[Senate Hearing 114-756]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-756

                 THE STATE OF HEALTH INSURANCE MARKETS

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS


                             SECOND SESSION

                               __________

                           SEPTEMBER 15, 2016

                               __________

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                  Christopher R. Hixon, Staff Director
              David N. Brewer, Chief Investigative Counsel
                      Samantha M. Brennan, Counsel
                        Kyle P. Brosnan, Counsel
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
                  Rebecca S. Maddox, Minority Counsel
    Lynn Sha, Senior Health Policy Advisor, Office of Senator Carper
                     Laura W. Kilbride, Chief Clerk
                            
                            
                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Johnson..............................................     1
    Senator Carper...............................................     4
    Senator McCain...............................................     8
    Senator Portman..............................................     9
    Senator Ernst................................................    14
    Senator Lankford.............................................    27
    Senator Peters...............................................    44
Prepared statements:
    Senator Johnson..............................................    49
    Senator Carper...............................................    51
    Senator McCain...............................................    54

                                WITNESS
                      Thursday, September 15, 2016

Hon. Mary Taylor, Lieutenant Governor, and Director, Ohio 
  Department of Insurance, State of Ohio.........................    10
J.P. Wieske, Deputy Commissioner, Office of the Commissioner of 
  Insurance, State of Wisconsin..................................    12
Nick Gerhart, Commissioner, Iowa Insurance Division, State of 
  Iowa...........................................................    14
Hon. Mike Kreidler, Commissioner, Officer of the Insurance 
  Commissioner, State of Washington..............................    16

                     Alphabetical List of Witnesses

Gerhart, Nick:
    Testimony....................................................    14
    Prepared statement...........................................    79
Kreidler, Hon. Mike:
    Testimony....................................................    16
    Prepared statement...........................................    86
Taylor, Hon. Mary:
    Testimony....................................................    10
    Prepared statement with attachment...........................    57
Wieske, J.P.:
    Testimony....................................................    12
    Prepared statement...........................................    72

                                APPENDIX

Statements Senator Carper submitted for the Record:
    William A. Hazel.............................................    90
    Christopher F. Koller........................................    92
    Rita Landgraf................................................    96
    Covered California...........................................    99
    Kathleen C. Hittner..........................................   102
Statement submitted by Christina Corieri, Senior Policy Advisor 
  to Arizona Governor Doug Ducey, Phoenix, AZ....................   103
Response to post-hearing questions for the Record from:
    Ms. Taylor...................................................   106
    Mr. Wieske...................................................   115
    Mr. Gerhart..................................................   127
    Mr. Kreidler.................................................   137

 
                 THE STATE OF HEALTH INSURANCE MARKETS

                              ----------                              


                      THURSDAY, SEPTEMBER 15, 2016

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:03 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Ron Johnson, 
Chairman of the Committee, presiding.
    Present: Senators Johnson, McCain, Portman, Lankford, 
Ernst, Sasse, Carper, Tester, and Peters.

             OPENING STATEMENT OF CHAIRMAN JOHNSON

    Chairman Johnson. Good morning.
    This hearing of the Senate Homeland Security and 
Governmental Affairs Committee (HSGAC) will come to order.
    The subject of the hearing today is the state of the health 
insurance markets.
    I want to thank all of our witnesses for your thoughtful 
testimonies and for traveling here. It is a beautiful city you 
got. You brought beautiful weather, by the way. It is not quite 
as hot and humid as it normally is, but I really do appreciate 
you coming here for a very important subject.
    The truth of the matter is, the reason I decided to run for 
the U.S. Senate was because of the health care law. I come from 
the private sector. I understand marketplaces. I understand 
what works and what does not work. And, I was very concerned 
about the very harmful effect, on real people, that the Patient 
Protection Affordable Care Act (ACA) would actually result in--
and it is coming true.
    The problem, that, certainly, I think all of us have had, 
in really evaluating the Patient Protection Affordable Care 
Act, is the complexity of the data. There is not just one 
overall metric that you can kind of point to and say, ``Hey, it 
is not working.''
    There are some metrics, I think, some pretty powerful ones. 
So, absent that very simplistic type of metric, evaluating the 
success or failure, I think, probably, the best way of doing it 
is the way you evaluate any kind of product or any kind of 
program. I come from the private sector. We do capital 
expenditure reviews. And, managers would say, ``OK. This is 
what we expect, if we invest this kind of money.''
    So, I think, maybe, the best way to take a look and start 
off the hearing--with my opening statement which, by the way, I 
have a written statement. I would like to have that entered 
into the record\1\--I will enter yours too--is, literally, to 
take a look at what promises were made and how those promises--
were those promises fulfilled or not?
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Johnson appears in the 
Appendix on page 49.
---------------------------------------------------------------------------
    There were three primary promises made when people were 
considering, debating, discussing and, finally, passing the 
Patient Protection Affordable Care Act. The first one was 
pretty famous--and I will quote. This is from President Obama--
and he made this promise 31 times: ``If you like your health 
care plan, you will be able to keep your health care plan. 
Period.'' You are going to be able to keep it.
    Well, there are all kinds of figures, again. How many 
millions of Americans actually lost their health care plan? I 
have seen them as high as, maybe, 8 million, but let us be 
conservative and go with the Urban Institute's numbers. Their 
most recent study said that about 2.6 million Americans lost 
their health insurance plans. In Wisconsin, certainly, we had 
something called the ``high-risk pool.''
    Anybody involved in the writing of the Patient Protection 
Affordable Care Act--they knew high-risk plans were going to be 
eliminated. So, I think there are more than 20,000 
Wisconsinites that were in the ``high-risk pool.'' And, again, 
the authors of Obamacare--I will just start referring to the 
ACA as Obamacare--they knew those individuals were going to 
lose their health insurance plans.
    Early on, I had a couple--this was actually in the fall of 
2008--call me in a panic. His wife had Stage IV--I believe it 
was lung cancer. He was suffering and being treated for 
prostate cancer. They, obviously, were losing their ``high-risk 
pool'' plan. They were paying about $700 a month--$767 per 
month--for insurance in the ``high-risk pool'', which is very 
competitive. That was a program that actually worked very well 
in Wisconsin.
    First of all, they tried getting on healthcare.gov almost 
40 times and could not, because that was a disaster when they 
first tried to initiate it. Finally, they called our office 
seeking help. Now, we did guide them to a couple of the 
insurance companies that were going to be on those exchanges. 
The cheapest plan they could find was $1,400. But, again, that 
couple lost their health care plan--contrary to President 
Obama's repeated promise that that would not happen.
    The second guarantee, if you like--that means, again, I 
will quote President Obama: ``That means that, no matter how we 
reform health care, we will keep this promise to the American 
people, this promise: If you like your doctor, you will be able 
to keep your doctor. Period.''
    I do not think anybody would stand up and say that that has 
been true. People have lost their doctors. We have a couple, in 
Marinette, Wisconsin, who, obviously, have lost their doctor. 
And, I just want to read a quick quote here. The only plan they 
could afford, under Obamacare, meant they would lose the doctor 
they have had for over 15 years. And, their quote was, ``Now I 
have to see a physician I have never even met.'' Broken promise 
number two.
    I think the third most famous promise was--as a candidate, 
President Obama repeated: ``In an Obama Administration, we will 
lower premiums by up to $2,500, for a typical family, per 
year.'' The truth is, back in 2008, when he was running as a 
candidate, according to the Kaiser Family Foundation (KFF), the 
average family was paying about $12,680 per year. In the latest 
figure by the Kaiser Family Foundation, an average family is 
paying $18,142 per year. That is a $5,462 increase, since 
President Obama made that promise. That is about 43-percent.
    You can look, year by year--and, obviously, that is the 
largest increase, because health care continued to increase--
but even from 2013, the year before the implementation of 
Obamacare, it was $16,351--and, today, it is $18,142--and that 
is still a $1,791 average increase across the board.
    So, obviously, the average family has not seen a $2,500 per 
year reduction in health care. Again, I have specific examples. 
A ``Janice'', from Spooner, Wisconsin, wrote me and said that, 
prior to Obamacare, she was paying $276 per month for health 
care. Her latest quote was $787 per month. That is a 185-
percent increase.
    And, we had a woman--a young woman who--a young mother--she 
was a nurse. Her husband operated in the heating, ventilation, 
and air conditioning (HVAC) industry. They both were working. 
They loved their jobs, but, because of the increase in 
premiums--they went from about $500 per month to $700 per month 
to $1,200 per month--a $700 increase. That is a 140-percent 
increase. The only way they could afford insurance--they were 
not getting it through their employer and they were having to 
buy on the individual market. The only way they could afford 
insurance was if she quit her job, so the income was lowered 
far enough that they could qualify for the subsidy. Broken 
promise number three.
    The really sad part about this is that this was known. The 
people who supported Obamacare had to know that those promises 
could never be kept. And, I just want to quote a number of 
quotes by Jonathan Gruber, who was, certainly, one of the 
individuals involved in the authoring of Obamacare. Politifact 
called him ``an architect''--and one of many architects of 
Obamacare--paid almost $400,000 by the Administration to 
consult. He was talking about the Cadillac tax, and here is his 
quote. He said, ``We just tax the insurance companies, they 
pass on higher prices that offset the tax break we get, and it 
ends up being the same thing.''
    Here is really the important quote: ``It is a very clever, 
basic exploitation of the lack of economic understanding of the 
American voter.''
    He went on to talk about the Cadillac tax and said--again, 
this is Jonathan Gruber, one of the architects of Obamacare--
somebody who knew what he was doing. He said, ``Americans were 
too stupid to understand the difference.'' He also said, ``The 
lack of transparency is a huge political advantage,'' and, 
basically, called the stupidity of the American voter or 
whatever--but, basically, said that that was really critical to 
getting the thing to pass.
    Now, that is a pretty sad state of affairs, but that is the 
truth. That is what happened.
    Now, I just wonder--I just kind of ask the question--we 
have some Agencies in the Federal Government--one set up under 
the Dodd-Frank Wall Street Reform and Consumer Protection Act, 
called the Consumer Financial Protection Bureau (CFPB)--we also 
have the Federal Trade Commission (FTC)--that take a look at 
consumer fraud and try and protect the consumers. I wonder what 
they would do--the kind of enforcement action they would take 
against an insurance company that sold a product--an insurance 
product--and said, ``Hey, listen, once you buy this thing, you 
are going to be able to renew this forever. If you like this 
plan, you can keep it.'' And then, in the fine print said, 
``Well, that is not true.'' In addition, they said, ``Hey, this 
insurance plan allows you to keep your doctor. Period. You are 
going to be able to keep your doctor,'' but then, the fine 
print said, ``Well, not if that doctor is not part of the 
network that we are going to cover.''
    Three, if you buy this health care plan--whatever you were 
paying last year--your premium is going to go down by $2,500. 
And, instead, your premiums went up $1,700 or $5,000. I just 
wonder what these Federal Regulatory Agencies would do to an 
insurance company that engaged--and let me be very clear about 
what this Administration did. It was a massive consumer fraud. 
That is what it was. That is what Obamacare is: a massive 
consumer fraud. We are going to be taking a look at that today. 
And, during my questioning, I will, probably, be asking the 
Deputy Insurance Commissioner from Wisconsin kind of his 
thoughts on how we would handle that, in Wisconsin.
    So, again, I want to thank the witnesses for coming. This 
should be a very interesting hearing. And, I think it is a very 
important hearing, because this Obamacare law is costing 
American taxpayers a whole lot of money. We all want people to 
be covered by health care. We all want people to have access 
and to be able to get high-quality insurance, but we did not 
have to completely remake the insurance in the health care 
market, to try and fill that gap and help those individuals, 
who we all want to help. And, I think we are going to see that 
this is not working. Those promises were, certainly, not lived 
up to.
    And so, again, I want to thank the witnesses. And, I will 
turn it over to Ranking Member Senator Carper.

             OPENING STATEMENT OF SENATOR CARPER\1\

    Senator Carper. Thank you. Thank you very much, Mr. 
Chairman.
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Carper appears in the 
Appendix on page 51.
---------------------------------------------------------------------------
    Welcome to one and all. Who of you is from Ohio? I am an 
Ohio State University (OSU) graduate, and I used to think 
Delaware was a little town just north of Columbus. I later 
found out it was a whole State. [Laughter.]
    And, I moved there, and they let me be their Congressman, 
Treasurer, Governor, and Senator. And, I am sitting here, 
today, with my colleagues and am able to welcome you all here, 
today. Tell your Governor that I said hello. He is an old 
friend. Give him my best.
    A little after noon, today, a handful of Senators--
Democrats and Republicans, believe it or not--will gather in a 
room, not far from the Senate Floor--something we do almost 
every Thursday that we are in session. For, maybe, a half an 
hour or so, we take part in a Bible study, lead by a guy who 
used to be a Rear Admiral in the Navy. He is Chief of 
Chaplains, from Navy Marine Corps. His name is Barry Black. He 
is our Senate Chaplain today, and believe it or not, Democrats 
and Republicans--amazingly, sit there and read in the same 
room. We read the scripture, we pray together, we share things 
with each other, and we talk about all kinds of things.
    And, invariably, during those conversations, Chaplain Black 
will ask how our faith should guide us. Almost every week--
``How should our faith guide us in the work that we do here and 
at home?'' It is a good question. It is a really good question.
    And, almost every week, he reminds us of one of the two 
greatest commandments we have all heard. And, that is: ``To 
love our neighbors as ourselves''--to treat other people the 
way we want to be treated. And, Chaplain Black often invokes 
Matthew 25 as well. You may not recognize that right away, but 
you will in a second, because Matthew 25 calls on us to focus 
on the least of these--the least of these in our communities. I 
am just going to paraphrase it today: When I was hungry, did 
you feed me? When I was naked, did you clothe me? When I was 
thirsty, did you get me to drink? When I was sick or in prison, 
did you visit me? When I was a stranger in your land, did you 
take me in?
    Matthew 25 does not say, however, the following things. It 
does not say, ``When my only source of health care was a 
crowded emergency room, did you help me?'' Matthew 25 does not 
say, ``When I turned 22 and could no longer be covered by my 
parents' health care, were you there for me?'' It does not say, 
``When I could no longer find health care coverage, because of 
a preexisting condition, did you do anything about it?'' It 
does not say, ``When I could not afford the medicine that would 
enable me to hold down a job or be the kind of parent that my 
children needed, did you lend a helping hand?'' And, it does 
not say, ``When I was denied health insurance, because I 
happened to be a woman, maybe, of childbearing age, and was 
charged an arm and leg for that coverage, did you go to bat for 
me?''
    Most of us are people of faith--different faiths. I believe 
we all agree on one thing, and that is, we have an obligation 
to treat other people the way we want to be treated--and we 
also have an obligation to the least of these who live among 
us. I believe that. I think my colleagues believe that and I 
think most of the people in this room believe that. And, I 
would like to think that most of the people in our country 
believe that. And, because our Nation's budget deficit, while 
down--it has been greatly reduced--it is still too large, we 
need to find ways to meet that moral responsibility to the 
least of these, in ways that are fiscally sustainable.
    Just about every American President since Harry Truman has 
sought to find ways to do just that. They believed in their 
hearts that, when people in this country are sick or in need of 
health care, they ought to be able to see a doctor or nurse--or 
maybe both--within a reasonable period of time. And, I am 
certain that most, if not all, of our colleagues believe that--
and I am sure that most Americans believe it as well.
    So, why has it proved so hard to do? It sort of reminds me 
of what my mom and dad used to say to my sisters and me. They 
used to say, ``The hardest things to do are the things most 
worth doing.'' This is a hard thing to do. This is a really 
hard thing to do.
    For another--just about any time, we might--one of us might 
try to do something meaningful about it, our efforts can be 
turned into a 30-second commercial and used as political 
weapons against Presidents or Members of Congress who try to do 
what we all know, in our hearts, is the right thing to do.
    Well, I will be the first to acknowledge that the 
Affordable Care Act is not perfect. I am not perfect--none of 
us are. I have never written a perfect law, and, my guess is, 
if truth be told, neither have my colleagues. This 
legislation--this law--can clearly be improved. When the 
election is over, we need to go to work to do just that--stop 
``carping'' about it. ``Carping'' is one of my favorite verbs. 
Stop carping about it, and just go to work.
    And, having said that, the Affordable Care Act has sought 
to better ensure health care for all Americans. I just want to 
mention a couple of ways how:
    In part, by creating state-based health insurance 
marketplaces, where people, who may never before have had 
access to health care, now have the opportunity to choose a 
plan that helps them get healthy and stay that way. How? By 
participating in large purchasing pools--not unlike the ones 
that Federal employees have participated in for decades. The 
individual mandate that incents people to purchase these plans 
is a well-tailored incentive that helps these marketplaces grow 
and thrive, so that insurance companies are not left with a 
pool of people to insure that are largely older, sicker, and 
more expensive to insure.
    In this room, today, there are witnesses and Members of 
Congress who represent--among others--the States of Delaware, 
Washington, Iowa, Ohio, Wisconsin, and more. The rate of people 
without insurance, in our States, on average, has fallen by 
almost half since our respective marketplaces have opened--
almost half. For the Delawareans, Washingtonians, Ohioans, 
Iowans, and Wisconsinites who may now take the child to the 
doctor, it is not only life changing, it can also be live 
saving--and these life changing effects are not being felt only 
in our States. Today, because of the Affordable Care Act, 20 
million Americans have access to health care that did not have 
it before--who did not have it before.
    Our uninsured rate is less than 9-percent--an all time low. 
Americans now have access to free preventive services, like 
cancer screenings and yearly checkups. And, the vast majority 
of people in the marketplaces buy their health insurance for 
less than $100 per month--less than $100 per month. This 
progress has been realized, while extending, at the same time, 
the life of the Medicare Trust Fund by 11 years.
    I find it more than a little ironic that we have been 
deadlocked in partisan fighting, for years now, over a law 
that--unknown to most--is actually built on a couple of sound 
Republican ideas: health insurance marketplaces and the 
individual mandate.
    To my friends on the other side of the aisle--they are my 
friends--your willingness to walk away from the policies your 
party once championed is dumbfounding to me, especially when 
those very same policies are enabling us to begin making a 
positive difference in the quality of life for so many 
Americans.
    Just a quick refresher for those who may not recall. 2012 
Republican Presidential nominee and former Massachusetts 
Governor, Mitt Romney, revolutionized health care in 
Massachusetts, by creating an insurance marketplace and 
requiring citizens to, eventually, obtain coverage. In fact, 
these ideas go back even further. Listen to this: In 1993, 
Republican Senator John Chafee introduced legislation that 
proposed an individual mandate and the establishment of 
insurance purchasing pools. That bill looked, frankly, a lot 
like the Affordable Care Act we are discussing at today's 
hearing. In fact, it had some 20 Republican cosponsors in the 
Senate. Some of them still serve here, today.
    Fast forward to 2009, my first year as a member of the 
Senate Finance Committee and the first year of a new 
Administration. And, our new President called on Democrats and 
Republicans to try and achieve what previous Presidents talked 
about doing for more than half a century. But, instead of 
coming to the table pursuing a productive discussion about how 
we could expand access to health care for millions of 
Americans, in the end, Senate Republicans, sadly, chose not to 
engage. But, the President and the rest of us soldiered on and, 
finally, passed this historic law that all of us acknowledge is 
not perfect--but a good deal better than continuing to do 
nothing.
    Like any major new Federal program, adjustments are going 
to need to be made as it is implemented. And, unfortunately, we 
have had a hard time finding as many willing partners in this 
effort as we would like. There used to be a time when 
Republicans and Democrats would come together to make 
bipartisan health care reforms. Some of us were here when we 
did just that. We created the Medicare Part D Prescription Drug 
Benefit. There was a lot of blowback on that. So, what did we 
do? We fixed it--we made it better.
    When we created Medicare Advantage Plans, there was a lot 
of blowback on that too. What did we do? We fixed it--we made 
it better. And, we did that together.
    That is not what we have done, with respect to the 
Affordable Care Act. Time and again, our Republican friends--
and they are friends--have blocked funding, proper 
implementation, and, I think, common sense improvements. 
Republican Governors and State legislators in 19 States have 
refused to expand Medicaid--not Ohio Governor, John Kasich--
tell him I said that--leaving millions of Americans without 
coverage and increasing marketplace premiums for millions more.
    It is a sad state of affairs when it seems that, sometimes, 
the only health care votes we are allowed to make are the ones 
which repeal the Affordable Health Care Act completely, leaving 
nothing in its place and leaving Americans with nothing--
nowhere to turn besides a hospital Emergency Room (ER). I will 
close with these words.
    In a couple of months, thankfully, Americans will go to the 
polls to elect a new President and new Members of Congress. I 
talk almost every day with Delawareans who wait with 
anticipation for that day to arrive. Some of my colleagues feel 
that way, too. Once that day has arrived, though, and the new 
Congress--as well as the new President--have taken their oaths, 
we need to go to work to make a good idea even better. Like we 
did with Part D and like we did with Medicare Advantage Plans. 
We can do that. We need to embrace what I call the three Cs: 
communicate, compromise, and collaborate. We also need to 
embrace the words in the preamble of our Constitution. 
Remember, it starts off, ``We the people of the United States, 
in order to form a more perfect union.''
    And, we need to get to work making the Affordable Care Act 
better. We can do that. I know we can and, with the right 
leadership, I believe that we will. In doing so, we will have, 
in the words of Mark Twain, ``Confounded our enemies and amazed 
our friends.'' Let us roll.
    Chairman Johnson. Thank you, Senator Carper.
    By the way, it is 54 days until Election Day, but who is 
keeping track? [Laughter.]
    Chairman McCain is stepping away from the Senate Armed 
Services Committee (SASC) hearing, and he would like to say a 
few words. So, we will go ahead and do that.

              OPENING STATEMENT OF SENATOR MCCAIN

    Senator McCain. Thank you, Mr. Chairman. And, I would 
appreciate if my complete statement would be made a part of the 
record.\1\
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator McCain appears in the 
Appendix on page 54.
---------------------------------------------------------------------------
    And, I must say that I was entertained by the statement of 
my dear friend from Delaware--and we are very dear friends--but 
to, somehow, now call upon Republicans to work with you to fix 
this disaster after--on the Floor of the U.S. Senate--you did 
not allow a single Amendment--not a single Amendment by the 
Republicans was allowed. It is the first time an entitlement 
program has ever been enacted on a strictly partisan basis.
    You had your 60 votes. You rammed the 60 votes, and the 
Affordable Care Act, down our throats. And so, now that it has 
been an abysmal failure, you want us to come and help you to 
bail it out. We want to replace it. We do not want to fix it. 
We want to replace it, because it has been a complete failure--
and my State is, probably, the best example that I know of.
    We now have 14 of our 15 counties with--guess what?--one 
provider. Do you remember the statement, ``If you like your 
doctor, you will be able to keep your doctor. Period. If you 
like your health plan, you will be able to keep your health 
care plan. Period. No one will take it away, no matter what.''
    Of course, that turned out to be a lie. Ever since, 
Americans have been hit by broken promise after broken promise 
and met with higher costs, fewer choices, greater uncertainty, 
and poorer quality of care--and, let me tell you, my home State 
of Arizona is hurt.
    We are talking about, next November 1, seeing as much as 
65-percent increases in premiums for our average citizens. We 
are talking about young people, who are now opting, clearly, to 
pay a fine, rather than to see these dramatically increasing 
costs--and, of course, the cost of health care continues to 
skyrocket--all done on a purely partisan basis.
    I remember the victory dance that you guys performed after 
passing Obamacare without a single Republican vote. And so, now 
the chickens have come home to roost. So, now, the question is: 
``Will the Republicans not join with us and fix this problem?''
    Give me a break. We need to replace it. We need to fix it 
and we need to go back to the fundamental principles of 
economics, which do not involve taking money from healthy young 
people in order to take care of unhealthy older people. That 
was the fundamental broken premise. And now, of course, I 
guarantee you the next step will be that you guys are going to 
want to go to a government run health care system. That will be 
your answer--which is, in Europe, clearly, a two-tiered system 
between those who are wealthy and can afford their own health 
care and those who are not, who will have a substandard level 
of care.
    Mr. Chairman, I would like to have my statement included in 
the record--but the people in my State are hurting. The people 
in my State are hurting. We have 15 counties--in 14 of them, 
there is only one provider. Just for a period of time, we had a 
county with no provider. Now, Blue Cross Blue Shield (BCBS) has 
moved in. Is what is happening in my State--is that, ``If you 
like your policy, you can keep your policy? If you like your 
doctor, you will be able to keep your doctor? Period. No one 
will take away your health care.''
    Of course, we have people scrambling all of the time as, 
understandably, these providers have hundreds of millions of 
dollars in losses. They cannot afford to stay in this 
affordable health care business.
    So, I thank you for holding this hearing. I thank the 
witnesses. And, if the Senator from Delaware and his Democrat 
friends want to join together with us, then yes, let us throw 
it where it belongs: in the trash can. And, let us start all 
over and give people an affordable health care system that they 
can live with and that will not be the situation that exists in 
my home State of Arizona.
    I thank you, Mr. Chairman.
    Chairman Johnson. Thank you, Senator McCain.
    It is the tradition of this Committee to swear in 
witnesses. So, if you will all rise and raise your right hand.
    Do you swear the testimony you will give before this 
Committee will be the truth, the whole truth, and nothing but 
the truth so help you, God?
    Ms. Taylor. I do.
    Mr. Wieske. I do.
    Mr. Gerhart. I do.
    Mr. Kreidler. I do.
    Chairman Johnson. Thank you. Please be seated.
    I think our first witness is Lieutenant Governor Mary 
Taylor--I think Senator Portman would like to introduce the 
Lieutenant Governor.

              OPENING STATEMENT OF SENATOR PORTMAN

    Senator Portman. Thank you, Mr. Chairman. And, I am really 
thankful we have Mary Taylor with us, because she is a true 
expert. She is a certified public accountant (CPA), first, and 
had 16 years in the private sector before she decided she 
wanted to get into public service. She started on her city 
council, where she did a terrific job--so much so that she got 
elected to the Ohio Statehouse. And then, she became our State 
Auditor--the first State Auditor ever to be a CPA. She 
transformed that office and was acknowledged, nationally, as 
having put together a cutting edge, 21st Century auditing 
office, in Ohio.
    Then, in 2011, she was sworn in as our Lieutenant Governor 
of Ohio. She has two other jobs: One is on regulation. She 
heads what is called the ``Common Sense Initiative'', which 
deals with making our regulations smarter--which has been a big 
reason for Ohio's economic success during the Kasich-Taylor 
Administration. And then, second, she is the Director of the 
Ohio Department of Insurance (ODI).
    So, here you have a CPA with this private sector background 
and government background, who, actually, is in charge of our 
Ohio Department of Insurance and, therefore, has gotten very 
involved in the Affordable Care Act.
    You are going to hear from her on this. She has some really 
interesting statistics--very specific numbers as to what is 
happening with our premiums, by the way. For the individual 
market, it has gone up about 91 percent. With regard to the 
Obamacare exchanges, I believe the number is a 13-percent 
increase next year. Who can afford that?
    And so, she will have the opportunity to talk a little bit 
about what is actually happening in our health care market, in 
Ohio--what it was like before the Affordable Care Act and what 
has happened since. So, I am really glad she is here. And, 
thank you for letting me introduce my friend, Mary Taylor.
    Chairman Johnson. Lieutenant Governor, by the way, I knew 
there was something I liked about you--fellow accountant.
    So, Lieutenant Governor.

TESTIMONY OF THE HONORABLE MARY TAYLOR,\1\ LIEUTENANT GOVERNOR, 
   AND DIRECTOR, OHIO DEPARTMENT OF INSURANCE, STATE OF OHIO

    Ms. Taylor. Thank you very much, Chairman Johnson, Ranking 
Member Carper, and distinguished Members of the Committee. 
Thank you for the opportunity to testify before the Senate 
Homeland Security and Governmental Affairs Committee (HSGAC).
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Taylor appears in the Appendix on 
page 57.
---------------------------------------------------------------------------
    My name is Mary Taylor, and I am Lieutenant Governor of 
Ohio, as well as the Director of the Ohio Department of 
Insurance. Today, I will provide testimony regarding Ohio's 
experience, related to the Affordable Care Act, specifically, 
in regard to premium changes, market shifts, and other trends, 
since 2013.
    As the Director of the Ohio Department of Insurance, I am 
responsible for regulating Ohio's insurance market--the seventh 
largest in the United States. Ohio is home to more than 200 
insurance companies, and more than 1,600 do business in the 
State, representing $76 billion in annual premiums.
    For years, we have taken great pride in the competitive 
insurance market we have in Ohio, across all lines of 
insurance. Under the leadership of both Democrat and Republican 
Administrations, the Ohio Department of Insurance has been a 
fair and thoughtful regulatory agency, providing the certainty 
and predictability that industry is looking for to be 
successful, which, in turn, benefits consumers. In fact, 
because our market is so competitive, the most recent data 
shows Ohio's auto and homeowners insurance premiums are below 
the national average and are ranked 12th and 9th.
    But, I am here today to focus on health insurance and what 
is happening in Ohio. Prior to the implementation of the ACA, 
Ohioans benefited from a large selection of insurance carriers, 
with more than 60 companies selling health insurance products 
in Ohio. Consumers could buy plans with a wide variety of 
coverage options and pay the corresponding premiums to go with 
that coverage.
    Unfortunately, since before the law was implemented, I and 
many others across the country--including Members of this 
Committee--pointed out that the ACA would not work as promised. 
Studies conducted in Ohio, at my request, showed premiums would 
go up, consumers would lose choice, and the market would suffer 
from turbulent and disruptive changes. Fast forward to today 
and the new ACA era we live in.
    In 2016, 17 health insurers sold products on Ohio's Federal 
exchange, during open enrollment. Next year--in 2017--assuming 
all companies approved to sell on the exchange by the Ohio 
Department of Insurance enter into contracts with the 
Department of Health and Human Services (HHS)--only 11 
companies will offer exchange products. This dramatic decrease 
in participation can be better put into perspective when 
looking at a county-by-county comparison in Ohio.
    In 2016, every one of Ohio's 88 counties had at least four 
insurers selling exchange products during open enrollment. In 
2017, 19 counties will have just one insurer selling exchange 
products and 28 counties will have just two.
    Fewer options give consumers less of an opportunity to get 
the coverage they need. Dramatically increasing premiums make 
the problem even worse. Based on the final rates approved for 
2017, the average premiums, for individuals buying on Ohio's 
Federally-run exchange--as Senator Portman has said--have gone 
up 91-percent since 2013. Even as insurers have fled the 
exchange, recent statements from HHS indicate everything is 
fine. Premiums around the country are increasing, but the 
response is that consumers are being shielded by tax subsidies 
that will offset the costs. The cost of those subsidies will 
continue to rise as premiums continue to increase--and the 
American taxpayer must shoulder that burden.
    I think most of us agree Americans should be able to 
purchase health insurance without facing barriers because of 
preexisting conditions. We agree more can be done to improve 
the system in order to increase accessibility and promote 
better outcomes for patients. However, the ACA is not living up 
to the promises that were made.
    In Ohio, less than 250,000 people purchased health 
insurance through the Federally-run exchange in 2016. If you 
consider the fact that there are 11.6 million people living in 
Ohio, that means we have completely upended the health 
insurance market, forced consumers to buy coverage they do not 
want or need, and placed significant regulatory burdens on job 
creators--all to offer taxpayer-backed insurance to 2.15 
percent of our population.
    We need to increase access by reducing costs--instead of 
forcing everyone to buy more expensive coverage that, in many 
cases, they do not need and they do not want. We need to 
empower States to design systems that are best suited for their 
populations--instead of forcing one-size-fits-all mandates 
across the country. We need to decentralize the powers in 
Washington that, quite frankly, do not understand insurance or 
how to regulate it--as my colleagues and my predecessors across 
the country do.
    In Ohio, we have ideas to help improve our health system, 
without destroying the free market--as the ACA has done. We 
believe there is a better, more inclusive way to design reforms 
that will increase access without driving up costs, but we need 
the flexibility to do it. It is my hope that, with the help of 
Congress, States can once again have the power to implement 
positive change.
    Thank you for the opportunity to testify before the 
Committee today. I would be happy to answer questions, 
Chairman, when you choose.
    Chairman Johnson. Thank you, Lieutenant Governor.
    Our next witness is J.P. Wieske. Mr. Wieske is Deputy 
Insurance Commissioner for the--can I say the great State of 
Wisconsin here, in the hearing?--I think I can--the great State 
of Wisconsin. He has served as Deputy Insurance Commissioner 
since 2016. Prior to his appointment as Deputy Insurance 
Commissioner, Mr. Wieske served as the Office of the 
Commissioner of Insurance's (OCI's) Legislative Liaison and 
Public Information Officer. Mr. Wieske.

TESTIMONY OF J.P. WIESKE,\1\ DEPUTY COMMISSIONER, OFFICE OF THE 
         COMMISSIONER OF INSURANCE, STATE OF WISCONSIN

    Mr. Wieske. Thank you, Chairman Johnson, Ranking Member 
Carper, and the distinguished Members of the Committee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Wieske appears in the Appendix on 
page 72.
---------------------------------------------------------------------------
    Last week, at church, the prodigal son was a parable that 
was discussed--as well as the parable of the lost sheep. And, I 
think, one of the concerns that we have, as we look at our 
insurance market, is that, in Wisconsin, we did, in fact, take 
care of the lost sheep. We did, in fact, take care of our 
folks.
    You highlighted our ``high-risk pool'', and our ``high-risk 
pool'' provided excellent care for the sickest among 
Wisconsinites. It provided subsidies for the sickest as well as 
those who had significant medical conditions--and they could 
choose any doctor.
    Unfortunately, Obamacare ended that. That was 20,000 people 
that were thrown into the marketplace, which created additional 
problems. In our market, the individual market has grown to 
272,000 people from 200,000 people. However, the 200,000 we had 
in the market prior to this did not include our ``high-risk 
pool'' and did not include our folks that were in our existing 
Medicaid program, where Wisconsin had, in fact, expanded it 
beyond the Federal requirements. In addition, we had a number 
of the reforms in Wisconsin, so we did not need the passage of 
Obamacare to protect adult dependents.
    In fact, we had to move our adult dependent coverage 
requirement down to age 26, because we had expanded it to age 
27, in the State of Wisconsin.
    Our small-group market has dropped by 30,000 people since 
Obamacare--2013 to 2015. Our large-group market has dropped 
from almost 1.25 million people down to 1 million people. Now, 
most of that large-group market has moved into the Employee 
Retirement Income Security Act of 1974 (ERISA) space--the 
largely State unregulated space. So, I think we have a number 
of concerns with the way our market has been hit.
    On top of that, we have seen a number of frustrations, from 
a consumer standpoint, regarding the rollout of Obamacare as 
well as the continuing problems for consumers, as we continue 
to regulate this market. So, we actually had to delay the end 
of our ``high-risk pool'' by several months, because of the 
disastrous rollout. We had to delay the movement of folks off 
of the Medicaid program into private coverage, because of the 
disastrous rollout.
    On top of that, we are, consistently, getting calls from 
consumers--and consumer complaints, submitted to our consumer 
complaints division, talk about the interference of the health 
care exchanges for folks with their private coverage. 
Specifically, when people want to terminate their coverage, 
when they want to make changes, or when they want to add folks 
to their insurance plan, they no longer are able to just do 
that and to call the insurance company to make those changes. 
They have to call a Federal bureaucrat and ask for permission 
in order to get that done. And, that takes time--and it creates 
errors and it creates problems.
    So, we have seen a number of regulatory issues. In fact, 
last year--I will highlight one other issue--we had a 
consumer--an insurer contact us when the Federal Government 
asked them to take money out of all of their consumer accounts. 
They had made a mistake--and they had undercharged consumers--
and, at Christmastime, the Federal Government had ordered 
them--which they would not do in writing--to take money out of 
the accounts of these consumers and pull it out of their 
accounts, in order to pay the back premiums.
    Now, as a matter of course, insurance regulators do not let 
insurance companies charge back consumers when they have 
undercharged them. So, we actually had to issue an order to 
protect our consumers--to prevent the direct pulling of the 
bank account information, from consumers, at Christmastime.
    On top of that, we are seeing, in this next year, this 
automatic reenrollment process, which is illegal in the State 
of Wisconsin. We have indicated, in letters, that it is illegal 
in the State of Wisconsin. We have 64,000 people in the State 
who will be losing their coverage--not just because of market 
withdrawals, but because of service area changes. Those 64,000 
people will be automatically reenrolled--their information sent 
to another carrier without their permission. Their private 
information will be sent to another private medical insurer--
from one to the other--without their permission, by the Federal 
Government.
    It is going to be a, potentially, fraudulent and 
problematic area for our Wisconsin consumers--64,000 of them, 
potentially, who could see these numbers change.
    In short, we have seen a number of issues, in the State of 
Wisconsin. And, we felt we did an excellent job of protecting 
consumers, prior to the ACA. We continue to try to protect them 
from the damage of the ACA. When we roll into 2017--I want to 
highlight that there will be, approximately, 200,000 people 
that will be newly on Obamacare--that have not been on it--who 
are on transitional plans, in our State. So, the damage is not 
yet done.
    In short, Wisconsin believes that the damage of Obamacare, 
hopefully, is not permanent. And, we are hoping for a solution 
that moves this problem back to the States, for us to fix it.
    Thank you.
    Chairman Johnson. Thank you, Mr. Wieske.
    I believe Senator Ernst would like to introduce our next 
witness.

               OPENING STATEMENT OF SENATOR ERNST

    Senator Ernst. Thank you, Mr. Chairman.
    It is my honor to introduce to the Committee, today, Iowa 
Insurance Commissioner Nick Gerhart. Nick has served our great 
State as Commissioner since February 2013. And, we appreciate 
your service, Commissioner.
    And, he also serves on the National Association of 
Insurance Commissioners' (NAIC) Executive Committee. The 
Commissioner's legal and health administration credentials, as 
well as his professional background, make him an excellent 
witness for us, today, to talk about this important topic. And, 
thank you, Commissioner, for traveling to Washington, D.C. to 
share your expertise with this Committee and the audience 
members--and your perspective on Iowa's health insurance 
market.
    Thank you, Mr. Commissioner.
    Senator Ernst. Thank you, Mr. Chairman.

  TESTIMONY OF NICK GERHART,\1\ COMMISSIONER, IOWA INSURANCE 
                    DIVISION, STATE OF IOWA

    Mr. Gerhart. Good morning, Chairman Johnson, Ranking Member 
Carper, and esteemed Members of the Committee. It is an honor 
to be here to share our views, in the State of Iowa.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gerhart appears in the Appendix 
on page 79.
---------------------------------------------------------------------------
    I really want to focus just on a couple of things in my 
short time. I want to focus on the duty of an insurance 
commissioner, the rates, and what is happening at the kitchen 
table to members of our State--and really a couple of 
highlights to fix some of these issues. And, I did submit 
written testimony, which is much longer, outlining some of 
those potential fixes.
    As the Insurance Commissioner for the State of Iowa--we are 
pretty local--a State of three million people. So, we actually 
know the folks that these rate increases are impacting. So, the 
75,000 Iowans that are getting rate increases of up to 43 
percent--I know a lot of these folks. I see them at church and 
I see them in the grocery store--and a lot of them are friends. 
In fact, I want to share a story of a good friend of mine. He 
had a good corporate job. He left that job. His name is Gregory 
Bailey. He started a company called Denim Labs in Des Moines, 
Iowa. He has two children in third grade and second grade and a 
lovely wife. And, when he got his notice, he called me--because 
he knows me--and was not very happy, obviously.
    I hope we are still friends, but, at the end of the day, he 
understands what is happening here--and he and his wife are 
looking at making a significant decision around whether they 
downsize their home--go without coverage. So, these are 
impacting all of our constituents. I hope we can have a 
productive dialogue on some potential fixes.
    In our State, we recently approved rate increases, from 19 
percent up to 43 percent, impacting almost 75,000 Iowans. In a 
State of three million people, that is a pretty significant 
number of Iowans that this is going to impact. Cumulatively, 
the rates have been up about 100 percent since the 
implementation of the ACA. And, I am not here to say it was 
working that great before. Rates were going up before as well, 
but I think we have some ideas and solutions to make it better.
    What we are seeing is a very high concentration of risk in 
this ``individual-risk pool.'' We had a ``high-risk pool'' that 
was functioning pretty well as well. We have expanded Medicaid, 
but a lot of the folks in this population are a lot like the 
Medicaid population. So, we have commercial insurers working to 
insure some of these ``Medicaid-type population'' folks. And, 
to give you an example, one claim in Wellmark is generating 
about $18 million in costs. Even with the discounts for the 
providers, it is about $12 million. That one claim is 10 
percent of the 43-percent increase. So, that one claim in that 
risk pool costs about $808 per member of that risk pool. So, 
you can see there is really no protection from that kind of a 
catastrophic claim. And, I will tell you that that claim, in a 
few of our smaller regional carriers, would make them almost 
insolvent.
    Unfortunately, in Iowa, we have also experienced 
withdrawals from the market--United Health Group. We were the 
first State that had to take over one of the failed co-ops. On 
Christmas 
Eve--Day, 2014, we had to take over a co-op--the first one to 
fail. So, that caused a lot of disruption as well for the 
120,000 members in Iowa and Nebraska.
    So, folks are a little bit skeptical right now about the 
market. We will have 23 counties, I believe, with one provider. 
We will have about half of the counties with two providers in 
the exchange. So, there are issues of having less choice.
    The product that is seeing the most traction in the market 
is what is termed a ``narrow network'' product. So, you have a 
concentration with one group of doctors that you could use--
and, again, those plans are fine. I think my family would buy 
one if we had the option of buying one, but it is a ``narrow 
network'' plan. But, we have deemed those to be appropriate and 
we are waiting for the Centers for Medicare and Medicaid 
Services (CMS).
    But, as Lieutenant Governor Taylor said, we really do not 
know who is going to sign on, on the 23rd of this month, to be 
in the exchange--or not. We will know that here in a couple of 
weeks, I guess.
    I also want to kind of highlight a few fixes. We talked a 
little bit about the ``three Rs'' in my written testimony: The 
risk corridor, risk adjustment, and reinsurance. Risk corridor 
sunsets--I would think we would want to keep it that way. It 
did not work very well. Risk adjustment--there are some new 
rules that CMS recently put out. I think that those, at least, 
look encouraging. And, I will wait for the carriers to comment 
on that. But, the reinsurance does sunset and we think that 
that was a provision that actually worked pretty well. And, it 
did help stabilize the market a little bit.
    Finally, we would encourage the Committee and the Members 
of this body to look at this idea of ``high-risk pools'' and, 
maybe, push the issue back to the States. We are going to look 
at a Section 1332 State Innovation Waiver, potentially, to try 
to create an Iowa-based solution for Iowans. We think that is 
the best way to do it. Because, if you have seen one health 
insurance market, you have, probably, seen one health insurance 
market, to be honest with you--and our issues are not what 
Washington, Texas, Wisconsin, or Ohio would have. So, we feel 
that pushing it back to the States--for them to have more 
control makes a lot of sense.
    So, I would like to conclude by saying that it is an honor 
to be with you all. I will answer any questions at the right 
time. Thank you.
    Chairman Johnson. Thank you, Commissioner.
    Our final witness is the Honorable Mike Kreidler. Mr. 
Kreidler served as the Insurance Commissioner of the State of 
Washington. He has served as Washington State's Insurance 
Commissioner since the year 2000. Mr. Kreidler previously 
served in the U.S. House of Representatives, representing 
Washington's 9th Congressional District. Congressman Kreidler.

  TESTIMONY OF THE HONORABLE MIKE KREIDLER,\1\ COMMISSIONER, 
   OFFICE OF THE INSURANCE COMMISSIONER, STATE OF WASHINGTON

    Mr. Kreidler. Thank you very much, Chairman Johnson, 
Ranking Member Carper, and Members of the Committee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Kreidler appears in the Appendix 
on page 86.
---------------------------------------------------------------------------
    I am the longest serving Insurance Commissioner in the 
country, currently. And, it is a position--that means that I 
have served 10 years before the Affordable Care Act and 6 years 
now, after. And, because it is the law of land, I have been 
working diligently to implement it to the fullest extent 
possible, in the State of Washington.
    I can tell you that, even though we have heard different 
stories, it has, quite frankly, had a profoundly positive 
impact on the State of Washington--not without problems, but 
profoundly--overall, very positive. And, we really need to look 
back at what it was like in that environment before health care 
reform.
    We have approximately seven million people in the State of 
Washington. Nearly a million of them were uninsured. That was 
14-percent of the population. We were experiencing something 
like $2 billion a year in uncompensated care. That is care that 
is being paid for, but it is coming at the expense of other 
payors that are absorbing those costs.
    We also had a robust market at that time, before the 
Affordable Care Act--some 11 insurers in the individual 
markets. But, if you looked at the products out there, none of 
them in the individual market covered maternity or covered 
prescription drugs. And, for many people, they would find that 
a serious shortcoming.
    Today, we are down to 7.3 percent of the population being 
uninsured. That is, nearly, a 50-percent drop since the 
Affordable Care Act came into effect. And, we have taken the 
$2.3 billion in uncompensated care and dropped it down to $1.2 
billion. Almost 80 percent of the people inside of our 
exchange--and we are looking at, approximately, 170,000 people 
inside of the exchange. The comparable number on the outside--
but, of those inside of the exchange, 80 percent of them now 
receive a subsidy.
    Today, we are looking at--for 2017, 13 insurers in the 
market and 154 plans that will be offered to consumers, for 
2017. The rates that came in were higher than what we had 
anticipated at 13.5 percent--their request--not what I have 
approved. In October, we will know better about what that final 
number will be, but it is higher--and it is, certainly, 
something that was not unexpected.
    When insurers started, in 2013, to submit their plans, they 
had no idea just exactly what they should wind up charging. It 
was a dramatic change. As I said, now they cover maternity and 
drugs, and they did not before. So, it was a real change. So, 
they are still in kind of a learning phase here, but double-
digit rate increases are no surprise. It is, certainly, 
something we saw very commonly--much more so before the 
Affordable Care Act. And, in 2014, as I said, it was really 
just a guess, at that point in time.
    And, no one wants to see rate increases going forward--
least of all if you are elected statewide, like I am, and have 
to do it and have to have direct accountability to the people 
of the State of Washington.
    I think one of the things we really look at is the kind of 
changes that are going forward, as Commissioner Gerhart was 
talking about. One of those things, if we want to make it work 
better, that I would identify is, we have to make sure that 
premium relief to consumers is something that is there--and, 
perhaps, even more so than what we have currently. We also need 
to stabilize the health insurance markets going forward.
    The number one task for us was to get everybody covered. 
That was the first step. The second step, which is critically 
important is, we have to do a much better job of helping to 
hold down health care costs. As I look at changes that could 
make a profound difference in helping to stabilize that health 
insurance market, one of them would, certainly, be to help hold 
down the cost increases we are seeing in prescription drugs. 
That is the number one driver, right now, in the plans that 
came forward to us for 2017.
    Another, from a national perspective, is to make sure those 
19 States that have not expanded Medicaid do so. In the State 
of Washington, we have 595,000 people that are now insured, 
who, previously, did not have health insurance through the 
Medicaid program.
    I would also say that we have to make sure that those 
States that have nonconforming plans out there--so you have a 
breakup of the risk pool by virtue of nonconforming plans and 
conforming plans to the Affordable Care Act--they all need to 
meet that same standard. Washington is working, as I said, 
diligently, to make sure that we fully embrace the Affordable 
Care Act reforms and to provide those to the people of the 
State of Washington.
    Now, holding down premiums is the next big factor needed to 
stabilize the private market. Immediate steps need to be taken 
to accomplish this. If we want to make this sustainable in the 
future, we have to address that second part: Get them covered, 
first, and, second, stabilize the market.
    Thank you, Mr. Chairman.
    Chairman Johnson. Thank you, Mr. Kreidler.
    Let me start with you. You said that it is an 18-percent 
increase that has been requested, on average?
    Mr. Kreidler. 13.5 percent.
    Chairman Johnson. 13.5 percent. OK. You said that that was 
not unexpected--no surprise. Again, you were asserting that 
position. You heard candidate Obama say that his health care 
plan would reduce premiums by $2,500 per family. Did you 
believe that?
    Mr. Kreidler. I have to admit there were a number of claims 
that were made, during those discussions, that I did not, as a 
professional regulator, necessarily embrace in totality.
    Chairman Johnson. Commissioner Wieske, it is very difficult 
to try to figure out exactly what these average increases are. 
And, I know the Manhattan Institute for Policy Research has 
done kind of a national study, by State. I have looked at 
that--six different demographic groups, in the State of 
Wisconsin. Our biggest cost increase, in terms of the 
individual Obamacare market, was in the first year. But, as I 
put the numbers together, based on the expected increase again 
for this year, the lowest increase on one of those demographic 
groups, since the inception of Obamacare, is about 1.8 times--
in other words, an 80-percent increase. So, if you were paying 
a buck, now you are paying $1.80 for your health care coverage. 
The highest is over $3.00.
    I want to get to the point, in terms of what would happen, 
in the State of Wisconsin. I kind of raised the issue, on a 
national level, with the CFPB or the FTC. In the Office of the 
Commissioner, what would you do? Because, I know we have laws, 
in Wisconsin, where you are authorized to bring enforcement 
proceedings against insurers that engage in unfair marketing 
practices. By the way, that is defined as ``misrepresentations 
or unfair inducements'', which, I guess, a tax penalty would be 
kind of an unfair inducement. ``Unfair discrimination.'' I do 
not know about that. What about the restraint of competition? I 
think Obamacare is definitely restraining competition. ``Unfair 
restriction of contracting parties' choice of insurer.'' Well, 
we have definitely seen that and then extra charges--things 
like the Cadillac tax--attempt to unduly influence employers 
and unfair use of official position. Man, that really describes 
Obamacare. Right?
    So, again, going back to the question I asked, if there is 
an insurance company that made those claims--you like your 
health care plan, your doctor, and $2,500 reduction--what would 
you do, as Deputy Insurance Commissioner in the State of 
Wisconsin?
    Mr. Wieske. So, I think there would be a couple of things. 
So, first, up front, I do not know that we would let the 
insurer do that, because they would go insolvent, because they 
would not be able to meet their obligations. Those promises are 
not deliverable. And so, I think we would have a concern if the 
insurer filed those with us.
    If they filed them from an advertising standpoint, I think, 
we would consider that unfair trade practices--and we have 
concerns and we take action against the insurer, because those 
are promises that, obviously, an individual insurer cannot 
deliver.
    We did have a number of carriers that wanted to make some 
sort of promises on rights over time. And, in fact, we did not 
allow them to do that. We have done that over a number of 
years.
    Chairman Johnson. So, unfair trade practices--another term 
for that would be ``consumer fraud''?
    Mr. Wieske. It would be a fraudulent advertising.
    Chairman Johnson. In the private sector, that is unlawful, 
right?
    Mr. Wieske. Right. Correct.
    Chairman Johnson. But, I guess when it is passed by the 
Federal Government--I guess that becomes legal consumer fraud.
    Mr. Wieske. It appears so.
    Chairman Johnson. I really want to get back, because I was 
kind of shocked by a couple of your stories here. Describe 
again how the Federal Government forced you to recover 
undercharged premiums.
    Mr. Wieske. So, there was a particular insurer--and we 
actually have the order that we can get you a copy of. A 
particular insurer made a mistake in their rate system. So, 
their quoting system was correct, but the rate system was 
incorrect. When the people got the rates and they were charged, 
a lower amount was pulled out of their accounts.
    Chairman Johnson. Just stop. So, again, had that just 
occurred with a private company, would that private company 
have been allowed to go back in and pull money automatically 
out of those accounts?
    Mr. Wieske. They would not have even asked. They would not 
have asked us to pull money out.
    Chairman Johnson. They would have just sucked it up and 
said, ``We made a mistake.''
    Mr. Wieske. They would have expected--most companies are 
good companies. From the consumers--they would not expect 
that--and they certainly would not ask their regulator if they 
could go back 6 to 8 months and pull money out of consumers' 
accounts. No, they would not even ask that question.
    Chairman Johnson. I also want to talk about automatic 
enrollment.
    Mr. Wieske. Yes.
    Chairman Johnson. When I first got involved in this, I 
called ACA--Obamacare--the greatest assault on our freedoms in 
a lifetime. This certainly speaks to that.
    Talk exactly about what is going to happen to individuals 
without their approval. What is going to happen, exactly, with 
automatic enroll?
    Mr. Wieske. So, a consumer, who is currently in a plan with 
a health insurer that is either exiting a particular service 
area or exiting the market in its entirety, will have their 
information sent by an insurer chosen--they have the option to 
choose it, by the way, but an insurer chosen by the Federal 
Government, and enrolled in that plan that will get an 834 
transaction--is our understanding. And so, that information 
will be sent to the insurer, who will then contact the consumer 
and ask them for premium.
    Chairman Johnson. Now, are there not laws against 
unauthorized transfer of medical information from one party to 
another?
    Mr. Wieske. We have made that argument, too. We have made 
that argument to our good friends in the Federal Government. We 
sent a letter over to Kevin Counihan, indicating all of the 
legal arguments--including Federal laws that we feel are 
broken--in sending people's private medical information--
private information from one insurer--and financial 
information, by the way--from one insurer--private insurer to 
another private insurer.
    Chairman Johnson. So, without the coercion of the Federal 
Government, an insurer would not be allowed to pass that 
information to another insurer without the insured's 
permission, correct?
    Mr. Wieske. Absolutely not.
    Chairman Johnson. That insurer would be breaking the law.
    Mr. Wieske. Absolutely.
    Chairman Johnson. So, once again, this is legal?
    Mr. Wieske. Well, we do not think it is legal.
    Chairman Johnson. Well, I am just saying, the Federal 
Government----
    Mr. Wieske. But they are treating it as----
    Chairman Johnson [continuing]. The Federal Government is 
doing their----
    Mr. Wieske. Correct.
    Chairman Johnson. They are doing it on their own account.
    Mr. Wieske. Correct.
    Chairman Johnson. Wow.
    Lieutenant Governor Taylor, I want to talk a little bit 
about the reduction in choice, because it is pretty stark--60 
companies down to 11. That was not supposed to happen under the 
ACA, was it? I mean--competition was supposed to flourish, 
right?
    Again, I am coming from the free market. I would have loved 
to have been a monopolist, because I had to compete. My prices 
are lower, my quality is higher, and my level of customer 
service is higher because of competition. But, competition is 
best realized when you have a lot of competitors. That is not 
what is happening here. We are seeing consolidation in the 
health care industry, across the board, but, in your State, you 
certainly have an example of that.
    Ms. Taylor. Absolutely, Mr. Chairman.
    Unfortunately, we are seeing consolidation. Nationwide, of 
course, we know there are a couple of cases pending, regarding 
mergers of large insurance companies. But, even more than that, 
when you look at who is still left in the market, selling on 
the Federal exchange, in Ohio--as you have already stated, we 
had 60 companies that, prior to the ACA, you could choose 
from--any individual could choose to purchase their insurance 
from--versus--we are going into 2017 down to 11. And, I think 
that is what 
is--again, which I stated in my testimony--the even starker 
reality is evident when you look county by county. I spent all 
day yesterday, primarily, in Zanesville, which is Muskingham 
County in Ohio. And, they are one of the counties that will 
have one insurer. So, I do not call that a choice. That is one 
insurer.
    Chairman Johnson. It is not competition.
    Ms. Taylor. No. And, to a person--I met with a lot of 
people and a variety of audiences and crowds, and it seemed to 
me that everyone knew that that was what was going to happen 
under Obamacare starting in 2017. They are very concerned. In 
fact, one gentleman asked me, ``Is there not something that you 
can do or your national association,'' which we are all members 
of--and, unfortunately, no. The answer is no.
    Chairman Johnson. I think you mentioned in your testimony--
do you have an overall average amount that your insurance has 
increased since Obamacare?
    Ms. Taylor. Ninety-one percent.
    Chairman Johnson. Ninety-one percent. Senator Carper.
    Senator Carper. Thank you, Mr. Chairman.
    Let me just start by saying a number of States--many 
States, maybe, as demonstrated by the Commissioner of 
Washington today, have fully embraced the health care law and 
have seen very significant benefits for most of their 
residents.
    I request that statements from insurance commissioners, 
market leaders, and health secretaries from several States, 
including Rhode Island, California, Virginia, and Delaware, are 
entered into the hearing record.\1\ I think all of these--and I 
would make that request, Mr. Chairman.
---------------------------------------------------------------------------
    \1\ The statements submitted appear in the Appendix starting on 
page 90.
---------------------------------------------------------------------------
    Chairman Johnson. Without objection.
    Senator Carper. Thank you.
    All of these statements make, maybe, two points--and I will 
just briefly state them. One point is, the Affordable Care Act 
is working in their States, lowering the uninsured rate and 
improving their insurance marketplaces.
    The second point that would be made in the statements is, 
Medicaid expansion has been critical to lowering the cost of 
private insurance and improving the health of their residents. 
That is a point I do not think we have made very well here, 
today. And, I will return to that later.
    A little bit later, I am going to respond to some of what 
my friend Senator McCain said, but I will hold off on that for 
now.
    Let me just ask a couple of questions, if I could, of 
Commissioner Kreidler. And, let me just ask what--first of all, 
congratulations on being the longest serving insurance 
commissioner in the country. Is that right?
    Mr. Kreidler. That is correct.
    Senator Carper. Pretty amazing.
    What percentage of your population was uninsured before 
2010, when the Affordable Care Act was first passed? Any idea?
    Mr. Kreidler. Yes. At that time--and as we look back over 
at least a decade or two that we have the information for--at 
the time of the passage, we were at 14 percent. We have reduced 
that down by nearly a 50 percent reduction in the number of 
uninsured in the State of Washington. It has had a profound 
positive effect.
    Senator Carper. All right. Thank you. Were individuals with 
preexisting conditions able to purchase comprehensive and 
reliable health insurance for a reasonable cost?
    Mr. Kreidler. No. They were not able to purchase it. There 
was the ``high-risk pool'' that was available to them, but 
there was a preexisting condition waiting period. So, if you 
had been diagnosed with cancer, and you would like to treat it 
right away, you would have to wait up to a year before you 
would have coverage.
    Senator Carper. In those days, were women charged more for 
insurance based on their gender? And, if so, any idea by how 
much?
    Mr. Kreidler. Actually, in the State of Washington, we have 
a State law that prohibits it--unlike a number of other States. 
So, there could not be a difference in the rates charged 
between men and women.
    Senator Carper. OK. My Republican colleagues, several of 
them, have recently introduced legislation to roll back the 
individual mandate. If enacted, how would this change affect 
the risk pools and health insurance premiums in your State?
    Mr. Kreidler. Well, it would devastate those pools, because 
you would have the healthy holding out until they got sick and 
then opting in--or hoping they could--when they started to 
become ill. If they, of course, had an emergent type of medical 
treatment, they are in a real problem until open enrollment 
rolls around again.
    For the rest of the individuals, it would be a situation 
where you would have a very sick pool of individuals very 
dependent on health insurance. Insurance does not work really 
well when you are only insuring the people who really need it 
and allowing them to come in at some later date.
    Senator Carper. One of my guiding principles in life is to 
find out what works and do more of that. As a previous Governor 
and Chairman of the National Governors Association (NGA)--and I 
chaired the National Governors Association Center for Best 
Practices--I said to my cabinet in Delaware--when trying to 
wrestle with a particular problem, I would always say, ``Some 
other State--some other Governor has dealt with this 
successfully. Maybe an insurance commissioner has dealt with 
this issue--maybe a Lieutenant Governor has dealt with this 
issue successfully. Let us find out who did it, how they did 
it, and whether or not the idea is transferable to Delaware.''
    In Massachusetts, when they launched the program there 
under Governor Romney, my recollection was, in terms of 
addressing lack of coverage, they addressed it. And, the plan, 
as I recall, really ensured that a lot of people got coverage.
    What they did not do well out of the starting gate was 
addressed costs. You have mentioned this a time or two in your 
statement. One of the things I recall--lessons learned from 
Massachusetts--I am going to ask you to share with us what 
those lessons 
were--but one of the things, it took a while for the penalty, 
if you will, for people who did not sign up--like my kids--my 
sons, who are 26 and 28 years old.
    Those who did not sign up, it took some while for the 
penalties to rise to a level that they actually said, ``I might 
as well go ahead and get coverage.'' And, it helps to provide 
for a better insurance pool to serve.
    The other thing is, you had a lot of people who did not 
have health care in Massachusetts--and, frankly, in our States 
today--who have not had health care for years. They are not in 
good shape. And, once they have health care for the first 
time--maybe, in their lives--they are using it. And, that has 
had an impact on utilization and an impact on costs for 
insurers. And, they are trying to recover those costs. They did 
not have much experience. They did not know what it would be. 
It was like playing in the blind, trying to figure out what the 
rates would be without any kind of real experience.
    So, is there anything you can share with us--lessons 
learned in Massachusetts that might guide us, as we go forward 
for the country?
    Mr. Kreidler. I think a number of us have looked to 
Massachusetts and their experience since they had a running 
start with the Affordable Care Act under Governor Romney. And, 
one of them, certainly, was having an adequate penalty, so you 
really incentivize people, so they did not hold out until they 
needed health care, because that was devastating. I think the 
other is, you cannot allow--you have to minimize the ability to 
get into health insurance coverage outside of the open 
enrollment period. So, you really encourage people--if you get 
a bad diagnosis, you want to be treated right away. You do not 
want to have to wait months before you will have the coverage 
you need. So, that was an important part.
    We wound up also finding it interesting--and Massachusetts 
did too--and that was that there was a prediction that the 
emergency rooms would be overrun with the expansion, 
particularly, with Medicaid expansion, in the respective 
States. We had the same prediction. The actual impact was that 
it was the opposite. We had a 10-percent reduction in people 
entering emergency rooms in the State of Washington. And, that 
was also reflected in Massachusetts.
    The reason is, when you go in there with a non-emergent 
issue, you are told, ``You know what, if you go down to the 
clinic down the street, the doctor in the box, so to speak--get 
your care there--it is going to cost you a lot less than 
getting it from us.'' It is remarkable how people were 
sensitive to that price indicator. There were a number of 
lessons like that that were learned.
    Senator Carper. All right. Lastly, you have mentioned in 
your testimony the need to promote competition. And, give us 
one or two just really good ideas of what worked in your 
State--and you think might work in others.
    Mr. Kreidler. First, you have to stabilize the market. Some 
things came out of the Affordable Care Act having the essential 
health care benefits--the out of pocket expense limitations, 
but, beyond that, you have to try to make sure that you 
consolidate the risk pool.
    Insurers need stability. They are going to gravitate to 
that. If it looks predictable, they are going to be much more 
willing to enter a market, and that is where you start to get 
more competition. Unlike a number of States, we went from 11 
insurers to 13 in our individual market in the State of 
Washington. And, I think that is a part of it--that we embraced 
that part of it. Even if it meant taking some pushbacks, such 
as those canceled policies that we had out there--rather than 
trying to apply cardiopulmonary resuscitation (CPR) to them to 
bring them back--we wound up saying, ``No, those are out of the 
market now.'' And, it really helped to stabilize the market. I 
think those are the kind of changes that insurers are looking 
for, and it gives us the kind of predictability we would like 
to see.
    Senator Carper. Thank you. Thank you so much.
    Chairman Johnson. Senator Portman.
    Senator Portman. Thank you, Mr. Chairman. And, this has 
been a very interesting discussion.
    Our health care system was not perfect before the 
Affordable Care Act, but, as indicated by pretty much every 
speaker today--even you, Mr. Kreidler, and I appreciate you 
saying this--many of the pledges and promises that were made 
just have not been kept. And, you can say, ``Well, that is 
because of overpromising, and it still means that this is an 
improvement.'' But, I have to tell you, for a lot of my 
constituents, it is not an improvement. It has created more 
problems for them. It is not just higher costs. It is people 
losing their insurance.
    We have not even talked about the CO-OPs, which are part of 
the Affordable Care Act. And, this Committee has done some good 
work on that, as well as our Subcommittee--and we have tens of 
thousands of Ohioans, who have lost their coverage under the 
co-op, because, pretty much every few weeks, another co-op goes 
under. And so, this has been tough for people.
    I have 30 specific examples here from constituents that I 
brought with me today out of the hundreds we have gotten, 
because we have a portal on our website, where people can tell 
us their experience. I am not going to go through all of them, 
because we do not have time. But, all I can say is, it is not 
just this theoretical issue that is a debate about health care 
policy. It is about people's lives, their families, and their 
inability to get insurance that covers them. So, I think you 
have done a good job, Lieutenant Governor Taylor, today, in 
talking about the numbers. But, behind those numbers, are 
people, so here is Chad from Archibald. ``The plan we had when 
Obamacare signed the law--the one we liked was canceled. At the 
next renewal, company said no longer able to do it due to the 
law's passage--did not meet the requirements of the law--
promised we could keep our plan if we liked it--promised lower 
rates. Our premiums have risen 92-percent,'' he says, ``And, we 
keep raising deductibles to keep it from going up more.'' And, 
I hear that a lot back home. People say, ``Yes, I have health 
care coverage, but really I do not, because my deductible is 
$5,000--$7,000 now--and that means it is like I do not have 
coverage.''
    One thing that I think that we should point out--and I 
could not agree more with Senator Carper and others who spoke 
who said we need to do this on a bipartisan basis. That was not 
done with Obamacare, obviously, as Senator McCain--who was here 
at the time--talked about it. I was not here at the time, but I 
saw it being shoved through. We have to figure out how to deal 
with this issue of not just the cost, but the quality of the 
care--and competition is going to help with that too, right?
    So, let us talk about competition for a second. You have 
given some troubling testimony today, Lieutenant Governor 
Taylor. And, you talked about the fact that you are seeing a 
big increase next year. I think you said these rates are about 
a 12-percent or a 13-percent increase next year. Who can afford 
that? This in an exchange--it is an individual-market exchange. 
You said that it has gone up 91-percent, since the 2013-14 time 
period.
    Ms. Taylor. Yes.
    Senator Portman. Wow. What do you see happening in the 
future? What is it going to be in 2018? And, what is it going 
to be 5 years from now? What do you think is going to happen if 
things do not change?
    Ms. Taylor. Well, it is really hard to predict the future, 
but, if we look at the past and what has happened over the last 
several years, my biggest concern for the next couple of years 
is that we still are not going to have a stabilized market, 
because, as we continue to lose carriers, writing coverage on 
the Federal exchange--that obviously creates turmoil within the 
market that is in that particular district or in that 
particular region--and that creates a lot of chaos. And, where 
there is chaos, it is hard to price products.
    Where that happens, obviously, it is the consumer in the 
end who gets harmed, because they are going to pay more or they 
are going to have--as has been stated by some of my 
colleagues--they are shrinking provider networks, as we are 
seeing also in Ohio, where we just do not have the provider 
networks that consumers in Ohio are used to.
    So, my concern is, over the next couple of years--where our 
early study that we commissioned in 2011 may have predicted 
that the market would stabilize by now--unfortunately, that has 
not happened. And, I am not certain that that is going to 
happen in the next year or two either.
    Senator Portman. It has not stabilized. And, what is 
interesting about your testimony is, it has gotten worse. And, 
very recently, it has gotten worse.
    So, in looking at your testimony here, 17 companies in 2016 
were approved to offer health care on the Federal exchanges--
only 11 have decided to offer plans in 2017. Is that right?
    Ms. Taylor. That is correct.
    Senator Portman. So, here we had a period where you would 
have expected some stabilization. Instead, you have just the 
opposite--and we have 88 counties in Ohio. How many now only 
have one insurer?
    Ms. Taylor. Let me find my numbers.
    Senator Portman. I was doing the math when you were 
talking, but I think it is about----
    Ms. Taylor. I have the math.
    Senator Portman [continuing]. About 25 percent of our 
counties have----
    Ms. Taylor. Nineteen. Yes.
    Senator Portman. Yes. That's about 25 percent, I think, 
that have only one insurer. I know, again, it is a complicated 
area. There is lots of debate about what we do, but just a lack 
of choice and the lack of competition, as it relates to costs--
but it also relates to quality of care. Recently, there was a 
group called the Kaiser Family Foundation that put out some 
estimates on this. And, they are saying that 19 percent of 
enrollees could have a single insurer by next year--2017. They 
talk about the increase in costs--substantially double digit 
increases in costs for people. They just cannot afford it. 
Eighty-six percent of Obamacare premiums were subsidized by tax 
dollars. So, people say, ``Well, I am not on the exchange''--
because most people are not on the exchange. ``It does not 
affect me.'' Well, it does affect all of us, because we are all 
taxpayers.
    But, the other thing that is happening in Ohio--and I am 
told it is happening around the country--is that these 
insurers, who cannot make a profit under the exchanges, because 
of the way they were structured, are doing what? They are all 
staying in business. They are either leaving the exchanges, 
which, as you see, Aetna just left Ohio, as you reported, a few 
weeks ago. But, they are also cost shifting, right?
    So, if you are a person in an exchange plan, the bad news 
is your costs are going up dramatically--deductibles, copays, 
and premiums--everything. If you are being subsidized by that, 
that helps you, clearly. But then, the taxpayers are obviously 
paying that. But then, also we have the situation where, if you 
are in an employer based plan--which is where most of us are--
you are seeing an increase in yours as well, because these 
companies are not going out of business, right?
    Do you have any evidence of that in Ohio--that there is 
cost shifting from the insurance companies, who cannot make it 
on the exchanges, because they are losing money? And, I assume 
we have numbers on those.
    I know Anthem, for instance, loses money in Ohio and other 
States they are in. But, these companies are not in trouble, 
because they are cost shifting on to the private employers. 
That is a concern that is outside of all we are talking about 
today, really.
    Ms. Taylor. Right. Senator Portman, I think it was Aetna, 
when they made their announcement they were pulling out of many 
markets across the country, that had announced a $400 million 
loss on their exchange--Federal exchange business. And so, I 
think that just using that number--clearly, there are some 
insurers that are finding it very difficult. The populations 
are sicker in the pools than they expected. And, they are 
having a hard time with the premium increases to keep up with 
the actual costs.
    I think one of the things that has not been said here, if I 
could--what has not been dealt with is the cost of health 
care--and premiums are driven by the ultimate cost of health 
care. And so, where we originally thought that the Affordable 
Care Act, or Obamacare, was going to place some emphasis on 
addressing the costs of health care, reinforcing healthy 
behavior, and getting people healthy and keeping them healthy--
instead of only treating them when they are sick--that is not 
what we are seeing happen in the marketplace.
    So, the exchange business--there are certainly some 
insurance companies that could write it in a profitable way, 
but I think that more of them than not are finding that it is a 
loss for them. And so, they have to make a conscious decision. 
They have to make a business decision. Is it such that they can 
continue to offer health insurance on the Federal exchange, 
even though they are writing at a loss? And then, if they 
decide to do that, how long can they continue to bear those 
losses before it, ultimately, is a decision they cannot make 
any longer?
    Senator Portman. Again, my time has expired, but I really 
appreciate your expertise--and being a CPA and understanding 
how insurance works--and, as you say, looking at the broader 
dynamics in health care, which was not done in the Affordable 
Care Act, unfortunately. That is what we have to do in this 
place. And, we have to do it on a bipartisan basis--unlike last 
time--and we have to come up with something that actually makes 
sense in the real world. So, you have the ability to provide 
people with affordable, high quality health care.
    Thank you.
    Chairman Johnson. Senator Portman, thank you for raising 
the cost shifting issue. It has been going on for decades, not 
only just in terms of Obamacare, but, as providers and 
governments take over more and more reimbursement, they do not 
reimburse providers--sometimes to cover the costs--those 
providers cost shift to the private sector--one of the reasons 
it put a lot of pressure on premiums to begin with.
    The other point I want to make, too, is, you talked about 
the hundreds of letters you have gotten--we all have--talking 
about individuals being harmed. They are not pretending. They 
are really being harmed by Obamacare. I do not know about you, 
but I hear more and more people on these individual markets 
just taking the risk. They simply cannot afford the premiums. 
They look at them--even the high premiums on the insurance they 
are getting with high deductibles and high out of pockets--and 
they are going, ``What is the point?'' So they are taking that 
risk on, themselves. I am not sure if you are seeing that in 
Ohio, but I am certainly seeing that in Wisconsin. Senator 
Lankford.

             OPENING STATEMENT OF SENATOR LANKFORD

    Senator Lankford. So, a year and a half ago, I talked to my 
daughter's doctor and asked him point blank, ``Why are you no 
longer practicing medicine after this year? Why are you closing 
your office?'' To which he said, ``For 2\1/2\ years in a row, 
we have tried to make this work. And, every single month for 
the last 2\1/2\ years, we have lost money. I cannot keep a 
practice open and do this. The new compliance costs--the things 
that are happening--we cannot stay open.''
    So, one of the great doctors in Oklahoma, who has years of 
experience, retired. He is not the only one. There are a lot of 
others. And, it is not just my family--it is a lot of families.
    Lieutenant Governor, I can very much appreciate Ohio 
experiencing, since 2014, a 91-percent increase in the 
premiums. I can understand that, because, currently, border to 
border in Oklahoma--77 counties--we now have one insurance 
carrier--one in the entire State. Every other carrier has left.
    That one has requested a premium increase for next year of 
75 percent from this year to next year--1-year increase: 75-
percent. If CMS does not approve it--we are a State that CMS 
does the approval for--they could just withdraw. The hard part 
about it is--and it is the dirty secret of the process for 
right now in the Affordable Care Act--that, certainly, CMS will 
approve the 75-percent increase, because then we will have no 
carriers in the entire State--and we will move from one to 
none.
    When they approve the 75-percent increase, it will change 
it dramatically for people that are at 201 percent above 
poverty. For everyone 200 percent of poverty and below, the 
subsidies will kick in. The taxpayers will cover the 75-percent 
increase, but, for everyone from 201 percent to 400 percent, 
their subsidies will not be near enough to be able to cover 
them. And, those at 400 percent and up, they will face the full 
brunt of the 75-percent increase. And, even more people in my 
State will say, ``I cannot afford--the one policy that is 
available, I cannot afford at all.'' And, they will go pay the 
tax penalty when they would like to buy insurance. But, 
literally, insurance now is so expensive in the State. Even 
those who want to buy it cannot buy it anymore.
    This has a very direct effect on what is happening to the 
families in my State. For those that are on the subsidies, they 
will not feel the effects--but those only 200 percent of 
poverty and down. There is, literally, now a new perverse 
incentive to say, ``If you are at 250 percent of poverty, find 
a way to be able to get to a 199 percent of poverty or you will 
not be able to get health care.'' That is the wrong direction 
to be able to direct our country. With only one option that is 
out there in my entire State, we are in a bad place.
    Now, our State used to run something called ``Insure 
Oklahoma.'' We were told we could not do that anymore. We used 
to run a plan to be able to take care of those in greatest 
need. That is being pushed out. There are other solutions that 
are out there and other ways to be able to take care of this. 
Supposedly, the co-ops, as Senator Portman mentioned, were 
supposed to rush into that space and provide the option. Now, 
of the 23 co-ops that were started--about $1.7 billion in total 
taxpayer funding--only 7 of them are left. And, all seven of 
them are in trouble. No way the taxpayer will recover that 
money.
    So, we have made it incredibly difficult for people to be 
able to get insurance on the insurance market in my State, 
because it is now so incredibly expensive they cannot get it on 
the individual market--they cannot afford it. So, they either 
have to go into poverty to be able to get health care insurance 
or be able to find some employer. But, if you are self-
employed, you are stuck.
    It is a tough cycle that we are already in. And, in some 
ways, Oklahoma is the ``canary in the coal mine.'' And, we are 
raising our hand and saying, ``This is really serious for us. 
This is what everyone said would happen. We are experiencing it 
now. It is actually happening there.''
    So, my question really is for Mr. Wieske as well. You 
talked a lot about State solutions and things Wisconsin has 
done in the past. We have done a lot of things in our State in 
the past--no longer allowed to do. If you were given the 
ability for your State to be able to say, ``Here is some 
flexibility to be able to take care of people,'' is it your 
assumption that your State would say, ``No, only the Federal 
Government cares about people in my State. We do not care about 
people in our State?'' Or, is it your assumption that your 
State would step into that gap and say, ``There are people in 
desperate need in our State. Give us the flexibility and we 
will be glad to fill that void?''
    Mr. Wieske. I think the leadership that Governor Walker has 
shown--as well as our State legislature--over the years would 
show that, yes, we would absolutely want to take care of our 
State. And, we have actually done that, because we have 
expanded Medicaid eligibility up to 100 percent of poverty, 
where the State is, in fact, covering a piece of that. So, for 
the first time in Wisconsin, everybody in poverty is covered 
under our Medicaid plan. So, Wisconsin has started down that 
road. We would love more flexibility to be able to do it fully.
    Senator Lankford. What would that look like practically? 
What are the plans and options that you would put into place?
    Mr. Wieske. Well, I think we need to take a look at what 
the options were, but I think we would, probably, to a large 
part, go back to a sort of ``high-risk pool'' that we had in 
the past. I think that was well functioning and did a good job 
of taking care of folks who had significant medical conditions 
in the State. And, it was a good funding procedure. It brought 
subsidies.
    We had a good program under BadgerCare to provide coverage 
for those folks in need. And, I think, if you look at the rates 
that I highlighted in my testimony--if you move the rates back 
down to a more reasonable level--if a 21-year-old does not get 
a 75-percent increase or more in the first year in Wausau--and 
a 21-year-old in Milwaukee does not get a 78-percent increase--
they are more likely to join the risk pool. So, there would be 
a number of things that would help lower the rates and bring 
more competition.
    We are facing the same thing that Ohio is. We have 15 
carriers and we have expanded service areas. And, where folks 
are covering has been in turbulence for the last several years. 
So, our market--despite the fact we have a highly competitive 
market--we have more insurers in Wisconsin than most States--it 
is in turbulence. And, more carriers are offering coverage off 
of the exchange than on. And, that is, in part, a reflection of 
the fact that it just does not work for them. And, our on-
exchange carriers have literally lost--even the well 
capitalized ones--millions of dollars in value from surplus. 
So, eventually, they are going to be at even greater risk.
    Senator Lankford. Well, we have dropped down, as I 
mentioned, to one carrier. At the same time, several of our 
rural hospitals have closed in the last several months. Others 
are on the brink of that. And, it is a very difficult time for 
them to be able to manage what is happening right now and the 
requirements that are put on them.
    So, as we watch rural hospitals close, physicians retire 
early, other physicians merge into hospitals, other hospitals 
merge, and insurance companies around the country merge, we are 
not watching a healthy future for where we are in health care. 
We can say we are sustaining where we are now, but we can see 
quickly where things are going--and it is not a healthy mark in 
the days ahead.
    So, I appreciate all of your testimonies and for being here 
and being part of this.
    Chairman Johnson. Thank you, Senator Lankford. Just a quick 
point: I cannot tell you how many doctors in Wisconsin told me 
they are retiring early. And, even worse, they are telling 
their kids, who have always wanted to follow in the footsteps 
of their mom and dad, ``Do not go into medicine.'' Some of them 
have even actually paid them incentives not to do it. So, it is 
a pretty sad state of affairs. Senator Ernst.
    Senator Ernst. Thank you, Mr. Chairman. And, again, thank 
you to our panelists today and witnesses.
    Commissioner Gerhart, thank you for being here, today. It 
is great to have someone representing Iowa and sharing some of 
our concerns on the panel today. I enjoyed your testimony--only 
because it is the same thing that I have heard over and over 
again, as I am traveling across Iowa.
    What I do not enjoy about that is the fact that the stories 
that are being shared by our wonderful Iowa families are 
stories of hardship, and what the ACA has done to their 
families.
    We all have very serious concerns about how our families 
will be able to continue to afford the Affordable Care Act--
those insurance policies. And, I hate to say that I agree with 
you that Iowans and folks across the country have been placed 
into a situation where they are attempting to decide, ``Do I 
pay for my mortgage, or do I purchase health insurance?'' And, 
I have heard that time and time again. It is either a mortgage 
payment, because the insurance costs now are so much more than 
they were previously. Is it a car payment? Is it a truck 
payment? Is it a tractor payment? I mean, there are so many 
considerations that families are now making that they did not 
have to make a number of years ago.
    A family of 3 in Kossuth County, Iowa, reached out to my 
office to share that they are currently paying nearly $8,000 
annually for 2 policies. One with a nearly $6,000 deductible, 
and the other with a $2,500 deductible per person. And, based 
on initial rate requests, they received notice that one plan is 
expected to go up 37 percent and the other plan 46 percent, 
putting them over $10,000 in premiums for next year. And, one 
family member already took a second part time job off of the 
farm that barely covers the $8,000 premium expense now. And, 
the family has had very few medical costs so far this year and, 
rightly, asked me why, as healthy participants, they keep 
facing these increases.
    You also mentioned some pretty shocking statistics. We know 
that Aetna found that 5 percent of spenders drive 60 percent of 
costs.
    Can you explain a little more in detail what certain 
Federal policies are driving this?
    Mr. Gerhart. Sure. Carriers have to have one individual 
risk pool for the individual market. And, again, if you have a 
catastrophic claim or a series of them, it drives the whole 
pool. And so, in Iowa, at least, we have had significant claims 
of one family driving upwards of 10 percent in one individual 
pool.
    So, we had a functioning ``high-risk pool'', and what has 
happened is the industry used to true that ``high-risk pool'' 
up to the tune of about $20 million annually. Now, that chronic 
spend is put onto the backs of insurance carriers. So, that 
pool is driving a lot of the rate. And, I heard it in my public 
hearing on these issues, Senator, where folks were really 
upset.
    To give you an idea, my family of 5--soon to be 6--if I 
wanted to buy a plan in Des Moines, Iowa, I think the cheapest 
plan I would find with deductibles is probably about $26,000 a 
year. That is the cheapest Silver plan. So, it is a cost issue. 
People have to make significant kitchen table decisions.
    Senator Ernst. Absolutely. And, we do hear it all of the 
time as I am out traveling across the State. So, thank you for 
that.
    As I mentioned, Iowa families are paying a lot for these 
premiums. And, they still have the high deductibles and other 
out of pocket costs, but one thing I hear commonly from folks 
that reach out to my office and reach out to me is, they did 
not realize what their deductible meant when they bought the 
plan. And, others ask why they are paying all of this money in 
premiums when they likely will never reach the deductible.
    And, I understand that lower premiums on the front end 
generally will mean higher out of pocket expenses and costs 
when accessing services, but can we help consumers look beyond 
the price and focus on the benefits and the network associated 
with the plans in this high premium environment? Is there a way 
we can do that?
    Mr. Gerhart. It is difficult, to be honest. And, we have 
done a lot of consumer education around the deductible issue, 
because, I would submit to you, $13,000, for the average Iowa 
family, is really not having insurance. They do not have 
$13,000 in their checking account to write that check if they 
actually use it. It is a really difficult issue. We tell folks 
to shop around. In some counties, there is only one option, so 
there is really not a lot of choice, to be honest with you. The 
plans that are out there are more narrow in network. Those 
might be cheaper. We have some new joint ventures that are kind 
of like an Accountable Care Organization (ACO).
    So, putting some of the risk in the provider community, I 
think, makes some sense so that the doctors have some skin in 
the game to keep the patient well. But, again, we have to look 
at prescription drugs, costs, and transparency. Insurance was 
fixed through Obamacare, and now a carrier has to pay out 80 
percent or more--depending on what group they are in--but we 
did not look at the actual cost. I think, until we look at the 
entire system of health care, we are going to be having this 
dialogue for a long time.
    Senator Ernst. Yes. And, I know I have shared this story 
with you too, about a young beginning farmer that really--his 
plan was canceled--a $300 plan, which was perfectly acceptable 
to him. It was canceled. It did not meet the requirements of 
the Affordable Care Act. It was replaced with a plan. The 
cheapest he could find was $700--so a $400 difference every 
month--which he was very angry about, because that was his 
truck payment there. And, his deductible was $10,000. And, he 
said, ``I do not have $10,000. If something should happen, I do 
not have it.''
    So, it is hurting our families. It is hurting those that 
are just starting out in the workforce, especially if they are 
self-employed. And, it targets many of our farmers and ranchers 
across the State. So, it has been very difficult for us. We 
could go on and on.
    I know you mentioned a solution for the ``high-risk pool.'' 
You mentioned the particular family that has had about $12 
million of costs, which is a significant concern. Can you 
explain a little bit more about what that risk pool--your 
solution to that risk pool would be?
    Mr. Gerhart. Yes. My idea would be--like Commissioner 
Kreidler, giving the carriers predictability of pricing is 
critical. And, if a carrier with no lifetime limits--no annual 
limits--you get a catastrophic claim like that, Senator, your 
whole balance sheet could be disrupted, certainly, if you are a 
small regional carrier. So, our theory is, if those folks went 
into some other pool--whether State backed or Federal backed--
where their coverage would still continue in some fashion--they 
still pay the premiums--if you told the carriers--you could 
almost pick a number. Say you have to pay the first million--it 
does not almost matter what the number is, but you are on the 
hook for $500,000 or $1 million. After that, it goes to this 
other pool that is more of a societal spend. I think that makes 
a lot of sense, because, in smaller States, like Iowa, the risk 
pool is just not that big. So, you get a catastrophic claim 
like that, in a pool of 21,000, and it is going to really hurt 
everybody in that pool. In our written testimony, we talk a 
little bit more about how that would work. I would be happy to 
explain that further if there is more time.
    Senator Ernst. OK. Wonderful. Thank you very much.
    Chairman Johnson. Thank you, Senator Ernst. Let me give you 
the opportunity.
    I am not quite sure whether every State's ``high-risk 
pool'' is funded the same way. I believe Wisconsin's was just 
basically a surcharge on everybody's insurance, correct?
    Mr. Wieske. It was a surcharge. It was paid by the 
insurers, and then the providers--medical providers--agreed to 
a discount, which was a portion of the contribution and then 
premium----
    Chairman Johnson. So, rather than have the adverse effects, 
as Commissioner Gerhart is talking about, you pool everybody. 
Everybody that are basically allowed to operate insurance in 
the State are paying premiums into that. And, the system worked 
great. I mean, it, literally, worked great.
    When I was running my business, we would go to renewal. 
And, there would be somebody, maybe, with a cancer or something 
like that. They were never dropped from coverage, but they were 
not offered coverage. They were called ``lasered out.'' But, 
because we had the ``high-risk pool'', we would immediately go 
there, because, if they were denied coverage--immediately 
qualified. We purchased--and there was a menu of different 
types of coverages--different deductibles and different out of 
pockets. We could almost always come up with one that is, 
basically, identical to our own group plan--pretty comparable 
prices.
    It is a system that worked well. It was complete risk pool 
sharing--and nobody had to raise their rates astronomically to 
protect themselves. So, it actually worked.
    I do want to talk about it, because it is true. And, when 
you are facing a total cost--literally, I have talked about 
somebody--$1,400 per month. You are getting up into the $15,000 
to $16,000 per year, plus you have your deductibles of $6,000 
to $7,000. You are, literally, talking about having to pay 
$20,000 or more before you get any insurance. And so, what I am 
seeing in the State--people are telling me that they are just 
dropping coverage. People that always had health care 
coverage--always were responsible to cover--they just simply 
cannot afford it and they are willing to take the risk, because 
they are going, ``What is the risk, other than a catastrophic 
instance?''
    I would like all of you to talk about that phenomenon in 
your own State. We will start with you, Lieutenant Governor.
    Ms. Taylor. So, in Ohio, the ``high-risk pool'' that 
existed just immediately before Obamacare was fully implemented 
was actually subsidized by the Federal Government. It was set 
up and essentially run by the Federal Government. And, it was 
subsidized by the Federal Government. So, it is a little 
different, it sounds like to me, than, maybe, what was 
explained in Wisconsin.
    Chairman Johnson. How did you guys get that done?
    Ms. Taylor. That was before my time (BMT). And so, it is 
different. However, we did regulate the insurance side of it, 
because it was, basically, underwritten by an insurance company 
in northeast Ohio.
    I will tell you, though, it was a unique arrangement, but 
we also had disputes with HHS. In particular, there were two 
disputes during the time since I have been in office. One was 
related to premium levels our actuaries looked at--the cost of 
the ``high-risk pool'' and the premium level necessary in order 
to sustain the ``high-risk pool.'' And, HHS refused to accept 
what we believed was actuarially justified. Of course, we then 
believe that puts the ``high-risk pool'' at risk. And then, 
obviously, the consumer, ultimately, is harmed.
    I will tell you that the second disagreement that we had 
with regard to the ``high-risk pool'' was whether or not 
certain individuals would be eligible for coverage under the 
``high-risk pool.'' Ultimately, we disagreed. The insurance 
company ended up having to file a lawsuit against both us, the 
Department of Insurance, and HHS in order to make a 
determination about which direction they were supposed to go.
    Chairman Johnson. So, there are always strings attached to 
Federal funding?
    Ms. Taylor. Yes.
    Chairman Johnson. But, again, I wanted to speak to the 
phenomena of individuals--people on the individual market with 
such high premiums and such high deductibles that they are just 
not taking insurance.
    I want to know how big of a problem is that in Ohio, 
Wisconsin, Iowa, and then Washington.
    Ms. Taylor. I can tell you, specifically, I talked to an 
individual--it has been about a year and a half ago--small 
business owner in central Ohio. And, her comment to me was, 
``The premiums are what they are.'' She said, ``But, if I get 
sick, it is going to cost me $12,000 out of pocket, in addition 
to what I have already paid in premiums in order to receive 
coverage. I do not have $12,000. I cannot afford to get sick.''
    Chairman Johnson. By the way, we are also seeing the same 
thing with people subsidized by Obamacare, because of the high 
deductibles--still do not access care, because they cannot 
afford it. I think that point has been made. Deputy 
Commissioner Wieske.
    Mr. Wieske. First, I would note that the uninsured rate 
had--the methodology that the U.S. Census Bureau used has 
changed. So, we may be talking about apples to oranges, as far 
as the numbers go. I think that is a concern of mine, when we 
look at those numbers, because Wisconsin, traditionally, has 
had a very low uninsured rate. We landed this time at sixth--
and that is where we typically landed: sixth or higher--from an 
uninsured rate perspective.
    Chairman Johnson. Just really quickly, I have information 
that, in 2010, about 94 percent had had insurance.
    Mr. Wieske. Yes.
    Chairman Johnson. Eighty-nine percent full time and 5 
percent part time. In 2004, 94 percent had insurance.
    Mr. Wieske. Yes.
    Chairman Johnson. Eighty-nine percent--it has not changed.
    Mr. Wieske. It has been very consistent in Wisconsin, and 
we are fortunate for that, because of our competitive market, I 
think, which is becoming less competitive.
    The individual market has grown because of Obamacare, but I 
think the scary thing is, the large group market and the small 
group market have shrunk. We expect the large group market to 
shrink, because they are moving into unregulated--at least by 
the State's ERISA plans--which is their prerogative--and the 
small group market has shrunk by 30,000 folks.
    So, if you factor in our changes in Medicaid and the loss 
of a ``high-risk pool'', that is, in fact, probably, not any 
gain in the individual market, as far as the enrollment goes. 
It is actually a drop.
    Chairman Johnson. When you talk ERISA plans, are you 
talking about employer's self funding----
    Mr. Wieske. Self funding, yes.
    Chairman Johnson [continuing]. And, starting their own----
    Mr. Wieske. Correct.
    Chairman Johnson [continuing]. Within their operations----
    Mr. Wieske. Correct.
    Chairman Johnson [continuing]. Which we are doing--so we 
have some real innovators in Wisconsin doing that.
    Mr. Wieske. Yes. So, there were about 200,000. We are OK 
with that, but there are about 200,000 folks, who are in fully 
insured plans, who moved from that to self funded. And, the 
question is, why were they in fully insured before and why did 
they move into self funded? And, Obamacare is the reason they 
moved.
    So, there may be a reason for that. We are supportive of 
employers providing coverage. So, I do not want to imply that, 
by any means necessary, but I think it is a concern when you 
see that sort of sea change shift, and it is caused by a 
Federal law change. And, I think that is where we are 
concerned.
    And, I think, as far as folks going without coverage, we 
are seeing this pretty consistently in Wisconsin. We are 
hearing about it--that people just cannot afford coverage. We 
are hearing about it from our legislators. We are hearing about 
it from consumers who call our consumer lines. We do not have 
any good numbers on that, but we are hearing this as a 
phenomenon. And, based on what we see, we really have not seen 
the individual market grow as much as you would expect, given 
the subsidies--80 percent in subsidizes--etc., that would 
indicate that there has been real movement in getting private 
coverage.
    Chairman Johnson. Because having insurance is not the same 
thing as having access?
    Mr. Wieske. Correct.
    Chairman Johnson. Bottom line. Senator Carper.
    Senator Carper [presiding]. I think the vote has started. 
And, we are going to come and go here for a while and try to 
conclude around noon or so.
    Again, thank you for joining us.
    I have a question for the record (QFR) that I am going to 
submit for you, Governor Taylor, and if you could respond to 
that, that would be great.
    I am going to ask Commissioner Kreidler to just think out 
loud. We have heard a fair amount about risk pools and other 
steps that States have taken or would like to take. Give us a 
short list of things that you would recommend that, when the 
elections are over or in a new year--new Congress and new 
President--what are some things you would recommend that we do 
on this end? Meanwhile, what are some things that the States 
should be doing--could be doing and should be doing on your 
end?
    Mr. Kreidler. Senator Carper, I appreciate this question, 
because I think what I have noticed--even in the discussion 
that we have been holding this morning--is that there is more 
of a focus right now on what we can wind up doing to make the 
system work better. And, one of them, certainly, is the concept 
here of having some form of a reinsurance or risk pool that 
would help to mitigate the risk and exposure that insurance 
companies would have, so they do not wind up with the 
particularly very sick people or many of their people are much 
sicker--that there is more of an adjustment here between the 
insurers, so they can predict their exposure and have the 
benefits of a much larger risk pool--rather than just the 
people that have bought their particular policy.
    I think that is a step in the right direction. That is 
starting to look at what we can do better than what we have 
right now.
    Senator Carper. Let me look at our other panelists. Would 
you just nod your head yes or no if you think that makes any 
sense. Thank you. Three heads nodded yes. One vigorously.
    Mr. Kreidler. Senator, you also made mention about 
Massachusetts. I think one of the areas that would help a lot--
and it really goes to the questions that have been raised about 
affordability that we have heard and, I think, where everybody 
is very sensitive--and, particularly, those of us who are 
regulators, because we are on the front lines. When those 
people have problems, they are calling us and registering their 
sentiment on the issue.
    And, that is something that Massachusetts has, which is the 
ability to move into what is referred to as ``active 
purchasing'' and ``standardized plans''--``value plans,'' as 
they are sometimes called.
    Senator Carper. What does that mean? I think I know, but 
what does that mean?
    Mr. Kreidler. It is interesting. We were just at our 
national meeting, and we had a professor from Harvard, who is 
on the exchange board in Massachusetts. And, it really is just 
trying to make sure that those medical services that are really 
high value--meaning that you do not want people to delay, 
whether it is hypertension or diabetes, whatever it might be--
you want to make sure they are getting those services. Bring 
down the out of pocket expenses, the copays, and the 
deductibles. Make it easier to get those particular services, 
because they have such a profound impact on the level of health 
of that individual.
    I think the States are in a unique position to be able to 
experiment along these lines. Massachusetts--California is 
moving in that direction. I am hoping that maybe I can take 
that issue to my State legislature this January so that we have 
that ability to do it. We did it--both California and 
Massachusetts have their own State exchanges. We do too. I 
would like to have them have the kind of power, so we can get 
in there and really explore what we can do in improving the 
value of those plans by making sure those really important 
services are not impeded due to the out of pocket costs.
    Senator Carper. All right. Give me one more good idea for 
us--for the Federal Government, please.
    Mr. Kreidler. I would have to tell you, from a Federal 
perspective, I would obviously strongly encourage--because of 
the impact it had as the principal medical driver on the rates 
that I am looking at, right now, in the State of Washington--
and that is pharmaceutical. The more that can be done to 
address that very tough, ticklish issue--and I understand that 
profoundly. At the same time, we are really out of line with 
other countries. We really need to bring down those costs.
    Stabilizing the market is very dependent on bending that 
cost curve down, so it does not rise as fast as it historically 
has. If we do not do that--getting everybody insured--the 
Affordable Care Act--it is not going to matter. We will be back 
to what we had before the Affordable Care Act--a whole system 
that is failing. We need to bring down the cost of health care.
    Senator Carper. All right. Thank you.
    I want to go back to something that my friend John McCain 
said during his visit to our hearing today. And, Senator McCain 
mentioned that we passed the Affordable Care Act on a party 
line vote. And, I think what he did not say, though, is that we 
had the longest markup in history on the Finance Committee, 
prior to that. We voted on literally dozens--I think, scores of 
amendments--Republican and Democrat. He did not mention that 
Senators Max Baucus and Chuck Grassley--two very close friends, 
as it turns out--spent over a half year together with four of 
their colleagues--two Democrats and two Republicans--to try to 
find a bipartisan compromise. And, three of those people--
Republicans--had an inordinate amount of pressure applied to 
them not to find a compromise. And, they, ultimately, felt 
compelled not to help find a compromise.
    I was there. And, there are three very fine Republicans--
and three really good Democrats as well--and there is a lot of 
pressure on my Republican colleagues just not to find the 
middle.
    But, there is a community called the Health, Education, 
Labor and Pension Committee (HELP). They spent a full month 
deliberating the law on a bipartisan basis. The House held 79 
bipartisan hearings and markups on the health reform bill over 
the period of an entire year. The Senate held dozens of public 
meetings and hearings in both the Finance and the HELP 
Committee--and accepted hundreds of Republican amendments. The 
Health, Education Labor, and Pension Committee held 14 
bipartisan roundtables, 13 bipartisan hearings, and 20 
bipartisan walk-throughs on health care reform.
    The HELP Committee considered nearly 300 amendments and 
accepted more than 160 amendments--many of them offered by our 
Republican colleagues. The Finance Committee held, meanwhile, 
17 roundtables, summits, and hearings on health care reform. 
Our Committee also held 13 member briefings and walk-throughs 
as well as 38 meetings and negotiations, for a total of 53 
meetings on health reform. And, our Committee--the Finance 
Committee also held a 7-day markup of the bill--I think that is 
the longest Finance Committee markup in 22 years--resulting in 
a bipartisan 14 to 9 vote to approve the bill. And, finally, 
the Finance Committee markup resulted in 41 amendments to 
revise the bill, including 18 unanimous consent (UC)--or 
without objection.
    And, as to the reliability of the insurance plans, my 
friend, Senator McCain, did not mention that consumers 
regularly lost their insurance rights when they did get sick 
and when they needed it the most. And, in those days, premiums 
did go up--and, in some cases, by as much as 10 percent or 20 
percent. I just want to put those things on the record.
    I want to go back to the issue of competition for our 
witnesses, if I could. There was one of my early mentors when I 
was State Treasurer. He was a very successful businessman--
older man. In Delaware, he was also the Chairman of the State 
Pension Plan. His name was Ernie Dannemann--and he ran a very 
successful fiber or fabrics business in our State--in fact, in 
several States. He used to have the saying--it is not original, 
but he used to say, ``Competition: first it makes you sick, 
then it makes you better.'' And, I think what we need here is 
competition--not just on the insurer side, but on the provider 
side. And, we have heard some ideas as to how to do that.
    And, I think the second thing that we need is to make sure 
we have a purchasing pool that insurance companies can actually 
afford to insure and to make sure it includes a mix of people--
healthy and unhealthy people.
    We talked a bit about this. You all offered different ideas 
or examples, but just let us go down the row, if you could. 
Governor Taylor, just on the competition--maybe, one 
particularly good idea that you think would enhance 
competition--either for the insurers or for the providers, 
please.
    Be very brief, if you could.
    Ms. Taylor. From the insurers' perspective, I would say 
that it is less regulation--open market and consumer choice--
and let insurers write the type of coverage that individual 
consumers want to purchase.
    Senator Carper. OK. Thank you.
    Mr. Wieske. It is the same thing in Wisconsin. We are 
seeing relatively homogenous plan designs because of Federal 
rules. And, I think that is a bit of a problem. Similar 
structures--similar 
provider network issues--that they are doing very narrow 
networks--and they are doing that to deal with the risk pool. 
So, I think--and then, they are constantly changing their 
service areas to reflect that. So, I think finding a way to get 
better competition and less regulation, I think, would free up 
and bring more carriers into the market. That is what we have 
seen in every other line in Wisconsin.
    Senator Carper. All right. Thank you. Mr. Gerhart.
    Mr. Gerhart. I will give you two thoughts: One, let the 
States have more flexibility when we are looking at 1332 
waivers and things of that nature when we work with CMS. 
Another is the Accountable Care Organizations and the alignment 
of the providers--and having skin in the game to keep the 
patient well and healthy. I think that is something we need to 
focus on.
    Senator Carper. In my State we are seeing the formation of 
a lot of Accountable Care Organizations. And, in your States, 
are they being formed, as well?
    Mr. Gerhart. We have quite a few in Iowa, yes.
    Mr. Wieske. We are seeing a different model in Wisconsin, 
but we are seeing increasing partnership with the medical 
providers.
    Senator Carper. All right. Thank you.
    Ms. Taylor. Some.
    Senator Carper. Some. OK. Thank you.
    All right. Commissioner Kreidler.
    Mr. Kreidler. I think what has been talked about here is 
allowing insurance companies to be able to innovate and offer 
changes without being unduly impeded. At the same time, you 
need to have the standardization so they maintain respective 
standards. You do not want an insurance company gaming the 
system so they get the healthy people at the expense of the 
less well. That is very harmful to the market and, certainly, 
to the individual group market that we have right now. So, it 
is really starting to have some standardization here--on the 
standards--but at the same time, you have to allow them to 
innovate.
    One of them is going to these narrow networks, which we 
have an obligation to make sure there is an adequate network 
there, to provide the services and the promises that are made 
with that particular policy. But, allowing them to go there--
and go to the highly managed plans that we are seeing as a 
trend right now in the marketplace. It is an innovation that 
can help hold down costs, but it needs to make sure they do not 
game the system inappropriately at the expense of the whole 
system.
    Senator Carper. All right. I may have said this earlier in 
the hearing, but I want to just say it again. We compete with a 
lot of different nations on earth. There are competitors. One 
of our strongest allies, but also a very strong economic 
competitor, is Japan. And, for years, I remember learning this 
when I was--I think it was my second year on the Finance 
Committee--2009 or 2010--and one thing we learned in the 
hearing was, in competing with the Japanese, they were spending 
8 percent of gross domestic product (GDP) for health care 
costs--8 percent. We were spending 18 percent. The Japanese 
were getting better results. People lived longer and they had 
lower rates of infant mortality than we did. So, they are 
spending less money, but getting better results.
    In addition, at that point in time, we had 40 million 
people going to bed at night with no health care coverage--
nothing. If you are lucky, you could go to a hospital--maybe, 
emergency room--and try to get something, but, for many of 
them, there was nothing.
    And, we have had some heart wrenching stories shared with 
us about individuals who are having a hard time affording the 
premiums and making sure they can have coverage for themselves 
and their families. There were 40 million people--not just ones 
or twos--40 million people that were in a situation like that. 
And, we cannot forget them. We cannot forget them. I am not 
going to, and I do not think you want us to do that.
    I am not smart enough. My colleagues and I, probably, 
here--even if we all tried to figure this out together--are not 
smart enough to figure out how to take a very good idea and 
make it an even better--not just idea, but program--and one 
that entails the partnership with--not just the Federal 
Government, not just the States, and not just the Governors, 
Lieutenant Governors, Insurance Commissioners, the providers, 
and the insurers. This is what we call an opportunity for an 
``all hands on deck'' moment. That is what we used to say in 
the Navy.
    And, that moment is going to come, I think, sometime in 
January. And, when the sound for General Quarters goes out on 
the Ship of State, my hope is that a lot of folks, including 
people in this room--people that I serve with and people who 
will be new in the Senate--new in, maybe, the White House--that 
they will answer that call as well. And, we will do what we do 
best as a country when we prevail--and that is to work 
together. We have done it. We need to do it again. We did it to 
clean up Medicare Advantage. We did it to clean up the Medicare 
Prescription Drug Program, Part D. We need to do it in this 
case as well.
    Thank you all so much. Thank you, Mr. Chairman.
    Chairman Johnson [presiding]. Thank you, Senator Carper. It 
looks like you went over your time.
    Senator Carper. Sorry.
    Chairman Johnson. I appreciate you holding down the fort 
here.
    Kind of along similar lines of people taking a look at 
these enormous premium increases--their out of pocket 
deductibles and just dropping coverage--I also want to talk 
about people gaming the system, because we have certainly heard 
reports of this where, because, under law, you can sign up 
for--you can go through the open enrollment period and sign up 
for the health care, never pay a premium, have coverage for 3 
months, which the Federal Government, if they are paying the 
premiums for you--providing the subsidies--and then quit. Never 
pay a premium, have insurance for, basically, 3 months out of 
12 months. Is that something you are seeing in your States? I 
will start with you, again, please give kind of quick answers. 
I have a number of questions.
    Ms. Taylor. I do not have a specific example of that, but 
it is certainly a concern. And, I can tell you, in speaking 
with providers in a hospital organization yesterday--one of 
which was a rural hospital who had recently filed bankruptcy--
those kinds of issues are significant--especially in our rural 
communities, where they have less ability to absorb those types 
of losses.
    Chairman Johnson. Commissioner Wieske, do you see that in 
Wisconsin?
    Mr. Wieske. We do. We have heard from the insurers 
consistently, yes.
    Chairman Johnson. Is that a growing problem?
    Mr. Wieske. I think it is. Yes.
    Chairman Johnson. Commissioner Gerhart.
    Mr. Gerhart. We have heard that and also with the special 
enrollment period (SEP) as well--lack of oversight on the 
special enrollment period. The claim I discussed earlier was a 
special enrollment. So, we are seeing the morbidity of the 
special enrollment crowd--about 100 percent to 200 percent 
more, on average.
    Chairman Johnson. Again, people are smart. If they see a 
system that can be gamed--the more they see it, the more they 
will do it, correct? Congressman Kreidler.
    Mr. Kreidler. I am not seeing it in the State of 
Washington--the kind of people who will come in for a few 
months and then get out. But, special enrollment has been an 
issue. And, purely from the standpoint of being a regulator, 
you look at it and you say that if you want to stabilize your 
market, you cannot allow people to have multiple opportunities 
to go into the market. And, that is something that, I think, as 
an association of--across the country, we have spoken out and 
said that we do not like the idea of having the extent of 
special enrollments that we see because it is harmful to the 
quality of the overall market.
    Chairman Johnson. You mentioned the term ``stabilized 
markets.'' One of the signs of a market that is stabilizing 
would be if the price increases were actually declining over 
the years. And, certainly, what happened in Wisconsin is an 
enormous price increase that first year at the individual 
market. But, nationally--and I am going to quote an individual. 
Charles Gaba has done a study. And, you said that, between 2015 
and 2016, on the individual market, there were rate increases 
somewhere between 12 percent to 13 percent. Between 2016 and 
2017, they are looking at somewhere between 25 percent and 26 
percent. That is going in the wrong direction. That is not a 
sign of a stabilizing market, correct?
    Does Anybody want to talk about that or dispute those 
figures?
    Again, part of the problem we have discussing this is that 
it is so hard to get good, solid metrics, because things are 
all over the map.
    Commissioner Gerhart, it looked like you wanted to speak.
    Mr. Gerhart. Well, in 2013, during my confirmation hearing, 
I thought that, by this point, we would have a stable market. 
And, it is not stabilized. We are looking at about 100-percent 
rate increases and our individual purchasing insurance has 
actually gone down. We had 189,500 folks that purchased 
individual coverage pre-ACA and now it is about 184,500. So, we 
have actually seen fewer people buying their own coverage. Even 
though our uninsured rate has gone down, because of the 
expansion of Medicaid.
    Chairman Johnson. Again, the fewer people who participate 
in these ``high-risk pools''--they are going to self-select and 
they are going to be the sicker--and, again, it just makes it a 
less stable system.
    Commissioner Wieske, did you----
    Mr. Wieske. That is correct. And, this is typical, when you 
have seen certain kinds of reforms, that when you hit this 
year--the third year of implementation--and you are moving into 
the fourth year--if you look back at College Health IPAs 
(CHIPAs) that were implemented in a number of States--you look 
back at a number of other reforms that went in States--it is, 
typically, this third to fourth year where you start to see the 
spike and you start to see what is called the ``death spiral'' 
in some of these markets--where the rates are increasing and 
your risk pool is getting worse and worse.
    Chairman Johnson. One thing about Obamacare--it is really 
affecting the individual market--less so on the group market. I 
do want you to speak a little bit about that. From my 
standpoint, fortunately, the group market has been able to 
operate and has not seen--although, as Senator Portman talked 
about, you are going to--and you probably already have seen the 
cost shifting of insurers from the individual market, because 
they cannot recover and shift that over to the group markets.
    But, can you just sort of speak to the dynamic curve there? 
And, Deputy Commissioner Wieske, you talked about people moving 
plans out of the group market into ERISA plans--completely 
self-insuring and completely leaving the market. So, I would 
like all of you to kind of just talk about that dynamic between 
the individual market and the group markets, and what is 
expected in 2017 and beyond.
    We will start with you, Lieutenant Governor.
    Ms. Taylor. So, I do not have numbers to speak, 
specifically, as far as enrollment and the exact shift of 
individuals from the individual market to--or group to 
individual market or vice versa. I do think that it is human 
nature to move to the path of least resistance, which in many 
cases is: ``What is going to cost me the least amount of 
money?''
    And, we have not seen quite the trend that you are 
commenting on, with regard to employers going to self-insured 
plans. However, I do expect that to change. I do think that we 
will see more of that going into the future--especially, as 
where--even if we stated that a 12-percent or a 13-percent 
premium increase--which is significant--our largest increase 
was in the first year. We had a 51-percent, on average, 
increase in the first year. Even if we thought that we could 
get to a point where we are stabilizing premiums, we are still 
not stabilizing the market with the carriers where you have 19 
counties with one carrier. You are still not stabilizing your 
market.
    Again, I do not feel like we have the stability in the 
market--and your point is, are you cost shifting? I guess, for 
all intents and purposes, that is what a pool does. A pool does 
cost shift from one individual to another--for all intents and 
purposes--for insurance purposes. I do not think that we could 
give you any numbers though to speak, specifically, to our--how 
is the individual market shifting to the group or vice versa.
    Chairman Johnson. It was pretty obvious, politically, that 
a number of the more harmful provisions of Obamacare were 
implemented in delayed fashion.
    Are there additional provisions about ready to kick in that 
will affect that group market?
    Mr. Wieske. I think, for Wisconsin, the end of the 
transition policies--so the president's promise that if you 
have a plan you can keep it--and then he sort of at the end--
just before 2014, he allowed some transition policies. So, in 
Wisconsin, we allowed that.
    So, in the small group market, there are roughly twice as 
many individuals in the small group market in transition 
policies and in grandfathered policies that are not Obamacare 
compliant than there are in Obamacare ``single-risk pools.'' 
So, when we get to the end of 2017, all of those plans--unless 
they do another extension--will go the way of the dodo. And so, 
that will create a big sea change in the small group market for 
us.
    Chairman Johnson. You will see a cumulative price increase, 
really, what we have seen since 2013, correct?
    Mr. Wieske. Right.
    Chairman Johnson. All in one year.
    Mr. Wieske. Correct. So, any of those consumers that have 
not participated either in the end--we have about 46,000 folks 
in the individual market who are in that, as well--they will 
see whatever the rates are in their particular counties, at 
that time.
    Chairman Johnson. So, if you take a look at what I said, 
based on the numbers from the Manhattan Institute, where, in 
the lowest demographic group, since the inception of Obamacare, 
premiums have increased at 1.8 times--the highest more than 3 
times. That is the kind of cumulative effect you are going to 
see in the small group market. All of a sudden--bam, like 
that--in 2018, just hit them like a ton of bricks.
    Mr. Wieske. Potentially, for those in the transition 
market, yes, they are going to have very significant increases. 
And, the same thing in the individual market--we expect they 
will see significant increases next year.
    Chairman Johnson. That is something people really need to 
understand. Senator Portman.
    Senator Portman. Thank you, Chairman.
    I have a question for the group. And, I do not want to hold 
you guys much longer, because you have been really patient with 
us. I appreciate all of the input that we have gotten--and we 
have some really smart people on the panel here, who are going 
to hopefully help us unravel this at some point and come up 
with a better system.
    But, some of you may have seen yesterday I joined some of 
my colleagues to introduce what is called ``The State 
Flexibility to Provide Affordable Health Options Act.'' And, it 
basically says that, if you are a family in an exchange and you 
are in a situation--as is the case of 25 percent of our 
counties in Ohio or all of counties in Oklahoma, apparently, 
where you do not have choices, you can go outside of the 
exchange--use the subsidy to go outside of the exchange to buy 
insurance. And, it is, to me, not the ultimate solution here, 
because I do think the whole system needs to be reformed.
    But, it is almost surely the stopgap measure that is needed 
right now to give some of these folks I represent--and from 
these other States that are even seeing less competition--a 
little bit of choice--and, again, cost and quality being what 
comes with more choice.
    What do you think about that? I know there is a potential 
problem with the tax credit--and we need to work on that, but 
what do you think about that, as a concept, to say, ``OK. Let 
us let people at least be able to go outside the network here 
to be able to get insurance when their choices are so 
constrained? ''
    Ms. Taylor. Senator Portman, thank you for the question.
    The more choice we can give consumers, the better. The more 
that we can eliminate overly burdensome regulations to allow 
the free market to work, so that consumers can choose the type 
of plans they want to purchase for the prices they can afford 
to pay, I think, the better off we are. So, I certainly would 
support an option to give consumers more choice to purchase 
health insurance.
    Senator Portman. Thank you.
    Mr. Wieske. I would note that Governor Walker of Wisconsin 
sent a letter asking for this in 2013 as well, broadly--and we 
are very supportive. It does not necessarily make any sense why 
a consumer should have to send all of their private information 
and run everything through a Federal exchange in order to be 
able to get a subsidy. If it is an insurance subsidy, then that 
might be something that we can look at--look at broadly--and 
there is some sense--we do not do this for anything else. So, I 
think, conceptually, it makes a lot of sense.
    Mr. Gerhart. And, I have not read it, myself. In concept, 
it is something we would support. It makes a lot of sense, 
absolutely.
    Senator Portman. Mr. Kreidler.
    Mr. Kreidler. My principal concern would be one of making 
sure the market is not somehow compromised by allowing people 
out--and what that would do to the integrity of the pool, 
itself, by doing that. The idea is to get as many people 
covered--whether they are in a rural area, which is not going 
to be well served by--they were not well served before the 
Affordable Care Act. It is an ongoing problem and challenge in 
rural communities. We want to make sure they are not made 
second class citizens and it comes at their expense, from the 
standpoint of having the kind of choices in a free market that 
they have. That is a task for all of us--regulators and, 
certainly, for Congress.
    Senator Portman. Yes. Clearly, that is exactly the 
objective here--to avoid that--that is currently happening. I 
do not know how--Washington is looking at it--exchanges going 
forward, but, certainly, in a place like Ohio, we are just 
seeing fewer and fewer choices. And, therefore, that second-
class citizen you were talking about--that is, unfortunately, 
happening within the exchanges.
    I will say there are some counties where there are not 
necessarily insurance companies willing to write at all. We may 
not have one in Ohio yet, but I am told, from talking to 
Lieutenant Governor Taylor, we may have that situation in our 
State, too. So, it is getting dire and we have to figure out a 
way. This is one, I think, that would provide people the 
flexibility they need to be able to get the care they and their 
family need.
    Did you want to comment, Lieutenant Governor?
    Ms. Taylor. No.
    Senator Portman. Thank you very much, Mr. Chairman, for 
allowing me to ask another round of questions.
    Again, I appreciate all of the information you guys have 
provided today. And, I hope you will stay in touch.
    Chairman Johnson. Senator Peters.

              OPENING STATEMENT OF SENATOR PETERS

    Senator Peters. Thank you, Mr. Chairman. And, thank you to 
each of the witnesses for being here and providing some good 
testimonies as to what is happening in your States. And, I 
certainly appreciate the comments of my colleagues here, 
particularly, Senator Portman. I appreciated your comments 
talking about how we need to be bipartisan. We have to figure 
out how to deal with some of these very complex issues and do 
it in a collaborative way. So, I hope that we are now at the 
point where we can get away from this partisan divide that has 
prevented us from dealing with the health care system in this 
country--where folks think we just repeal--or we are well 
beyond that debate now. The Affordable Care Act is not going to 
be repealed, but that does not mean it is perfect--although 
there is also a lot to celebrate in it as well.
    So, we should be in a position to celebrate what is good 
and fix what is not so good, and take it in a practical 
commonsense kind of way--roll up our sleeves to do that. And, I 
think it is also important, as we are having that debate, to 
remember that the health care system was not all that great 
before the Affordable Care Act was passed. The reason it came 
out is because of significant problems that existed, in terms 
of access and in terms of costs.
    I think, in my State of Michigan, prior to the Affordable 
Care Act passing, statistics I saw showed it was up something 
like--costs had been growing at 15 times faster than wages. 
That is not a sustainable course. So, the health care system 
was not on a sustainable course prior to the Affordable Care 
Act.
    At the same time, you had large numbers of people who 
simply did not have health insurance. In this great country of 
ours, we had folks who knew that if they got sick, that might 
mean personal bankruptcy for them and ruining their family. In 
fact, I think that the number one cause of bankruptcy--personal 
bankruptcy--was that someone got sick.
    How could we accept the kind of system that existed before 
the Affordable Care Act where now anybody--even if they have a 
preexisting condition--can get health care? To me, that is 
where the American people are. It is certainly a very popular 
option--probably, the most popular option as they know, that, 
if they leave a job and they lose health insurance and they 
have a preexisting condition, they can still get health care 
coverage. They are not in a system where they are out of luck. 
And, it frees up people from an entrepreneur's perspective 
too--that you are not locked into a particular insurance plan. 
You can get insurance and you can go off and start your own 
business and know--even if you have a preexisting condition--
your family is still protected. Your children are protected 
now, up to age 26.
    So, there is a lot. And, if I look at Michigan--the 
numbers--I think if you look between Medicaid expansion, the 
marketplace, and the Children's Health Insurance Program 
(CHIP), it is somewhere around 700,000 people, after the ACA, 
that now have health insurance. They did not have it before.
    So, I think that is significant. And, we should celebrate 
the fact that we have 700,000 people that now know they have 
some coverage and protection should they get sick.
    But having said that, nothing is perfect. I have never seen 
a perfect bill in my years as a State legislator and now in 
Congress. I have never seen a perfect bill. I do not think one 
exists and never will exist, so you have to go back and refine 
it and try to find those changes.
    So, along those lines, certainly, a lot has been said about 
competition, which I am very troubled by as well--the lack of 
competition and how that does not bring prices down.
    So, first, for Lieutenant Governor Taylor, you have been 
particularly outspoken about your concerns about the reduction 
of competition. And, I think you said, in your testimony, too, 
that we need to make sure that it continues to be robust.
    Under your role as an insurance commissioner, do you have 
the authority to hold public hearings?
    Ms. Taylor. Yes, in some cases I do, Senator Peters.
    Senator Peters. So, were you asked to hold any public 
hearings about the merger between Aetna and Humana?
    Ms. Taylor. Yes, we were, Senator Peters.
    Senator Peters. Did you hold any of those public hearings?
    Ms. Taylor. I did not.
    Senator Peters. So, here we have two major insurance 
companies--and I think you talked about how some places in Ohio 
have just one insurance company--and now you have two major 
providers in your State combining, which means less 
competition. You have talked a great deal about how we have to 
keep robust competition--and it was my understanding that a 
number of groups in Ohio did ask you to hold public hearings, 
because there were concerns that this merger was going to 
reduce competition, it was going to raise costs, it was going 
to decrease network adequacy, and it was going to hinder 
success to the individual market in Ohio.
    So, why did you choose not to hold those hearings on the 
merger?
    Ms. Taylor. Thank you, Senator Peters. I was referring to 
my health policy expert. The law, in this case, would not have 
permitted us to hold a public hearing, because they had met the 
requirements, under the law, to proceed. There is no specific 
statute that would have said that we could have or should have 
held public hearings in this particular situation.
    Senator Peters. So, are you working to change that law in 
Ohio?
    Ms. Taylor. No, I am not.
    Senator Peters. Do you think it would be good to have 
public hearings before a major merger of the magnitude that we 
are seeing in Ohio, which will limit competition?
    Ms. Taylor. Obviously, as you well know, each State deals 
with these types of acquisitions and mergers differently--but 
they also impact States in a different way. So, where you may 
have a merger of two very large insurance companies--obviously, 
being reviewed by the Department of Justice (DOJ), where a 
determination will be made on its face in total--whether or not 
there are competitive issues, States deal with this 
individually. And, individual States may have a different 
impact on overall competition.
    So, where Ohio may be less impacted by that particular 
merger--from a competitive perspective--you might speak to 
another commissioner of another State where they would express 
more concern, because of the nature of the market that they 
hold within that State, the type of business that they write, 
and where and how it might impact competition.
    Senator Peters. So, it sounds like it is a good reason why 
you should have public hearings in your State, because every 
State is different. You would certainly want to understand how 
mergers would impact your State. And, certainly, I would think 
the people of Ohio would be interested to have that kind of 
transparency.
    And, really, when we are talking about consolidation and 
what is happening, I am particularly concerned--and I am sure 
my colleagues have received all sorts of correspondence on what 
is happening with drug manufacturers--the recent EpiPen 
situation, where you have a drug that really has not changed 
much in years, as far as its composition, and, yet, we have 
seen a 400-percent cost increase by the drug company.
    Now, we understand a drug company's need to charge a fair 
price to have research and development (R&D) and to develop 
products. And, we all agree that there has to be some return to 
them. But, when you have a drug that has been out in the 
marketplace and has not changed, and you see a 400-percent 
increase that is then passed on either to the individuals who 
buy it or to the insurance companies that have to cover it--I 
just had a group of dermatologists in my office earlier this 
week. And, they are saying that they are seeing 400- 500-, and 
600-percent increases in basic creams--things that may have 
cost--what they were saying was, $4 or $5 in the past--are now 
several hundred dollars for a tube of cream for dermatologists. 
And, these drug companies are increasing these prices.
    So, maybe, I will open it to the panelists and maybe Mr. 
Kreidler will mention--what should we be doing? And then, the 
others--what should we be doing to reign in these outrageous 
price increases from drug companies when there is not even a 
change in their product--it is at the end of their life cycle--
and they are just profiting? The only one that seems to be 
rewarded are the Chief Executive Officers (CEOs) of these 
companies. They are getting huge bonuses.
    Chairman Johnson. We will take that as a question for the 
record. We are over in time. And, you can submit your responses 
to Senator Peters for the record.
    Senator Portman, you had a quick comment.
    Senator Carper. Mr. Chairman, I would ask for unanimous 
consent that the panel be given, like, 2 minutes to respond, 
please.
    Chairman Johnson. Two minutes maximum.
    Senator Carper. Thank you. Thank you a lot.
    Senator Peters. Two minutes to respond to a major reason 
why health care costs are going up in this country? That is 
worth 2 minutes.
    Chairman Johnson. You could have started your questioning 
with that. But, anyway, 2 minutes. And then, if you have a 
further response, you can----
    Senator Portman. Mr. Chairman.
    Chairman Johnson. Senator Portman.
    Senator Portman. All of us have appointments. I have 
constituents waiting for me. And, I appreciate the fact that 
you want to have more time than you are allotted. The rest of 
us have been here all morning, listening to this testimony. I 
also appreciate the fact you want to get an answer to your 
question, but you could have asked that question, rather than 
asking a question that is totally unrelated to this hearing to 
our Lieutenant Governor--who did a terrific job answering you, 
by the way, by saying you are wrong. She did not even have the 
ability under the law to do what you claim she should have 
done. So, I just want to state that for the record as well. I 
am happy to stay and keep the constituents waiting, but I hope 
we can keep to our time. And, I hope Members would show up to 
these hearings to be able to listen to the testimony and hear 
from these experts, rather than taking our time here at the 
end.
    Senator Peters. Well, if I may say, I was here, and you 
will note I was here and heard the testimony from these folks. 
And, I did leave to vote. So, I am sorry that I went to vote, 
but it is one of our requirements, Senator Portman.
    Chairman Johnson. I understand that.
    I will give you 2 minutes, but let us go because I also 
have another hearing to go to.
    So, does anybody want to respond? Start the clock.
    Ms. Taylor. So, at the Department of Insurance, we regulate 
the business of insurance. We do not regulate health care, nor 
do we have any authority over the regulation of health care 
costs.
    Chairman Johnson. OK. Does anybody else want to comment on 
that?
    Mr. Wieske. It is the same in our State.
    Mr. Gerhart. It is the same in our State. But, I would 
agree. Prescription drugs--in particular, specialty drugs--are 
a major issue.
    Mr. Kreidler. I would absolutely agree. And, I think it is 
important to keep in mind that, before the Affordable Care Act, 
we were seeing actual rate increases that were going up faster 
than what we are seeing right now. So, this is not a new 
feature, and I think it has been well stated by all of the 
Committee Members, Mr. Chairman, that we really need to start 
to focus on how we can make this work better.
    Chairman Johnson. I would suggest the Food and Drug 
Administration (FDA) reform. It used to take about 10 years 
from discovery to approval of a drug. Now, it takes about 14 
years. It used to cost about a billion dollars, now it is $2.5 
billion. There would be a good place to start--again, 
governmental reform at the FDA.
    Senator Carper, do you have additional questions before I 
close it out?
    Senator Carper. Just a pretty easy one--maybe, a yes or no.
    We talked a bit today about the value of having States 
increase their coverage under Medicaid and the positive effect 
you can have, in terms of making the marketplaces work better. 
And, as an Ohio State alumni--somebody who cares a lot about 
Ohio--I follow what goes on there--followed my friend Kasich as 
well from afar. But, your testimony--and I applaud him for 
having made the change in Ohio that a lot of other States have 
made.
    But, your testimony does not acknowledge the important role 
that the Affordable Care Act played in allowing States to 
expand Medicaid. And, I would just ask: Is this something--do 
you support Medicaid expansion in your home State of Ohio?
    Ms. Taylor. So, to address the reason----
    Senator Carper. You do not have to go into any depth. Is 
that something you support? I know the Governor does.
    Ms. Taylor. There is no statement here, because I do not 
regulate Medicaid. It is a separate agency. And, I support the 
Governor in the decision that he made.
    Senator Carper. So, you think he has done the right thing?
    Ms. Taylor. I support the Governor in the decision he made.
    Senator Carper. All right. Thank you.
    Chairman Johnson. Thank you, Senator Carper.
    Again, I want to thank all of the witnesses. In the spirit 
of bipartisanship, here would be my suggestion for a little 
fix: Eliminate the individual mandate and return a little 
freedom to Americans. Let the States define what insurance is--
let the States regulate. That is the vision of our founding 
fathers--government is supposed to govern. That would return 
choice to the American public. And, I am happy to repeal the 
Cadillac tax.
    So, there would be my little olive branch. You want to do 
some bipartisan reform to fix this, you eliminate the 
individual mandate, you put the States back in charge of 
defining and regulating insurance products, and you eliminate 
the Cadillac tax. That would be a good place to start.
    Again, thank you all for your thoughtful testimonies and 
for traveling here. I would ask unanimous consent to enter a 
statement by Christina Corieri\1\, a senior policy advisor to 
Arizona Governor Doug Ducey, for the record, without objection.
---------------------------------------------------------------------------
    \1\ The statement of Christina Corieri appears in the Appendix on 
page 99.
---------------------------------------------------------------------------
    Senator Carper. Yes.
    Chairman Johnson. With that, the hearing record will remain 
open for 15 days, until September 30, 5 p.m., for the 
submission of statements and questions for the record.
    This hearing is adjourned.
    [Whereupon, at 12:24 p.m., the Committee was adjourned.]

                            A P P E N D I X

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