that can push them to look at other
areas, whether it is active exchange or other areas of
innovation within the health care ecosystem.
Mr. Messer. I presume part of your point there is when it
gets so complicated, the individual employer just throws up
their hands and decides to--
Mr. Zern. It can be a little frustrating.
Mr. Messer. Yes. Anybody else?
Okay. Thank you. I yield back the balance of my time,
Chairman.
Chairman Roe. I thank the gentleman for yielding. Mr.
Hinojosa, you are recognized.
Mr. Hinojosa. Thank you, Chairman Roe, and Ranking Member
Polis. The health insurance landscape has changed tremendously
for employers and employees since the Patient Protection and
Affordable Care Act implementation.
Just last month, we celebrated six years since ACA's
enactment and celebrated the 20 million previously uninsured
Americans who now have access to quality, affordable coverage.
In my region of South Texas, from San Antonio down to the
Rio Grande Valley, we have close to 200,000 families receiving
tax credits to help pay for coverage. In 2009, prior to ACA, 40
percent of the families in my congressional district were
uninsured. Today, in 2016, only 20 percent are uninsured.
We have made great progress in this large region that has
been growing so fast. Today's hearing focuses on alternative
insurance models for employer provided health coverage, but in
my view, any changes to employer coverage must be handled
carefully as over 147 million people currently rely on employer
sponsored benefits for health needs.
As you well know, the governor and the Texas legislature
did not embrace ACA in our State, and they did not allow
expansion of Medicare, nor did they allow creation of the Texas
health insurance exchange marketplace.
However, in spite of those actions, Texas saw 1,306,208
people enrolled in private plans for 2016 through the Texas
exchange during open enrollment. I am encouraged that we are
doing some things right and helping a lot of people who under
the conditions that our ranking member, Bobby Scott, gave that
could not afford it or had preexisting medical conditions, are
now covered.
So, my question that I have goes to--I have my papers a
little mixed up here, excuse me. To Sabrina Corlette. Based on
your expertise, how can Congress work together with health care
service providers to ultimately reduce the cost of health care
experienced by patients?
Ms. Corlette. Thank you, Congressman. As I mentioned in my
testimony, I think one exciting thing but often under
publicized about the Affordable Care Act is that it really
launched a number of experiments in payment and delivery system
reform that are bringing both public purchasers, like Medicare
and Medicaid, along with private purchasers, like employers and
employer coalitions, together to start to work towards
increasing health care value.
By that, I am talking about things like patient-centered
primary medical homes. As the Chairman mentioned earlier,
accountable care organizations. Efforts to really re-emphasize
primary, lets really Primary care, start putting more
accountability into the system, reduce unnecessary and wasteful
care.
These experiments are still in early days, and so they are
showing, so we are starting to see some results, but still more
time needed needs to tell. One thing that was very exciting
about this particular hearing is the role of the employer and
particularly self-funded employers, and how influential they
can be at the local level in really driving change towards
value and value-based care.
Mr. Hinojosa. I agree with you. I want to be sure that the
record reflects that across all 38 states, that use
healthcare.gov, in the final week of the 2016 open enrollment
period, eight of the 10 local areas with the fastest growing
enrollment numbers were in Texas. It included Corpus Christi,
Harlington, Laredo, El Paso, Odessa, Midland, San Antonio,
Abilene, Sweetwater, and Lubbock.
I am encouraged. I am an optimist and I believe if we can
just tweak ACA a little bit, that we can make it work for so
many more people, and with that, I yield back.
Chairman Roe. I thank the gentleman for yielding. Mr.
Grothman, you are recognized.
Mr. Grothman. Thank you very much. I guess what we are
coming down to is what can we do to make health care
affordable. Yes, I strongly agree with Ms. Corlette that we are
in the beginning stages of that. I think there are a variety of
companies out there, Serigraph owned by John Torinus, in my
neck of the woods, who have already found ways to greatly
reduce the cost of their health care for employees.
I give a couple of you guys, if you can kind of rattle off
what your total costs, not just the cost to the employer, but
the cost to the employer plus employee is, in each one of your
businesses, or if you don't have I guess--I guess you are all
businesses of one nature or another.
We will start with Ms. Corlette since I just finished up
with her. What is the total cost per employee at Georgetown
University?
Ms. Corlette. I am sorry, sir. I actually do not know. I am
not here to represent the university.
Mr. Grothman. You will look into it? It is an important
number. We should all know that. Ms. McDonough, what is the
cost for health care at Fitbit per employee, in the programs
that you cover?
Ms. McDonough. Unfortunately, I am also not able to speak
to that. I do not sit within the H.R. organization.
Mr. Grothman. Mr. Zern, do you know?
Mr. Zern. Unfortunately not.
Mr. Grothman. We need new witnesses. Ms. Franklin, do you
know for Hallmark, what is your total cost--
Ms. Franklin. Yes, sir. I pay those bills. It is about
$9,500 $9,800 per employee per year.
Mr. Grothman. That includes the cost the employee is
paying?
Ms. Franklin. No, that is just the Hallmark cost.
Mr. Grothman. What is the cost per employee?
Ms. Franklin. You know, I do not have that on an average
basis because employees can enroll in different levels of
coverage. I apologize.
Mr. Grothman. You should keep track of that. It is a little
bit embarrassing. What I wanted to do was talk about the
difference between costs in corporations, what they are, and
costs in government, costs in Medicare, and what they could be.
What they could be if you combined an HSA with a wellness
program, with an onsite clinic, and you did some sort of co-pay
so your employees could shop for the lowest cost health care.
Since none of you know the answer to this, which you all
should, since you are experts in the field, I can tell you I
think a lot of companies could drop their total costs from
about $20,000 to $12,000 per employee. It would be a difficult
thing for the government to do since the government is so big,
but I think if you had your own onsite clinics without the
incentives to send people to expensive specialists, if you get
a little bit wellness, even an HSA, so people had a little bit
incentive not to run to the doctor at the drop of a hat, you
would be amazed how much you four could find a drop in health
care costs. It can be done by nonprofits, too.
I think Ms. Corlette, if you get involved in Georgetown's
health insurance, I think you would find you could save a lot.
There are a lot of universities today that claim they need more
money and tuition is so high, but you might find, Ms. Corlette
- I recommend you should read Mr. Torinus' book. You might find
you could save $6,000 or $7,000 per employee at Georgetown and
not have those kids graduating with such excessive debt.
Since people do not know that, I guess I will yield back
the remainder of my time. That is what you should focus on,
total cost including cost paid for by the employee in your
businesses, and see what you can do to drag that down.
Thanks much.
Chairman Roe. I thank the gentleman for yielding. Mr.
Takano, you are recognized.
Mr. Takano. Thank you, Mr. Chairman. Following up on my
colleague Representative Bonamici's comments about health
literacy, Ms. Corlette, I wanted to relate some experience in
my home State of California.
Covered California recently announced--Covered California
is the name of our exchange--recently announced that its
contract with insurers for plan years 2017 through 2019 will
include expanded tools to help consumers make their choice in
plans that is best for them.
Can you discuss how improving health literacy is a tool for
workers to make more informed health care decisions?
Ms. Corlette. Absolutely. There are a number of exciting
components to that Covered California contract for 2017 that
include both more support for consumers to make smart choices
but also really starting to align incentives for insurance
companies to start to deliver better value. So, I commend
California for really being the leader in this area.
On the issue of health insurance literacy, what we have now
learned after a few years of enrollment through the health
insurance exchanges is that there really is not much health
insurance literacy in this country, unfortunately.
Part of that stems from the fact that health insurance is
such a complicated product. You are talking about premiums,
deductible, co-insurance, co-payments, network issues,
benefits. It is just very, very complicated.
Then you couple that with once you are enrolled, figuring
out where is the appropriate place to get care. All of these
things require a tremendous amount of knowledge on the part of
the consumer.
One of the things the ACA has tried to do is provide more
tools to consumers such as the Summary of Benefits and
Coverage, to help them make informed decisions, but we are
still a long, long way away from really getting to the decision
support tools that are needed.
Mr. Takano. This may be an obvious question, but I think it
is important for us to kind of get the thinking out there for
the public.
I want to ask you a follow up. How does improved health
literacy help to keep costs in check?
Ms. Corlette. Well I think first and foremost, by helping
people understand where an appropriate care setting is for a
particular injury or illness or condition, that can help people
get the right care at the right place at the right time.
For example, you should not go to the emergency room for a
sore throat or if you got the flu, you should go to a primary
care setting, and that can lower costs dramatically. That is
just one example. Just educating people about where the right
place is to get care for a particular condition is important.
Mr. Takano. Because people who have not been insured before
really do not know the different aspects of a health care
system.
Ms. Corlette. That is right.
Mr. Takano. They need to learn these things, these terms,
co-pay, co-insurance, all new to someone who has not really
been insured before.
Had we not acted and passed the ACA, do you believe
premiums for workers likely would be higher than they are today
if we had not acted?
Ms. Corlette. Since the ACA was enacted, we have had the
slowest growth in health care prices in just about a
generation. It has really been remarkable. Some attribute that
to the ACA. Some say it is the economy and other factors. We
certainly have seen much, much slower growth than we had prior
to the ACA.
I think that one of the other exciting things about the ACA
are these multi-payer efforts where private purchasers are
pulling together with Medicaid and Medicare to start to get
more efficiencies into the system. Those are still in the early
stages, and need some time to bear fruit. I am hopeful that we
can, as you say, bend the cost curve for the long term.
Mr. Takano. One thing we know for sure is the sky did not
fall, the world did not end, and we are not seeing lots of
people being put out of work, lots of full-time people being
moved into part-time jobs, all these claims that were made
pointing to a dire disaster have not occurred.
Ms. Corlette. Quite the opposite. We are seeing job growth,
really strong foundation of an employer-sponsored health care
system.
Mr. Takano. Thank you very much, and I yield back my time.
Chairman Roe. Thank you, Mr. Takano. I will now yield to
myself for five minutes. Why do companies form wellness
programs? Well I think they do that, which is what the subject
of this was today, to lower costs and improve the health care
for their employees. I think that is why we do it. It makes
sense to do it.
Just to point out something, I think the way you do that,
and you have all clearly pointed out, is empower consumers,
transparency, and quality. If you do those things, people can
shop, and Americans are the best shoppers in the world. We will
drive across five lanes of Interstate to get gas two cents a
gallon cheaper. I know if we have the knowledge, we absolutely
will make smart consumers.
I am a smart healthcare consumer. I have an HSA. What did
the Affordable Care Act do? It discouraged consumerism, me
being able to be in charge, not the insurance company, not the
government, and one of the things you can do tomorrow, we could
do tomorrow, is allow people to shop.
In other words, I am forced right now to buy ten essential
health benefits, half of which I do not need. We need to allow
consumers to purchase what they and their family can afford and
what they need.
Let me just tell you what has happened in the real world,
this all sounds great. In the real world, in the hospital where
I practiced and taught at the medical school, 60 percent of the
uncollectible debt in that hospital are people with insurance.
Why? To meet these benchmarks of affordability, you raise the
co-pays and out-of-pockets so high that people cannot afford
it.
Now, it is left to providers, me and the hospitals, to
provide that care when people cannot pay. If you have a $5,000
out-of-pocket, and you are a police officer where I live making
$35,000 a year, it might as well be $100,000 out-of-pocket. You
do not have the money to pay it.
We have to factor that in and figure out how not to do
that. I think having consumers decide what they need to buy is
the way.
Medicare, for instance--Medicaid, I mean for instance, we
tried that experiment 20 years ago. Right now with the Federal
Government running a deficit and paying all the bills, it looks
fine, except the quality of care for Medicaid patients in many
cases is actually less than people with no insurance. I find
that abhorrent that we have people in this country with
Medicaid that get a lower standard of care than other people. I
think that is absurd. We need to reform that program before we
expand that program. It almost bankrupted our State of
Tennessee, which is why we have not expanded it yet.
Just a few things like that. I want to get back to a couple
of questions that I would like to ask. By the way, the
exchanges, which I found amazing, you all have set up these
private exchanges at zero cost to the taxpayers, and we
literally have flushed billions down the drain with the public
exchanges.
By the way, one of them was Oregon, Hawaii. I could go on
and on. The co-op's, almost half, over half of them are
bankrupt and out of business. We need to let the private sector
do this. They have done it very well at no cost to the
taxpayers.
I wanted to say those few things just to get started.
First, Mr. Zern, I want to go to you, and Ms. Franklin, both.
Do you see these private exchanges expanding? In other words,
you went from a system where you were self-insured to an
insurance plan. Did you see that happening? Is that going up? I
love the idea of these private exchanges.
Mr. Zern. We certainly see continued steady growth in the
exchange portfolio, and across the definition of exchanges, we
absolutely expect to see continued growth, not only within ours
but just as the industry defines exchanges and what is
happening in the private health care exchange.
Chairman Roe. Why do you, Ms. Franklin--because when I was
mayor of our local city, we had 1,000 employees, 1,500 teachers
or so, and we were self-insured. What reason did you make at
Hallmark to switch from a self-insured plan to--
Ms. Franklin. The primary model that Aon has used is a
fully insured model. Part of that model is to put the
responsibility and accountability to the carriers as they seek
innovation in health care.
To your specific question about the growth of this program,
I do think--we have seen with our employees coming into the
workforce, they value choice, they do not want one-size-fits-
all, they appreciate being able to learn and customize a
program that meets their needs.
Chairman Roe. I think by allowing consumers to have that
voice and choice you have empowered them. I think there is no
question about that.
The other thing I want to get in my little bit of time
left, and this goes to maybe Fitbit, we need data to make
clinical decisions. I mean I have to have that to make a
rational clinical decision.
Ms. Corlette, I certainly understand where you are coming
from with maybe someone who is coerced into doing something, we
do not want that either.
We also need that data to be able to make decisions about
are we doing the right thing. Otherwise, we keep doing, as Mr.
Polis just said, at least some of these wellness programs may
not work, and a gym membership is not a wellness program.
How do we protect the data so I can use it? I don't know
what My cholesterol is my cholesterol. I could put it out there
you wouldn't know it was Phil Roe.
Ms. McDonough. Thank you for the question. Fundamentally, I
think it goes back to what you suggested, which is giving the
consumer the choice to who and when and what data they share
and with whom. There is a responsibility on Fitbit in this case
to make sure that the data is secure and privacy is respected,
and then by giving the employee or the individual the
availability to share that data with their practitioner in the
future so that they can have a better and more informed
conversation, I definitely think is where the market is
growing, given it is empowering the consumer and also the
practitioner to be able to have that conversation.
Chairman Roe. I am going to gavel myself, I am over time. I
want to thank the witnesses today. You all have been terrific.
I have thoroughly enjoyed this. It is always nice to have a
hearing you know something about, which is health care. I
really enjoyed hearing what you had to say. I think it has been
very beneficial.
We want to continue this discussion, and I want to thank
you all for taking time to prepare to come today. At this
point, I would like to ask Mr. Polis if he has any closing
remarks.
Mr. Polis. I will be brief. Thank you, Mr. Chair. Thank you
to our witnesses for a very thoughtful and thought provoking
discussion about how we can reduce costs, improve health
outcomes in our employer-based health care system. Employer-
sponsored insurance has been very popular, is very popular,
will likely remain very popular.
We need to do everything we can to make sure that
businesses and health care consumers have the right incentives
to provide additional wellness based options and new programs
to employees to help save costs and to make workers healthier.
I am excited about the role and the potential of technology
and data to be very central to the decision making process at
the employer level and within private exchanges as well.
It is heartening to see companies that are taking a close
look at new and more efficient models for delivery, that can
cut costs and improve outcomes.
I think we only scratched the surface today, Mr. Chair, and
look forward to a lot more information for policymakers to make
informed decisions about how we can encourage these kinds of
activities in the marketplace, and I yield back.
Chairman Roe. I thank the gentleman for yielding. Just to
finish up, I agree with much of what Mr. Polis said. We have
created a system in the public system, and Ms. Franklin has a
premium support, basically, it is a defined contribution for
health care. You get to choose as a consumer which one of
those.
Mr. Zern clearly pointed out that consumers will decide
where their providers, where they go to the hospital, what
doctors they see, what medications they can receive.
That is empowering people to make those decisions. We need
to do more of that. What we have in Medicaid and Medicare is an
archaic out of date system, and it needs to be completely
redone, it is completely archaic. I mean we have a Medicare
system that has an A, B, C, and D, and the day I turned 65,
nothing happened except I got 65, and now I had an alphabet to
go through about what kind of health care I wanted. I am
exactly what I had the day before.
Those are the kinds of things I think this hearing--you
have really ferreted it out very, very well. I do believe,
absolutely believe, that the wellness part and one of the
questions I did not get to ask was how do we take this
technology and do we--in a big company, at Georgetown, where
they are highly educated people, it is really pretty easy to
do.
As I walked into the office today, I walked by a lot of
people who are not very sophisticated, and I have lived in
areas that are not, and I want to know is how do we get that
information down to where it can make a bigger impact, which is
our lower income people and other folks.
I think we did not delve into that, and maybe that is a
subject for another hearing. I think it is critically
important. That is where your biggest gains will quite frankly
be.
With nothing further, I appreciate very much you being
here. The hearing is adjourned.
[Additional submissions by Dr. Roe follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Whereupon, at 12:15 p.m., the Subcommittee was adjourned.]
[all]