[Senate Hearing 115-584]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 115-584
 
    STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE INDIVIDUAL 
          INSURANCE MARKET FOR 2018: HEALTH CARE STAKEHOLDERS

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

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                                   ON

     EXAMINING STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE 
     INDIVIDUAL INSURANCE MARKET FOR 2018, FOCUSING ON HEALTH CARE 
                              STAKEHOLDERS

                               __________

                           SEPTEMBER 14, 2017

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                 Pensions
                                 
                                 
                                 
                                 
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                U.S. GOVERNMENT PUBLISHING OFFICE
                   
26-932 PDF                WASHINGTON : 2019             
        


          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  LAMAR ALEXANDER, Tennessee, Chairman
                  
MICHAEL B. ENZI, Wyoming            PATTY MURRAY, Washington
RICHARD BURR, North Carolina        BERNARD SANDERS (I), Vermont
JOHNNY ISAKSON, Georgia             ROBERT P. CASEY, JR., Pennsylvania
RAND PAUL, Kentucky                 AL FRANKEN, Minnesota
SUSAN M. COLLINS, Maine             MICHAEL F. BENNET, Colorado
BILL CASSIDY, M.D., Louisiana       SHELDON WHITEHOUSE, Rhode Island
TODD YOUNG, Indiana                 TAMMY BALDWIN, Wisconsin
ORRIN G. HATCH, Utah                CHRISTOPHER S. MURPHY, Connecticut
PAT ROBERTS, Kansas                 ELIZABETH WARREN, Massachusetts
LISA MURKOWSKI, Alaska              TIM KAINE, Virginia
TIM SCOTT, South Carolina           MARGARET WOOD HASSAN, New
                                    Hampshire
              
                                      
                                         
               David P. Cleary, Republican Staff Director
         Lindsey Ward Seidman, Republican Deputy Staff Director
                  Evan Schatz, Democrat Staff Director
              John Righter, Democrat Deputy Staff Director

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                      THURSDAY, SEPTEMBER 14, 2017

                                                                   Page

                           Committee Members

Alexander, Hon. Lamar, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     1
Murray, Hon. Patty, a U.S. Senator from the State of Washington, 
  opening statement..............................................     4
Baldwin, Hon. Tammy, a U.S. Senator from the State of Wisconsin..     6
Bennet, Hon. Michael F., a U.S. Senator from the State of 
  Colorado.......................................................     6
Scott, Hon. Tim, a U.S. Senator from the State of South Carolina.     7
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming..    42
Collins, Hon. Susan M., a U.S. Senator from the State of Maine...    46
Casey, Hon. Robert P., Jr., a U.S. Senator from the State of 
  Pennsylvania...................................................    47
Paul, Hon. Rand, a U.S. Senator from the State of Kentucky.......    49
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....    51
Warren, Hon. Elizabeth, a U.S. Senator from the State of 
  Massachusetts..................................................    51
Murkowski, Hon. Lisa, a U.S. Senator from the State of Alaska....    55
Murphy, Hon. Christopher S., a U.S. Senator from the State of 
  Connecticut....................................................    62
Kaine, Hon. Tim, a U.S. Senator from the State of Virginia.......    64
Hassan, Hon. Margaret Wood, a U.S. Senator from the State of New 
  Hampshire......................................................    66
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode 
  Island.........................................................    67

                               Witnesses

Sethi, Manny, M.D., President, Healthy Tennessee, Orthopedic 
  Trauma Surgeon, Nashville, TN..................................     7
    Prepared statement...........................................     9
Turney, Susan L., M.D., MS, FACP, FACMPE, Chief Executive 
  Officer, Marshfield Clinic Health System, Inc., Marshfield, WI.    11
    Prepared statement...........................................    13
Ruiz-Moss Robert , Vice President, Individual Market Segment, 
  Anthem Inc., Denver, CO........................................    20
    Prepared statement...........................................    21
Postolowski, Christina , Rocky Mountain, Regional Director, Young 
  Invincibles, Denver, CO........................................    29
    Prepared statement...........................................    31
Farmer, Raymond G., Director, South Carolina Department of 
  Insurance, NAIC, Secretary-Treasurer, Columbia, SC.............    38
    Prepared statement...........................................    39

                                 (iii)
  

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.
    American College of Physicians Statement for the Record......    72
    Habilitation Benefits Coalition Testimony for the Record.....    76
    Joint Statement for the Record...............................    79
    The American Congress of Obstetricians and Gynecologists, 
      Womens's Health Care Physicians............................    82
    Testimony by Margaret Murray.................................    82
    Appendix A Evaluation of Alternatives to the Individual 
      Mandate prepared by Wakely Consulting Group................    85
    Letter from ACOG to Lamar Alexander and Patty Murray.........    92
    Response by Susan L. Turney to questions of:.................
        Chairman Alexander.......................................    92
    Response by Manny Sethi to questions of:.....................
        Senator Whitehouse.......................................    94
    Response by Raymond G. Farmer to questions of:...............
        Senator Whitehouse.......................................    94
    Response by Christina Postolowski to questions of:...........
        Senator Whitehouse.......................................    95



  


    STABILIZING PREMIUMS AND HELPING INDIVIDUALS IN THE INDIVIDUAL 
          INSURANCE MARKET FOR 2018: HEALTH CARE STAKEHOLDERS

                              ----------                              


                      THURSDAY, SEPTEMBER 14, 2017

                                       U.S. Senate,
                    Committee on Health, Education, Labor, 
                                              and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:10 a.m., in 
room 430, Dirksen Senate Office Building, Hon. Lamar Alexander, 
Chairman of the committee, presiding.
    Present: Murray, Enzi, Paul, Collins, Murkowski, Scott, 
Young, Casey, Franken, Bennet, Whitehouse, Baldwin, Murphy, 
Warren, Kaine, and Hassan.

                 Opening Statement of Senator Alexander

    The Chairman. Good morning. The Senate Committee on Health, 
Education, Labor, and Pensions will please come to order.
    This morning we are holding our fourth hearing on 
stabilizing premiums and ensuring access to insurance in the 
individual health insurance market for 2018.
    Senator Murray and I will each have an opening statement, 
and then we will introduce our five witnesses. Welcome to you. 
After their testimony, senators will have an opportunity to ask 
the witnesses 5 minutes of questions.
    To begin with, we ought not to take for granted the three 
hearings this committee has had over the last 10 days.
    For 7 years, hardly a civil word was spoken between 
Republicans and Democrats on the Affordable Care Act. It was 
Trumpcare versus Obamacare, day in and day out. But for the 
last 10 days, senators from both sides of the aisle have 
engaged in serious discussion for several hours at a time about 
what Congress can do between now and the end of this month to 
help limit premium increases for 18 million Americans next year 
and begin to lower premiums in the future; and also to prevent 
insurers from leaving the markets where those 18 million 
Americans buy insurance.
    Last week, between the meetings held before our hearings 
such as the one we had today and the hearings themselves, for 
two consecutive days, half of the members of the U.S. Senate 
participated in bipartisan conversations about getting a result 
on health insurance.
    I want to thank Senator Murray once again for her 
leadership in helping make that happen. These have been focused 
hearings, they have been bipartisan hearings, and I think they 
have been refreshing for most of the members of the Senate who 
are hungry for that sort of opportunity to see if we can work 
together to get a result.
    At last week's hearings, we heard from State insurance 
commissioners, then from Governors, and on Tuesday, from 
experts in State flexibility. During those hearings, three 
themes emerged, in my opinion, that represent a working 
consensus for stabilizing premiums in the individual insurance 
market in 2018.
    First, the first theme is congressional approval of 
continued temporary funding of the cost-sharing payments that 
reduce co-pays and deductibles for many low-income Americans on 
the exchanges.
    Second, senators from both sides of the aisle suggested 
expanding the so-called ``copper plan'' already in the law so 
anyone, not just those 29 or under, could purchase a lower-
premium, higher-deductible plan that keeps a medical 
catastrophe from turning into a financial catastrophe.
    Third, this was advocated by State insurance commissioners, 
Governors, and senators from both sides of the aisle to give 
States more flexibility in the approval of coverage, choices, 
and prices for health insurance.
    Most of the discussion about flexibility has centered on 
amending Section 1332 State innovation waiver, because it is 
already a part of the Affordable Care Act.
    In looking at 1332, we heard a number of commonsense 
suggestions about how to improve and speed up the process, such 
as reducing the 6-month application review period and allowing 
a copycat application so that if Senator Murray's State gets 
something approved, why can't Tennessee come along and say, 
``We want to do what Washington State did with one change?'' 
Such changes will make it easier for States to use 1332 waivers 
to create programs, like the reinsurance program in Alaska or 
the invisible high-risk pool in Maine, to help cover higher-
cost individuals.
    At Tuesday's hearing on State flexibility, witnesses 
recommended how to amend 1332 to give States the authority to 
offer a larger variety of health insurance plans with varying 
benefits and payment rules. That was discussed extensively at 
our hearing on Tuesday by all five witnesses, and several 
witnesses suggested that ``actuarial equivalency''--they used 
those two words--is a useful way to do that. That means, in 
effect, that while States might be able to offer plans with 
varying levels of benefits, that the value of those plans to 
consumers has to be similar to the plans currently offered on 
the Affordable Care Act exchanges or in the individual market.
    At our hearing on Tuesday, former Governor Michael Leavitt, 
a former Secretary of Health and Human Services, suggested that 
with this approach plans would be of equal value but wouldn't 
have to be carbon copies of one another.
    He used a car as an example. He said if you looked at 
several $25,000 cars, one might have a backup camera, one might 
have more horsepower, but they are still $25,000 cars. So 
health plans might have different benefits, but they have to be 
of the same value to the consumer. He testified that this 
``actuarial equivalence'' would give States, in his words, 
``the ability to construct an option menu of benefits and 
provide either the State or even consumers with the ability to 
choose plans that weigh those differently.''
    The Governor of Massachusetts made a similar suggestion 
last week at our hearing. He said that with current regulations 
and guidance, 1332 waivers are administered in such a way that 
Massachusetts cannot offer anything but an existing Affordable 
Care Act exchange plan.
    Governor Baker testified, ``Greater flexibility is also 
needed around benefit design. Value-based insurance design 
approaches to benefit design seek to align patients' out-of-
pocket costs, such as copayments and deductibles, with the 
value of services.''
    He continued, ``Massachusetts is committed to providing 
access to quality, affordable health insurance for our 
residents. Rather than walking away from that commitment, we 
believe that increased flexibility would allow us to meet this 
commitment in more effective ways.''
    This type of approach to insurance allows individuals the 
opportunity to have a more personalized health insurance plan. 
It can benefit healthy individuals, as well as those with 
complex and chronic medical conditions.
    I made clear at Tuesday's hearing, and I want to repeat, 
that I am not in any way proposing that we change the patient 
protection guardrails already written in Section 1332, 
including the pre-existing condition protections--that nobody 
can be charged more if they have a pre-existing condition and 
that everyone is guaranteed to be sold insurance; the 
requirement that your insurance policy cannot be rescinded; 
that those under 26 may remain on their parents' insurance; and 
there may be no annual or lifetime limits on your health 
benefits. That is not a part of the proposal, changing any of 
that.
    Our goal is to see if we can come to a consensus by early 
next week so that we can hand, Senator Murray and I can hand, 
with hopefully the support of several Republicans and 
Democrats, could hand Senators McConnell and Schumer an 
agreement that the Congress can pass by the end of the month 
that would help limit premium increases for 18 million 
Americans next year and begin to lower premiums after that, and 
to prevent insurers from leaving the markets where these 18 
million Americans buy insurance.
    So that is our schedule.
    Now, what happens if we don't succeed?
    Last year, 4 percent of American counties had one insurance 
company on the exchange. This year, 36 percent have one insurer 
on the exchange. For 2018, CMS tells us that one-half of the 
counties will have one or zero insurers on the exchange. In 
Tennessee, it is 78 of our 95 counties.
    We have heard from the State insurance commissioners that 
this by itself, this monopoly in so many counties, drives up 
premiums because it creates those monopolies. Without cost-
sharing reductions, as has been pointed out by several 
senators, the Congressional Budget Office, the Joint Committee 
on Taxation, and our witnesses have said that premiums will 
increase an additional 20 percent in 2018.
    So premiums go up 20 percent, the Federal debt goes up $194 
billion over 10 years to pay for the higher premiums, and 5 
percent of the people will be living in bare counties after 
just 1 year. That is according to CBO and Joint Tax, and our 
witnesses.
    So let's keep in mind also that even if President Trump 
wanted to extend the cost-sharing payments, the courts might 
not allow him to do that, unless we act. The Federal District 
Court for the District of Columbia has said that the President, 
whether it is President Obama or President Trump, does not have 
the authority to continue the cost-sharing reduction payments 
because Congress never appropriated the funds. That is what the 
Court said.
    I want a result, and a part of a result that limits 
premiums in 2018 and begins to lower premiums in the future, is 
flexibility for States in the approval of coverage, choices, 
and prices.
    To get a result, Republicans will have to agree to 
something many do not want to agree to, additional funding 
through the Affordable Care Act, and Democrats will have to 
agree to something that some are reluctant to agree to, and 
that is more flexibility for States. That is called a 
compromise.
    I simply cannot go to the Republican majority in the 
Senate, the Republican majority in the House, and to the 
Republican President to extend the cost-sharing payments 
without giving States more meaningful flexibility.
    Now to today's hearing. Today we are looking at what 
patients are facing if we do not reach a compromise.
    For example, we will hear from a patient, a doctor, and a 
hospital about what happens when an insurance plan leaves your 
State, and when you lose your doctor in the middle of your 
care.
    It is clear that to truly protect patients, we need to 
stabilize the markets, limit premium increases, and begin to 
lower premiums in the future.
    I look forward to the testimony of our witnesses.
    Senator Murray.

                  Opening Statement of Senator Murray

    Senator Murray. Well, thank you very much, Chairman 
Alexander. I am really grateful to you for returning us to this 
committee process, and I think it has been very productive. 
This is really the way things ought to go and the way we should 
be getting things done in the Senate, and I really appreciate 
your leadership in this.
    I want to thank all of our colleagues who are joining us 
today, and our witnesses who are taking time out, as well.
    As the Chairman said, this is our last scheduled hearing on 
bipartisan steps we can take to stabilize the individual 
insurance market so that millions of Americans will not face 
higher premiums and fewer coverage options in 2018 and beyond.
    I am really pleased that we have had very productive, 
bipartisan conversations over the last 2 weeks.
    In the coffees we have held with our witnesses and in the 
hearings themselves, we have gotten valuable input from 
Governors, experts, and members on both sides of the aisle, as 
well as from Senators who don't serve on this committee but 
care deeply about making sure our health care system works 
better.
    I am really grateful for all of this input, and I think it 
indicates an enormous amount of common ground on key issues, so 
I want to take this opportunity to talk about that in a little 
bit more detail.
    We have heard from many people, including Republican and 
Democratic witnesses, who see the need for multiple years of 
certainty on out-of-pocket cost reductions, as well as the need 
for reinsurance to assist States in strengthening markets.
    We have acknowledged the importance of making sure outreach 
around open enrollment is robust and effective so that families 
are informed about their coverage options.
    I was also glad to hear in Tuesday's hearing that we agree 
on the need to uphold patient protections in any deal we reach.
    I have been glad to hear ideas, inside these hearings and 
out, for offering more flexibility to States, many of which 
take approaches that do not undermine our core goal of 
stabilizing the markets and lowering costs for families.
    Governors have suggested ways to speed up and streamline 
the process in ways that do not result in coverage loss, raise 
patients' costs, or undermine quality of care.
    Insurance commissioners and patients have talked about ways 
to increase flexibility and actually allow for improvements for 
patients, but without putting insurance companies back in 
charge or undercutting core patient protections. So I am really 
encouraged by that and hopeful we can get a result.
    Now, to be clear, some of the proposals I have heard 
discussed would leave people vulnerable to negative 
consequences like undermining the essential health benefits or 
taking us back to a time when plans did not cover maternity 
care, substance use disorder treatment, mental health, or 
prescription drugs, and that would be unacceptable, and I do 
not think either side expects that we settle on those larger 
issues in this current negotiation.
    But I am very confident there is room for common ground 
right here in the coming days that makes it easier for States 
to innovate in ways that make health care work better for 
patients, and I am looking forward to continued discussion on 
that.
    I feel optimistic that there is much more we agree on than 
disagree on, and I think many of us here today feel the same 
way. I want to again express my appreciation to all of your 
work, Mr. Chairman, in getting us to this point.
    People across the country are looking to Congress for 
solutions on health care. It is a deeply personal issue and one 
that has been far too partisan and divisive for too long. I 
hope that our conversations over the last few weeks can mark a 
turning of the page away from that kind of partisanship and 
that we can take some steps in the next few days in a very 
short amount of time, and then I hope we keep the conversation 
going in this committee in the months ahead.
    So with that, again, I want to thank all of our witnesses 
for being here for the coffee this morning, for your input, for 
your willingness to come and share with us your ideas.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you, Senator Murray.
    I am pleased to welcome our five witnesses to today's 
hearing. I thank each of you for taking the time to testify.
    Our first is Dr. Manny Sethi. He's President of Healthy 
Tennessee and an orthopedic trauma surgeon from Nashville. He 
and his wife are founders of Healthy Tennessee, a non-profit 
organization designed to promote preventive health care across 
the State. He is an assistant professor at Vanderbilt 
University and the Director of the Vanderbilt Orthopedic 
Institute Center for Health Policy.
    Senator Baldwin, would you like to introduce our next 
witness?

                      Statement of Senator Baldwin

    Senator Baldwin. Yes. Thank you, Mr. Chairman and Ranking 
Member.
    I am honored to introduce Dr. Susan Turney, CEO of the 
Marshfield Clinic Health System in Marshfield, Wisconsin. Dr. 
Turney has a wealth of experience, including as a practicing 
internal medicine physician. She has also held leadership 
positions at the Medical Group Management Association and the 
Wisconsin Medical Society.
    Marshfield serves over 1 million rural Wisconsinites 
through its health system and its insurance plan, Security 
Health Plan. The population is older, has lower average incomes 
than most in our State, which is why they have such a critical 
story to share about the benefits of the health laws' 
protections, but also why we need to ensure immediate and long-
term stability for the Wisconsin market to allow Marshfield to 
maintain this success.
    In fact, Security Health Plan recently expanded in our 
State to ensure that we would not have a bare county after 
another insurer left, and we must now do our part and provide 
long-term Federal certainty.
    Dr. Turney, welcome to the committee. Thank you for joining 
us to share your expertise and experiences. We really 
appreciate it.
    The Chairman. Thank you very much, Senator Baldwin.
    Senator Bennet, would you introduce the next two witnesses, 
please?

               Statement of Senator Bennet

    Senator Bennet. Thank you, Mr. Chairman.
    It really is a privilege to have two people here from my 
home State of Colorado. Christina Postolowski is the Rocky 
Mountain Regional Director for Young Invincibles, a non-profit, 
non-partisan research and advocacy organization working to 
expand economic opportunity for young adults. Previously, Ms. 
Postolowski served as a consumer representative to the National 
Association for Insurance Commissioners. Her work has appeared 
in national and State news outlets.
    Robert Ruiz-Moss serves as Vice President for Anthem, where 
he oversees the company's individual market business across 14 
States, including Colorado. Mr. Ruiz-Moss has extensive 
experience in health care. In fact, Governor Hickenlooper, who 
testified before the committee last week, appointed him as an 
original board member of the Colorado Health Benefits Exchange. 
Mr. Ruiz-Moss is also an alum of the University of Colorado at 
Boulder.
    It has been a good month for our State in the HELP 
Committee, and I think it has been a good month for our 
committee overall.
    Mr. Chairman, I want to apologize to the witnesses that I 
have two other hearings this morning, so I am going to be going 
back and forth. Thank you.
    The Chairman. Thank you, Senator Bennet.
    Senator Scott, would you introduce our remaining witness?

                   Statement of Senator Scott

    Senator Scott. Thank you, Mr. Chairman.
    It certainly is my pleasure and my honor to introduce 
Director Ray Farmer to the committee. Since his appointment as 
Director of South Carolina Department of Insurance in 2012, he 
has distinguished himself as a steady leader and a humble man 
of integrity guiding our State through times of uncertainty. A 
veteran in his field, he comes to us with over four decades of 
experience, previously serving as a Deputy Insurance 
Commissioner of the Enforcement Division for the Georgia 
Department of Insurance, and later as Vice President of the 
American Insurance Association.
    Over the course of his career, Director Farmer has been 
recognized numerous times for his contributions to the public 
good. He was recently elected as Secretary-Treasurer for the 
National Association of Insurance Commissioners, affording him 
insight into the challenges of the insurance industry across 
the country.
    His profound knowledge base, extensive experience, and core 
values have made him an indispensable resource for me, my 
staff, and our State. I am grateful to have him here with us 
today, and I look forward to your testimony, Director Farmer.
    The Chairman. Thank you, Senator Scott.
    Now we will ask the witnesses each to take about 5 minutes 
and please summarize your testimony, and then we will go to a 
round of questions from the senators.
    Let's start with Dr. Sethi.

 STATEMENT OF MANNY SETHI, M.D., PRESIDENT, HEALTHY TENNESSEE, 
            ORTHOPEDIC TRAUMA SURGEON, NASHVILLE, TN

    Dr. Sethi. Well, good morning, Chairman Alexander, Senator 
Murray, and distinguished members of the committee. Thank you 
so much for the invitation to discuss the very serious 
challenges Tennesseans are facing in obtaining health 
insurance.
    I currently serve as the President of Healthy Tennessee, a 
non-profit organization that my wife and I founded over 7 years 
ago. Our mission has been to improve the lives of Tennesseans 
through preventative care by way of online education, statewide 
symposiums, and free health fairs for those in need. I am also 
a practicing orthopedic trauma surgeon at a major academic 
medical center, and today I speak on my own behalf.
    I am a product of rural Tennessee and the American Dream. 
My parents were both immigrants from India and doctors in the 
small town of Manchester. I learned my first lessons about 
health riding shotgun in my dad's blue 1980 Oldsmobile as he 
would make house calls.
    Thirty years have passed since that time, but we continue 
to rank near the bottom for almost every chronic health 
condition, an issue that is central to the survival of the 
individual market in our State. We certainly face many health 
challenges in Tennessee, but one problem is certainly not a 
dearth of government funding. In fact, last year alone we spent 
$12 billion, with a ``B,'' 33 percent of our State budget, on 
Medicaid. We must get on the front side of this problem with 
prevention before it is too late.
    Our organization has traveled across Tennessee, one 
community at a time, hosting free preventive health screenings 
for those in need and educating citizens about the benefits of 
living a healthy lifestyle. Our efforts are all powered by 
local communities, an all-volunteer army of local nurses and 
doctors with boots on the ground who give of their time to help 
a neighbor in need.
    From rural Appalachia all the way to Memphis, we have seen 
patients who can no longer afford the rising premiums of the 
individual market, many who suddenly lost coverage when an 
insurer pulled out. My dad always used to tell me, ``People 
don't care what you know until they know that you care.'' So at 
our events, we always start with a lot of listening. We spend 
months meeting local community leaders in each area we visit to 
determine the best path forward.
    I will never forget this trucker I met in Hawkins County. 
His blood pressure was 200 over 100, which is out of control, 
and his body mass index was 50, indicating severe obesity. As I 
spoke with this gentleman, I heard the story of a very proud 
and hard-working man who just wanted to make ends meet. He 
didn't want a handout.
    But here is the problem: His income was too high for a 
subsidy on the individual market, and he just simply could not 
afford the insurance or a basic blood pressure pill. With 
premiums rising over 139 percent in 3 years, like so many 
Tennesseans, he was priced out of coverage. We started to talk 
about diet, about weight loss, physical activity modification, 
and other conversation measures that would help him. As our 
conversation progressed, I could really see the light bulb turn 
on. He understood.
    Now, personally, I believe that repeal and replace was our 
best option to achieve a more patient-centered system. But 
today we find ourselves in a moment when the individual 
insurance market is in critical condition, and we must take 
action rapidly. I view the potential solutions to this problem 
through the lens of a trauma surgeon.
    First, we must stop the bleeding, and then we can make 
health care healthy again. We have to take three steps fast. 
First, as you have heard over the last 2 weeks, let's continue 
the cost-sharing reduction program. Premiums are skyrocketing 
in our State as insurers fear they are going to be left to bear 
the cost.
    Second, let's continue to create Federal reinsurance 
program risk pools and allow individuals with serious chronic 
conditions to get coverage and allow more affordable options 
for younger, healthy patients.
    Third, I believe that a one-size-fits-all program made 
right here in Washington, DC, just doesn't fit the needs of 
Tennesseans. Open the door to innovation and allow States to 
create their own insurance products like catastrophic coverage 
for all.
    But in the longer term, to tackle this crisis we must focus 
on the rising costs of health care and emphasize incentivizing 
healthy behaviors and placing more transparency around cost. 
For example, I believe that health savings accounts send a very 
powerful message to consumers about wellness and 
accountability. We must also transition health care 
reimbursement toward a value-based model that incentivizes 
better outcomes. Finally, we need to be less talk and more 
action about prevention. More spending will not solve this 
problem.
    To make real progress, we must empower local communities 
and not the Federal Government to create local solutions. If we 
trust our citizens, we will meet with success. It is very 
simple: people want to help people. I have seen it across 
Tennessee.
    Thank you so much for allowing me to share my story with 
you. It is an honor to be here.
    [The prepared statement of Dr. Sethi follows:]
                  Prepared Statement of Manny K. Sethi
                                summary
    Throughout the last decade, Tennessee has consistently found itself 
ranking near the bottom of all States in terms of the health of its 
citizens. Recent statistics show that 13 percent of the adults in 
Tennessee have diabetes (we rank 46th), 34 percent are obese (we rank 
42nd) and almost 39 percent of the adult population in Tennessee has 
high blood pressure (we rank 44th). Surely we can do better, but the 
statistics speak for themselves and the people of Tennessee face 
daunting threats to health and wellness.
    Our struggles to get healthy in Tennessee are directly related to 
the challenges we face in the individual insurance market. Seventy-
eight of ninety-five counties have one insurer remaining. In 1 year, 
coverage rates have jumped anywhere from 44 percent to 62 percent. Some 
families are paying as much as $3000 per month and have seen an 
increase of $1000 in their monthly rates. In fact, over the past 3 
years, premiums have risen by more than 139 percent.
    Healthy Tennessee is a non-profit (501c3) organization that seeks 
to improve the lives of Tennesseans through preventative care by way of 
online education, statewide symposiums, and free health fairs for those 
in need.
    Our organization has traveled across Tennessee, one community at a 
time, hosting preventative health screenings and educating patients on 
the benefits of a healthy lifestyle. Our efforts are powered by local 
communities; an all-volunteer army of local nurses and doctors with 
boots on the ground, who give of their time to help a neighbor.
    We have cared for folks who can no longer afford the rising 
premiums of the individual market, and people who have suddenly lost 
coverage when an insurer pulled out. We have attempted to get on the 
front end of health problems with prevention by educating citizens on 
their own health. Our events focus on encouraging conservative measures 
to improve overall wellness such as modifications in diet, weight loss, 
and physical activity.
    There are three steps to be taken in the short-term to rescue the 
individual insurance market. First, we must continue the cost sharing 
reduction program. Second, we must quickly create risk pools for those 
individuals with serious chronic conditions, reducing premiums for 
young, healthy citizens. Third, I believe we must open the door for 
innovation and allow more flexibility for States to create their own 
insurance products.
    In the longer-term, to tackle this crisis we must focus on the 
rising costs of healthcare with an emphasis on incentivizing healthy 
behaviors and creating more transparency around pricing. For example, 
health savings accounts send a powerful message about wellness to the 
consumer. We must also transition healthcare reimbursement toward a 
value based care model to incentivize improved outcomes.
    We must be less talk and more action about prevention. To make real 
progress, we must empower communities and not the Federal Government to 
create local solutions. If we trust our citizens, we will meet with 
success. People want to help people; government just needs to get out 
of their way.
                                ------                                


                         INTRODUCTION

    Good Morning Chairman Alexander, Ranking Member Murray, and 
distinguished members of the committee. Thank you for the 
invitation to speak about the ongoing and serious challenges 
Tennesseans are facing in obtaining and maintaining health 
insurance.
    I currently serve as President of Healthy Tennessee, a non-
profit organization that my wife and I co-founded 7 years ago. 
Our mission has been to improve the lives of Tennesseans 
through preventative care by way of education, statewide 
symposiums, and free health fairs for those in need. I am also 
a practicing Orthopaedic Trauma surgeon at an academic medical 
center, and today I speak on my own behalf.

                      THE CHALLENGES IN TENNESSEE

    I am a product of rural Tennessee and the American Dream; 
my parents were both immigrants from India and doctors in the 
small town of Manchester. I learned my first lessons about 
health in our State as a boy, sitting shot-gun in my dad's blue 
1980 Oldsmobile as he made house calls.
    Thirty years have passed, but we continue to rank near the 
bottom for almost every chronic health condition. Recent 
statistics show that 13 percent of the adults in Tennessee have 
diabetes (we rank 46th), 34 percent are obese (we rank 42nd), 
and almost 39 percent of the adult population in Tennessee has 
high blood pressure (we rank 44th).
    Our struggles to get healthy in Tennessee are directly 
related to the challenges we face in the individual insurance 
market. Seventy-eight of ninety-five counties have one insurer 
remaining. In 1 year, coverage rates have jumped anywhere from 
44 percent to 62 percent. Some families are paying as much as 
$3000 per month and have seen an increase of $1000 in their 
monthly rates. In fact, over the past 3 years, premiums have 
risen by more than 139 percent.
    There are obviously many health challenges in Tennessee, 
but the problem is certainly not a dearth of government 
spending. In fact, last year we spent $12 billion dollars, 33 
percent of our State budget, on healthcare. The opportunity 
costs of this spending are enormous and come at the expense of 
investments in education and infrastructure. Instead, we must 
focus on getting on the front side of this problem with 
prevention before it's too late.
    Over the last 7 years our organization has traveled across 
Tennessee, one community at a time, hosting preventative health 
screenings and utilizing patients' own information to educate 
them about their health. Our efforts are powered by local 
communities across Tennessee; an all-volunteer army of local 
nurses and doctors with boots on the ground who give of their 
time to help a neighbor.

                            OUR EXPERIENCES

    From rural Appalachia to Memphis, we have seen patients who 
can no longer afford the rising premiums of the individual 
market--many have in fact opted to pay the tax penalty. We have 
cared for families in rural counties who have lost their 
coverage all together when an insurer pulled out. We hear these 
stories from hundreds of folks who attend our fairs.
    I have personally cared for patients who were victims of 
near life ending trauma. Together after multiple surgeries and 
clinic visits, we built the bonds of trust that come with time, 
when suddenly these individuals found their insurance coverage 
canceled. Having to play by the rules of the one insurer 
remaining in their county, they were forced to find a new 
doctor. I had an unbreakable bond with these patients, but it 
all changed due to circumstances out of our control. I just 
don't think that's right.
    My dad always told me, ``People don't care what you know 
until they know that you care.'' So, at our health events we 
start with a lot of listening. In fact, we spend months meeting 
local community leaders to understand the best path forward in 
each area we visit.
    I will never forget the trucker we met in Hawkins County. 
His Body Mass Index (BMI) was over 50, consistent with severe 
obesity, and his blood pressure was out of control, measuring 
200/100. As I spoke with this gentleman, I heard the story of a 
very proud and hardworking Tennessean who struggled to make 
ends meet and didn't want a hand out. His income was too high 
for a subsidy on the individual market and he just simply 
couldn't afford the insurance, or a basic blood pressure pill 
for that matter.
    With premiums that have doubled since 2014 and no 
government subsidy, he was priced out of coverage like so many 
of our citizens. Rising premiums led to 30,000 Tennesseans 
leaving the individual market last year alone.
    Together, we discussed diet, weight loss, and physical 
activity as conservative measures to help him. As our 
conversation progressed, I could see the light bulb turn on. He 
understood.

               POTENTIAL SHORT AND LONGER-TERM SOLUTIONS

    I personally believe that repeal and replace was our best 
option to find a more patient centered system that offers 
greater access and patient choice at affordable rates. But now, 
we find ourselves in a moment where the individual market in 
Tennessee is in critical condition and on the verge of 
collapse. We must rapidly take action, and I view the potential 
solutions through the lens of a trauma surgeon. We must first 
stop the bleeding, then work on getting healthcare healthy 
again.
    We must take three steps immediately. First, in order to 
stabilize the insurance markets, we must continue the cost 
sharing reduction program (CSR). Premiums are rapidly rising as 
insurers fear they will be left bearing the costs. These 
soaring costs are forcing young members out, saturating the 
market with higher-need and higher-cost patients, and further 
escalating prices in a troublesome cycle.
    Second, we must quickly create risk pools for those 
individuals with serious chronic conditions, allowing more 
affordable coverage options for young, healthy citizens.
    Third, I believe a one size fits all plan from Washington 
D.C. doesn't meet the needs of Tennesseans. Open the door for 
innovation and allow more flexibility for States to create 
their own insurance products. For example, a catastrophic plan 
should be available regardless of age or income status, which 
is currently not the case.
    In the longer-term, to tackle this crisis we must focus on 
the rising costs of healthcare with an emphasis on 
incentivizing healthy behaviors and creating more transparency 
around pricing.
    For example, health savings accounts send a powerful 
message about wellness to the consumer. We must also transition 
healthcare reimbursement toward a value based care model to 
incentivize improved outcomes.
    Finally, we need less talk and more action about 
prevention--more spending won't fix this problem. What ever 
happened to common sense approaches? What's wrong with using 
our resources on the front end to prevent chronic diseases from 
developing, instead of wasting billions of dollars when it's 
too late?

                              CONCLUSIONS

    To make real progress, we must empower communities and not 
the Federal Government to create local solutions. If we trust 
our citizens, we will meet with success. People want to help 
people; government just needs to get out of their way.
    It is an honor to be with you today. Thank you for this 
opportunity, and I look forward to answering any questions you 
may have.
    The Chairman. Thank you, Dr. Sethi.
    Dr. Turney, welcome.

   STATEMENT OF SUSAN L. TURNEY, MD, MS, FACP, FACMPE, CHIEF 
   EXECUTIVE OFFICER, MARSHFIELD CLINIC HEALTH SYSTEM, INC., 
                         MARSHFIELD, WI

    Dr. Turney. Thank you very much. I'd like to thank you, 
Chairman Alexander, and also Senator Murray, and the rest of 
the committee, and your tireless staff, for organizing these 
hearings to really look for a bipartisan means to address 
health coverage in the individual and in the small group 
market.
    Marshfield Clinic Health System is made up of several 
organizations, including a research foundation, a multi-
specialty physician-based practice with several hospitals, and 
an insurance subsidiary that is known as Security Health Plan. 
We do provide coverage throughout most of Wisconsin and 
commercial Medicare and Medicaid markets. Our health system has 
over 1.4 million patient encounters annually and does see 
patients from all 72 counties in the State.
    As Senator Baldwin mentioned, we serve a population that is 
older and poorer than the rest of Wisconsin, with a large 
portion of the population served by public health programs.
    Since the passage of the ACA, we have reduced the number of 
uninsured that we see by nearly 50 percent, from over 13,000 to 
under 7,000 patients; and at the same time, with the unique 
approach that the State of Wisconsin took implementing the ACA 
to ensure that there were no gaps in coverage, this has 
resulted overall in decreasing the number of uninsured across 
the State by 40 percent.
    Our health plan, Security Health Plan, does participate in 
the exchange marketplace, and we have enrolled nearly 30,000 
residents in the plan. It is important to note that nearly 95 
percent of those who enroll in this product receive subsidies 
to cover the cost of their health insurance, and over half 
receive the cost-sharing reduction subsidy.
    Well, we all agree that the ACA is not perfect, but before 
it was implemented we saw much larger variations in the health 
insurance for our patients, and many of the products that were 
sold on the market were substandard, not covering medications, 
certain procedures, hospitalizations or pre-existing 
conditions. These items have significantly stabilized and have 
helped reduce the cost for our patients, as well as for the 
health care industry at large.
    Regulatory relief that was offered earlier this year by 
Secretary Tom Price at HHS gave insurers tools to better manage 
their ACA individual population, but we do have several 
suggestions, and you're certainly going to hear a theme here.
    First of all, we believe that fully funding the cost-
sharing reduction payments is extremely important. Security 
Health Plan's ACA individual population, as I already noted, is 
heavily dependent on the cost-sharing reduction, subsidies that 
are paid monthly, to help our patients decrease the amount that 
they have to pay out-of-pocket. We recommend that Congress 
fully fund CSR payments to health insurance carriers for 2018 
and beyond, and allow States that have already reached their 
filing date to reopen the bids so that we can allow for that 
appropriate adjustment rate, and we will make it happen.
    Second of all, we need to re-extend the reinsurance 
program. The transitional reinsurance program that was 
established by the ACA did help us significantly, and it helped 
control and bring down premiums for the 3-years that it was in 
existence. Our plans show that without this reinsurance, in 
2014 rates would have been 20 percent higher, and in 2015 they 
would have been 12 percent higher.
    We recommend that Congress create a reinsurance program 
similar to that which expired so that we can stabilize premiums 
in that individual market for the long term.
    Third, we want to make sure that we reinstate the enrollee 
outreach programs. It is really critical that that happen. We 
cover 25,000 square miles. We have very limited resources in 
our communities, and health insurance and the subsidies that 
are available to help our area residents afford the coverage is 
a very complex and confusing topic for them. We recommend that 
the Navigator services should be reinstated and that the funds 
should be prioritized to these rural areas for community 
outreach.
    We will need to continue to alter our health care system. 
We need to meet the future needs of the American people, and we 
believe that these recommendations would be a big step in 
meeting those needs.
    Thank you for your time, and after we present I'd be happy 
to answer any questions.
    [The prepared statement of Dr. Turney follows:]
                   Prepared Statement of Susan Turney
                                summary
    This testimony will discuss the Marshfield Clinic Health System's 
experience with the Affordable Care Act (ACA) individual market, both 
on and off the Federal marketplace, and our perspective as a rural 
health system caring for this population.
    MCHS is made up of several organizations, including: a research 
foundation, a multi-specialty physician-based practice with several 
hospitals, and an insurance subsidiary known as Security Health Plan 
providing coverage throughout Wisconsin in commercial, Medicare and 
Medicaid markets. Our Health System has over 1.4 million patient 
encounters annually and sees patients from every county in Wisconsin.
    MCHS serves a population that is older and poorer than the rest of 
Wisconsin. In many communities a large portion of the population is 
covered by public health programs. The subsidization of health coverage 
for low income Wisconsinites under the ACA has helped mainstream tens 
of thousands into traditional commercial coverage through the Health 
Insurance Marketplace. The State of Wisconsin took a unique approach to 
the implementation of the ACA that has resulted in the uninsured rate 
dropping by nearly 40 percent. In many of the areas we serve there are 
very few large employers, so the population has been dependent on the 
individual and small group insurance market to achieve health coverage. 
SHP participates in the exchange marketplace and has enrolled 28,000 
residents in ACA plans. Between 95 and 98 percent of those who enroll 
in our Health Plan's insurance through the Health Insurance Marketplace 
receive subsidies to cover the cost of their health insurance.
    Stabilizing the market--Regulatory relief off red earlier this year 
by Secretary Tom Price at HHS gave health insurers tools to better 
manage their ACA individual population, but those reforms didn't go far 
enough to fully stabilize the market. We believe that the suggestions 
below will improve the ACA and ensure coverage for vulnerable 
populations.
a. Cost sharing reduction payments--SHP's ACA individual population is 
        heavily reliant on the cost sharing reduction (CSR) subsides 
        paid monthly to help our members lower their out-of-pocket 
        costs. Nearly half of the total enrollment in SHP's ACA 
        products is eligible and enrolled in this important program. We 
        recommend that Congress should fully fund CSR payments to 
        health insurance carriers for 2018 and beyond and allow States 
        that have already reached their filing deadline to reopen 
        carrier's bids to allow for an adjustment to rates.
b. Extension of the reinsurance program--The transitional reinsurance 
        program established by the ACA helped to hold down premiums in 
        2014, 2015 and 2016. Our Plan's experience shows that premiums 
        would have been nearly 20 percent higher in 2014 and 6 percent 
        higher in 2015, had this program not been in effect. We 
        recommend that Congress create a reinsurance program similar to 
        the program that expired in 2017 to stabilize premiums in the 
        ACA individual market for the long term.
c. Continuous coverage provision--The ACA provisions that provide for a 
        3-month grace period and avoid tax penalties has created a 
        perverse incentive for enrollees to stay insured for just 
        enough time to avoid the penalty. We recommend that Congress 
        should create a continuous enrollment provision or late 
        enrollment penalty similar to Medicare's Part B and Part D to 
        incentivize 12 month enrollment in the ACA individual market.
d. Risk adjustment program enhancements--We recommend that HHS' risk 
        adjustment program should pay carriers a capitation for members 
        whose risk scores exceed a certain predefined value. Lower-
        than-current future rate increases would reduce expenditures 
        for the advanced premium tax credits.
e. Federal funding for enrollee outreach--Health insurance and the 
        subsidies available to help area residents afford coverage is a 
        complex and confusing topic. We recommend that navigator 
        services should be re-instated and funds prioritized to rural 
        areas for community outreach.
    There is no doubt that the Affordable Care Act has flaws. There are 
aspects of the law that will need to be continually altered to meet the 
future health care needs of the American people. Our objective in this 
testimony is to offer resolutions that will immediately help to 
stabilize the market and ensure that our patients and members continue 
to have access to the care they need.
                                 ______
                                 
                               testimony
    On behalf of the physicians and staff and patients of Marshfield 
Clinic Health System (MCHS) I am honored to make the following 
statement. Throughout my comments I will be discussing our Health 
System's experience with the Affordable Care Act (ACA) individual 
market, both on and off the Federal marketplace, and our unique 
perspective as a rural health system caring for this population.
    The ideas that we offer in the following testimony are what we 
believe will have the greatest impact on stabilizing the market in the 
short and long term. The ideas presented are not partisan. Instead, 
they seek a higher ground for our discussion focused on how we can best 
help the patients and members we serve maintain health coverage to 
ensure the best possible health care outcomes.
               i. a history of caring for rural wisconsin
    The mission of MCHS is to enrich our patients' lives by creating 
healthy communities through accessible, affordable and compassionate 
health care.
    MCHS is made up of several organizations, including: a multi-
specialty physician-based practice with several hospitals in various 
stages of development and construction, and an insurance subsidiary 
providing coverage throughout Wisconsin in commercial, Medicare and 
Medicaid markets. We have 663 physicians and 400 non-physician 
providers across 80 medical specialties and more than 9,000 staff MCHS 
has over 1.4 million patient encounters annually and sees patients from 
every Wisconsin county, every State in the United States and nearly 30 
Foreign Nations.
    There are many examples of how MCHS has been innovative in serving 
the care needs of our rural service area. Below are some recent 
examples that demonstrate our commitment to defining the future of 
health care services for our patients:
 Precision Medicine Program: Three Wisconsin-based medical and 
    scientific organizations--Marshfield Clinic Research Institute, 
   University of Wisconsin School of Medicine and Public Health and 
Medical College of Wisconsin--have collectively been awarded more than 
 $5 million to help implement in Wisconsin the National Institutes of 
   Health's (NIH's) All of Us Research Program that aims to benefit 
                    communities across the country.
    The All of Us Research Program is an ambitious nationwide effort to 
advance research into precision medicine, an approach for disease 
treatment and prevention that takes into account individual variability 
in biological makeup, environment and lifestyle for each person. The 
Wisconsin awardees will use their collective resources to enroll 
interested individuals and gather health information to help 
researchers understand how these factors can help determine how to best 
prevent or treat disease.
     Comfort and Recovery Suites: MCHS expanded its ambulatory 
surgery centers in Marshfield, Eau Claire and Wausau, Wisconsin to 
include comfort and recovery suites for post-surgical procedures 
performed in their ambulatory surgical centers. The comfort and 
recovery suites offer the same high-quality, post-operative care 
received in a hospital but at a considerably lower cost. This approach 
has saved the MCHS insurance subsidiary, Security Health Plan, more 
than $1 million in just under 2 years and patient satisfaction is 
extremely high with an average rating between 4.5 and 5 on a 5-point 
scale.
     Dental Care Program: The Marshfield Clinic Dental 
Initiative has improved the overall health care for the population we 
serve by providing clinical and economic value to patients and 
communities. The program is comprised of ten dental centers with 41 
dentists and 39 hygienists. This staff provides dental services to 
almost 90,000 patients from all 72 counties in Wisconsin. The dental 
centers serve all patients, whether Medicaid, Medicare, commercially 
insured or uninsured, with a sliding scale fee so that everyone can 
have access to dental care. As an indicator of the importance of this 
dental care, we have documented evidence that when we open a dental 
center in an underserved community the incidence of ER visits due to 
dental problems drops dramatically.
     Behavioral Health Integrated Care Model: MCHS experiences 
difficulty in recruiting clinical psychiatrists, despite overwhelming 
demand for these services. In order to serve the unmet needs of 
patients and increase access to care, Marshfield Clinic developed the 
Behavioral Health Integrated Care Model. This care delivery model 
improves the value of care delivered by encouraging appropriate 
patients to be managed by a primary care physician and integrated care 
coordinator, rather than using more costly services.
    MCHS is currently collecting outcomes data to demonstrate changes 
in depression and anxiety symptoms for patients enrolled in the 
integrated care model. While the outcomes have not yet been validated, 
the evidence suggests that we will see:
     A reduction in patient claims for behavioral health 
treatment
     A reduction in ER visits
     A decrease in visits to primary care
    The health system is working with Security Health Plan to determine 
the overall change in cost of care for patients after 18 months in the 
program.
    For more than 100 years, MCHS has been living our mission of 
enriching lives in Wisconsin through accessible, affordable and 
compassionate health care. As we embark on our second century, we look 
forward to building on our past successes and continuing to innovate, 
maximize efficiencies and reduce patient costs while providing even 
higher quality care and a great patient experience.
               ii. challenges of serving rural wisconsin
    MCHS serves approximately one million residents across our rural 
service area. Residents in our area have an average annual income of 
approximately $42,000 for a family of four, which is below the State 
average of more than $66,000. In addition to lower than average 
incomes, we also have an older population than the State average. In 
ten of the 31 counties that we serve there are fewer than two workers 
per Medicare beneficiary and in the balance of our service area there 
are three.
    While these statistics do not tell the whole story, what they show 
is that in our communities, a large portion of the population is 
covered by public health programs. The subsidization of health coverage 
for low income Wisconsinites under the ACA has helped bring tens of 
thousands into traditional commercial coverage through the Health 
Insurance Marketplace. This has been vital to the health of our 
patients.
    Wisconsin took a unique approach to the implementation of the ACA 
that has resulted in the uninsured rate in the State dropping by nearly 
40 percent. Wisconsin expanded Medicaid to every resident under 100 
percent of the Federal Poverty Level in 2014, which ensured there was 
no gap in available coverage, unlike other States that did not accept 
Medicaid expansion. Those who did not have employer health benefits 
were covered by the ACA individual market and the subsidies available. 
This approach helped to minimize the cross subsidization health care 
providers often have to implement to offset the losses they experience 
in providing care to Medicaid recipients. The reduced cross 
subsidization resulted in keeping employer health insurance increases 
more moderate. Overall, Marshfield Clinic Health System's experience in 
the way Wisconsin structured its insurance market has been positive and 
has resulted in more residents achieving coverage.
    In many of the areas we serve there are very few large employers, 
so the population has been dependent on the individual and small group 
insurance market to achieve health coverage. This market was subject to 
large variations in the cost of health insurance before the ACA. Many 
of the insurance products available prior to the implementation of the 
ACA's annual limitations on cost sharing and elimination of annual and 
lifetime maximums were substandard and did not adequately cover 
expensive services such as medications, certain hospitalizations and 
pre-existing conditions.
    The ACA made several important changes which stabilized the market 
in a way that has been beneficial to the patients that we serve. We 
might also add that this area is very well served by multiple, high-
quality insurance carriers that compete on the Health Insurance 
Marketplace so there is competition between and among the carriers that 
holds premium cost increases below national averages, accruing to the 
benefit of consumers.
    MCHS's insurance subsidiary, Security Health Plan, participates in 
the exchange marketplace and has enrolled 28,000 residents in ACA 
plans. Between 95 and 98 percent of those who enroll in our Health 
Plan's insurance through the Health Insurance Marketplace receive 
subsidies to cover the cost of their health insurance.
    In the communities we serve, 57 percent of enrollees in Security 
Health Plan's products are older than age 50.
     7 percent are Under 21
     9 percent are 21-29
     13 percent are 30-39
     14 percent are 40-49
     27 percent are 50-59
     30 percent are 60+
    This population of enrollees is dramatically different than the 
population Security Health Plan covered prior to the ACA. This has 
resulted in an increased use of services to care for the chronic 
conditions of the population, resulting in higher costs to the health 
care system and higher premium increases.
    During this same time our population of patients covered by 
Medicaid decreased from 66,197 to 55,910--a reduction of 14.3 percent. 
We believe that a large percentage of these patients migrated into the 
exchange market. In order for these individuals to maintain coverage it 
will be important that there be a mechanism that allows them to afford 
health care on an out-of-pocket basis.
    Additionally, prior to the enactment of the ACA we provided high 
volumes of uncompensated services. MCHS receives and treats all 
patients regardless of their ability to pay, and it was our experience 
that in 2012, before the implementation of the ACA, we were treating 
13,277 residents who were uninsured and whose ability to pay for the 
care they received was limited. In 2016, our most recent tally of 
individuals without any insurance or ability to pay had dropped to 
6,948, nearly a 50 percent reduction in the number of uninsured 
patients we serve.
    As a community-based organization, our objective has been to find a 
way to get the population covered and promote an awareness of 
prevention of disease in the community.
                                 ______
                                 
                          iii. our philosophy
    Throughout the repeal and replace debate, MCHS has maintained that 
it is imperative the individual market remain a stable, viable option 
for people to get and maintain health care coverage. In Wisconsin, the 
uninsured rate has been reduced by nearly 40 percent, in part because 
there are many more thousands of people who have newly attained 
coverage through the ACA individual market.
    In 2014 and 2015, Security Health Plan was the largest carrier of 
ACA products in Wisconsin. Today, we remain in the top three. This is 
primarily because, as we noted earlier, we serve a largely rural and 
lower income portion of Wisconsin. The subsidies off red to lower 
income enrollees are a critical lynchpin in our patients' and members' 
ability to secure health insurance coverage.
    Unlike stand-alone health insurers and their contracted providers, 
integrated delivery systems like Marshfield Clinic Health System and 
Security Health Plan have the unique ability to serve this market in a 
way that is economically practical as well as perfectly aligned with 
our mission to enrich lives through accessible, affordable and 
compassionate health care.
    We believe the current instability in the ACA individual market 
will cause more of our community members to forego coverage and 
Marshfield Clinic Health System's mission of caring for our communities 
no matter a patient's insurance status puts us as a rural health system 
at greater risk if this occurs. Our community members who are uninsured 
will show up in our ERs, urgent cares and provider offices as 
uncompensated care in the short term. In the long term, uninsured 
residents will end up in our Health Plans Medicare products, or 
Medicaid products, or even more inspirationally, in their group 
commercial products after seeking gainful employment. If these patients 
don't have continuity of care, they will have higher costs in the 
future because their care needs haven't been adequately met.
    Most recently, our Health System renewed its commitment to this 
market by filling the second to last remaining county in the United 
States in the ACA individual market. This was a decision that allowed 
us to live our mission and step up to serve the community at a time 
when other health insurers are stepping back. We remain committed to 
the ACA individual market and patients and members that rely on it to 
ensure they can maintain their best health.
                       iv. stabilizing the market
    It's through the lens of our organizational philosophy that we 
offer a perspective unlike most other health systems or stand alone 
health insurance carriers on fixes that would stabilize the ACA 
individual market over the long term.
    Some of the regulatory reliefs offered earlier this year by 
Secretary Tom Price at Health and Human Services did assist in giving 
health insurers tools to better manage their ACA individual population, 
but those reforms didn't go far enough to fully stabilize the market. 
We believe that the ideas outlined below give us the greatest chance to 
build on the base of the ACA and ensure continued coverage for the 
vulnerable population served by our Health System.
a. Cost sharing reduction payments
    Security Health Plan's ACA individual population is heavily reliant 
on the cost sharing reduction (CSR) payments paid monthly to help our 
members lower their out-of-pocket costs when they use health care 
services. As you can see in the chart below, nearly half of the total 
enrollment in Security Health Plan's ACA products is eligible and 
enrolled in this important program. And nearly 40 percent of our total 
population is enrolled in the lowest income bracket of between 100 
percent to 200 percent of the Federal Poverty Level who receive the 
highest amount of CSR subsidy.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Like many States, Wisconsin's Office of the Commissioner of 
Insurance created certainty where there was none by instructing 
carriers to assume that CSR payments will not continue in 2018. Non-
payment of the subsidy has a profound impact to the rates insurers, 
including Security Health Plan, will charge. The assumption of non-
payment of the CSR subsidy has pushed Security's rate increase to 
double over what it would have been if CSR payments would continue as 
promised.
    Because our filed rates for 2018 assume CSRs will not be paid, the 
population of enrollees that will be primarily impacted are those above 
400 percent of the Federal Poverty Level who don't receive either 
advanced premium tax credits or cost sharing reduction subsidies. These 
enrollees are subject to the full force of these substantial, and 
completely unnecessary, rate increases.
    Finally, we take exception to the implication that these CSR 
payments are a ``bailout to insurance companies.'' The CSR payments are 
simply a pass-through payment to providers, with no financial benefit 
to health insurers. Health insurers are simply the mechanism by which 
these payments are made to providers on behalf of members who receive 
these subsidies. Continuing funding for the program is fulfilling the 
promise the Federal Government has made to these enrollees.
    Recommendation: Fully fund CSR payments to health insurance 
carriers for 2018 and beyond and allow States that have already reached 
their filing deadline to reopen carrier's bids to allow for an 
adjustment to rates.
b. Extension of the reinsurance program
    Offsetting high-cost claims through reinsurance is a well-
established mechanism to protect against unanticipated losses and 
resulting premium increases; it has worked effectively for programs 
including Medicare's prescription drug program.
    The transitional reinsurance program established by the ACA 
achieved its intended outcomes of holding down premiums in 2014, 2015 
and 2016. Our Health Plan's experience shows that premiums would have 
been nearly 20 percent higher in 2014 and 12 percent higher in 2015, 
respectively, had this program not been in effect.
    A continuation of the reinsurance program would stabilize the 
market and reduce premiums for everyone enrolled (both on and off the 
Federal marketplace).
    Recommendation: Create a reinsurance program similar to the program 
that expired in 2017 to stabilize premiums in the ACA individual market 
for the long term.
c. Continuous coverage provision
    One of the struggles that health insurance carriers have faced in 
this market is the stability of population who are insured. The 3-month 
grace period provision for those covered by the advanced premium tax 
credit aligns with the individual mandate provision that someone can 
have up to 3 months of being uninsured and still avoid the tax penalty. 
This has created a perverse incentive for enrollees to stay insured for 
just enough time to avoid the penalty. The chart on the next page shows 
our experience in 2016, which is strikingly similar to the experience 
in each of the previous years.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    In order to create aligned incentives between the enrollee and the 
health insurer, the solution would be to create a continuous enrollment 
provision or late enrollment penalty similar to Medicare's
    Part B and Part D. If enrollees failed to maintain coverage for at 
least the previous 12 continuous months, the health insurance carrier 
could institute a late enrollment penalty. The key to making this 
effective is creating a level playing field for the penalty across all 
health insurers to ensure that additional unintended consequences were 
not created.
    This provision isn't just for the benefit of health insurers and 
their risk tolerance, but as an integrated delivery system, we know 
that when patients have an ongoing relationship with their care 
provider that is facilitated through continuous health insurance 
coverage, patient outcomes are improved.
    Recommendation: Establish a late enrollment penalty and/or a 
continuous enrollment penalty to incentivize 12 month enrollment in the 
ACA individual market.
d. Risk adjustment program enhancements
    The current risk adjustment program is intended to transfer funding 
from health insurers that have lower risk enrollees to health insurers 
that have higher risk enrollees. Each year, the program has a net 
neutral impact to the Federal budget because transfers between carriers 
net to zero.
    In actual experience, the risk adjustment program seems to be 
transferring funds from rural markets into urban markets and from new 
insurance carriers to established insurance carriers. These transfers, 
although supported by the complex risk adjustment formula, are not 
operating in the original intent of the program.
    As an enhancement to this program, we would suggest that risk 
adjustment not be budget neutral, but instead be structured similarly 
to Medicare Advantage risk adjustment. In Medicare Advantage, the 
Centers for Medicare and Medicaid Services pays an increasing amount of 
capitation to health insurers based on the number of health conditions 
a particular enrollee has. This program more equally compensates health 
insurance carriers for the risk of the enrollees in its population.
    Understanding that the ACA individual market and the Medicare 
market are inherently different in the amount of risk assumed by the 
Federal Government, we would suggest a scaled back program that offers 
some additional funding based on the chronic conditions of each 
enrollee instead of the insurance market as a whole within a State.
    A program like this, coupled with the temporary reinsurance program 
noted previously, would hold premium increases in check. By keeping 
health insurance premium increases at a lower annual increase than is 
currently projected, the Federal Government could net savings for this 
program through lower future payments of the advanced premium tax 
credits.
    Recommendation: Enhance the risk adjustment program to pay carriers 
a capitation for members whose risk scores exceed a certain predefined 
value. Savings from this program would be captured from lower-than-
current future rate increases that would reduce Federal expenditures 
for the advanced premium tax credits.
e. Federal funding for enrollee outreach
    Health insurance and the subsidies available to help area residents 
afford coverage are complex and confusing topics. Because of this, 
Marshfield Clinic Health System has invested in having more than 25 
certified application counselors onsite at our busiest centers. This 
service is a critical resource for the community in helping patients, 
especially the uninsured, understand the coverage options available to 
them.
    Because our program is funded by the System's Family Health Center 
through a grant from the Health Resources and Services Administration, 
it is not in jeopardy from the recently announced cutbacks to outreach 
activities. However, through our own experience, we have found how 
important these programs are to lowering the uninsured rate in our 
communities.
    Even with our strong commitment to promoting coverage availability, 
we cannot serve this need alone and we rely on the other community 
organizations that receive this funding to fill the gaps.
    Recommendation: Reinstate funding for navigator and assistor 
programs and prioritize dollars to rural areas for community outreach 
of insurance options.
                             V. Conclusion
    There is no doubt that the Affordable Care Act has flaws. There are 
aspects of the law that will need to be continually altered to meet the 
future health care needs of the American people. The goal in my 
testimony is to offer solutions that will immediately help to stabilize 
the market and ensure that our patients and members continue to have 
access to the care they need.
    Thank you to the committee for offering us the opportunity to 
provide our point of view on this important topic.
    The Chairman. Thank you, Dr. Turney.
    Mr. Ruiz-Moss, thank you for coming today.

   STATEMENT OF ROBERT RUIZ-MOSS, VICE PRESIDENT, INDIVIDUAL 
            MARKET SEGMENT, ANTHEM INC., DENVER, CO

    Mr. Ruiz-Moss. Thank you, Chairman Alexander, Ranking 
Member Murray, and members of the committee. I am Vice 
President of Individual Business at Anthem. It's a privilege to 
appear before you today to share Anthem's recommendations on 
how we can work together to bring stability to the individual 
health insurance market and promote our common goal of making 
high-quality, more affordable health care accessible for all.
    Based on Anthem's vast experience and expertise, we feel 
uniquely positioned to offer our perspective. For more than 75 
years, we have been focused on caring for America's health, a 
responsibility we take seriously, and today we continue that 
focus through our service to 74 million Americans.
    Anthem has participated in the ACA exchanges since their 
inception and has continued to offer coverage even as many 
competitors have withdrawn. Unfortunately, the underlying lack 
of stability in the markets has led to difficult decisions 
regarding Anthem's participation next year. We must come 
forward to address this challenge, and these hearings are a 
great step in that direction.
    Our experience has shown us that three fundamental 
considerations are necessary to ensure a viable insurance 
market. First, a balanced risk pool. Today, too few healthy 
individuals are enrolling in coverage, and many are doing so 
only when they require services, quickly dropping the coverage 
when it is no longer needed. Nearly 20 percent of Anthem 
individual market members maintained coverage for 6 months or 
less last year.
    Second, a predictable and stable regulatory environment. 
The rules governing the individual market need to stabilize so 
consumers know what to expect and so health plans, providers 
and consumers can plan effectively.
    And third, predictable government financing. To ensure the 
individual market provides affordable options for consumers, 
premium assistance and cost-sharing reduction funding must be 
predictable and reliable. With the open enrollment period 
beginning November 1st, the need for swift action is clear. To 
improve the stability of the market in 2018, there are 
legislative and regulatory changes that, if made quickly, could 
improve the individual market environment for consumers next 
year.
    The first step is funding certainty for CSR subsidies. CSRs 
play a pivotal role in ensuring more affordable access to 
health care for low-income consumers. If CSRs are ended, the 
CBO predicts the premiums for Silver exchange plans will jump 
nearly 20 percent, driving people to forego coverage and 
costing the Federal Government $2.3 billion more in fiscal year 
2018.
    The second step is repealing the health insurance tax. The 
moratorium on the health insurance tax ends at the close of 
2017. If reinstated, this tax will result in premium increases 
for consumers between 3 and 5 percent.
    The third step is market stability funding. For the 
individual market to find its footing, it's critical that 
consumers have affordable options. Federal reinsurance would 
enhance coverage affordability for all and maintain access for 
individuals with high-cost needs.
    The fourth step is to ensure continuous coverage 
provisions. Sufficient measures must be in place and enforced 
to encourage healthy individuals to purchase and maintain 
coverage. All these steps will help address the short-term 
instability undermining individual health insurance markets.
    However, these steps alone will not solve all the 
challenges facing the individual market. Given the layers of 
Federal and State regulation covering the individual market, 
additional actions are needed to be taken to ensure long-term 
stability. My written testimony includes a number of 
recommendations, but I would highlight one in particular that 
Anthem encourages the committee to pursue, improving the 
Section 1332 waiver process which enables States to implement 
innovative programs.
    It's also important to note that market instability is only 
a symptom of the disease facing our health care system, which 
is the rising cost of care. The cost of health care is simply 
too expensive and continues to rise at an unsustainable rate, 
which is the true impediment to ensuring all Americans have 
access to high-quality, affordable coverage. Anthem is 
committed to working with this committee and other policymakers 
to advance solutions to this crisis and continue to bend the 
cost curve.
    We stand at a challenging moment, but we are confident that 
our collective efforts can bring about meaningful improvements 
for health care consumers.
    Thank you for the opportunity to testify today. I look 
forward to your questions.
    [The prepared statement of Mr. Ruiz-Moss follows:]
                 Prepared Statement of Robert Ruiz-Moss
                                summary
    Persistent instability in the individual market continues to 
threaten consumers' access to affordable, quality health care. A stable 
insurance market is dependent upon three fundamental key conditions. 
First, there must be a balanced risk-pool through the broad spreading 
of risk, as well as market dynamics which promote ongoing enrollment by 
individuals of all risks--healthy and unhealthy. Second, it requires a 
predictable regulatory environment with a known set of rules and 
conditions under which rates can be reliably developed. Finally, it 
requires predictable financing to ensure affordability for consumers. 
Unfortunately, those three conditions have failed to fully materialize, 
which has made the planning and pricing of health plans in the 
individual market increasingly difficult, leading to a deteriorating 
and contracting risk-pool with higher costs and fewer choices for 
consumers.
    For more than seven decades, Anthem, Inc. has served consumers in 
the individual market, standing by families and communities at some of 
the most important moments of their lives. Across its portfolio of 
affiliated health plans and subsidiaries, Anthem today serves more than 
74 million Americans. This depth of experience and breadth of reach, 
not only affords Anthem a line-of-sight into the challenges threatening 
the individual market, but also grants us insight into ways 
stakeholders, lawmakers, and regulators can work together to bring 
much-needed stability to the individual market in time to benefit 
consumers in 2018 and beyond. Our immediate recommendations to help 
stabilize the individual market for 2018 include:

     Funding certainty for cost-sharing reduction (CSR) 
subsidies
     Repeal of the health insurance tax (HIT) or an extension 
of the current moratorium
     Market stability funding, e.g., reinsurance
     Continuous coverage provisions
     Predictability in regulations and corresponding 
implementation

    While Anthem believes that these steps will help bring short-term 
stability to the individual market next year, we feel strongly that 
attention must be paid to finding long-term stability, as well. To 
accomplish this, Anthem recommends that additional focus be directed to 
the following: Section 1332 waivers; long-term stability funding; 
limiting third-party premium payments; and, returning more regulatory 
authority to the States over the individual and group markets.
    Taken together, the above recommendations will bring stability to 
the individual market in, both, the near-and long-term. However, we 
must also seek solutions to address the underlying threat to our entire 
health care system--specifically, the spiraling cost of care.
    Consumer research points to `affordability' as being the most 
important factor guiding consumers' decisions when it comes to their 
health care. As they look to make these important choices, they depend 
on assurances that policymakers and industry stakeholders are making 
the necessary investments to optimize affordability. Anthem has made 
this pursuit a foundational element of our identity. Accordingly, we 
encourage a greater emphasis on value-based care, the need to address 
the escalating cost of prescription drugs, and the transformational 
improvements to our health care system made possible by increased 
investments in innovation.
    Despite the challenges facing the troubled individual market, 
Anthem is optimistic that the collective efforts of stakeholders across 
the health care spectrum will result in the kind of meaningful, lasting 
improvements that ensure consumers will continue to enjoy access to the 
quality, affordable health care they deserve.
                                 ______
                                 
                              introduction
    Thank you, Chairman Alexander, Ranking Member Murray, and members 
of the committee for the opportunity to testify today. I am Robert 
Ruiz-Moss, Vice President, Individual Business Segment at Anthem, Inc., 
and it is my honor to appear before you to share Anthem's ongoing 
experience in working with stakeholders across the health care spectrum 
to achieve a functioning, stable individual health insurance market.
    Anthem is uniquely positioned to offer our perspective. For more 
than 75 years, Anthem has been focused on caring for America's health. 
Today, we serve more than 74 million Americans. As an independent 
licensee of the Blue Cross and Blue Shield Association, Anthem operates 
affiliated Blue-health plans in 14 States or State regions across the 
country. Through our Medicaid presence, we are able to broaden that 
reach, partnering with 20 States to serve 6.5 million beneficiaries. 
When combined with our growing Medicare business and diverse portfolio 
of specialty products and subsidiaries, Anthem plays a pivotal role in 
the health and well-being of communities across this country and for 
generations of American families.
    I have over 25 years of experience across numerous facets of the 
health care industry, including serving as an original board member of 
the Colorado Health Benefits Exchange, appointed by Governor John 
Hickenlooper. Since joining Anthem in 2009, my primary objective has 
been refining the company's business model to meet the health care 
coverage needs of consumers in the reformed individual market.
    Anthem remains committed to transforming health care by making it 
more affordable, higher quality, and more accessible for all. We are 
grateful for the work that you and your colleagues have done to improve 
our health care system. However, the uncertainty that continues to 
surround the individual market has only served to undermine its ability 
to function effectively, leading to increased costs and limited choices 
for consumers.
    I appreciate this opportunity to speak to you today about some of 
the challenges we have observed in the individual market--from the 
opening of the Exchanges in 2014 to today--and to offer our 
recommendations for ways in which health care stakeholders, lawmakers, 
and regulators can work together to bring stability to that market in 
2018 for the millions of consumers who rely on it.
         fundamentals of a viable, functioning insurance market
    For more than seven decades, Anthem has served consumers in the 
individual market. Throughout that time, our commitment to providing 
our members access to affordable, quality health care coverage has been 
unwavering. As consumers' expectations have shifted, we have evolved to 
be responsive stewards of the trust they have placed in us to manage 
their health care benefits. Since the creation of the insurance 
exchanges through the Affordable Care Act (ACA), we have continued to 
serve consumers in all of the States where we provide fully insured 
individual health plans.
    While we are pleased that a number of steps have been taken to 
address the long-term challenges facing the individual market, the 
underlying lack of stability and predictability in the structure of the 
market continues to undermine our ability to map out a sustainable path 
forward. For Anthem, that has resulted in our having to make difficult 
decisions regarding our participation in markets across the country 
next year, which we do not take lightly.
    A stable insurance market is dependent upon three fundamental 
conditions. First, there must be a balanced risk pool. A balanced risk 
pool is the result of health plans' ability to offer products that 
create value for consumers through the broad spreading of risk, as well 
as market dynamics which promote ongoing enrollment by individuals of 
all risks--healthy and unhealthy. Second, it requires a predictable 
regulatory environment with a known set of rules and conditions under 
which rates can be reliably developed. Finally, it requires predictable 
financing to ensure affordability for consumers. Unfortunately, those 
three conditions have failed to fully materialize, which has made the 
planning and pricing of health plans in the individual market 
increasingly difficult, leading to a deteriorating and contracting risk 
pool with higher costs and fewer choices for consumers.
        1. Balanced Risk Pool: Not enough healthy individuals are 
        enrolling in coverage. This, in combination with the increased 
        prevalence of ``buying to use'' behavior, in which individuals 
        only purchase coverage in order to receive services before 
        dropping that coverage, has accelerated deterioration of the 
        individual market risk pool. The effects of this behavior are 
        reflected in the average risk score of enrollees in the 
        individual market, which Anthem data shows to be 10 percent 
        higher than that of enrollees in the small group market in 
        2016, with the gap widening further so far this year. In 
        addition, nearly 20 percent of Anthem individual market members 
        only maintained their coverage for 6 months or less in 2016.
        2. Predictable Regulatory Environment: Health plans serving 
        consumers in the individual market are regulated by two, and in 
        some cases three or four, separate governmental entities with 
        varying requirements, mandates and timelines to follow. For 
        example, in States that established a State-based exchange, 
        health plans are subject to regulation from the Federal 
        Government, State government and State exchange operating 
        entity. In addition, some States have separate regulating 
        entities for HMO and non-HMO plan offerings, which in addition 
        to the Federal Government and State exchange operating entity, 
        lead to four separate governmental regulating entities. 
        Accordingly, plan participation in the individual market 
        requires the careful orchestration of a multitude of moving 
        parts in order to bring a product to market. For health plans, 
        that means gathering input from clinicians, actuaries, claims 
        departments, pharmaceutical benefits managers, and countless 
        other functions, in the development of a high-quality product 
        that is not only tailored to suit the varied health care needs 
        of today's consumer, but is also affordable. Unfortunately, 
        these efforts are rendered ineffective if the regulatory 
        environment in which these products are developed is 
        unreliable. The rules governing the individual market must be 
        predictable and stable to ensure a balanced and functional 
        operating environment for health plans.
        3. Predictable Financing to Ensure Affordability for Consumers: 
        It is critical that the individual market provide affordable 
        options for consumers. Any payments from government sources to 
        help achieve that objective must be predictable and reliable to 
        ensure a stable market. There are many low-income individuals 
        who cannot afford to purchase coverage in the individual market 
        without financial assistance. As such, the uncertainty 
        surrounding funding for the cost-sharing reduction (CSR) 
        subsidies, coupled with the looming threat of the 
        reintroduction of the health insurance tax (HIT), have only 
        contributed to the volatile dynamics undermining health plans' 
        ability to responsibly price products tailored to meet 
        consumers' expectations of quality and affordability. These 
        uncertainties have caused health insurance plans, including 
        Anthem, to be cautious about continuing their participation in 
        the individual market.
      recommendations to stabilize the individual market for 2018
    With open enrollment scheduled to begin on November 1, 2017, 
consumers will be looking to make important decisions regarding their 
health care needs. In order for them to make the best decisions for 
themselves and their families, they want assurances that lawmakers, 
regulators, and industry stakeholders are taking the necessary steps to 
ensure a viable, functioning individual market for the near-and long-
term. While the window is closing, and our geographic participation is 
set, for 2018, there is still time for lawmakers and regulators to 
improve some of the conditions that have contributed to the instability 
of the individual market--but only if they act quickly. Drawing on our 
considerable experience providing health insurance coverage for more 
than 1.5 million consumers in this market, we believe the following 
steps must be taken immediately at the Federal level to improve the 
individual market environment for consumers in 2018:
         Funding certainty for CSRs: Cost-sharing reduction 
        subsidies play a pivotal role in ensuring access to health care 
        services for very low-income enrollees, helping these 
        individuals better afford their co-pays, deductibles, and other 
        out-of-pocket costs. Currently, 6.4 million consumers are 
        benefiting from CSRs. However, uncertainty over funding for 
        CSRs for the remainder of 2017 and 2018, including threats to 
        cutoff this funding, both immediately and in the future, only 
        contributes to the instability undermining the individual 
        market. In its recent analysis \1\ of the effects of 
        terminating payments for CSRs, the Congressional Budget Office 
        predicted that premiums for benchmark plans on the exchanges 
        would go up by nearly 20 percent next year. Further, according 
        to analyst projections, eliminating CSR payments would also 
        result in a net increase in Federal costs of $2.3 billion \2\ 
        for fiscal year 2018 as the result of the increased benchmark 
        premium also increasing the premium subsidies. Independent 
        analysis \3\ also lays out the possibility of additional market 
        exits as health plans are forced to decide whether the overall 
        uncertainty of the market, coupled with the possible 
        elimination of CSR funding, is too much risk to bear. 
        Stakeholders \4\ across the health care spectrum have found 
        common cause in their shared recognition of the stabilizing 
        role that funding certainty for CSRs play in the individual 
        market.
---------------------------------------------------------------------------
    \1\ ``The Effects of Terminating Payments for Cost-Sharing 
Reductions,'' Congressional Budget Office, 
August 2017, https://www.cbo.gov/system/files/115th-congress-2017-2018/
reports/53009-costsharingreductions.pdf.
    \2\ Larry Levitt, Cynthia Cox, and Gary Claxton, ``The Effects of 
Ending the Affordable Care Act's Cost-Sharing Reduction Payments,'' The 
Henry J. Kaiser Family Foundation, 25 April 2017, http://www.kff.org/
health-reform/issue-brief/the-effects-of-ending-the-affordable-care-
acts-cost-sharing-reduction-payments/.
    \3\ Dianna Welch and Kurt Giesa, ``Analysis: Potential Impact of 
Defunding CSR Payments,'' Oliver Wyman Health, 12 May 2017, http://
health.oliverwyman.com/transform-care/2017/05/impact defunding CSR 
payments.html.
    \4\ ``Cost-Sharing Reductions Are Essential for Consumer 
Affordability, Choice, and Stability,'' AHIP Issue Brief, April 2017, 
https://www.ahip.org/wp-content/uploads/2017/04/CostSharingReductions 
IssueBrief 4.25.17-1.pdf.
---------------------------------------------------------------------------
         HIT repeal or extension of the moratorium: The 
        moratorium on the health insurance tax ends at the close of 
        2017. The reintroduction of the HIT next year would result \5\ 
        in premium increases--ranging from three to 5 percent--across 
        all fully insured health insurance coverage, resulting in 
        further disruption to the individual market. An extension of 
        the current HIT moratorium--or full repeal of the onerous tax--
        would help prevent consumers from having to shoulder this 
        burden, while introducing an additional stabilizing element to 
        the individual market.
---------------------------------------------------------------------------
    \5\ Chris Carlson, Glenn Giese, and Steven Armstrong, ``Analysis of 
the Impacts of the ACA's Tax on Health Insurance in 2018 and Beyond,'' 
Oliver Wyman, 8 August 2017, http://www.stopthehit.com/wp-content/
uploads/2017/08/Oliver-Wyman-2018-HIT-Analysis%E2%80%8E-August-8-
2017.pdf.
---------------------------------------------------------------------------
         Market stability funding: For the individual market to 
        find its footing, it is critical that consumers have affordable 
        options. Given the skewed distribution of health care 
        spending--especially in the individual market--policy 
        mechanisms \6\ are necessary to help spread the costs 
        associated with covering high-risk individuals.\7\ In order to 
        restore confidence in this fragile market, predictable and 
        broadly financed stabilization funding must be made available. 
        One way this can be accomplished is through a Federal 
        reinsurance \8\ program that reduces risk \9\ and enhances 
        coverage options for individuals with costly health needs while 
        lowering premiums for all consumers.
---------------------------------------------------------------------------
    \6\ ``Steps Toward a More Sustainable Individual Health Insurance 
Market,'' American Academy of Actuaries, April 2017, http://
www.actuary.org/files/publications/Sustainable Health Insurance 
Marketplace 042417.pdf.
    \7\ ``Using High-Risk Pools to Cover High-Risk Enrollees,'' 
American Academy of Actuaries, February 2017, http://www.actuary.org/
files/publications/HighRiskPools 021017.pdf.
    \8\ Ashley Ridlon, ``Stabilizing the Health Insurance Market: What 
the Experts Say,'' Bipartisan Policy Center, 8 June 2017, https://
bipartisanpolicy.org/blog/stabilizing-the-health-insurance-market-what-
the-experts-say/.
    \9\ Michael Chernew and Christopher Barbey, ``Supporting the 
Individual Health Insurance Market,'' Health Affairs, Blog, 7 August 
2017, http://healthaffairs.org/blog/2017/08/07/supporting-the-
individual-health-insurance-market/
---------------------------------------------------------------------------
     Continuous coverage provisions: Consumers purchasing 
coverage through the individual market should be treated like consumers 
with coverage through their employer and not be allowed to purchase 
insurance only when they need services. Health plans are required to 
take all applicants, regardless of health status. To ensure that the 
risk pool is functioning as intended, with healthy individuals 
balancing higher risk participants, broad participation is required. 
Accordingly, sufficient incentives must be in place to encourage 
healthy individuals to purchase and maintain coverage. Currently, the 
individual mandate under the Affordable Care Act is the mechanism in 
place that is intended to promote continuous coverage. However, the 
weak enforcement of the individual mandate--since its inception in 
2014--coupled with the organic weakening that has occurred as a result 
of the widening gap between the cost of 12-months of premiums and the 
mandate's financial penalty, is a primary driver of growing instability 
in the individual market. If the individual mandate is repealed, and 
health plans are still required to take all applicants, there must be 
an alternative mechanism to incentivize individuals to purchase and 
maintain health coverage. This can be accomplished through the 
introduction of rules incentivizing both enrollment and maintenance of 
continuous coverage. For example, establishing a waiting period to 
access benefits or assessing a late enrollment charge for someone who 
has failed to meet the continuous coverage requirement.
     In addition, while we appreciate efforts by both the 
previous and current Administrations to constrain special enrollment 
periods (SEPs) by requiring pre-enrollment verification of eligibility, 
more must be done to discourage ``gaming'' of the enrollment rules, 
including:

        -  Limiting the number of life events that trigger an SEP to 
        better align with the employer-sponsored market;
        -  Requiring State-based exchanges to implement the same pre-
        enrollment verification rules required for the Federal 
        exchange;
        -  Tightening premium payment grace period rules or returning 
        authority to State regulators, to more closely align with pre-
        ACA grace periods, which were typically shorter than the 
        current 90-day period under Federal law, thereby limiting 
        gaming opportunities, while still giving consumers a reasonable 
        time to pay for coverage; and,
        -  Requiring that consumers be able to demonstrate continuous 
        coverage to qualify for an SEP.

     Predictable regulation and implementation: As previously 
referenced, health plans serving consumers in the individual market are 
regulated by two, and in some cases three or four, separate 
governmental entities with varying requirements, mandates and timelines 
to follow. Stability and predictability of law and regulation is 
essential to a company's ability to engage in a market and effectively 
plan and execute its business operations. Successful partnership 
between government and business relies upon clear and predictable 
rules. The implementation of even small regulatory changes in the 
individual insurance market can be tremendously burdensome, requiring, 
at a minimum, sufficient lead time to plan and execute under the 
current rate and product filing requirements. Additionally, issuance of 
sub-regulatory guidance such as FAQs must be predictable and timely.
    With the 2018 open enrollment period scheduled to begin on November 
1, 2017, the window for making legislative and regulatory changes to 
promote a viable market is growing smaller, but it has not closed. 
While the changes that we are recommending will not change our 
geographic participation for 2018, they can still be implemented and 
operationalized for the 2018 plan year to improve the market 
environment for consumers--but, only if actions to effectuate those 
changes are taken very quickly. I urge the committee to act on these 
recommendations as soon as possible in order to provide a more stable 
market environment in 2018 that leads to more affordable, quality 
health coverage options for consumers. While the focus of this hearing 
is on stabilizing the individual market for 2018, it is important to 
note that the aforementioned recommendations will also have a lasting, 
positive effect on the individual market environment in 2019 and 
beyond.
  recommendations for long-term improvements to the individual market
    The process for planning products and geographic participation for 
2019 will begin in a few months. As such, we encourage the committee to 
also devote time and attention to several issues that will help ensure 
the long-term stability of the individual market, including: Section 
1332 waivers under the ACA; long-term stability funding; limiting 
third-party premium payments; and returning to the States more 
regulatory authority over the individual and small group markets.

     Section 1332 Waiver Flexibility: Section 1332 waivers 
offer a valuable opportunity for States to implement innovative 
programs to stabilize and promote long-term sustainability in their 
markets. Given the length of time that it takes to develop and obtain 
approval of a waiver, any future changes to the Section 1332 waiver 
requirements or process may not impact 2018. Such changes, however, 
could greatly benefit States seeking to make changes to their markets 
in 2019 and beyond.
    Unfortunately, rigid requirements and a burdensome process have 
dissuaded States from seeking innovation waivers until recently, when 
continuing instability prompted a number of States to pursue waivers in 
an effort to ensure that their residents would have access to 
affordable coverage in 2018. Waivers for reinsurance programs, in 
particular, have shown great potential for promoting stability, 
reducing premiums, and increasing the number of individuals covered in 
a State. For example:

        -  Alaska recently received approval of a waiver to implement a 
        reinsurance program for 2018. Premiums are expected to be 20 
        percent lower in 2018 than they would have been without the 
        waiver. In addition, Alaska predicts that an additional 1,641 
        individuals will have health insurance coverage due to the 
        lower cost of health care through stabilization of the 
        individual market.
        -  Minnesota and Oklahoma have also submitted applications 
        seeking to implement reinsurance programs in their marketplaces 
        for 2018, while Colorado and Maine are exploring possible 
        waivers of their own.

    We recommend providing States flexibility to make innovative 
changes tailored to their markets by simplifying and streamlining the 
process for obtaining Section 1332 waivers and affording them greater 
flexibility in navigating the guardrails for obtaining a waiver. 
Specifically, actions should be taken to:

        -  Reduce the time period for Federal review of waiver 
        applications, expediting the approval of waivers similar to 
        those already approved for other States;
        -  Allow States to authorize filing a waiver application via 
        executive order or certification by the Governor and department 
        of insurance, as opposed to requiring legislation; and,
        -  Allow States to satisfy the budget neutrality requirements 
        for a waiver over its lifetime, as opposed to year by year.

     Long-Term Stability Funding: In addition to the need for 
market stability funding in the short-term, we recommend establishing 
predictable and reliable long-term funding, from broadly based revenue, 
to help spread the costs of high-risk individuals. There are several 
viable ways to direct such funding, including reinsurance programs and 
high risk pools.
     Prohibit Third Party Steerage: Another recommendation that 
will improve the long-term stability of the individual market is to 
prohibit third parties from steering high-cost patients from public 
programs into the individual market. Health plans set rates based on 
the assumption that certain populations, like end-stage renal disease 
(ESRD) patients, will be covered under Medicare and/or Medicaid. 
Currently, certain third parties are taking action to seek higher 
reimbursements from health plans by paying premiums on behalf of 
Medicare and/or Medicaid-eligible Americans to move them into the 
individual market. This practice is increasing costs for consumers by 
driving more high-risk individuals into an already unstable market, 
while disadvantaging consumers from accessing specialized public 
programs established for their unique care needs.
     Reduce Duplicative Regulation while returning authority to 
States: Health plans serving consumers in the individual market are 
regulated by two, and in some cases three or four, separate 
governmental entities, which leads to duplication of regulation by 
Federal and State entities in some instances. Specifically, the ACA 
created duplicative Federal regulation in several areas where States 
are better positioned to know what works best for their markets. While 
increased Federal oversight has led to greater uniformity, it has also 
compounded the regulatory schemes that health plans must comply with, 
which often increases costs for consumers. We recommend reducing 
duplicative regulation and returning regulatory authority to the States 
in the following areas to give health plans greater ability to 
customize products to meet the local needs of consumers, while 
maximizing quality and affordability:
        -  Individual and small group rate and benefit design review: 
        The States have a long history of reviewing forms and rate 
        requests for health insurance plans. Fully recognizing and 
        relying on State activity in these areas will ensure that 
        experienced regulators continue to review rates and forms while 
        eliminating a duplicative process that often requires 
        submissions of different forms, through different platforms, on 
        different timelines at the Federal level.
        -   Network adequacy determination and enforcement: States are 
        best positioned to evaluate plan networks as they are familiar 
        with consumer needs, provider availability, market dynamics, 
        geographies and patterns of care--all of which are relevant to 
        evaluating the adequacy of a health plan's network.
        -  Grace periods for nonpayment: The ACA contained a provision 
        requiring for a 90-day grace period, meaning consumers could 
        get coverage for the whole year while only paying for 9 months 
        of coverage. Regulation in this area should be governed by 
        State law, which prior to the ACA established grace period 
        standards that were typically shorter than 90 days, limiting 
        gaming opportunities, while still giving consumers a reasonable 
        time to pay for their coverage.
            anthem's commitment to transforming health care
    Anthem values the important role we play in the lives of millions 
of consumers. Our commitment to transforming health care is built upon 
the foundational belief that by driving innovation, we can deliver 
greater value for our members and provider partners, and ultimately, 
improve the sustainability of the system as a whole. We do this every 
day by focusing on four strategic areas: provider collaboration, 
consumer centricity, quality, and cost of care.
         Provider collaboration. Stakeholders are increasingly 
        sharing risk. Behind this trend is our health care system's 
        growing emphasis on value-based care. Anthem is working hard to 
        cultivate the kind of close, collaborative models with 
        providers that result in a better holistic health care 
        experience for our members.
         Consumer centricity. As consumers' comfort with their 
        health care options has increased, so, too, have their 
        expectations. This fluency has led to an increased demand for a 
        more personalized health care experience. Anthem has responded 
        by investing in new tools that enhance our members' interaction 
        with their benefits, while improving the quality of that care 
        and lowering costs.
         Quality. Anthem understands that it is not enough for 
        health care to be affordable and accessible--it must also be 
        high quality. This is why we have made our goal to transform 
        and improve health care a foundational component of who we are 
        as an organization. We see quality as more than just a clinical 
        goal, though, and are actively remaking ourselves, developing 
        the necessary structures and process improvements across every 
        business operation to further enhance our high quality 
        standards.
         Cost of care. Our final strategic focus has to do with 
        managing the total cost of care. While bringing stability to 
        the individual market is a short-term imperative, a long-term 
        health care crisis is being overshadowed: The continually 
        rising cost of health care. Cost is the biggest and most 
        pressing challenge facing our health care system. The cost of 
        health care is simply too expensive and continues to rise at an 
        unsustainable rate. Fifty years ago, spending on health care 
        amounted to approximately 5 percent of the country's gross 
        domestic product. By 2015, that number jumped to an alarming 
        17.8 percent, and is projected to reach 19.9 percent by 2025. 
        Our country cannot simply continue to just spend more money on 
        health care. We must seek solutions to address the underlying 
        causes of cost growth in health care.
    Consumer research tells us that `affordability' is now the most 
important factor guiding consumers' health care decisions. It is also a 
top priority for employers, as well as for our Federal and State 
government partners. Improving affordability requires a focus on the 
cost of care--at both the individual and population levels. Anthem is 
doing our part to address the cost of health care. Examples include:

    -  Value-based care. We now pay nearly 60 percent of our 
reimbursements through value-based care models. Today, more than 64,000 
doctors across our family of health plans receive value-based payments 
and are accountable for the cost and quality of care for more than 5.5 
million of Anthem's commercial members. Further, through our 
partnership with health care analytics firm, Castlight Health, we are 
able to provide members with the type of price and quality information 
that empowers them to make better informed choices. Also, Anthem has 
successfully built reference-based benefits programs with large 
employers, like the California Public Employee Retiree System (CalPERS) 
\10\, in which set price limits are established for certain services--
e.g., hip replacement--so consumers are armed with information about 
price and quality as they go to select their provider. Reference-based 
benefits have driven greater consumer engagement, addressing the 
disparity that often exists in provider costs, without compromising 
access to quality care. In fact, independent studies estimate savings 
for CalPERS of over $7.5 million per year on several procedures alone, 
including colonoscopies and arthroscopies.
---------------------------------------------------------------------------
    \10\ Ann Boynton and James C. Robinson, ``Appropriate Use of 
Reference Pricing Can Increase Value,'' Health Affairs, Blog, 7 July 
2015, http://healthaffairs.org/blog/2015/07/07/appropriate-use-of-
reference-pricing-can-increase-value/.
---------------------------------------------------------------------------
    -  Mitigating escalating drug prices. Spending on prescription 
drugs is now the fastest growing area of health care costs,\11\ and is 
expected to continue rising faster than overall health care spending. 
Last year, the cost of drugs exceeded the cost of inpatient hospital 
stays in Anthem's commercial business. This trend is most acutely felt 
in the area of specialty drugs, where--across the entire health care 
system--spending on this category rose 13.1 percent in 2014, and is 
projected to exceed $400 billion by 2020. Closer to home, we project 
that by next year, spending on specialty drugs alone will account for 
approximately half of Anthem's total prescription drug spend--up from 
about 30 percent currently. Meanwhile, according to expert 
analysis,\12\ just ten breakthrough drugs are projected to cost 
government programs an estimated $50 billion over the next decade.
---------------------------------------------------------------------------
    \11\ Jeff Lagasse, ``Prescription Drug Spending Shows Fastest 
Growth, Overall Spending Outpaces Previous Two Years, Report Shows,'' 
Healthcare Finance, 23 November 2016, http://
www.healthcarefinancenews.com/news/prescription-drug-spending-shows-
fastest-growth-overall-spending-outpaces-previous-two-years.
    \12\ ``The Future Cost of Innovation: An Analysis of the Impact of 
Breakthrough Therapies on Government Spending,'' Avalere Health, LLC., 
June 2015, file:///C:/Users/aa47057/Downloads/1433970206 061015 Avalere 
AHIP WhitePaper LP Final 03%20(1).pdf.
---------------------------------------------------------------------------
    Given drug costs' disproportionate impact on the overall health 
care cost curve, the necessity of finding workable solutions cannot be 
overstated. With that in mind, Anthem joined forces with 
biopharmaceutical manufacturer, Eli Lilly & Co., in an attempt to 
confront the issue. Our partnership was born out of a shared 
understanding that our health care system needs vested stakeholders to 
put aside parochial interests in the service of moving toward real, 
achievable solutions. In keeping with the transition to paying for 
value that is currently reshaping other areas of the health care 
sector, similar value-based payment arrangements for pharmaceuticals 
must also be explored.
    Anthem believes that this transition toward a value-based system 
for prescription drugs will help drive payment innovation. So, together 
with Lilly, we released two policy proposals aimed at changing Federal 
regulations to help mitigate the challenges ahead in adopting sensible 
payment reforms for pharmaceuticals: 1) explicitly allowing for 
communication between health benefits companies and drug manufacturers 
regarding their products prior to FDA approval; and, 2) changing 
existing restrictions that hamper efforts to establish value-based 
contracts for new drug therapies. These two policy proposals are not a 
panacea for addressing rising drug costs, but they would have a 
positive real world impact and, more importantly, can help advance the 
current debate into legislative and regulatory action.
        -  Innovation. Anthem believes in the power of innovation to 
        bring about transformational improvements to our health care 
        system. That belief has seen us make considerable investments 
        in technologies, like our LiveHealth Online telehealth platform 
        that allows users to virtually connect to the care they need, 
        when and where it is most convenient to them. Telehealth holds 
        tremendous promise for improving access to health care in the 
        day-to-day lives of consumers and during emergency situations. 
        For example, Anthem is making access to LiveHealth Online free 
        for the people of Texas and Louisiana impacted by Hurricane 
        Harvey.
    Adopting a forward-thinking approach to anticipating consumers' 
evolving expectations, we have also established an Innovation Studio in 
Atlanta that brings together industry and technology leaders in a 
collaborative environment to brainstorm ideas and come up with new 
solutions that will enhance their experience. One innovation that is 
being piloted is a mobile bill-paying app that allows our members to 
pay premiums or medical bills directly from their mobile device. In its 
first 6 months of use, we received more than 50,000 transactions via 
the app.
    Separately, as we look to help our members better manage their 
total cost of care, we interact with them more comprehensively along 
their entire continuum of care--from prevention to treatment to follow-
up. This is made possible by our deep understanding of, and significant 
investment in, data analytics, which have enabled us to develop 
clinical programs and quality improvement initiatives that benefit 
consumers directly. For example, through our Anthem Cancer Care Quality 
Program--developed with our AIM Specialty Health subsidiary--we are 
able to make actionable data available to oncologists to help them make 
better informed treatment decisions. Last year, more than 1.6 million 
Americans were diagnosed with cancer. While advances in treatment 
continue to offer hope, it remains a challenge for patients, their 
families, and their physicians to select from available therapies when 
seeking the best treatment options. With treatments costing about 
$100,000 on average per patient per year, information on health 
outcomes and cost effectiveness is critical.
    These key investments in our health care data analytics 
capabilities speak to our ongoing effort to unlock greater savings for 
our members. Last year alone, we processed more than 730 million 
claims. The sheer enormity of that data translates into 17 petabytes of 
health information about our members--which is the equivalent of 1,700 
times the entire printed collection housed in the Library of Congress.
                               conclusion
    For all the challenges facing us, we remain optimistic about what 
lies ahead. Anthem is doing our part, but we cannot do it alone. We 
must also recognize that given the layers of Federal and State 
regulation over the individual market, Federal actions alone will not 
achieve long-term stability. The level of deterioration and contraction 
of risk pools vary by State, in some instances due to challenges at the 
State level in need of attention. However, we are confident that the 
collective efforts of stakeholders and Federal and State legislators 
and regulators from across the political spectrum, will continue to 
result in the kinds of improvements that make a difference in the 
health and well-being of consumers everywhere. We applaud the committee 
for advancing a thorough and balanced dialog aimed at bringing much 
needed stability to the individual health insurance market.
    While a balanced risk pool and a more predictable and stable 
regulatory environment remain necessary components of a viable, 
functioning individual health insurance market, we must also turn our 
attention to the underlying cost of health care. Working in our favor 
are advances in both science and medicine, technological enhancements, 
and the mutual goal that affordable, high-quality health care should be 
accessible to all.
    Thank you, again, for inviting me to share Anthem's perspective 
today and for the opportunity to work with you as we strive to ensure 
better health care for our Nation's consumers.
    The Chairman. Thank you very much.
    Ms. Postolowski

  STATEMENT OF CHRISTINA POSTOLOWSKI, ROCKY MOUNTAIN REGIONAL 
            DIRECTOR, YOUNG INVINCIBLES, DENVER, CO

    Ms. Postolowski. Thank you very much, Chairman Alexander, 
Ranking Member Murray, and members of the committee, for the 
opportunity to speak with you today.
    My name is Christina Postolowski, and I'm the Rocky 
Mountain Regional Director of Young Invincibles. We are a non-
profit, non-partisan organization working to expand economic 
opportunity for young adults ages 18 to 34.
    Since the passage of the Affordable Care Act, the young 
adult uninsured rate has been nearly cut in half. More than 8 
million young people between the ages of 18 and 34 have 
received coverage through the law, and millions more are 
benefiting from the law's consumer protections.
    The typical uninsured young person makes just $20,000 a 
year, and given their low incomes, millions of young people are 
benefiting from Medicaid expansion and the law's premium tax 
credits. To build on these gains, Congress should act to bring 
further stability to the market and pursue strategies to 
maximize young adult enrollment by making coverage easier to 
afford and access.
    First, Congress should make clear that cost-sharing 
reduction payments will be made through at least the end of 
2019. Up to 7.2 million young adults who are either uninsured 
or in the individual market could qualify for CSRs. If these 
payments are not made, premiums will increase 20 percent next 
year, hampering young people's ability to afford coverage and 
potentially driving them out of the market.
    Second, Congress should create a permanent reinsurance 
program starting with guaranteed funding through a 2-year 
mandatory appropriation. Reinsurance is not new or unique, nor 
is it an insurer bailout. National and state-level reinsurance 
programs have already been shown to reduce premiums, which can 
help increase young adult enrollment.
    Third, Congress should do more to make coverage affordable 
for young adults by increasing their premium tax credits. 
Boosting premium tax credits by $50 a month, for example, for 
young people would result in 900,000 more young adults gaining 
coverage. Another idea would be to lower the premium 
affordability threshold for young adults. This would lower the 
maximum amount low-income young people have to spend on 
premiums, resulting in larger premium tax credits.
    Fourth, enrollment depends on consumers knowing about their 
options. Uninsured 19- to 34-year-olds are still the least 
likely group to know about the health insurance marketplaces. 
So the Administration's recent announcement that they would 
substantially cut Navigator grants and advertising goes in the 
exact wrong direction. Navigators help young people understand 
their options, qualify for financial help, and assess provider 
networks. Seventy-seven percent of individuals who received 
personal assistance ultimately enrolled in coverage, whereas 60 
percent of those who did not get assistance ultimately 
enrolled. Studies also show a correlation between the volume of 
TV ads in a given area and higher rates of enrollment. I urge 
Congress to reverse these cuts.
    Briefly, I'd like to also speak to some other ideas that we 
have heard that claim to make plans more affordable for young 
people but would, in fact, put their financial security at 
risk.
    First and foremost, weakening the Section 1332 guardrails 
and allowing States to undermine consumer protections in the 
ACA could actually decrease rather than increase young adult 
enrollment. We have already seen some States propose reducing 
financial assistance or eliminating essential health benefits 
through 1332 waivers, both of which shift costs to consumers.
    The top three essential health benefits that young people 
use are mental health services, maternity care, and preventive 
services. Without access to coverage for EHBs, young adults may 
see less value in getting covered.
    Second, Congress should not authorize State or Federal 
high-risk pools because they are insufficient and expensive for 
people with pre-existing conditions. I know this to be true 
because when I was 20 I was diagnosed with rheumatoid 
arthritis. Prior to the ACA, 35 percent of 18- to 24-year-olds 
like me were at risk of being denied coverage because of their 
health status. When multiple insurers did deny me coverage, 
Colorado's high-risk pool was the only place I could go to get 
a plan. Even with the subsidy I received, my insurance through 
Covered Colorado was expensive, and I was subject to a 3-month 
exclusion period for my condition.
    Finally, proposals that lead to higher deductibles or lower 
actuarial values expose our generation to costs they can't 
afford. You might be surprised to know that the law's current 
version of high-deductible plans are widely unpopular among 
young adults. About 76 percent of young marketplace enrollees 
in 2015 chose a Silver-level plan or higher, with only 3 
percent of young people enrolling in catastrophic coverage. So 
while so-called Copper plans would have lower premiums, we 
would not expect these plans to be much more popular for young 
people, and they would have significant financial downsides. 
Deductibles for these policies would be around $9,000. That 
means the typical uninsured young person who earns a median 
income, again, of $20,000 a year would have to spend nearly 
half of their annual income to meet their deductible.
    To conclude, we know that current uncertainty is 
threatening the gains young people have made, and we look 
forward to working with Congress to continue to increase 
coverage for our generation.
    Thank you for the opportunity to speak with you today, and 
I look forward to taking your questions.
    [The prepared statement of Ms. Postolowski follows:]
              Prepared Statement of Christina Postolowski
                                summary
    Young adults have historically had higher uninsured rates than any 
other age group, but since passage of the Affordable Care Act (ACA), 
we've seen their uninsured rate nearly be cut in half. Over eight 
million people between the ages of 18 and 34 have received coverage 
through provisions in the ACA,\1\ including 3.5 million through the 
health insurance marketplaces, thanks in large part to the law's 
financial assistance. While we've made tremendous progress, 11 million 
young adults remain uninsured, including 6.1 million who could be 
eligible for premium tax credits.\2\ We are encouraged to see Congress 
work together to focus on what can be done to boost youth enrollment 
and further stabilize the market. Here are some of our recommendations:
---------------------------------------------------------------------------
    \1\  Erin Hemlin, What's Happened to Millennials since the ACA? 
Unprecedented Coverage & Improved Access to Benefits'', Young 
Invincibles, April 2017, http://younginvincibles.org/wp-content/
uploads/2017/05/YI-Health-Care-Brief-2017.pdf.
    \2\ ung Invincibles' analysis of Current Population Survey, Annual 
Social and Economic Supplement, 2016. Based on raw number of uninsured 
young adults ages 18 to 34. http://www.census.gov/cps/ data/
cpstablecreator.html.
---------------------------------------------------------------------------
    Fund cost-sharing reduction (CSR) payments through a mandatory 
appropriation through at least 2019. Making CSR payments would reduce 
uncertainty among consumers and carriers. This funding is crucial not 
only for consumers currently receiving CSRs, but also for marketplace 
consumers whose incomes may exceed the threshold to qualify for premium 
tax credits. Given young adults' lower net worth and incomes, young 
people are less able to absorb an increase in their out-of-pocket costs 
or what CBO forecasts would be a 20 percent increase in premiums. If 
CSR payments are not funded, we could see fewer young adults able to 
participate in the marketplaces.
    Create a permanent reinsurance program--not high-risk pools. 
National and state-level reinsurance programs have already been shown 
to significantly reduce premiums, which promotes market stability, 
insurer participation, and the enrollment of younger, healthier 
consumers. Reinsurance is not new or unique, nor is it an insurer 
bailout: for instance, Congress recognized the importance of a 
permanent reinsurance program when developing the Medicare Part D 
prescription drug program in 2003. To provide immediate stability to 
the market, we recommend Congress guarantee funding for reinsurance 
through at least a 2-year mandatory appropriation. As someone who was 
denied coverage for having Rheumatoid Arthritis and left no other 
option but to enroll through Colorado's pre-ACA high-risk pool, I saw 
its shortcomings first hand. I can tell you that high-risk pools are an 
unacceptable coverage alternative for people with pre-existing 
conditions.
    Maintain existing guardrails around Section 1332. We recognize the 
value and importance of State flexibility in expanding access to 
coverage. However, amendments to Section 1332 that would change the 
law's guardrails would likely harm the most vulnerable young people. 
These guardrails are as important as ever in light of recent State 
waiver proposals that would decimate financial assistance for low-
income young adults, like those proposed by Iowa and Oklahoma. 
Furthermore, allowing States to waive essential health benefits, for 
example, could actually decrease rather than increase young adult 
enrollment, by reducing or eliminating the services that young people 
use and value most in their coverage.\3\
---------------------------------------------------------------------------
    \3\ How Millennials Use Their Health Insurance, Young Invincibles, 
August 2016, http://younginvincibles.org/wp-content/uploads/2017/04/
how-millenials-use-health-care.pdf.
---------------------------------------------------------------------------
    Reverse cuts to marketplace enrollment promotion and consumer 
assistance--specifically targeting these efforts to reach young adults. 
While young adults disproportionately qualify for financial assistance, 
their enrollment depends on them knowing about their options. Many 
young people remain unaware of premium tax credits or opportunities to 
enroll in marketplace coverage. Congress should reverse the 
Administration's recent cuts to enrollment promotion and Navigator 
grants. These are proven strategies for helping connect people, 
particularly those with lower rates of health insurance literacy, to 
coverage.
    Provide increased financial assistance to maximize young adult and 
further stabilize the market. To achieve our shared goal of boosting 
young adult enrollment and further stabilizing the individual market, 
Congress should do more to further reduce young adults' premium costs 
to help more of them afford coverage. One proposal suggests a boost in 
financial assistance by an additional $50 a month for young adults. 
This would result in an additional 900,000 insured young adults at a 
less than $3.7 billion a year price tag to the Federal Government.\4\ 
Another way to lower costs for young people is to lower the premium 
affordability threshold for young adults. This would result in greater 
financial assistance for young people based on their incomes and 
account for, as the ACA currently does, premium variation in markets 
across the country. Boosting young adult enrollment in the marketplaces 
will not only help young people, but can help reduce premiums for 
marketplace consumers more broadly.
---------------------------------------------------------------------------
    \4\ C. Eibner & E. Saltzman, The Commonwealth Fund, Insuring 
Younger Adults Through the ACA's Marketplaces: Options to Expand 
Enrollment, December 16, 2016, http://www.commonwealthfund.org/
publications/blog/2016/dec/insuring-younger-adults.
---------------------------------------------------------------------------
                                 ______
                                 
                               testimony
    Thank you Chairman Alexander, Ranking Member Murray, and members of 
the committee for the opportunity to appear before you today. My name 
is Christina Postolowski, and I am the Rocky Mountain Regional Director 
of Young Invincibles, a non-profit, non-partisan research and advocacy 
organization working to expand economic opportunity for young adults 
ages 18 to 34. We welcome the chance to discuss ways to both improve 
the individual insurance market and build on the gains young adults 
have made under the Affordable Care Act (ACA).
    The data on the impact of the ACA on young people's coverage rates, 
health care needs, and the financial challenges facing this generation 
might surprise you. Consider the following:

          Since 2010, the uninsured rate for young people has 
        declined from 29 percent to 16 percent.\1\ As of 2015, over 
        eight million people between the ages of 18 and 34 received 
        coverage through provisions in the ACA,\2\ including 3.5 
        million through the health insurance marketplaces and 3.8 
        million through Medicaid.\3\
---------------------------------------------------------------------------
    \1\ Erin Hemlin, What's Happened to Millennials since the ACA? 
Unprecedented Coverage & Improved Access to Benefits'', Young 
Invincibles, April 2017, http://younginvincibles.org/wp-content/
uploads/2017/05/YI-Health-Care-Brief-2017.pdf
    \2\ Ibid.
    \3\ Ibid.
---------------------------------------------------------------------------
          Young adults already earn lower incomes than other 
        age groups, but young adults who are uninsured or purchasing 
        insurance individually earn even less. Young workers in the 
        individual market earn a median income of $26,000,\4\ while 
        uninsured young workers earn a median income of $20,000 per 
        year.\5\ That means that the typical young adult enrolled in 
        the individual market could get a benchmark plan for $154 a 
        month (or 7.1 percent of their annual income) in premiums.\6\ 
        An uninsured young person could pay $83 a month in premiums (or 
        4.96 percent of their annual income) for the same policy.\7\ In 
        addition to these tax credits, up to 7.2 million young adults 
        between the ages of 18 and 34 are eligible for cost-sharing 
        reductions (CSRs).\8\
---------------------------------------------------------------------------
    \4\ Young Invincibles' analysis of Current Population Survey, 
Annual Social and Economic Supplement, 2016.
    \5\ Ibid.
    \6\ Estimated using Kaiser Health Foundation's Health Insurance 
Marketplace Calculator, assuming a single 26-year old non-tobacco user.
    \7\ Ibid; Young Invincibles' analysis of Current Population Survey, 
Annual Social and Economic Supplement, 2016.
    \8\ Young Invincibles' analysis of Current Population Survey, 
Annual Social and Economic Supplement, 2016.
---------------------------------------------------------------------------
          Contrary to stereotypes, young adults value health 
        insurance and want to enroll in coverage.\9\ More than seven 
        inn young adults say it is ``very important'' that they have 
        health insurance.\10\ And prior to the ACA, just 5 percent of 
        young workers with an offer of employer-sponsored coverage said 
        that they opted not to enroll in their employer's plan because 
        they did not need the coverage, instead citing others reasons 
        such as parental coverage or prohibitive costs.\11\
---------------------------------------------------------------------------
    \9\ Kaiser Family Foundation. (2013). Kaiser Health Tracking Poll: 
June 2013. Princeton Survey Research Associates International. 
Retrieved from http://www.kff.org/health-reform/poll-finding/kaiser-
health-tracking-poll-june-2013/.
    \10\ Ibid.
    \11\ S.R. Collins, The Commonwealth Foundation, Covering Young 
Adults Under the Affordable Care Act, August 2013, 6 http://
www.commonwealthfund.org//media/Files/Publications/Issue 
percent20Brief/2013/Aug/1701 Collins covering young adults tracking 
brief final v4.pdf.
---------------------------------------------------------------------------
          A survey conducted prior to the ACA found that 60 
        percent of young people said that they did not get needed 
        health care because of cost and half reported problems paying 
        medical bills or said they were paying off medical debt over 
        time.\12\
---------------------------------------------------------------------------
    \12\ S.R. Collins, The Commonwealth Foundation, Young, Uninsured, 
and in Debt: Why Young Adults Lack Health Insurance and How the 
Affordable Care Act Is Helping, June 2012, 1, http://
www.commonwealthfund.org//media/files/publications/issue_brief/2012/
jun/1604_
collins_young_uninsured_in_debt_v4.pdf.
---------------------------------------------------------------------------
    To ensure we continue to build on the ACA's coverage gains, Young 
Invincibles recommends that Congress take the following policy actions:
        1. Swiftly fund cost-sharing reduction payments through at 
        least 2019;
        2. Create a permanent reinsurance program--not high-risk pools;
        3. Maintain existing guardrails around Section 1332 waivers;
        4. Reverse cuts to marketplace enrollment promotion and 
        consumer assistance--specifically targeting these efforts to 
        reach young adults; and
        5. Provide increased financial assistance to maximize young 
        adult enrollment and further stabilize the market.
1. Fund cost-sharing reduction payments through at least 2019.
    First, to ensure those already benefiting from the ACA do not see 
their coverage jeopardized, Congress should make clear that CSR 
payments will be made by immediately funding the reductions through a 
mandatory appropriation through at least the end of 2019. Making these 
payments would reduce uncertainty among consumers and carriers stemming 
from pending litigation and statements from the Administration about 
whether these payments will continue to be made. Moreover, these 
payments are already built into the Federal budget baseline and would 
not require additional spending.\13\ By immediately funding CSRs 
through at least 2019, Congress will avoid increasing consumers' 
premiums up to 20 percent next year,\14\ spur greater competition among 
insurers in the individual market, and prevent the Federal Government 
from absorbing the additional costs associated with financing 
enrollee's premium tax credits. This funding is crucial not only for 
consumers currently receiving CSRs, but also for marketplace consumers 
whose incomes may exceed the threshold to qualify for premium tax 
credits. This is especially critical for young adults who have seen 
their net worth drop 56 percent in the last 25 years.\15\ Given young 
adults' lower net worth and incomes, young people are less able to 
absorb an increase in their out-of-pocket costs or 20 percent increase 
in premiums. Therefore, if CSR payments are not funded, we could see 
fewer young adults able to participate in the marketplaces.
---------------------------------------------------------------------------
    \13\ Paul N. Van de Water, ``Providing an Explicit Appropriation 
for Cost-Sharing Reductions Wouldn't Require a Budgetary Offset,'' 
Center on Budget and Policy Priorities (CBPP) blog, April 19, 2017, 
https://www.cbpp.org/blog/providing-an-explicit-appropriation-for-cost-
sharing-reductions-wouldnt-require-a-budgetary.
    \14\ Congressional Budget Office, ``The Effects of Terminating 
Payments for Cost-Sharing Reductions'', August 2017, https://
www.cbo.gov/system/files/115th-congress-2017-2018/reports/53009-
costsharingreductions.pdf.
    \15\ Tom Allison, ``The Financial Health of Young America: 
Measuring Generational Declines Between Baby Boomers & Millennials,'' 
Young Invincibles, January 2017, 11, http://younginvincibles.org/wp-
content/uploads/2017/04/FHYA-Final2017-1-1.pdf.
---------------------------------------------------------------------------
2. Create a permanent reinsurance program--not high-risk pools.
    Second, to keep premiums down and make coverage more affordable, 
Congress should create a permanent reinsurance program. National and 
state-level reinsurance programs have already been shown to 
significantly reduce premiums, which promotes market stability, insurer 
participation, and the enrollment of younger, healthier consumers. 
Under the ACA's temporary reinsurance program, for instance, 
reinsurance was estimated to have reduced premiums by 10 to 14 percent 
in 2014.\16\ And earlier this year, Governor Walker estimated that 
consumers in Alaska could see their premiums drop as much as 20 percent 
next year because of the state's reinsurance program.\17\ Reinsurance 
is not new or unique, nor is it an insurer bailout: for instance, 
Congress recognized the importance of a permanent reinsurance program 
when developing the Medicare Part D prescription drug program in 
2003.\18\ To provide immediate stability to the individual market, we 
recommend Congress guarantee funding for reinsurance through at least a 
2-year mandatory appropriation.
---------------------------------------------------------------------------
    \16\ American Academy of Actuaries, Using High-Risk Pools to Cover 
High-Risk Enrollees (2017).
    \17\ Matt Buxton, Alaska's health insurance premiums to fall by 20% 
with new Federal funding, The Midnight Sun, July 11, 2017, http://
midnightsunak.com/2017/07/11/alaskas-health-insurance-premiums-fall-20-
%-new-Federal-funding/
    \18\ Michael Hiltzik, ``As GOP Moves Toward Repeal, A Government 
Report Shows Obamacare is Working Well,'' Los Angeles Times(Jul. 3, 
2017)
---------------------------------------------------------------------------
    Well-funded and well-designed reinsurance programs will go a long 
way to helping cover high-cost consumers--a return to State or Federal 
high-risk pools, on the other hand, will not. Historically, high-risk 
pools have been woefully inadequate at providing affordable, 
comprehensive coverage to those who need it most and would fail to meet 
the needs of young people, resulting in higher uninsured rates and 
subjecting those with pre-existing conditions which affect up to 35 
percent of 18-to 24-year-olds and 46 percent of 25-to 34-year-olds to a 
lifetime of struggling to access care.\19\
---------------------------------------------------------------------------
    \19\ High Risk Pool Ruse, USA Today, March 5, 2017, https://
www.usatoday.com/story/opinion/2017/03/05/high-risk-pool-ruse-
editorials-debates/98681846/; ``At Risk: Pre-Existing Conditions Could 
Affect 1 in 2 Americans.'' HHS ASPE Brief. p.1. https://aspe.hhs.gov/
system/files/ pdf/76376/index.pdf.
---------------------------------------------------------------------------
    I know this to be true, because when I was 23, I was diagnosed with 
Rheumatoid Arthritis. It was 2008, and, in the midst of moving and 
changing jobs, I was denied coverage on the individual market by 
multiple insurers due to my chronic condition. The State of Colorado 
hired me as a contractor, without benefits. It was a great opportunity, 
particularly in the midst of the Great Recession, but the prospect of 
going without health coverage was nerve-wracking. I was still fairly 
early in my diagnosis and trying to figure out the appropriate 
medications and treatment to control my condition, to prevent more 
serious health challenges down the road. Colorado's state-run high-risk 
pool, CoverColorado, which operated prior to the ACA, was the only 
place I could get covered, so I enrolled. Even with the subsidy I 
received, my insurance through CoverColorado was expensive. By law, 
CoverColorado's premiums could be up to 50 percent higher than standard 
individual market rates.\20\ I was also subject to a 3-month pre-
existing condition exclusion period,\21\ which meant that for one-
quarter of the time that I was on the plan, I still lacked the coverage 
I needed. And CoverColorado had a lifetime limit of $1 million.\22\
---------------------------------------------------------------------------
    \20\ Robin Baker, Bell Policy Center, Non-Group Insurance: Not a 
Quick Fix for Health Care, Page 10, (2009).
    \21\ Blair Miller, ``Despite Concerns Over Pre-existing Conditions, 
Rep. Mike Coffman Leaning Yes on AHCA as Vote Looms,'' Denver Channel 
(May 3, 2017).
    \22\ Ibid.
---------------------------------------------------------------------------
    I was not alone in my experience. In 2008, about 23 percent of 
CoverColorado enrollees were young adults between the ages of 20 and 
39.\23\ However, there were also many Coloradans with pre-existing 
conditions who were left out of our State's previous high-risk pool. At 
its peak, CoverColorado only served about 14,000 people and accounted 
for only 3.5 percent of Coloradans in the individual market in 
2011.\24\ Today, it is estimated that about 753,000 non-elderly 
Coloradans--nearly 54 times that number, or 22 percent of Colorado's 
nonelderly population--have a pre-existing condition that could 
potentially make them eligible for a high-risk pool.\25\
---------------------------------------------------------------------------
    \23\ Robin Baker, Bell Policy Center, Non-Group Insurance: Not a 
Quick Fix for Health Care, Page 11, (2009).
    \24\ John Ingold, ``High-Risk Pools, A Centerpiece of GOP Health 
Care Bill, Have a History in Colorado,'' The Denver Post (May 5, 2017); 
Karen Pollitz, High-Risk Pools for Uninsurable Individuals, Page 4, 
(2017).
    \25\ Gary Claxton et al., Pre-existing Conditions and Medical 
Underwriting in the Individual Insurance Market Prior to the ACA 
(2016).
---------------------------------------------------------------------------
    But it is not just health care consumers that come up short under 
high-risk people schemes; it is the government and taxpayers as well. 
In a recent interview with The Denver Post, former Colorado insurance 
commissioner Marcy Morrison explained that Colorado regularly struggled 
to fund the pre-ACA CoverColorado program.\26\ And the cost to operate 
a high-risk pool offering ACA-like coverage and subsidies--where the 
typical consumer spends between 8 and 10 percent of their income on 
coverage--would be very expensive: up to $656 billion over 10 
years.\27\
---------------------------------------------------------------------------
    \26\ ``High-risk pools, a centerpiece of GOP health care bill, have 
a history in Colorado,'' The Denver Post, May 5, 2017, http://
www.denverpost.com/2017/05/05/high-risk-pools-ahca-history-colorado/.
    \27\ Linda Blumberg et al., High-Risk Pools Under the AHCA: How 
Much Could Coverage Cost Enrollees and the Federal Government?, Page 4, 
(2017).
---------------------------------------------------------------------------
3. Maintain existing guardrails around Section 1332 waivers.
    As we think about building on coverage gains made by the ACA, we 
recognize the value and importance of State flexibility in expanding 
access to coverage. For example, Colorado decided to run its own state-
based marketplace and expand its Medicaid program. As a result of these 
efforts, Colorado has seen a reduction in its uninsured rate from 14.3 
percent in 2013 to 6.7 percent in 2015, with young adults seeing the 
largest gains in coverage.\28\ Section 1332 waivers are one way that 
States can make changes that build upon these types of successes and 
improve young people's access to quality, affordable health insurance.
---------------------------------------------------------------------------
    \28\ ``Impacts of the Affordable Care Act,'' Colorado Health 
Institute, last updated February 21, 2017, https://
www.coloradohealthinstitute.org/research/impacts-affordable-care-act-0.
---------------------------------------------------------------------------
    However, amendments to Section 1332 that would change the law's 
guardrails would harm the most vulnerable young people. We urge 
Congress not to change the Section 1332 guardrails that require that 
any waiver proposal provide coverage to at least a comparable number of 
residents as the ACA, provide coverage that is at least as 
comprehensive and affordable as the ACA, and not increase the Federal 
deficit.\29\ These guardrails are as important as ever in light of 
recent State waiver proposals that would decimate financial assistance 
for low-income young adults, like those proposed by Iowa and 
Oklahoma.\30\ Additionally, allowing States to waive essential health 
benefit requirements, for example, could actually decrease rather than 
increase young adult enrollment, by reducing or eliminating the 
services like maternity and newborn care, mental health and substance 
use disorder services, and preventive services--that young people use 
and value the most in their coverage.\31\
---------------------------------------------------------------------------
    \29\ 42 U.S. Code  18052(b)(1).
    \30\ Iowa Insurance Division, Draft: Iowa Stopgap Measure, July 13, 
2017, https://iid.iowa.gov/documents/iowa-stopgap-measure; Oklahoma 
State Department of Health, Oklahoma 1332 Waiver Application, Page 18, 
August 16, 2017.
    \31\ How Millennials Use Their Health Insurance, Young Invincibles, 
August 2016, http://younginvincibles.org/wp- content/uploads/2017/04/
how_millenials_use_health_care.pdf
---------------------------------------------------------------------------
4. Reverse cuts to marketplace enrollment promotion and consumer 
assistance--specifically targeting these efforts to reach young adults.
    To bring greater stability to the market and help more young people 
achieve the financial security associated with having coverage, we 
recommend boosting enrollment promotion and assistance efforts with 
additional funds dedicated to targeting young adults. Despite 
tremendous gains since the passage of the ACA, 11 million young adults 
remain uninsured.\32\ About 6.1 million of these uninsured young adults 
have incomes that could qualify them for premium tax credits.\33\ Of 
those, approximately 4.2 million of them have incomes that could 
qualify them for cost-sharing reductions,\34\ including over 3 million 
who may be eligible for insurance plans with deductibles no larger than 
$250 a year.\35\
---------------------------------------------------------------------------
    \32\ Young Invincibles' analysis of Current Population Survey, 
Annual Social and Economic Supplement, 2016. Based on raw number of 
uninsured young adults ages 18 to 34. http://www.census.gov/cps/ data/
cpstablecreator.html
    \33\ Ibid.
    \34\ Young Invincibles' analysis of Current Population Survey, 
Annual Social and Economic Supplement, 2016. Based on raw number of 
uninsured young adults earning between 100 and 250% FPL. http://
www.census.gov/cps/ data/cpstablecreator.html.
    \35\ Ibid, Based on raw number of uninsured young adults earning 
between 100 and 250% FPL; Center for Budget & Policy Priorities, Key 
Facts You Need to Know: Cost-Sharing Reductions, Page 2, December 3, 
2015, http://www.healthreformbeyondthebasics.org/wp content/uploads/
2013/09/KeyFacts Cost-Sharing-Reductions.pdf.
---------------------------------------------------------------------------
    Guaranteed CSR payments and a reinsurance program would help bring 
premiums down for even more young people, but actual enrollment depends 
on young adults knowing about their options. Many young people remain 
unaware of premium tax credits or opportunities to enroll in 
marketplace coverage, with historically too few resources devoted to 
reaching this population. For example, a report from the Commonwealth 
Fund found that 19-to 34-year-olds were the least likely group of 
uninsured adults to know about the insurance marketplaces.\36\ This is 
not surprising: young people are often learning about the health 
coverage system for the first time in their lives.
---------------------------------------------------------------------------
    \36\ S. R. Collins, M. Z. Gunja, M. M. Doty, and S. Beutel, ``Who 
Are the Remaining Uninsured and Why Haven't They Signed Up for 
Coverage?'', The Commonwealth Fund, August 2016, http://
www.commonwealthfund.org/publications/issue-briefs/2016/aug/who-are-
the-remaining-uninsured
---------------------------------------------------------------------------
    The Administration's announcement that they would cut Navigator 
grants by 41 percent and paid advertising by 90 percent for this 
upcoming enrollment period goes in the exact wrong direction.\37\ 
Congress should reverse these cuts and direct HHS to administer these 
resources so as not to limit enrollment,\38\ imperil the risk pool, and 
discourage issuers' future participation in the marketplace. These 
outcomes would result in higher premiums for consumers and greater 
costs to the government and taxpayers in future years.
---------------------------------------------------------------------------
    \37\ Amy Goldstein, The Washington Post, Trump officials slash 
advertising, grants to help Americans get Affordable Care Act 
insurance, August 31, 2017, https://www.washingtonpost.com/national/
health-science/trump-officials-slash-advertising-grants-to-help-
americans-get-affordable-care-act-insurance/2017/08/31/e8a45386-8e8f-
11e7-84c0-02cc069f2c37 story.html?utm term=.17f5754f54d3.
    \38\ Pinar Karaca-Mandic, Health Affairs, The Volume Of TV 
Advertisements 
During The ACA's First Enrollment Period Was Associated With Increased 
Insurance Coverage, March 2017
---------------------------------------------------------------------------
    Navigators, consumer assistance programs, and marketplace call 
centers help bridge inequities in health insurance literacy and ensure 
that young people understand their options and are able to get covered. 
And we have seen the value of this assistance in our state-based 
outreach efforts. For example, recently, someone on our outreach team 
in Virginia recently met a student in Burke, Virginia who was weeks 
away from turning 26. She did not understand her options for 
transitioning off dependent coverage, was unaware of the 60-day special 
enrollment period, and had no idea she could qualify for premium tax 
credits. She now plans on making an appointment with Enroll Virginia as 
her birthday gets closer. Without this additional information, the 
young woman could have missed her opportunity to enroll. And she's far 
from alone: due to mixed messages from the Administration and 
uncertainty in Congress, we have seen that consumer confusion has 
increased. All of this calls for renewed, targeted outreach and 
assistance funding that helps provide accurate information to consumers 
and better ensures that young adults know about their coverage options.
5. Provide increased financial assistance to maximize young adult 
enrollment and further stabilize the market.
    To achieve our shared goal of boosting young adult enrollment and 
further stabilizing the individual market, Congress should do more to 
further reduce young adults' premium costs to help more of them afford 
coverage. One proposal suggests a boost in financial assistance by an 
additional $50 a month for young adults. This would result in an 
additional 900,000 insured young adults at a less than $3.7 billion a 
year price tag to the Federal Government.\39\
---------------------------------------------------------------------------
    \39\ C. Eibner & E. Saltzman, The Commonwealth Fund, Insuring 
Younger Adults Through the ACA's Marketplaces: Options to Expand 
Enrollment, December 16, 2016, http://www.commonwealthfund.org/
publications/blog/2016/dec/insuring-younger-adults
---------------------------------------------------------------------------
    Another way to lower costs for young people is to lower the premium 
affordability threshold for young adults. This would result in greater 
financial assistance for young people based on their incomes and 
account for, as the ACA currently does, premium variation in markets 
across the country. Boosting young adult enrollment in the marketplaces 
will not only help young people, but can help reduce premiums for 
marketplace consumers more broadly.\40\ Lowering the affordability 
threshold would help make plans more accessible to the lowest income 
young people in the highest cost markets, ultimately bringing down 
costs for all consumers. We are currently analyzing the full impact on 
coverage, premiums, and cost that such a proposal would have.
---------------------------------------------------------------------------
    \40\ Ibid.
---------------------------------------------------------------------------
    As Congress considers ways to bring premiums down, we would caution 
that bringing premiums down by increasing out-of-pocket costs may do 
very little to help young people afford care. Very high-deductible or 
catastrophic plans will further expose our cash-strapped generation to 
financial insecurity that most cannot afford. Enrollment trends show 
little appetite for skinny plans, with young people opting 
overwhelmingly for more comprehensive coverage, not less.\41\ In 2015, 
77 percent of young adults ages 18 to 34 in Healthcare.gov States chose 
a Silver-level plan or higher, with only 21 percent selecting a Bronze 
plan and 3 percent in a catastrophic plan.\42\ Perhaps surprising to 
some, a recent survey found that young adults were nearly 40 percent 
more likely to indicate that they would prefer a plan with a higher 
monthly premium and a lower deductible as compared with adults 50 and 
over.\43\ This is particularly true for low-and middle-income 
consumers; the survey found just 39 percent of those earning under 
$50,000 a year preferred a low premium, high-deductible plan, compared 
to 52 percent of people making over $50,000.\44\
---------------------------------------------------------------------------
    \41\ ASPE Issue Brief, ``Health Insurance Marketplace 2015 Open 
Enrollment Period: March Enrollment Report,'' 30-31, https://
aspe.hhs.gov/system/files/pdf/83656/ib_2015mar_enrollment.pdf.
    \42\ Ibid.
    \43\ Jay McDonald, Bankrate, How bad is shopping for health 
insurance?, December 2, 2014, http://www.bankrate.com/finance/
insurance/health-insurance-poll-1114.aspx.
    \44\ bid.
---------------------------------------------------------------------------
    While so-called ``copper plans'' or similar proposals would 
certainly reduce premiums,\45\ deductibles for these policies would be 
around $9,000,\46\ even while a recent analysis of consumer finance 
data found that, for young people, an extraordinary medical payment 
amounted to $1,406.\47\ Furthermore, the typical young adults' net 
worth is just $10,900,\48\ and the median income for an uninsured young 
worker is just $20,000 a year.\49\ In the event of a health care 
emergency, these types of policies would require a young person to 
spend nearly all of their net worth--or half the annual income of a 
typical uninsured young worker to even meet their deductible.. Even if 
such a plan were coupled with a Health Savings Account, the typical 
uninsured young person would have to save $632 a month to avoid facing 
an extraordinary medical payment just to meet a copper plan 
deductible.\50\ Young people may determine that a plan offering them 
such little in value is not worth the cost and forego coverage 
altogether.
---------------------------------------------------------------------------
    \45\ Caroline Pearson, Avalere Health, Avalere Analysis: ``Copper 
Plan'' Alternative Would Lower Premiums 18 percent, August 20, 2014, 
http://avalere.com/expertise/managed-care/insights/avalere-analysis-
copper-plan-alternative-would-lower-premiums-18
    \46\ 46 Ezra Klein, Vox.com, 7 Democrats have a plan to make 
Obamacare cheaper. Here's how., October 28, 2014, https://www.vox.com/
2014/10/28/7083343/obamacare-copper-plans-explained
    \47\ Farrell, Diana and Greig, Fiona. ``Coping with Medical Costs 
through Life.'' JPMorgan Chase Institute, 2017
    \48\ Tom Allison, ``The Financial Health of Young America: 
Measuring Generational Declines Between Baby Boomers & Millennials'', 
Young Invincibles, January 2017, Page 11, http://younginvincibles.org/
wp-content/uploads/2017/04/FHYA-Final2017-1-1.pdf.
    \49\ Young Invincibles' analysis of Current Population Survey, 
Annual Social and Economic Supplement, 2016.
    \50\ Ibid.; Farrell, Diana and Greig, Fiona. ``Coping with Medical 
Costs through Life.'' JPMorgan Chase Institute, 2017
---------------------------------------------------------------------------
    Millions of young people are accessing coverage for the first time 
and millions more are benefiting from the law's benefit standards and 
consumer protections, enabling them to live independent, productive 
lives without fear of experiencing a health emergency and devastating 
financial loss. We hope Republicans and Democrats will follow this 
committee's lead and work together to bring greater stability to the 
health care system and make meaningful changes to the law to meet the 
needs of young people across the country. Thank you for the opportunity 
to speak with you today. I look forward to taking your questions.
    The Chairman. Thank you very much.
    Mr. Farmer, welcome.

   STATEMENT OF RAYMOND G. FARMER, DIRECTOR, SOUTH CAROLINA 
DEPARTMENT OF INSURANCE, NAIC SECRETARY-TREASURER, COLUMBIA, SC

    Mr. Farmer. Good morning, Chairman Alexander, Ranking 
Member Murray, and distinguished members of the committee. My 
name is Ray Farmer, and I am the Director of Insurance in South 
Carolina and Secretary-Treasurer of the National Association of 
Insurance Commissioners. I testify today on behalf of the 
membership of the NAIC, and I thank you for this opportunity.
    State insurance regulators have seen firsthand the effects 
of the Affordable Care Act's health insurance reforms on our 
markets, and the results have been mixed. While the experiences 
of the States have differed, every State regulator is concerned 
that things could be worse in 2018 if the necessary actions at 
the Federal level are not swiftly taken.
    As my fellow commissioners testified last week, there are 
three immediate actions Congress can and should take to 
stabilize the individual health insurance markets across the 
country.
    One, ensure health insurance carriers will be reimbursed 
for the enhanced cost-sharing plans they offered to lower-
income consumers under the law. Two, reinstate the Federal 
reinsurance programs. And three, amend Section 1332 to create a 
waiver process that is clear, timely, and flexible. These 
actions would help stabilize rates, encourage carriers to 
remain in the market, and improve consumer choice.
    I know that you have heard similar recommendations from 
commissioners, Governors, and others over the past week, but I 
would like to make a few points.
    First, to reimburse carriers under the cost-sharing 
reduction program is in no way a bailout of the industry. Under 
the ACA, carriers that sell on the exchange are required to 
offer Silver plans with lower cost-sharing requirements such as 
deductibles and co-insurance, but must charge the same premium 
as they charge for the standard version of those same Silver 
plans. The ACA States that the Secretary of HHS shall make 
periodic and timely payments equal to the value of the 
reductions in these cost-sharing requirements as compensation 
for these enhanced benefits to consumers. If the Federal 
Government fails to fulfill its reimbursement obligations, or 
if uncertainty over reimbursements continues, carriers will be 
forced to stop selling plans or increase premiums by 15 to 20 
percent to offset their losses.
    The best option is for the Federal Government to pay its 
obligations under the law. Carriers need to know what rules 
they will be operating under in 2018, and they must know now 
before rates are finalized and exchange participation contracts 
are signed in less than 2 weeks. Furthermore, carriers need to 
know payments will be made in 2019 before they start working on 
the 2019 rates, which will occur early 2018.
    Second, uncertainty in the risk pool has also increased 
premiums and moved some carriers to stop selling on the 
exchange. The risk pool in many States is much sicker than 
anticipated, and the resulting claims have led to significant 
losses for some. To address this, the NAIC recommends that $15 
billion per year be provided to cover high claims. We believe 
this can be implemented quickly by the Federal Government, as 
is similar to the program that worked successfully in 2014 
through 2016. This would not only bring greater stability to 
rates but also save the Federal Government billions of dollars 
through lower premium tax credits.
    As to whether States or the Federal Government should fund 
and operate the reinsurance program, it would be impossible for 
most States to implement such a program in 2018, or even in 
2019 in many States. Most States do not have the existing 
authority to create such a program or the existing revenue to 
fund it or the mechanisms to operate it. By contrast, the 
Federal Government can reinstate the reinsurance program 
quickly and impact rates in 2018.
    Third, as you've heard from several witnesses, the current 
Section 1332 waiver process is simply too uncertain, too time-
consuming, and too limited to be a real option for most States. 
The NAIC recommends more flexibility, clear guidance, and 
timely deadlines to be established.
    Finally, we urge the Senate to also consider extending the 
moratorium on the Section 9010 annual fee on health insurance 
providers through 2013, thus reducing premiums, and also to 
provide assistance to the U.S. Territories, whose markets have 
been devastated under the ACA.
    State regulators remain committed to working 
collaboratively with Congress on a non-partisan basis to 
address the longer-term issues related to health insurance. As 
your partners in government, we look forward to working with 
you as we all seek to make health insurance coverage more 
affordable and accessible.
    [The prepared statement of Mr. Farmer follows:]
                Prepared Statement of Raymond G. Farmer
                                summary
    While the experiences of the States have differed under the ACA, 
every State regulator is concerned that things could be worse in 2018 
if the necessary actions at the Federal level are not swiftly taken.
    Specifically, immediate action must be taken to: (1) ensure health 
insurance carriers will be reimbursed for the enhanced cost-sharing 
plans they offer to lower-income consumers under the law; and (2) 
reinstate the Federal reinsurance program that successfully operated in 
2014 through 2016. Both of these actions would help stabilize rates, 
encourage carriers to remain in the market, and improve consumer 
choice.
    To be clear, the Cost Sharing Reduction (CSR) program provides 
financial assistance to consumers and is in no way a ``bailout'' of the 
industry. Under the ACA, carriers that sell on the Exchange are 
required to offer Silver plans with lower cost sharing requirements 
(such as deductibles and coinsurance) but must charge the same premium 
as they charge for the standard version of those same Silver plans. The 
ACA States that the Secretary of HHS ``shall make periodic and timely 
payments... equal to the value of the reductions'' in these cost 
sharing requirements as compensation for these enhanced benefits to 
consumers.
    If the Federal Government fails to fulfill its obligations to 
reimburse carriers, they will be forced to stop selling plans or 
significantly increase premiums. If carriers have to raise premiums by 
15-20 percent to offset their losses due to unpaid Federal obligations, 
it is estimated that it will cost the Federal Government an extra $194 
billion over the next 10 years due to increased premium tax credit 
payments.
    The risk pool in many States is much sicker than anticipated and 
the resulting claims have led to significant losses for some. To 
address this, the NAIC supports the reinstatement of the Federal 
Temporary Reinsurance Program. We recommend that $15 billion per year 
be provided to cover high claims. It is important for the Federal 
Government to act because it would be impossible for most States to 
create and implement such a program for 2018, or even 2019.
    In addition, the NAIC recommends that Congress: (1) extend the 
moratorium on the Section 9010 Annual Fee on Health Insurance Providers 
through 2019, thus reducing premiums; (2) modify the Section 1332 
waiver process to give clear guidance to States and expedite the review 
process; and, (3) provide assistance to U.S. Territories, whose markets 
have been adversely treated under the ACA.
    State regulators remain committed to working collaboratively with 
Congress on a non-partisan basis to address the longer-term issues 
related to health insurance. As your partners in government, we look 
forward to working with you as we all seek to make health insurance 
coverage more affordable and accessible.
                                 ______
                                 
    Good morning Chairman Alexander, Ranking Member Murray, and 
distinguished members of the committee. My name is Ray Farmer and I am 
the appointed Director of the South Carolina Department of Insurance 
and Secretary-Treasurer of the National Association of Insurance 
Commissioners \1\ (NAIC). I testify today on behalf of the membership 
of the NAIC and I thank you for this opportunity to discuss how to 
immediately address an issue of critical importance to State 
regulators: the uncertainty and resulting lack of stability in our 
individual health insurance markets.
---------------------------------------------------------------------------
    \1\ Founded in 1871, the NAIC is the U.S. standard-setting and 
regulatory support organization created and governed by the chief 
insurance regulators from the 50 States, the District of Columbia and 
the five U.S. territories. Through the NAIC, State insurance regulators 
establish standards and best practices, conduct peer review, and 
coordinate their regulatory oversight. NAIC members, together with the 
central resources of the NAIC, form the national system of state-based 
insurance regulation in the U.S.
---------------------------------------------------------------------------
    As State insurance regulators, we have seen firsthand the effects 
of the Affordable Care Act's (ACA's) health insurance reforms on our 
markets, and the results have been mixed. In some States, the 
individual market is struggling and, in a few, it is on the verge of 
collapse. In these States, premium increases, limited plan options, 
little or no competition, rising cost-sharing and more limited options 
have combined to create a health insurance market that fails to meet 
the needs of consumers and is unsustainable. However, in other States, 
the individual market is robust, with increased enrollment and stable 
premiums.
    While the experiences of the States have differed, every State 
regulator is concerned that things could be worse in 2018 if the 
necessary legislative and administrative actions at the Federal level 
are not swiftly taken. Specifically, immediate action must be taken to: 
(1) ensure health insurance carriers will be reimbursed for the reduced 
cost-sharing plans they offer to lower-income consumers under the Cost-
Sharing Reduction (CSR) program under the ACA; and 2) create a Federal 
reinsurance program with permanent funding similar to that which 
operated in 2014-2016, to spread the volatile risk in the individual 
market. Both of these actions would help stabilize rates, encourage 
carriers to remain in the market, and improve consumer choices.
    To be clear, the CSR program provides financial assistance to 
consumers. The reimbursement to carriers under the CSR program is in no 
way a ``bailout'' for health insurance carriers. Pursuant to Section 
1402 of the ACA, issuers that sell Qualified Health Plans (QHPs) on the 
Exchange must offer Silver plans with lower deductibles and 
coinsurance--plans with a 94 percent actuarial value, an 87 percent 
actuarial value and a 73 percent actuarial value, depending on income--
but must charge the same premium as the 70 percent actuarial value 
Silver plan. The ACA also clearly States that the Secretary ``shall 
make periodic and timely payments to the issuer equal to the value of 
the reductions'' to compensate them for Section 1402's requirement. 
Fulfilling the Federal law's requirement to reimburse health insurance 
carriers for benefits they are providing to lower-income consumers is 
not a bailout by any stretch of the definition.
    If the Federal Government fails to fulfill its obligations to 
reimburse health insurers, insurers will have only two choices: (1) 
stop selling plans on the Exchange or in the individual market 
altogether; or (2) significantly increase premiums for all plans or 
just the Silver plans. If carriers have to raise premiums by 15-20 
percent to offset their losses under the CSR program what will be cost 
to the public As estimated by the Congressional Budget Office in its 
August 2017 report ``The Effects of Terminating Payments for Cost-
Sharing Reductions'', increasing the Silver plan premiums will cost the 
Federal Government $194 billion over the next 10 years in increase tax 
credit payments and there will still be more consumers in areas with no 
coverage options. In addition, it must be noted that while those 
receiving tax credits may be protected from the higher premiums, those 
not eligible for tax credits could be hit with significant premium 
increases or be forced to move to a Bronze plan that has higher cost-
sharing.
    The best option is for the Federal Government to pay its 
obligations under the law. And, assurances that these payments will be 
made in 2018 must be made now. On August 10th, CMS/CCIIO issued an FAQ 
that allowed carriers to adjust their rate filings and finalize them by 
September 20, 2017, while carriers must sign their contracts to sell on 
the Federal Exchange by September 27, 2017. Insurance carriers need to 
know now under what rules they will be operating in 2018, and they must 
know now before rates are finalized and contracts are signed.
    In addition to uncertainty in the Federal funding, uncertainty in 
the risk pool has also increased premiums and moved some carriers to 
stop selling on the Exchange. The risk pool in many States is much 
sicker than expected and extraordinary claims have resulted in 
significant losses for some carriers. To address this, the NAIC 
supports the creation of a Federal reinsurance program to spread the 
risk of the small, volatile individual market to a larger pool. We 
recommend that $15 billion per year be provided to cover high claims. 
This is a program that can be implemented quickly as it is similar to 
the program that work successfully in 2014-2016 under the ACA. 
Protecting carriers from outlier claims and spreading the risk of the 
individual market will stabilize rates for consumers and encourage 
carrier participation, giving consumers more choices.
    In addition to fully funding the CSR reimbursements and creating a 
Federal reinsurance program, to address high risk claims, the NAIC also 
recommends that Congress: (1) extend the moratorium on the Section 9010 
Annual Fee on Health Insurance Providers through 2019; (2) modify the 
Section 1332 waiver process; and, (3) provide assistance to U.S. 
Territories, whose markets have been adversely treated under the ACA.
    Extending the moratorium on the Section 9010 premium tax would, of 
course, help reduce premiums. Modifying Section 1332 waiver 
requirements would allow more States to pursue their State-based 
solutions more quickly, thus returning more decision-making back to the 
States where they are best equipped to balance consumer and insurer 
needs for a strong market that offers competition, affordable options 
and significant consumer choice. When modifying Section 1332 
requirements, Congress should consider the fact that States are 
hesitant to pass legislation unless it is clear that it will be 
approved. Without clear direction regarding what, exactly, may be 
waived under Section 1332, States are left looking to CMS for guidance, 
which often does not come. Any congressional efforts to amend Section 
1332 should be very clear about what can, and cannot, be waived. 
Finally, providing grants to the Territories would help them repair 
their markets where very few, if any, carriers are currently selling 
individual market coverage.
    We also note that several legislative proposals have been 
introduced under the auspices of market stabilization and increased 
competition that actually would have the opposite effect. For example, 
the Competitive Health Insurance Reform Act, H.R. 372, a bill that 
would repeal the health insurance exemption from Federal antitrust laws 
as established by the McCarran-Ferguson Act, could have far-reaching 
implications which could hinder competition, harm consumers and weaken 
the health insurance market. States have their own antitrust and unfair 
competition laws. State regulators and attorneys general play 
complimentary and mutually supportive roles in monitoring and 
investigating insurers, agents, and brokers to prevent and punish 
activities prohibited by those State laws. Furthermore, the NAIC's 
fundamental concern in the 1940's--a concern that continues to define 
the NAIC's position on antitrust reform today--was that the competitive 
benefits of collectively developing loss costs and policy language 
would be jeopardized by the insertion of Federal antitrust authority in 
the insurance markets. This limited exemption allows insurers to share 
loss data, which promotes healthy insurance markets by increasing the 
level and competence of the competition.
    Another legislative proposal that could adversely affect health 
insurance markets is the Small Business Health Fairness Act, H.R. 1101. 
This bill would allow a new category of federally supervised health 
insurance company, ``Association Health Plans (AHPs),'' to form and 
operate outside the authority of State regulators and beyond the reach 
of proven State consumer protections and solvency laws. State insurance 
regulators share the Congress's concern for the growing number of small 
business owners and employees who cannot afford adequate coverage. H.R. 
1101, however, would do little, if anything, to address the problem and 
could exacerbate the problem by encouraging AHPs to ``cherry-pick'' 
healthy groups. This, in turn, would make existing State risk pools 
even riskier and more expensive for insurance carriers, thus making it 
even harder for sick groups to afford insurance. States already have 
the power to authorize and supervise AHPs but importantly would do so 
in a way that protects those consumers and ensures a level playing 
field. A top-down Federal approach like H.R. 1101 would only empower 
more Federal creep, which we vehemently oppose.
    Finally, legislative proposals that would mandate interstate sales 
of health insurance policies, such as S. 1516 and H.R. 314, would do 
nothing more than undermine State insurance laws, make health insurance 
policies less available, make insurers less accountable, and prevent 
State regulators from assisting consumers in their States. Under S. 
1516 and H.R. 314, insurance carriers would be allowed to choose their 
own regulator--heir ``primary state''--and sell health insurance 
policies in any other State without having to comply with that state's 
insurance regulations and laws. Naturally, insurance carriers will seek 
out a State with regulations that allow them to most aggressively 
select the healthiest risk, this would then cause risk pools with 
sicker enrollees to experience steep premium hikes, thus making it more 
difficult to increase enrollment. Consequently, as existing risk pools 
collapsed, insurance policies would be forced to cover less and less as 
insurers try to design policies that discourage the sickest consumers 
from signing up. Rather than being a top-down Federal mandate as they 
are in S. 1516 and H.R. 314, interstate sales should be conducted under 
voluntary agreements among States under which appropriate market rules 
will be set by interstate compact.
    To summarize, the NAIC recommends that Congress act immediately to: 
1) fully fund CSR reimbursements; 2) provide $15 billion per year for a 
Federal reinsurance program; 3) extend the moratorium on Section 9010 
fees; 4) modify the Section 1332 waiver requirements to provide 
flexibility and expedite the process; and, 5) provide grants to U.S. 
Territories. Doing these things now will help shore up the individual 
health insurance market as the Congress continues its consideration of 
broader reforms.
    State regulators remain committed to working collaboratively with 
Congress on a non-partisan basis to address the longer-term issues 
related to health insurance. As your partners in government, we look 
forward to working with you as we all seek to make health insurance 
coverage more affordable and accessible.

    The Chairman. Thank you, Mr. Farmer, and thanks to each of 
you.
    We will now begin a 5-minute round of questions, and I will 
try to hold to 5 minutes for the questions and answers because 
we have lots of senators who want to be a part of it.
    We'll start with Senator Enzi.

                       Statement of Senator Enzi

    Senator Enzi. Thank you, Mr. Chairman.
    I want to thank the witnesses of all of the panels that 
we've had, but I want to thank the Chair and the Ranking Member 
for going into this vigorous process that seems to have brought 
out a lot of good ideas.
    I've appreciated the comments on the invisible high-risk 
pool, which means that nobody knows that they're in it, and 
they don't pay any different premium than they were before. I 
think there's a way for that to be done in a rather quick 
manner.
    I've appreciated the favorable comments on the small 
business health plans that allow groups of people to band 
together to be able to more effectively negotiate the rates. 
I'm always trying to figure out how to get more people insured, 
and I had a constituent that was paying attention to what we're 
doing, evidently, because the person paid a fine for not having 
any coverage, and she said ``I've been paying for the small 
stuff myself. If I could get a Copper plan with catastrophic 
coverage, it would be more valuable than sending money to the 
Federal Government where I don't know where it goes.''
    Dr. Sethi, would you like to comment on that?
    Dr. Sethi. Well, thank you so much, Senator. You know, what 
we--what I have seen with patients across Tennessee is that a 
lot of the folks who cannot obtain insurance in the individual 
market, it is because the premiums are simply too high, and 
then compounded with the fact that the deductibles are too 
high.
    So I think allowing a catastrophic plan for all ages that 
could buy in would allow these patients to enter the individual 
market. So I believe that is a good step in providing 
affordable insurance coverage.
    Senator Enzi. Thank you. I'm glad we have an insurer on the 
panel, too, because I think there's been a problem with people 
signing up on their way to the hospital and not being able to 
pay premiums, and when they get out of the hospital dropping 
their policy. As an insurer, do you think if we had a Copper 
plan that covered catastrophic so that we can encourage people 
to get into a plan, that would help? One suggestion that I saw 
was that if we drop the penalty and then after a year, after a 
year if people didn't have coverage for that first year, then 
they'd kind of be on their own for a year. But they'd have a 
year's grace to be able to sign up to some plan, and if they 
paid for at least the Copper plan for that last year they'd be 
covered. Is that a viable thing for bringing down costs and 
getting something instituted?
    Mr. Ruiz-Moss. Thank you for the question. I would agree 
that the way to bring more people into the market and have them 
maintain coverage is first to make coverage more affordable. So 
we see that as a critical piece in getting more people to join. 
Then there needs to be continuous coverage provisions. So today 
we have the individual mandate, that provision intended to make 
sure that people buy and keep coverage. The challenge I think 
that was stated earlier is the difference between the penalty 
and an insurance premium is so broad that it's losing its 
effect, and the fact that people can enroll specifically to 
come in and get services and then dis-enroll from plans is 
really our key contributors to destabilizing that market 
overall.
    The Copper plan is an interesting concept. I think one of 
the things you have to consider is that a Copper plan is 
already a similar level as a Bronze plan is today. So there is 
an available option that's going to be similar to a Copper 
plan. A big reason that the catastrophic plans are so 
inexpensive today relative to the other plans is that they're 
only available to people 30 and under, and there's no subsidy 
in those plans. So if you open that plan up to a broader 
population and assume older ages or other conditions are going 
to come into that plan, the premiums are going to have to 
reflect that expected underlying cost from the new population, 
thereby hurting some of the affordability that's in those plans 
today.
    I think my colleague pointed out those plans do have much 
higher deductibles, co-insurance, et cetera, so they may not be 
the right plan for everyone. So I think all that ultimately has 
to be considered in offering catastrophic coverage.
    Senator Enzi. Thank you. My time has almost expired. I'll 
try to help out.
    The Chairman. Thank you, Senator Enzi.
    Senator Murray.
    Senator Murray. Well, thank you to all of our panelists. 
This is really a good discussion.
    Ms. Postolowski, I want to start with you. Thank you for 
sharing your expertise and experience.
    Over the last couple of weeks, this committee has spent a 
lot of time talking about how we can get more young people to 
sign up so that the pools are spread a little more across the 
board and lowering the cost for everyone. One theory says that 
if States have the ability to sell coverage with higher 
deductibles and fewer benefits, young people will buy that 
coverage because it has a lower premium. Given your experience 
with the health care system and your work with young people who 
need health care, give us your perspective on that approach.
    Ms. Postolowski. Certainly. So what I'm hearing you bring 
up is conversations around potential changes to essential 
health benefits or potential changes to cost-sharing under 
private insurance plans. I would start by saying that as a 
reminder, the essential health benefits represent 10 basic 
categories of services that States had a fair amount of 
flexibility in setting up initially in determining what plan 
they were going to use to determine what would be in those 
essential health benefits.
    It might surprise members of the committee, but the health 
care services that young people use the most actually fall 
under the EHB categories. So things like mental health 
coverage, 7.6 million young people received treatment for a 
mental health condition last year. Maternity care is another 
big one for our generation. We know 8.7 million women received 
maternity care through the ACA for the first time, and 
preventive services.
    Senator Murray. So making sure we provide those services is 
an incentive to young people to sign up?
    Ms. Postolowski. Yes. That's certainly what I hear when I 
talk to young people on the ground, and the presence of the 
out-of-pocket maximums, the lack of annual lifetime limits on 
the EHBs also provide important financial security for young 
people. Again, the average young person on the marketplace is 
making $26,000 a year, so they don't have a lot of room, if 
they do get hit with a big medical bill, to pay for that 
coverage.
    Senator Murray. OK, thank you.
    Dr. Turney, let me turn to you. Marshfield's health plan 
you said disproportionately serves rural and low-income 
populations, and you testified that more of your enrollees 
received out-of-pocket cost reductions than other plans. Talk 
to us a little bit about what the uncertainty around the out-
of-pocket cost reductions has had on your enrollees.
    Dr. Turney. You know, we talked about the income of the 
younger adults that live in Colorado. Our average household 
income for a family of four in the northern half of the State 
of Wisconsin is $42,000. In the State overall, it's $66,000. So 
you can see that people are making very tough choices about 
where their money goes. And if you live in Wisconsin, you know 
you have to heat your house in the winter, and they're making 
those decisions, do I heat my house or do I actually get health 
care?
    What we see is that the people that are in the exchange are 
very hard-working people. They are oftentimes self-employed or 
they're in a very small business. So they really have no other 
option for health insurance. They need to come to the exchange 
to make that happen.
    What we've seen, the extremes that we've seen, however, is 
much like what others are seeing in that we have about a 30 
percent drop-off in the number of people that maintain coverage 
at the last 3 months of a calendar year, and that's been 
consistent for the last 3 years.
    We also know that we have a high percentage that are 
sicker. About 50 percent of the people in the exchange are over 
50. The population tends to be sicker, and we know that about 
15 percent of the people on the exchange that we serve for 
30,000 patients account for about 80 percent of the cost.
    So as we look at how to help the patients that we serve--
and our choice is to see all patients regardless of their 
ability to pay--we know that without the CSRs, we know that 
without reinsurance, and we know that without risk adjustment, 
it's going to be a challenge for the health plan and the 
provider group that are very closely tied to really serve the 
population in the best way possible.
    We certainly have evidence that the patients that have come 
onto the exchange, many who have been on the exchange all 3 
years, have better outcomes. They're coming in for preventive 
care. They're getting the screening health care. Their chronic 
illnesses are better managed.
    So we want to continue to serve that population, we want to 
serve our communities, but without the opportunity to make that 
happen, it's going to be a very big challenge for us.
    Senator Murray. OK, and this committee has heard a lot 
about providing certainty for this program beyond 2018, so more 
than 1 year. How soon do you start developing your premiums for 
2019?
    Dr. Turney. We're already in the process of setting 
premiums. We start 18 months or more in advance looking at the 
population, the services they've utilized, and determining how 
we can provide the premiums that are going to be acceptable to 
the patients that we serve. We know that without the CSRs, 
certainly like others, our rates would go up over 20 percent 
this year, above what they already are. That is just not 
tenable for the people that we take care of.
    Senator Murray. OK. And really quickly, Mr. Farmer, you 
mentioned reinsurance helping reduce premiums in the individual 
market. Can you talk a little bit more about that?
    Mr. Farmer. Sure. We've seen over the years that when 
reinsurance is paid, it stabilizes the rates on the front end. 
We did a survey of our carrier for the year 2014, and it showed 
a reduction of about 21 percent. So the Federal dollars or the 
reinsurance dollars certainly pay off on the front end.
    Senator Murray. OK. Thank you very much, appreciate it.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Murray.
    Senator Collins.

                      Statement of Senator Collins

    Senator Collins. Mr. Farmer, following up on Senator 
Murray's question, do you think that it would be helpful if the 
Federal Government were to provide some initial seed money to 
help States establish reinsurance funds or reinsurance pools in 
the short term?
    Mr. Farmer. Certainly in the short term, and in my opinion 
the longer term. You know, I know funding is tight and dollars 
are hard to come by, but the more the Federal Government can 
put in the reinsurance program to support this Federal program, 
the better States are going to be. We've seen reinsurance 
payments reduce premiums on the front end.
    Senator Collins. Thank you.
    Dr. Turney, I support giving States more flexibility in 
plan design, but I think you quickly get into a thorny issue, 
and I want to give you an example and get your reaction, and 
that is the interaction between certain essential health 
benefits that are listed under the ACA and the prohibition 
against lifetime or annual caps on insurance benefits. If a 
State chooses not to cover mental health and substance abuse 
treatment as an essential benefit, then doesn't that make the 
cap on lifetime and annual benefits irrelevant?
    Dr. Turney. You know, that's a really good question, and I 
would speak to the issue of the waiver because I think that's 
one of the things that is certainly on the table. We would 
struggle understanding what the flexibility would look like if 
we eliminated the essential health benefits and if we didn't 
have the guardrails for the protection of our patients.
    So if you look at the economics in health care, if you 
aren't serving your population and they need care, which they 
frequently do, someone is going to have to pay for that care, 
whether it's through taxes or a federally funded program. So I 
think it's critical as we give States flexibility in the way 
they design care that we continue the protections that exist 
today for our patients.
    So then what you're really looking at is insurance design. 
I think it would be interesting to hear what other States are 
going to be doing in this realm and not just around reinsurance 
but how do we look at co-pays, deductibles, premium rates, and 
still cover the patients with the basic health care that they 
need.
    Senator Collins. Thank you.
    Dr. Sethi, when you told the story of the truck driver, it 
reminded me of a conversation that I had with a major blueberry 
processor in my State just yesterday. The company pays the 
workers in this processing plant $14 an hour. It pays 78 
percent of their health insurance premiums, so that's generous. 
And yet, for the average worker, the remainder of the premium 
constitutes 30 percent of their pre-tax income.
    So he told me about a conversation that he had with some of 
his workers who said, you know, we're really better off not 
working because we can get the subsidy because of our income 
levels through the ACA, but because we're in an employer-
sponsored plan, we are ineligible for the subsidy.
    This really troubled me, because I think part of the 
problem with the ACA is there are numerous provisions that 
discourage work. We see the clips, for example, that if you 
make one dollar more than 400 percent of the poverty rate, you 
lose your subsidy.
    What about allowing a low-income employee to use an ACA 
subsidy to help pay for his or her share of the employer-
provided health insurance? What would you think of that idea?
    Dr. Sethi. Thank you, Senator. I would have to study it a 
little bit more, but from the sound of it, I definitely think 
that is something that could really help folks.
    You know, in my experience with patients, what I've seen is 
exactly what you're describing. People can't afford the 
insurance, and I'll just tell you this. Last night I had a 
patient call me who I've taken care of for about 8 years. She 
was involved in a major car accident with both her femurs 
broken, her tibia, both arms. It's amazing that she survived. 
Over the last 8 years her insurance has changed three times 
because she's on the individual market.
    What she told me to tell you all is this, that it's harder 
right now. She would pay more for her insurance than she does 
for her mortgage. So I think some of those rails that we have 
in place between the employer-based insurance and the 
individual market, I think that's a great idea to allow some 
sort of subsidy for those folks so that they can get it. But I 
think at the end of the day, we really need to get premiums 
down. That's what we need to do.
    Senator Collins. Thank you.
    The Chairman. Thank you, Senator Collins.
    Senator Casey.

                       Statement of Senator Casey

    Senator Casey. Mr. Chairman, thank you. I wanted to start 
with a commendation of this process, to commend both the 
Chairman and the Ranking Member, as many have, and we should 
continue to say that because this hasn't happened in years, 
what you're seeing in the last 2 weeks.
    I'd also say--I don't want to bring up bad news, but this 
process that they have undertaken and that we've all been 
participating in stands in marked contrast, dramatic contrast 
to not just what's been done more recently but we're hearing 
again about yet another bill, a big bill that will knock a lot 
of people off of health care, with no hearings and the kind of 
consideration that we're giving to much more discrete issues. 
But this is the way you do it. You take difficult but narrow 
issues and examine them like you have, and you've brought your 
expertise here. The idea that you can slap together a bill with 
a couple of people in Washington and not have hearings and not 
have the benefit of outside-of-Washington expertise is really 
misguided, and that's a charitable way of describing it. So 
we're grateful that at least here we're examining difficult 
issues but in a very considered fashion.
    I wanted to start with a question or a topic that Senator 
Murray asked Ms. Postolowski. I was stunned to be reminded, I 
guess, that when you talk about the essential health benefits, 
and that's a major issue that we confront, how do you balance 
providing good coverage and quality coverage to keep people 
healthy with the idea of providing incentives to get them to 
enroll, especially young people?
    But you have cited in your testimony--I guess it's page 3--
three types of services that are used most substantially by 
young people: No. 1, maternity and newborn care; No. 2, mental 
health and substance use disorder services--so that's a big 
category--the mental health and substance use component part 
being the opioid issue; and then the third area was preventive 
services, which probably a lot of people don't think young 
people avail themselves of.
    I guess in light of that, and in light of the challenges of 
getting young people enrolled, what do you see as the main 
barriers? What must we focus on in terms of barriers to getting 
young people to enroll, thereby helping everyone by balancing 
the risk pool?
    Ms. Postolowski. Thank you, Senator. Well, first I think 
there's still a lot of work to be done around letting young 
people know about the marketplaces, about financial assistance, 
and about the type of comprehensive coverage that they can get, 
including free preventive care, if they sign up for a plan. As 
I mentioned in my testimony, 18-to 34-year-olds are still the 
group that's least likely to know about the marketplaces, let 
alone the availability of financial assistance.
    So I'm deeply concerned about the Administration's recent 
cuts, 41 percent cut to Navigator funding, 90 percent cut to 
advertising. This is not the time when we want to stop telling 
people about the marketplaces. We know that 8 million young 
people have gotten covered, so the ACA in that sense is 
working, and we want to improve on that progress rather than 
stop it in its tracks.
    I also think ideas around increased financial assistance to 
young people could be another way to incentivize young adults 
to enroll in coverage. We know there are still young people who 
feel like they can't afford coverage even with financial 
assistance. There are young adults who are not getting 
financial assistance that we'd like to bring into the 
marketplaces. So an additional subsidy to make plans more 
attractive to young people would be one way of incentivizing 
enrollment.
    Senator Casey. Thank you.
    Dr. Turney, the reinsurance issue has been highlighted not 
only in discussions and hearings but even in questioning today. 
I guess the question I have is now that you've got a 
reinsurance program that expired, what's your perspective on a 
Federal version of that, a federally run version of that versus 
doing something at the State level? How do you assess that 
issue?
    Dr. Turney. Well, I think the reinsurance program is 
important, first of all, because I do think it helps to 
stabilize the markets. Whether it's a Federal program or a 
State program I think has yet to be determined, but the funding 
initially is probably going to have to come from the Federal 
Government as seed money so that the States can set up whatever 
program is needed to make sure that reinsurance exists, similar 
to what other States are doing right now.
    But it's really critical, and I think that it has helped to 
mitigate the rises in health insurance in our State. In 2014, 
increases were 20 percent, and in 2016 they were 6 percent on 
the exchange, so it does have an impact. And if we're going to 
make sure that people do get coverage, this is one way to make 
that happen.
    Senator Casey. Great. Thank you very much.
    The Chairman. Thank you, Senator Casey.
    Senator Paul.

                       Statement of Senator Paul

    Senator Paul. I think the Chairman has done a great job of 
continuing to bring us back to where the problem is. The 
problem is in the individual markets, about 6 percent of the 
public. I think we can probably all agree that it's very sick. 
The individual market doesn't work very well. We can call it 
adverse selection. We can call it a lot of things, but it 
doesn't work very well. It's broken.
    The problem I have with it is everybody, including the 
panel and everybody we bring before us, says we're going to 
subsidize it. Are we going to fix it or subsidize it? I haven't 
heard yet anybody here say they're going to fix it. We're going 
to subsidize it. So when we subsidize it, we give money, and if 
you're poor and you're in the individual market and it's too 
expensive, we're going to give you some money. But is that 
going to make the premium go down?
    We've had the cost-sharing reductions for about 6 years, 
and all the problems with premiums in the individual market 
we've been talking about we've had with these subsidies. So 
what we're doing is that we have a broken market, the rates are 
going through the roof, and we're giving you some money and 
say, hey, it won't be so bad if we give you some money, but 
we're not fixing the problem of the rates going up.
    The individual market is sick. It's terminal. We shouldn't 
subsidize it. We should give people an exit ramp out of it. We 
shouldn't try to fix the individual market. It's not fixable. 
If you guys give them the cost-sharing reductions, which it 
sounds like the majority want to do, we codify them, we will be 
back here in 2 years or 5 years because, as Senator Collins 
said, the prices are rising. It costs 30 percent of your salary 
if you make $14 an hour.
    You're not doing anything to fix that. You're going to come 
back here in 5 years and you're going to say we've got to 
double the CSRs, or triple them, or quadruple them. It's a 
never-ending saga.
    So I don't think it works, I don't think it fixes the 
problem. You subsidize a problem and you leave the problem 
dangling out there to get worse over time. If you want to fix 
the problem, give people an escape ramp. Let them get free of 
the individual market.
    The one marketplace that works is the group marketplace. 
Insurance companies make a ton of money in it. For the most 
part, people are happy with it. If you work at Vanderbilt or a 
big hospital or Toyota, for the most part you don't worry about 
your insurance being dropped. You're not even worried about the 
expenses much, although expense is kind of a problem.
    If you look at the expense of the insurance, what is the 
one marketplace that works? It's group. But within group, what 
is it? The ERISA plans that are large-group plans. What is 
unique about the large-group plans? They evade the regulations. 
They evade the State regulations, they evade the ACA 
regulations, but they still have a lot of protections. You 
still have pre-existing conditions protected. People are 
largely happy in the large-group market. But the rates have 
stayed down.
    I meet people all the time who say, oh, the rates went up 2 
percent last year in our company. I say, what kind of plan do 
you have? Large-group ERISA self-insured.
    So what you want to do is take people in the individual 
market and let them get the hell out of it, let them get into 
the group market, empower them.
    Who has all the power? The insurance companies have all the 
power. The equation is where the insurance companies tell 
everybody what to do and control the equation completely, 
unless you're in a group and you have some leverage with them 
in a group.
    But I'm morally and philosophically opposed to giving them 
any money, all right? The definition of crony capitalism is 
this: you privatize your profits and you socialize your losses. 
You know, don't weep for me, the insurance company. They made 
$6 billion a year before Obamacare. They make $15 billion a 
year now. I don't get it why you guys want to give money to the 
middleman. In fact, I said the last time I'm more with Bernie 
on this than I am with the members of my party who want to 
subsidize it.
    If you want to buy people health care, buy them health 
care. Don't give money to the intermediary, public money. Why 
would you give public money to a private company? We've got no 
business doing that, and you're not fixing the problem.
    I promise you, they'll be back for more. It is always that 
way. If you don't fix the problem, if fundamentally the 
individual market is unsound, the insurance companies will be 
back for more of your money.
    We say we're helping the poor, but why can't it come out of 
the insurance companies' profit? You know how it comes out of 
their profit? Let the people escape the individual market and 
go in the group market. What happens then? The $15 billion in 
profit they make will be spread amongst more people because 
more people will be in the group market. Will they be able to 
deny those people coverage? If you let the National Restaurant 
Association negotiate for everybody that's a McDonald's 
employee, everybody that's a Burger King employee--one, many of 
these people don't have insurance. But if you let one person 
negotiate for them and you go to any big insurance and you say 
I've got 15 million people, do you think they're going to turn 
it down? They're going to have to take a contract, and they 
will have to negotiate.
    But you get a plumber, a carpenter, a welder, even a doctor 
or a lawyer who has a small business, and you try to negotiate 
with big insurance, you have no power.
    So I would say I don't want to break up big insurance. I'm 
not for dividing up companies. But let's empower the consumer. 
Let's think about a way, even if you continue to want these 
subsidies, let's think about a way we could also empower the 
consumer that actually might be a fix to the market that lets 
people get out of the individual market and into the group 
market, which is the only place that works.
    I see my time has expired without a question, but I enjoyed 
giving a speech anyway. Thank you.
    (Laughter.)
    The Chairman. Thank you. You're good at it. Thank you, 
Senator Paul.
    (Laughter.)
    The Chairman. Senator Franken.



                      Statement of Senator Franken

    Senator Franken. I think that Senator Warren has someplace 
she has to go, so I would not give up my place in the order, 
but can I let Senator Warren go first?
    The Chairman. Well, Senator Baldwin is next after you.
    Senator Franken. We discussed that.
    The Chairman. That would be fine.
    Senator Warren.

                      Statement of Senator Warren

    Senator Warren. Thank you very much. Thank you, Mr. 
Chairman, and thank you very much, Senator Franken and Senator 
Baldwin. I really do appreciate it.
    So let me ask this. Mr. Ruiz-Moss, you're a top executive 
at Anthem, the second-largest health insurer in the country. 
When Congress was talking about taking away health insurance 
from over 20 million Americans, a lot of companies, including 
Massachusetts Blue Cross and Blue Shield, stood up to fight for 
the people they insured, but not Anthem. Instead, Anthem sent 
Congress a ransom note saying it would, quote, ``begin to 
surgically extract'' from the ACA's insurance markets if 
Congress didn't meet a list of your demands, including tax cuts 
for insurance companies and the right to collect taxpayer money 
for selling junk insurance plans. To show you meant business, 
you pulled out of insurance markets then in Ohio, Indiana and 
Wisconsin, and endorsed the Republican bill to repeal health 
care coverage for millions of Americans.
    Now, when that bill failed, Anthem pulled out of more 
markets, claiming you just can't make it work. So I just have a 
couple of questions about that.
    Mr. Ruiz-Moss, how much profit did Anthem make in the 
second quarter of this year?
    Mr. Ruiz-Moss. I'm not familiar with the profit number for 
the second quarter. It's a public document, so----
    Senator Warren. Yes. Yes, it is. It's $855 million in just 
3 months, just a little bit shy of a billion dollars in 
profits.
    Now, you attack the ACA, but do you know how much of 
Anthem's total revenue comes from government health care 
programs, including Medicare and Medicaid?
    Mr. Ruiz-Moss. I do not know that off hand.
    Senator Warren. How about half? Does that sound about right 
to you? According to your own press release from 7 weeks ago, 
in fact, more than half of Anthem's revenue from the first half 
of this year, 54 percent, came from taxpayer-funded public 
insurance programs. You rake in money on Medicare Advantage 
plans, you rake in money on Medicare Part D prescription drug 
plans, you rake in money from Medicaid, on and on, buckets of 
taxpayer money, but you're pulling out of the ACA market. Can I 
ask why?
    Mr. Ruiz-Moss. Sure. So, we look at each market as its own 
insurance market and believe that the individual market, in 
order to be successful, needs to stand on its own. In fact, if 
we want to attract competition, if we want to bring in other 
carriers, there will need to be an independent, stable 
individual health insurance market. So when we made our 
decision, looking across all of our 14 States, and our CEO 
mentioned we're looking at this surgically, what that meant to 
me was I want to know by area within a State, and by State, 
where we can make a go of it, because anyplace we can find 
stability, our inclination is to participate.
    Senator Warren. Sir, I just want to make sure I'm following 
this. You make a lot of money off government plans elsewhere, 
but you want to say that the only way you're going to stay in 
the ACA is if you get to make more money. In fact, what you 
specifically said is you want to be able to sell junk insurance 
plans that leave families paying more, and you want a tax 
break, and if you can't get it, then you're telling Congress 
that if you don't get this kind of help you're going to quit 
the one market where people need you here.
    So I just want to say on this, if you're curious about why 
a majority of Americans support Medicare for All, here's 
Exhibit A. I believe that Congress should ignore your threats. 
If you want taxpayer money, then you ought to show up in the 
ACA plans as well and be there, just like other companies have 
done, and you ought to be able to provide decent coverage. I 
just don't think that's too much to ask.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Warren.
    Senator Scott.
    Senator Scott. Thank you, Mr. Chairman.
    Mr. Farmer, NAIC has recommended the delay of the health 
insurance tax, commonly referred to as the HIT. Can you explain 
how the HIT impacts premiums and in turn creates instability in 
the marketplace?
    Mr. Farmer. Yes, Senator. Thank you very much.
    In our calculations, the HIT tax accounts for about 3 
percent of the premium. So during this moratorium piece, our 
citizens are saving 3 percent. If it goes back into place in 
2018, that's part of the overall 31 percent rate increase that 
I just had to approve last week.
    Senator Scott. That's on top of 120 percent rate increases 
over the last 4 years.
    Mr. Farmer. That number is pretty high, but it was probably 
90 something. Nevertheless, it's high, and it's too high.
    Senator Scott. Politicians have a habit of inflating the 
numbers a little bit, it seems like.
    Mr. Farmer. If it's your number, Senator, I'm fine.
    Senator Scott. Thank God he's from South Carolina. He's 
great.
    (Laughter.)
    Senator Scott. Dr. Sethi, you mentioned in your testimony 
the need to open up catastrophic plans to all individuals 
regardless of age or income status. In your experience, do you 
think opening up these plans to folks without subsidies will 
help bring some people into the market?
    Dr. Sethi. Well, thank you, Senator. Meeting with patients 
through my travels with Healthy Tennessee and my own orthopedic 
trauma patients, I do believe that creating a catastrophic plan 
open to all ages, all incomes, I think would bring younger 
folks and people in general into the insurance market because I 
think that's the problem. You don't want to pay more for your 
insurance than you do for your home mortgage. I mean, when you 
do that, something is wrong.
    Senator Scott. Absolutely. I was talking to some of the 
insured in South Carolina recently, a husband and wife, three 
kids, premiums over $33,000. I sold insurance for about 8 years 
in my prior life, and I will tell you that the catastrophic 
opportunity, the catastrophic plan is an opportunity to bring 
more revenues into the marketplace and also provide the needed 
coverage for folks who are able or willing to self-insure to 
some extent but simply need that catastrophic exposure. So the 
flexibility that may be necessary in the marketplace and today 
is absent could provide folks with more opportunities in the 
health insurance space, but more premium dollars. Is that a 
fair assessment?
    Dr. Sethi. I agree, Senator.
    Senator Scott. One last question for you, sir. Not only is 
the individual mandate in direct opposition to free market 
principles, it is pretty clear that from all the data we can 
see it has not worked, particularly for those younger folks and 
the higher-income folks, particularly those folks under the age 
of 35, when only 37 percent in 2016 exchange enrollees are in 
that age bracket. Only 16 percent of those eligible and earning 
300 percent to 400 percent of the Federal poverty level get 
coverage through an exchange.
    So if we were to give States more flexibility through the 
1332 and the elimination of the individual mandate being part 
of that flexibility, what would that do to our markets?
    Dr. Sethi. As you mentioned, I think that it would bring 
more people into the insurance market. You know, as you 
mentioned, and has been testimony here, I think two-thirds of 
the folks on the individual market, they don't even qualify for 
a tax credit or the CSR program. Even if you look at the folks 
who do get subsidies, the majority of people who sign up are 
those people between 100 to 250 percent of the Federal poverty 
line. The folks beyond 250 percent, they don't enroll, and I 
think that's because it's just so expensive, even with a 
subsidy that is curtailed. They can't afford it. So I agree 
with you.
    Senator Scott. Excellent. Thank you, sir.
    Thank you, Chairman.
    The Chairman. Thank you, Senator Scott.
    Senator Franken.
    Senator Franken. Just quickly, Dr. Sethi, you said that 
two-thirds of the people in the individual market don't get a 
tax credit?
    Dr. Sethi. Two-thirds of the people who would be eligible 
to be in the individual market. I believe in Tennessee that 60 
percent of the folks who are actually on the individual market 
right now do get a tax credit. But what I'm talking about is 
all of those who are eligible.
    Senator Franken. OK. I don't quite know the relevance of 
what you were saying, then.
    Senator Alexander and Ranking Member Murray, thank you for 
holding these hearings. They've been constructive and 
informative, and I appreciate that we are hearing new ideas, 
including the idea of actuarial equivalence. I hope and trust, 
though, that as we debate these changes, that we will explore 
both the opportunities and the challenges they create.
    For example, if we can explore ideas that promote States to 
innovate around delivery system reform, I think that's great. 
However, I share Senator Collins' concern that we consider the 
unintended consequences of these policy changes, especially as 
regards the essential health benefits. I can't, for example, 
imagine what happens if we start taking out--we have policies 
that don't allow for mental health or addiction. I mean, I just 
can't understand what that would mean, and I fear that. A lot 
of people don't plan on having a mental health issue or having 
an addiction.
    But I remain committed to working with you, with all of 
you, and simultaneously will fight to protect benefits that 
have helped Minnesotans and helped millions of Americans.
    I'm co-chair of the Rural Health Caucus. I spend a lot of 
time traveling around rural Minnesota talking to folks about 
health care. I often hear rural consumers, including many 
farmers, talk about their challenges in accessing affordable 
health coverage, especially given that they often have to pay 
higher premiums, have higher cost-sharing, and have fewer 
provider options.
    It's important to note, though, that the ACA has helped 
increase health insurance coverage rates in rural areas in 
greater Minnesota and provided more stability to rural 
providers and community institutions. We need to do more to 
help rural consumers, and sometimes that can be difficult, as 
folks living in rural areas tend to be higher risk than their 
urban counterparts.
    Dr. Turney, you're a neighbor. My staff and I have been 
having conversations with rural health experts about how we can 
better serve those living in rural communities to make health 
insurance more affordable. Some have recommended that we 
include changes to the 1332 waiver process to highlight rural 
health needs or fund reinsurance payments to insurers that 
serve rural communities to increase competition in rural 
markets.
    In your testimony, you also advocated for changes to the 
ACA's risk adjustment program to increase payments for rural 
carriers. Can you comment on how Congress could amend the 1332 
waiver process, adjusting the existing risk adjustment program, 
or tweak a Federal reinsurance program to improve competition 
in rural areas?
    Mr. Farmer, please feel free to weigh in as well.
    Dr. Turney. Thank you, Senator Franken. You know, Wisconsin 
is just a little bit different than other parts of the country, 
and we've heard about States where there's only one dominant 
payer. In Wisconsin we have over 30 insurance companies, and we 
have--about a third of them are provider sponsored plans, so 
working in conjunction with the providers in the community. We 
have 11 insurance companies on the exchange. So although 
Security Health Plan did go into a nominee county and rescue 
the nominee, one of the last two counties to be bare, we 
realize that, again, rural communities have very unique needs. 
As you mentioned, we have very few large companies in the 
northern half of the State of Wisconsin, so patients oftentimes 
find it very challenging to get insurance, and the individual 
market is a way that they have been able to access care.
    But I think the one thing we're not talking about here that 
is very important is that you also have to look at the way we 
deliver care. Because rural health care presents unique 
challenges, there's a lot of investment that goes into taking 
care of people in these geographic disparate regions. 
Telemedicine and telehealth is just one example.
    So as we look at this short-term fix to a relatively small 
group of insured, 6 percent, we have to start thinking 
differently about how we provide care, and actually I think the 
care delivery model needs to be above the payment system. Once 
we figure out how to take care of our communities, we can then 
look differently at the way we support the practices who 
provide those services. People don't ask to get sick. There 
certainly are preventable illnesses, and we've talked about 
that. But most people don't ask to get sick, and we need to 
take care of them, and we need to figure out the best way to do 
that.
    So the challenges in rural communities are definitely 
unique.
    Senator Franken. You don't have to say anything, Mr. 
Farmer.
    Mr. Farmer. I'm watching the Chairman.
    Senator Franken. That's the guy to watch.
    The Chairman. If you'll be succinct, please go ahead.
    Mr. Farmer. I am extremely concerned. Contrast 11 carriers 
in Wisconsin, Senator, and I'm down to one in all of our 
counties. We've had as many as four or five at a given time on 
the exchange. We're down to one owner and two carriers, the 
same owner but two carriers off the exchange. So I'm extremely 
concerned about all of our counties, but especially the rural 
counties just for the reasons that she mentioned a minute ago.
    Senator Franken. Thank you.
    The Chairman. Thank you, Senator Franken.
    Senator Murkowski.

                     Statement of Senator Murkowski

    Senator Murkowski. Thank you, Mr. Chairman. I love this 
committee. I've loved this discussion going back and forth for 
the past couple of weeks. This is so important to recognize and 
appreciate the clear differences and distinctions in so many of 
our States. We would dream to have 30 providers or carriers 
that would come to the State of Alaska.
    We're with you in the State of South Carolina in Alaska. 
We're down to one, and we're just doing everything that we can 
to make sure that they're going to continue to stay there. But 
I think this is why, when we talk about flexibility, whether 
it's within 1332 or how we address these issues of health care, 
it is so important to have these very open discussions and 
great stakeholders that are here providing us with insight.
    I've spent a lot of time over these past four hearings, and 
we've got three very reoccurring themes. We've got to deal with 
the CSRs, we have to deal with some level of flexibility within 
1332--that seems like an avenue forward--and then how we're 
going to deal with the issue of expanding that risk pool there, 
making sure that enrollment stays up but also aspects of 
affordability, whether it's through a catastrophic, and I want 
to go down that road right now.
    I'll ask you, Ms. Postolowski, we talk a lot about the 
great value that a Copper plan or a catastrophic plan can 
provide to young people, the invincibles. I'm hearing far too 
often that it's one thing to get premium support, but I may as 
well not even have insurance because I can't afford the 
deductibles, so I just might as well not even go.
    There's been a lot advertised here in this committee about 
what Alaska has seen in how we applied for a 1332 waiver. We're 
going to see our rates actually going down as a State as a 
consequence of that. But one of the things that we learned from 
our state's director of insurance is that they're still doing 
an analysis to see how much is actually attributable to this 
whole backstop reinsurance and how much might be attributable 
to the fact that people have just deferred medical care because 
they can't afford to access it because they're earning, on 
average, $26,000 a year. Or to your example, Dr. Sethi, you're 
making $14,000 a year and you cannot afford the deductibles.
    So how do we address this part of our reality, that when 
we're talking about affordability, premiums are just one aspect 
of it? I'm having far too many people that are still going to 
the emergency room because that's where they're going to get 
their level of care. So as we look at a catastrophic or a 
Copper plan, you're suggesting to us that you don't think that 
for the young people that's going to be as attractive as we 
might think it is. Can you speak to that?
    Ms. Postolowski. Certainly. Thank you, Senator Murkowski. 
Yes, that's my biggest concern with a Copper plan, that the 
deductible may be $9,000. The typical uninsured young adult who 
we're trying to bring into the marketplace makes $20,000. So if 
they were to buy a catastrophic or Copper plan and something 
did happen, they'll be looking at having to pay almost half of 
their annual income just to meet their deductible.
    I also hear from young adults--for example, I heard from a 
young woman last month who needs mental health services but has 
an $80 cost sharing. And for her, even that amount of cost 
sharing is unaffordable.
    So I think one way we can address this is to continue to 
fund the cost-sharing reduction payments. We know that 7.2 
million young people rely on those subsidies so that they can 
access health care services. Then in the longer term looking at 
reducing health care costs.
    Senator Murkowski. Let me ask Dr. Sethi, and back to you 
again, Ms. Postolowski, in terms of how we're doing this 
outreach, we've heard the dramatic drop-off in support for the 
advertising for the Navigators. I think you said that with TV 
ads we saw increased enrollment. I've got a 24-year-old and a 
26-year-old. I don't think they've watched TV in years now. 
Rural areas, which Alaska is all rural, what do we need to be 
doing better to really do the outreach, whether it's to the 
young people or to those in rural parts of the country if, in 
fact, we don't have this level of support here from the Federal 
Government for this level of outreach?
    Dr. Sethi.
    Dr. Sethi. Well, thank you, Senator. What I would tell you 
in terms of a model for rural outreach, we do these health 
screening events all across rural Tennessee, and what I have 
found is--we just did one 2 weeks ago near the Tennessee-
Virginia border. We worked with a whole host of folks and 
brought them together. But I think in rural places, to be very 
successful, for example, to get insurance enrollment, you've 
really got to get on the ground with the community leaders. 
You've got to talk to the county mayor. You've got to talk to 
the State representative, talk to the local Chamber of 
Commerce. That's what we do, and I think that really starts a 
conversation where people say maybe we should listen to these 
people.
    I'll just give you an example. Do you know what the most 
powerful source of getting people to our health event was 2 
weeks ago? It was the Sneedville Shopper, this paper we put an 
advertisement in and it goes out once every 2 weeks. So 
literally this paper--I asked all these folks who came to our 
event. They said, oh, I heard about it in the Sneedville 
Shopper. So I would have never known this, you know?
    So I think that is one very powerful way that in rural 
communities you could really be effective, but you've got to 
know that community. I think this one-size-fits-all idea, like 
you're saying, and if we just really advance the ball and give 
it to local communities, I think they could do a more effective 
job.
    Ms. Postolowski. I think you also bring up a really good 
point about meeting young people where they are, right? So if 
young people are not watching TV, meeting them online, meeting 
them on their smart phones, thinking about reaching out to 
young adults in different ways.
    For example, in Colorado this year I ran a pilot in rural 
areas using Facebook advertising to tell young people about 
preventive care, and actually we had very early signs of 
success from that pilot where we saw young adults clicking on 
the ads at higher than average rates, and we saw young people 
who are disproportionately uninsured still, so Hispanic young 
adults and young white men engaging with the ads at higher 
rates than other younger people.
    So I think more innovation like that would be good. I also 
would add that Navigators play a really important role in 
outreach. So----
    The Chairman. We're running out of time on this question.
    Ms. Postolowski. OK. Can I have one sentence?
    The Chairman. Sure.
    Ms. Postolowski. Tabling at community colleges, for 
example, is a way to reach underserved young people, what 
Navigators do.
    Thank you, Senator.
    Senator Murkowski. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thanks, Senator Murkowski.
    Senator Bennet.
    Senator Bennet. Thank you, Mr. Chairman. I think I speak 
for the committee when I say we'd all like to have a copy of 
the Sneedville Shopper distributed to us, to each of us.
    (Laughter.)
    The Chairman. Well, if you approve something good, I'll get 
you a subscription.
    (Laughter.)
    Senator Bennet. Ms. Postolowski, thank you again for 
testifying today. We deeply appreciate your being here. In your 
written testimony you describe your perspective as a patient 
who saw firsthand the effect of high-risk pools. In Covered 
Colorado, our high-risk pool has had waiting periods for care, 
and the premiums failed to cover health care costs.
    Based on your testimony, it sounds like you're in favor of 
a reinsurance program. As you already know, our Department of 
Insurance in Colorado is currently working with actuaries to 
study the reinsurance program for the individual market. I 
wonder if you could expand a little bit for the panel on your 
experience with high-risk pools in Colorado, what the benefits 
are from your perspective of reinsurance versus high-risk pools 
and what parameters we ought to keep in mind if we're thinking 
about designing a Federal reinsurance program.
    Ms. Postolowski. Great. Thank you, Senator Bennet, and 
thank you for the introduction earlier.
    I think one of the biggest benefits of reinsurance programs 
over high-risk pools is that they are less expensive because 
you have everyone in the same risk pool and you have healthy 
people who can offset some of the costs of the high-risk pool.
    Covered Colorado was our state's previous high-risk pool 
before the ACA. It was an option that was available. I was 
grateful that I had at least some backstop, but it was 
expensive. Premiums could be over 50 percent higher by law in 
Covered Colorado. Other State high-risk pools had premiums up 
to 250 percent higher than other plans in the individual 
market. As you mentioned, there was also a waiting period, as 
well as an annual lifetime limit, and that was because it was 
hard for Colorado to find the money to fund the high-risk pool, 
whereas reinsurance programs are more affordable.
    I know the Colorado Division of Insurance has been having 
stakeholder meetings on setting up a reinsurance program in our 
State and is committed to doing so but would be unable to do so 
next year given that we need legislative approval for that 
process. We also need a mechanism set up because we repealed 
the high-risk pool in our State to administer a State 
reinsurance program.
    So one thing that I'd like to ask the committee to do would 
be to fund Federal reinsurance for at least the next 2 years to 
give States the opportunity to set up their own programs if 
they want, but really immediate funding for reinsurance is the 
only thing at the Federal level that's going to be able to keep 
rates down next year.
    Senator Bennet. Thank you for that answer.
    Mr. Ruiz-Moss, as we consider policies to stabilize the 
individual market, I often think about what the Chairman has 
said multiple times, which is that we're dealing with 6 percent 
of the people that are insured when we're focused on that. The 
individual market also represents 6 percent of Coloradans.
    In your testimony you talk about managing the total cost of 
care as a long-term goal. You said that Anthem now pays nearly 
60 percent of reimbursement value-based care models. I wonder 
if you could expand on the steps Anthem has taken to achieve 
that goal, what outcomes you've seen, and what do we need to do 
to better realign incentives in the system more broadly to try 
to capture the kind of value you've done both in Colorado and 
in California.
    Mr. Ruiz-Moss. Great, thank you. Certainly, we have been 
innovative in value-based plan designs. Working with 
accountable care organizations, we're seeing the physician 
community willing to accept more of the insurance risk, which 
is able to help us manage both quality and cost better. 
Initiatives that we're working on as an industry, and really 
with CMS around payment innovation continue, I think, to help 
us bend that cost curve. So support for those kinds of 
initiatives and continued support for transparency. We use 
Castlight, where we have much greater transparency now toward 
both quality and cost, and those both play into the decision. 
It's not just a cost-based decision for people when they're 
looking to get care.
    The promotion of all those types of programs we believe 
will help to bend that----
    Senator Bennet. Before I let you go--I only have 30 seconds 
left--can you describe with a little more precision the kind of 
transparency you're talking about, what that looks like?
    Mr. Ruiz-Moss. Sure. So, a person, let's say they're going 
in for a knee replacement, is able to look at the average cost 
of that kind of procedure from a variety of physician hospitals 
in their area, and they can look across and see which they 
think is the best fit for them specifically.
    Senator Bennet. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Bennet.
    I'll ask my questions now.
    Mr. Ruiz-Moss and Mr. Farmer, since you're regulators and 
insurance companies, let me direct this to you.
    The Section 1332 innovation waiver that's already in the 
Affordable Care Act expressly says that you may not, in 
approving plans in a State, you may not approve plans that 
don't include what we call the patient protections or patient 
protection guardrails, which are pre-existing conditions, 
lifetime limits, age 26, guaranteed issue, all that. In at 
least the suggestions I've made--I've not heard anybody else 
make a suggestion--no one is suggesting we change that. That's 
in the law.
    Also in Section 1332 it says you may waive the essential 
health benefits in the Affordable Care Act--that's what it 
expressly says--as a part of the innovation waiver. You may not 
waive the patient protections; you may waive the essential 
health benefits in the existing law as long as the result is a 
comprehensive policy, one that's affordable and covers the same 
number of people, basically.
    What does that mean? What kind of policy is that? I mean, 
what does that say to you? If you're designing a plan, what 
does that say to you about plan design, Mr. Ruiz-Moss? What 
flexibility do you have under the existing Section 1332 if you 
were designing a plan?
    Mr. Ruiz-Moss. So when we think about this, we think about 
both essential health benefits, what are the benefits that have 
to be covered in a plan, and then we think about a metal level 
which says how much of the medical cost should be covered by 
the insurance company versus the population of people in total, 
and I think those always have to be--they should come in 
tandem, those conversations should come in tandem, and we 
certainly believe we support those portions of the law that you 
talked about that you're not talking about changing.
    The Chairman. Right. In essence, it says you may waive the 
essential health benefits if you create the plan. What does 
that mean to you?
    Mr. Ruiz-Moss. Right. Well, right now it would mean the 
State would have to allow, or a regulator would have to allow 
for a change in essential health benefits. We're not a 
proponent of blowing up essential health benefits. I think 
there's some flexibility that could be----
    The Chairman. So the State would have that decision--I 
interrupted you--but you're not a proponent of creating plans 
that don't include them. Is that what you're saying?
    Mr. Ruiz-Moss. We're not a proponent of blowing up 
essential health benefits and starting from scratch. We think 
there needs to be a minimum level of benefit. There are some 
programs under the current arrangement that we're not able to 
offer the individual market that we offer in the group market. 
So there's some wellness incentives. There's reference-based 
pricing, which we worked with CalPERS on, and now if you're 
looking for knee and hip replacement----
    The Chairman. So you can do that in the group market, but 
you're not allowed to do it in the individual market because 
it's too rigid?
    Mr. Ruiz-Moss. Because the law, the way the rules are 
currently written, wouldn't allow that. We couldn't design a 
plan around----
    The Chairman. So you can design a plan that encouraged, 
say, wellness more, as an example.
    Mr. Ruiz-Moss. There are limitations on how much a patient 
can be rewarded for certain types of behaviors.
    The Chairman. Mr. Farmer, what about you? You see different 
plans. What does it mean to you when it says that a plan under 
Section 1332, if someone came forward with a plan that would 
have to have pre-existing condition, et cetera, but the Federal 
law says you may waive the essential health benefits as long as 
the result is what I read, what does that mean to you? What 
could you approve? What flexibility do you have?
    Mr. Farmer. Senator, we at our department and most 
departments, especially under the Affordable Care Act, we are 
an effective rate review State, so we have the authority to 
review rates and the forms. We would have some flexibility. 
But, Senator, every day we go to our office with--to protect 
the consumer. If a plan is submitted that does not offer those 
essential benefits to the consumer that we think they need, it 
wouldn't be approved. If there's some flexibility in there 
that----
    The Chairman. Even though the Federal Government doesn't 
require it according to the current law, you might require it 
anyway? The essential health benefits I mean.
    Mr. Farmer. Yes, sir. Our number-one goal is going to be 
protecting the consumer. Each filing, each case would be looked 
at----
    The Chairman. As you read the law that says you may waive 
it, do you think the law says that a State may waive essential 
health benefits but that the same section of law would say but 
you can't do it?
    Mr. Farmer. I don't think that section says I have to do 
it.
    The Chairman. OK. Well, my time is up.
    Senator Baldwin.
    Senator Baldwin. Thank you, Mr. Chairman.
    Ms. Postolowski, I'm wanting to start with a question for 
you, but I also wanted to appreciate the fact that you shared 
your own personal health story with us in your testimony as a 
young adult with a diagnosis that led you to be labeled as a 
young adult with a pre-existing condition. I, too, actually 
after a childhood illness, bore that label of being a child 
with a pre-existing condition and remember the struggles that 
my family had in obtaining insurance coverage for me during my 
youth.
    Over the course of our bipartisan hearings, of course we've 
been hearing so much about the importance of having young and 
healthy people in our insurance pools to make it work. So I 
know our staffs have been talking to one another. I'm 
interested in your proposal to look at financial assistance, 
particularly for young adults, to help increase the enrollment, 
and look forward to continuing those discussions.
    I wonder if you could say why is the young adult population 
specifically in need of this boost in order to better afford 
coverage, and how could we do this without impinging on quality 
or raising costs for other enrollees?
    Ms. Postolowski. Thank you, Senator Baldwin. I do 
appreciate and look forward to future conversations with your 
staff about how to increase young adult enrollment in the 
marketplaces.
    As you mentioned, we all share the goal of making sure that 
more young people can get covered, which we know will have 
positive impacts on the risk pool and the cost for everyone 
else in the health insurance market.
    So one way that I'd like to see this done is by perhaps 
lowering the affordability threshold for young adults, which 
would in turn increase their premium tax credits or their 
financial assistance. So the median income for a young person 
in the marketplace is $26,000 a year, which means that their 
affordability threshold right now is about 7.1 percent of 
income that they have to pay toward health insurance. A 26-
year-old's premium at this median income in Milwaukee, 
Wisconsin, for example, is $154 a month for coverage. Whereas 
if we lowered that threshold by 2.5 percentage points, for 
example, so their affordability threshold would change to 4.6 
percent, their monthly premium would drop to just under $100 a 
month, which would save them about $650 a year.
    One good thing about looking at changing the affordability 
thresholds is the additional financial help adjusts based on 
the prices of plans in your market, as well as your income 
level.
    Senator Baldwin. Dr. Turney, I am heartened that Security 
Health Plan expanded to serve the nominee county. After a 
national insurer left the marketplace, it was the only insurer 
providing service to the nominee county prior to that. Can you 
discuss why you made the decision to fill that gap and to 
ensure our rural residents have an option, and specifically why 
a Federal reinsurance program is critical to helping you 
maintain Security's ability to serve Wisconsin in the longer 
term?
    Dr. Turney. Thank you. As I mentioned, we have about 30,000 
people that are enrolled on the exchange with Security Health 
Plan. The advantage of having the insurance plan, as well as 
the provider group, I do think creates opportunity that an 
independent insurance company might not have.
    The reason we got into the exchange is to make sure that 
our patients not only had care, because they were getting care, 
they were also getting coverage for that care. So we realized 
that even if the health plan loses money, the patient benefits 
and the practice does get some reimbursement for what would 
otherwise be provided, and oftentimes be provided at an 
appropriate time, not when they, for example, have oral pain, 
have something wrong with their teeth, go to the emergency room 
and get opioids. So you can kind of see the cycle that starts 
to build.
    So we are here to enrich lives. We take care of patients 
regardless of their ability to pay, and we know that our 
responsibility is to the patients at least in the northern half 
of the State even though we see patients from all 72 counties. 
We will continue to do that and do what's best to make sure 
that happens. I think we've been successful with our model. 
We've been around 100 years, and I hope we're here another 
hundred.
    Senator Baldwin. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Baldwin.
    Senator Murphy.

                      Statement of Senator Murphy

    Senator Murphy. Thank you very much, Mr. Chairman.
    Thank you all for being here.
    Yesterday in Connecticut, the new rates were announced for 
the two insurers, Anthem included, who offer on our exchanges. 
There was an announcement of a 17 percent increase attributable 
only to the uncertainty around cost-sharing reduction payments, 
an additional 6 to 8 percent increase due to the uncertainty 
around the individual mandate. So you're looking at a 20 
percent increase to Connecticut consumers based only upon the 
uncertainty that this Administration is inserting into the 
marketplace commands our attention.
    I actually wanted to essentially re-ask the question that 
Senator Alexander asked because I think it is probably the most 
important question, especially as we try to sort through how we 
provide some more regulatory certainty to States. I'll just ask 
it a little different way.
    I think what Senator Alexander is saying is that because 
you have the ability under existing law to change these minimum 
benefits, we're searching for what the existing standard is, 
how a State would be guided in doing that today, what would be 
allowed and what wouldn't be allowed, and whether we need to 
amend that standard or clarify that standard, because it's 
already permissible but there's some uncertainty as to how you 
would be guided.
    So let me maybe ask this question to Dr. Turney, but I'll 
ask anybody to comment on it. If the standard is simple 
actuarial value of the overall benefit plan, then theoretically 
that would allow a State or a plan to get rid of, let's say, 
mental health benefits and maternity benefits, the things that 
young people use, so long as they loaded up on hospitalization 
or on cardiac services.
    I'd be interested as to what the upsides and downsides are 
to a model in which actuarial value is the simple measure of 
whether or not you can seek that kind of waiver, whether that's 
the right way or whether there's some peril to providers and to 
patients if you can essentially move around benefits at will, 
so long as in the end the amount of money you're providing to 
an average beneficiary remains the same. Does that make sense 
as a question?
    Dr. Turney. I believe the question makes sense, but I might 
take it a different direction I think than you were heading, 
and that is as a physician, I'm here to serve our patients, and 
when we think about serving our patients across our geography, 
it's very important that we take care of the whole patient 
throughout the continuum of life. So we are committed to our 
patients in our communities and making sure that patients do 
get preventive care, that they get appropriate screening health 
care, that they get taken care of during their acute episode of 
care as well as for their chronic illnesses.
    Our focus is to make sure that they do have comprehensive 
benefits because we know that if they do, they're more likely 
to come in at the appropriate time, seek care in the office, 
not in the emergency room, make sure that if a woman has a 
breast lump she comes in to be seen and doesn't wait until her 
skin is eroding because the tumor has advanced.
    I think we think about it more probably from the provider 
side where we understand that the patients need care. If they 
have coverage, they will seek care. We know that outcomes are 
better with that care.
    Senator Murphy. You'd be worried, then, about flexibility 
that would allow you to get a really robust hospitalization 
benefit at the expense of any coverage for, for instance, 
mental health or addiction.
    Dr. Turney. Yes, we're worried about it for two reasons. 
One, if you have, for example, a catastrophic plan, we're very 
worried that, first of all, patients wouldn't come in for other 
care because all they have is a catastrophic plan; and if they 
do need to seek care, there's a good chance that they're not 
going to be able to afford that care. So that's the one issue.
    Actuarially, yes, we have to look at balancing the business 
and making sure that we can run our business, but we want to 
make sure that people do have the most comprehensive benefits 
they can get, and we're not going to--I mean, can you carve out 
benefits? Absolutely. Can people choose to do that? Certainly. 
Not all of our patients are insured by Security Health Plan. So 
we do have to deal with a number of different options. But our 
philosophy is to take care of the whole patient.
    Senator Murphy. I will stipulate that it's hard to figure 
out what the measurement would be other than actuarial value, 
but therein lies the problem. If it is, then you potentially 
provide some significant gaps, and you get rid of the certainty 
of products that was part of the reason that we put it in, so 
that when you bought insurance you knew what it is.
    But I think this is a true conundrum. If it's not actuarial 
value, then it's kind of hard to figure out what the substitute 
standard is.
    Dr. Turney. Right.
    Senator Murphy. Thank you, Mr. Chairman.
    The Chairman. Thanks, Senator Murphy. That's very helpful.
    Senator Kaine.

                       Statement of Senator Kaine

    Senator Kaine. Thank you, Mr. Chair, and thanks to the 
witnesses.
    One of the things these four hearings has shown is that 
reinsurance is a really popular idea. I have a bill with 
Senator Carper, who is here, to do a Federal reinsurance 
program. There's a cost to it, but it's not a bailout of 
insurance companies. What reinsurance does is it brings down 
premiums for most people. By bringing down premiums, it allows 
some people to buy insurance who weren't going to do it 
otherwise. By bringing down premiums, it reduces the Federal 
Government's payment of subsidies based on those premiums. It 
provides a backstop that enables high-risk or high-claim 
individuals to get insurance, and it provides certainty to a 
number of insurers to stay in the market. There are five 
definite benefits to reinsurance, and that's why every witness 
in the four hearings has asked for it.
    Mr. Ruiz-Moss, I want to talk to you about Anthem in 
Virginia, just using it as an example. Anthem was the largest 
provider of care through the individual marketplace, 330,000 
Virginians, and Anthem recently announced it would no longer 
provide coverage on the individual market. I am right, am I 
not, that Anthem still does a lot of business in Virginia with 
group plans and finds Virginia and Virginians in that market 
very good customers; correct?
    Mr. Ruiz-Moss. Yes, that's absolutely correct.
    Senator Kaine. So in the group market, Anthem finds 
Virginia to be profitable and stable, but the individual market 
you found not to be profitable and definitely not stable; 
correct?
    Mr. Ruiz-Moss. Correct.
    Senator Kaine. I don't think it's unfair for Anthem to 
deliver a message to Congress, or for insurers generally, that 
we would like some stability. So in the individual market, if 
you don't know whether the mandate is going to be enforced, if 
you don't know whether CSR payments are going to be made, if 
you don't know whether marketing is going to be done or whether 
open enrollment is going to be vigorous or narrow, that creates 
an awful lot of instability for a company like Anthem, and I 
don't think it's unfair for you or other insurers to say to us 
give us some stability. If we don't give you stable answers, 
then you take actions. I get that, and I hope we can provide 
stability.
    But I want to turn it around and give you a message about 
an action that we're likely to take. Anthem coming out of 
Virginia, combined with others, could lead about 60 to 65 
counties in Virginia to be without an insurer writing on the 
exchange. We have 134 cities and counties, so that would be 
half of our counties, not half of our population, because this 
is overwhelmingly rural. It's depriving people in rural 
Virginia of opportunities. I think people ought to be able to 
buy into Medicare. This is the Tim Kaine view, if I had a magic 
wand. People under Medicare-eligible age, I think they should 
just be able to pay a premium that's actuarially sound and buy 
in, and I don't have the votes for that right now, but I will 
get the votes for it if there are bare counties in Virginia or 
elsewhere.
    So just as you've communicated to us a desire for 
stability, which is fair, I just want to communicate to all 
insurance companies there is no way, none, that Congress is 
going to tolerate a situation where persistently there are 
counties in this country where people cannot buy insurance on 
the individual market. We just won't tolerate it. The pressure 
will build, and then we will create a solution for it, and the 
solution will be, if there's no private companies that will 
provide insurance, the solution will be something like Medicare 
that people can buy into.
    When that day comes, we won't just allow them to buy in if 
insurance companies don't cover their county. We won't just 
allow somebody to buy into Medicare if insurance companies have 
said they're too old or too poor or too sick. We will provide a 
vigorous public option to allow anybody to buy into Medicare 
because we want to have a broad risk pool with some young and 
healthy people, just like you would want to have one.
    So in some ways, the bare county phenomenon, I view it 
bluntly that the insurance companies have to worry about 
holding a knife up to their own throat. The bare county 
phenomenon is going to create incredible pressure for us to 
provide a solution so that people can have health insurance. At 
the end of the day, that solution I think is going to be one 
that is going to work directly contrary--you know, you're 
worried about profitability and stability, as you should be. 
You're a company, you need to worry about that. But if you're 
thinking about that in the short term and you're missing the 
long term, we can't have bare counties. I'm not going to 
tolerate one. I'm going to find a solution for the one. If we 
can't find a solution through private insurance, we're going to 
find a solution.
    So just as you're communicating to us that we owe you 
stability, and we do, I want to communicate to private 
insurance companies that we're not going to tolerate bare 
counties and we will provide an option, and it will be an 
option that will be very, very challenging to the insurance 
industry as we know it.
    So, with that, Mr. Chair, that's all I have. Thanks.
    The Chairman. Thank you, Senator Kaine.
    Senator Hassan.

                      Statement of Senator Hassan

    Senator Hassan. Well, thank you, Mr. Chair and Ranking 
Member Murray, for this hearing, as well as the last three that 
we've had, and thank you to all the witnesses not only for 
being here today but for what you do. It's incredibly 
important.
    Most of the questions I had have been asked. Ms. 
Postolowski, I wanted to follow-up with you on the issue of 
Copper plans because you've talked a little bit about how high 
the deductible would be in relationship to the median income of 
young invincibles, but one of the other things that I noticed 
in your testimony is that you also talked about the idea that 
those Copper plans or catastrophic plans could be supplemented 
by HSAs, and I think in your testimony you said in order for a 
young invincible to make up that deductible difference through 
an HSA, they'd have to save something like $632 a month. Is 
that right?
    Ms. Postolowski. I know it would be $9,000 for the 
deductible.
    Senator Hassan. So you'd need a young person whose median 
income, according to your testimony, is around $20,000 a year 
to be able to save $632 a month to make up that deductible over 
the course of a year. The reason I point that out is that I 
think it's really critical that as we have this discussion 
about health care, we understand how things actually would play 
out on the ground for the people we're trying to serve.
    The founding principle of this country is that every single 
person counts. That's why what we just heard from Senator Kaine 
is so real, that we're not going to tolerate people in our 
States not being able to get health care. Every single person 
counts. That's the basic foundational principle of our 
democracy, and that means every single person has to be able to 
get health care.
    So as we look at the debate we're having, I also think it's 
really important that we understand that health care is not 
like any other consumer product. I can choose not to go to a 
restaurant or have the most expensive thing on the menu. I can 
choose not to take vacation and save money that way. But nobody 
plans to get sick, and we don't say, 'Oh, gee, that essential 
benefit has been waived by my State, so I just won't get mental 
illness.? Nobody plans to get substance use disorder, but 
people in my State are being ravaged by it. And, boy, has the 
fact that substance use disorder is an essential health benefit 
been absolutely critical to our capacity to try to address this 
terrible epidemic.
    So as we move forward, I think it's really critical for us 
to think about that. I think it's very critical for us to think 
about, as compelling as Senator Paul's remarks about the group 
plans were, every group plan I know relies on employers paying 
an awful lot of the cost of the premium that actually plays 
out, which is why when people terminate their employment in a 
group plan, they often can't afford the cost of COBRA, because 
that's the actual cost of the plan that the employer was 
helping to subsidize.
    We have to understand how this plays out, and ultimately we 
have to figure out a way to make the innovations and 
discoveries that have made 21st- century health care in this 
country so remarkable available to people. We have to provide 
incentives, as we try to do in New Hampshire, through 
transparency of cost and outcomes so that people can understand 
that sometimes lower costs can actually be aligned with better 
health outcomes, something that I do not think is intuitive for 
most people who think if you say to them, hey, please go use 
the lower cost provider, that they're somehow going to get 
worse care.
    Ultimately, in my State the business community came 
together, for instance, and supported Medicaid expansion under 
the Affordable Care Act and convinced a Republican legislature 
to reauthorize it because they know that when people don't have 
the access to get the health care they need at the front end, 
ultimately they end up in emergency rooms in great crisis. They 
get the care because we're the United States of America. We are 
going to give our citizens in health care crisis care because 
everybody counts, but ultimately that cost gets shifted 
somewhere else, and the private insured through their employers 
end up paying greater health care costs.
    So I hope as we work to stabilize the markets right now 
with cost-sharing reductions, with, I hope, federally at least 
seeded reinsurance plans, I hope that we also then move on to a 
discussion about how we continue to get our country healthier, 
lowering costs, so that all of us can thrive together, that we 
can have a workforce that is competitive in the 21st century 
economy, and that we can make sure that all Americans have the 
opportunity to enjoy the quality of life that we'd all like to 
have as healthy citizens.
    Thank you all very much.
    The Chairman. Thank you, Senator Hassan.
    I want to acknowledge Senator Carper, who is in the back. 
He's come to--he's not a member of the committee, but if it 
were the 3d grade, he'd get perfect attendance, I think.
    (Laughter.)
    The Chairman. So, thank you for your interest in what we're 
doing, and we welcome your ideas.
    Senator Whitehouse.

                    Statement of Senator Whitehouse

    Senator Whitehouse. Thanks, Chairman. As I think I've done 
in each one of these hearings, let me thank you and Ranking 
Member Murray for the bipartisan way in which this has 
proceeded and what I think has been an optimistic launch 
platform this has made for good work going forward.
    I wanted just to check in with Ms. Postolowski. As I 
understood your testimony, your dissatisfaction with the 
Colorado high-risk pool that you were put into had to do with 
the waiting period that you were subjected to and with the cost 
of the premium. Is that a fair description of what you said?
    Ms. Postolowski. That's correct.
    Senator Whitehouse. So you were here when Senator Kaine 
talked about the prospect of, say, a Medicare program that 
somebody could buy into at a reasonable rate. Would you have 
the same hesitation about that, or would you feel comfortable 
going into a Medicare for people who had diseases, as opposed 
to Medicare for people who were over a certain age?
    Ms. Postolowski. I certainly think a public option that has 
a robust risk pool would be the most attractive option both for 
taxpayers and consumers. The idea of buying into a public 
option is not something that I would be opposed to, though.
    Senator Whitehouse. As the co-author with Sherrod Brown of 
the public option that we nearly got into the Affordable Care 
Act, I appreciate you saying that. We came very close. We 
missed by a very small margin of votes. And I think had we 
succeeded, we would not be having the competition problem and 
the bare counties problem that we are facing right now. But 
this is Congress, and you have to have the votes. We were 
close, but no cigar.
    Mr. Farmer, I wanted to ask you a question. I was the State 
insurance commissioner for a while in Rhode Island as well, and 
in the health insurance market I wanted to get your comment on 
if a health insurance provider was to come and propose to do 
business in either your State or, speaking for the National 
Association of Insurance Commissioners, more generally, how 
important would it be for that insurer to show that they had a 
robust and legitimate provider network in your state?
    Mr. Farmer. Thank you, Senator. First, we welcome 
competition in our State, and no regulator would say anything 
different.
    Senator Whitehouse. Correct.
    Mr. Farmer. It's important for that new provider or that 
provider to have a workable and extensive provider network. The 
Affordable Care Act in some instances has produced more narrow 
networks. We've got to get beyond that.
    Senator Whitehouse. An insurance company that was proposing 
to do business in your State and had made no effort to 
establish a network of doctors and hospitals, a provider 
network, would be viewed with disfavor, correct?
    Mr. Farmer. That company is not going to do business in our 
State.
    Senator Whitehouse. And that would be true for most or all 
insurance commissioners as well?
    Mr. Farmer. They'd have to speak for themselves, but I 
doubt anyone would. If you're not going to come in and provide 
the basic services and the networks that you're there to do, 
you're going to have issues, I don't care what State you're in.
    Senator Whitehouse. So let me ask all of you, if you 
wouldn't mind, a question for the record. It's the same 
question that I have asked all of the witnesses, all the panels 
so far. Many witnesses have urged, and the Chairman has 
expressed interest in, continuing this bipartisan conversation 
beyond just market stability and going into the areas of cost 
and quality of care that I think provide immense bipartisan 
opportunities. There are five that I have asked people to focus 
on.
    One is patient safety, hospital-acquired infections, that 
arena of concern. It is a very significant cost of casualties 
among the American public.
    The second is learning from the variations in cost and 
outcomes that show themselves among different States, and using 
those differences to learn what best practices are.
    The third is trying to reduce administrative overhead. One 
of my particular favorites is warfare between insurance 
companies trying to deny payment to providers, and providers 
having to staff up to try to fight their way through that 
barrier, and the whole enterprise contributing zero health care 
value and it's just ridiculous administrative bureaucratic 
warfare that we all have to pay for.
    The fourth is making sure that people's wishes as to what 
care they will receive at the end of life are properly 
documented early on so that they can be honored when it's game 
day and things are going badly.
    The final one is looking at payment reform as an 
opportunity to redirect care so that doctors have the incentive 
to intervene earlier in the process with prevention and so 
forth and not be condemned to receive no compensation unless 
and until somebody is sick enough to require a procedure or a 
prescription.
    If you'd all be kind enough to respond on those fronts what 
you think our opportunities are here for bipartisan action in 
this committee, I'd be grateful to you, and I'm grateful to the 
Chairman and the Ranking Member.
    The Chairman. Thank you, Senator Whitehouse, for your 
participation.
    Senator Murray, do you have any closing questions or 
comments?
    Senator Murray. I have some closing comments, and I do want 
to thank everyone here and all of our witnesses who are joining 
us. I especially want to, again, express my appreciation to 
you, Chairman Alexander, for your leadership in holding these 
hearings. I think we all agree it hasn't been an easy 2017. 
There's been a lot of partisanship and disagreement, some 
unfortunate acrimony and sniping, but I want to thank you for 
the work we've done here in the past few weeks. I think this is 
the way things ought to go. This is the work that we should be 
doing here in the Senate, Democrats and Republicans coming 
together focused on common ground and working to find results 
for our constituents. And from the beginning you've agreed and 
we have worked together to organize these hearings in a 
bipartisan way. We've had great conversations in our committee 
coffees that you've organized, in our hearings, and outside 
them as well.
    We've heard from really great witnesses who have laid out 
some really good ideas for helping us to move forward and 
engaged in productive negotiations, which we are ongoing with 
and I'm very hopeful about so we can find common ground and get 
something done.
    As all of you know, Chairman Alexander, you and I have 
worked together in this committee to get some really important 
things done that were not easy, but I think the Every Student 
Succeeds Act, the 21st Century Cures Act, and mental health 
reform are great examples, and I'm confident that this 
committee can do it again because we know this isn't about us, 
it's not about partisanship, it's not about politics. It is 
about getting results for the people we serve, and no committee 
that I serve on does it better than this, and I really 
appreciate that and all of our committee members who worked 
together and your leadership on this.
    So as we wrap up this last hearing today, I'm really glad 
we've had these. I'm glad for the open and frank discussions 
and, as I mentioned, taken together, all the perspectives we 
have heard make it very clear that there is common ground on 
the key goal that we do want to meet together, which is 
stabilizing our markets and lowering costs for families in the 
near term.
    Certainly, there are some differences to be resolved, but I 
feel very optimistic that there's a lot more that we agree on 
than we disagree on with respect to that goal, and I'm hopeful 
and confident we can get that done. And then we hopefully can 
use that as a base to continue doing what this committee does, 
which is get results.
    So thank you, Chairman Alexander, and thank you to all our 
committee members and everybody who has participated for all 
that we've been doing here.
    The Chairman. Thank you, Senator Murray.
    I subscribe to everything she just said. We have shown in 
this committee on actually issues that are larger and more 
difficult than this one should be that we know how to take very 
contentious and difficult issues and get a result. And the 
advantage of that is that once we get it, whether it's fixing 
No Child Left Behind or the 21st Century Cures bill, or the 
first reorganization of our mental health laws in 10 years, 
then the law is settled for a while. People can count on it. 
It's durable. There's a consensus.
    When one party does it at the expense of the other, why 
then we just keep fighting like the Hatfields and the McCoys. 
The result of that over the last 7 years is that we've really 
spent, as important as it is to every single American, we spent 
too much time on insurance and not enough time on the cost of 
health care. You can't have lower cost insurance if you have 
higher cost health care, and we need to get into the issues 
that many of you have mentioned, having to do, for example, 
with wellness and other provisions.
    There's been a lot of suggestion that if we just had a 
little more money for this or for that, it would solve the 
problem. Well, we have a Federal Government that this week 
became $20 trillion in debt. So there's not any money up here 
to give to anybody, really. We just have to borrow it from 
somebody's grandchildren. So that's the reality of what we're 
faced with.
    I have one question I'd like to ask Mr. Ruiz-Moss. Would 
you say again--Senator Murphy, I thought, put it pretty well. 
We're trying to figure out what Section 1332 really means when 
it says you may waive this but you may not. You said that you 
offered a wellness provision in the group market, but there was 
something too rigid about the individual market to permit you 
to offer it. Could you explain that?
    Mr. Ruiz-Moss. There are innovations that are in the 
employer market, and a lot of times they will relate to if a 
consumer makes this kind of a decision, can they be rewarded 
for that financially.
    The Chairman. Right.
    Mr. Ruiz-Moss. That, with the way plans and rates are 
developed in the individual market, is just virtually 
impossible to design. So it sort of comes from the rules that 
exist today without it looking like a premium rebate or some 
adjustment from that----
    The Chairman. It has to do with plan design or benefit?
    Mr. Ruiz-Moss. Probably as we get deeper into it, I can 
have some of my team follow-up in more detail with you on the 
specifics of that, but it will relate somewhere between plan 
design and rate development, premium rate development.
    The Chairman. Thank you very much. I would be interested if 
you could follow-up with that.
    Mr. Ruiz-Moss. Absolutely.
    The Chairman. And as Senator Murray said, we've had a very 
good 2 weeks, and we're really a long way toward a consensus. 
Always sometimes the last decisions are the hardest decisions, 
and she and I will visit over the next few days and consult 
with members both on and off the committee, and we'll see if 
next week we can come to some consensus that we can offer to 
Senator McConnell and Senator Schumer, ask them to present it 
to the Senate before the end of the month so we can pass it, 
send it to the House, and hopefully the President will sign it.
    If we do that, I'm convinced that we can limit the increase 
in premiums in the year 2018 and put in place some improved 
flexibility for States that will mean lower premiums in the 
future.
    Senator Murkowski is still here. All of us are very 
interested in what Alaska has done, what Minnesota is trying to 
do, Iowa and Maine as well, which is basically to take some of 
the available money, create a reinsurance plan with some State 
funds and lower rates by 20 percent in those States.
    So State innovation is a part of our solution, and I look 
forward to working with Senator Murray. As I said yesterday, 
when Senator Murray decides that we're going to get a result, 
we usually do, and we've been both working in that way for the 
last 2 weeks, and I hope we succeed.
    My last comment will be that I heard a Supreme Court 
justice in the summer who was asked how can members of the 
Supreme Court get along as well when they have such different 
points of view, and the answer was that we try to remember that 
the institution is more important than our own opinion, and I 
think that's a good lesson for the U.S. Senate as well.
    The record will be open for 10 days for comments and 
questions. We'd like to have your additional suggestions, 
though, in the next three or 4 days because we're trying to 
come to a consensus quickly. We've heard from a variety of 
witnesses including Governors, insurance companies, providers, 
actuaries, insurers. We thank them and you especially for your 
time.
    The last 10 days mark a modest first step in our efforts to 
stabilize the market for 2018 and beyond. But if we can take 
one modest first step, we believe it will make it a lot easier 
to take step 2 and step 3 and step 4.
    The committee will stand adjourned.
    [Whereupon, at 12:32 p.m., the hearing was adjourned.]
    [Additional Material follows.]

                          ADDITIONAL MATERIAL

        Statement for the Record American College of Physicians
    The American College of Physicians (ACP) applauds Chairman 
Alexander and Ranking Member Murray for convening a series of 
bipartisan hearings to improve and strengthen the individual insurance 
market to ensure that millions of patients continue to have access to 
critical health coverage into the future. We also appreciate the HELP 
Committee inviting input from the physician community during the 
legislative process and we support the adherence to regular order which 
provides a valuable opportunity for analysis, review and input by 
organizations and other stakeholders, by members of the Senate, and by 
independent and nonpartisan analysts.
    ACP is the largest medical specialty organization and the second 
largest physician group in the United States, representing 152,000 
internal medicine physicians (internists), related subspecialists, and 
medical students. Internal medicine physicians are specialists who 
apply scientific knowledge and clinical expertise to the diagnosis, 
treatment, and compassionate care of adults across the spectrum from 
health to complex illness.
    ACP is pleased to offer the following recommendations on market 
stabilization with the strong belief that any reforms should first, do 
no harm to patients and actually result in improving access and quality 
of care.
                ensuring cost sharing reduction payments
    ACP believes that Congress must make a clear, immediate and 
unambiguous commitment to preserve the ACA's cost-sharing reduction 
(CSR) payments to insurers at least through 2019, and better yet, for 
the long-term. In 2016, about 6 million enrollees relied on CSR 
payments to help reduce the burden of co-payments, deductibles, and co-
insurance. Without a guarantee that the CSR payments will be continued, 
many insurers will have no choice but to leave the exchanges or to 
raise premiums by up to 23 percent to make up the shortfall according 
to preliminary insurer rate filings for plan year 2018.\1\ Insurers are 
deciding now whether they will be able to offer insurance through the 
exchanges for the 2018 enrollment cycle and several have already 
announced substantial premium increases because of the uncertainty over 
whether the CSR payments will continue. The Congressional Budget Office 
(CBO) has determined that gross silver plan premiums would increase by 
20 percent in 2018 and 25 percent in 2020 compared to the March 2016 
baseline if CSRs are not continued after 2017.\2\ While enrollees who 
receive premium tax credits would be largely insulated from rate 
fluctuations, individuals who do not qualify for subsidized plans would 
be forced to pay the higher premiums or switch to less-expensive, off-
marketplace plans. However, eliminating CSR payments would in fact cost 
the Federal Government $194 billion more over 10 years according to the 
CBO.\3\ Therefore, it is imperative that CSRs be preserved into the 
future.
---------------------------------------------------------------------------
    \1\ http://www.kff.org/health-reform/issue-brief/an-early 
look-at-2018-premium-changes-and-insurer-participation-on-aca-
exchanges/.
    \2\ https://www.cbo.gov/system/files/115th-congress-2017-2018/
reports/53009-costsharingreductions.pdf.
    \3\ Congressional Budget Office. The Effects of Terminating 
Payments for Cost-Sharing Reductions. August 2017. Accessed at https://
www.cbo.gov/system/files/115th-congress-2017-2018/reports/53009-
costsharingreductions.pdf.
---------------------------------------------------------------------------
  encourage reinsurance and other stabilization efforts through state 
                                waivers
    The College believes that the Department of Health and Human 
Services' (HHS) March 13, 2017 letter encouraging States to seek 
Section 1332 waivers for reinsurance programs was a step in the right 
direction. There is ample evidence that reinsurance can help to ensure 
that patients retain the coverage they have while protecting insurers 
from high costs. The ACA's temporary reinsurance pool ended in 2016 and 
was proven to be effective by HHS' June 30, 2017 report on transitional 
reinsurance payments and risk adjustment transfers for plan year 2016. 
That report showed that the ACA's transitional reinsurance program 
stabilized insurers with a substantial amount of high-cost enrollees, 
and, in concert with the risk adjustment program, reduced the risk of 
adverse selection.\4\ Alaska's reinsurance program has successfully 
reduced premium costs,\5\ containing premium hikes to just 7 percent, 
down from a projected 42 percent increase. Minnesota has also applied 
for a section 1332 waiver to help finance its reinsurance program. 
Congress can also embrace initiatives that have proven effective in the 
Medicare Part D program by establishing permanent reinsurance and risk 
corridor programs as well as emergency fallback protections to provide 
coverage when no plans are available in an area.\6\
---------------------------------------------------------------------------
    \4\ Centers for Medicare and Medicaid Services. Summary Report on 
Transitional Reinsurance Payments and Permanent Risk Adjustment 
Transfers for the 2016 Benefit Year. June 30, 2017. Accessed at https:/
/www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-
Programs/Downloads/Summary-Reinsurance-Payments-Risk-2016.pdf on July 
6, 2017.
    \5\ Alaska Department of Commerce, Community, and Economic 
Development Division of Insurance. Alaska 1332 Waiver Application. 
December 7, 2016. Accessed at https://aws.state.ak.us/
OnlinePublicNotices/Notices/Attachment.aspx?id=106061.
    \6\ http://www.commonwealthfund.org/publications/blog/2017/apr/
shoring-up-the-health-insurance-marketplaces. 
---------------------------------------------------------------------------
    Congress should consider additional policies to encourage State 
innovation and bring more choice and competition into insurance markets 
without rolling back current coverage, benefits and other consumer 
protections guaranteed by the ACA and other Federal laws and 
regulations. Provided that coverage and benefits available in a 
particular State would be no less than under current law, Congress 
should encourage the use of existing section 1332 waiver authority to 
allow States to adopt their own innovative programs to ensure coverage 
and access. Section 1332 waivers offer States the opportunity to test 
innovative ways to expand insurance coverage while ensuring that 
patients have access to comprehensive insurance options. However, ACP 
believes that Congress should not weaken or eliminate the current-law 
guardrails that ensure patients have access to comprehensive Essential 
Health Benefits and are protected from excessive co-payments and 
deductibles. If existing requirements were removed (e.g. that waivers 
provide comprehensive, affordable coverage that covers a comparable 
number of people as would be covered under current law), a backdoor 
would emerge for insurers to offer less generous coverage to fewer 
people and to make coverage unaffordable for patients with preexisting 
conditions. As long as a State's waiver program meets the ACA's 
standard of comprehensiveness at the same cost and level of enrollment, 
it can test a more market-based approach, or make other, more targeted 
revisions to continue existing State initiatives.
          enhance enrollment through promotion and engagement
    ACP supports robust outreach to patients to encourage patient 
enrollment in health coverage. Congress should support and properly 
fund this outreach and other education efforts to avert declining 
enrollment that could lead to higher premiums and market 
destabilization. The administration's recent actions to cut marketing 
funding for advertising by 90 percent and cut navigator program grant 
funding by about 41 percent are steps in the wrong direction and are 
counter to the available evidence. Distressingly, the administration 
has also interrupted the current funding for the navigator program and 
it is unclear when the funding will resume.\7\ With open enrollment 
starting November 1st and the administration already stating that the 
funding will not be retroactive, Congress must step in with its 
oversight authority to properly ensure that the navigator programs are 
properly funded.
---------------------------------------------------------------------------
    \7\ Cliff, Sarah. ``This is the most brazen act of Obamacare 
sabotage yet.'' Vox, September 8, 2017. Accessed at https://
www.vox.com/platform/amp/policy-and-politics/2017/9/8/16268572/trump-
obamacare-navigators
---------------------------------------------------------------------------
    ACP strongly believes that more intensive outreach and enrollment 
efforts will be needed because the open enrollment period for 2018 was 
considerably shortened. Many uninsured people remain unaware of 
marketplace-based coverage options and subsidies \8\ and in 2017 
marketplace enrollment declined after HHS prematurely ended its open 
enrollment publicity and outreach campaign. Evidence suggests that 
efforts such as enhanced television advertising can increase 
enrollment.\9\ Curtailing funding for such advertising, as the 
administration is planning to do, will not only reduce overall 
enrollment, leading to more uninsured persons, but also lead to adverse 
selection (and higher premiums and Federal premium subsidies) if 
younger and healthier persons to do not get the information needed to 
encourage and help them enroll. Therefore Congress must encourage the 
administration to redouble efforts to promote marketplace awareness and 
attract more people to shop and purchase the right coverage for them.
---------------------------------------------------------------------------
    \8\ http://www.commonwealthfund.org/publications/blog/2016/jan/
better-outreach-critical-to-aca-enrollment-particularly- for-latinos
    \9\ Karaca-Mandic P, Wilcock A, Baum L, Barry CL, Fowler EF, 
Niederdeppe J, Gollust SE. The Volume of TV Advertisements During The 
ACA's First Enrollment Period Was Associated With Increased Insurance 
Coverage. Health Affairs. 2017; 36(4):747-754. Accessed at http://
content.healthaffairs.org/content/36/4/747 on June 13, 2017.
---------------------------------------------------------------------------
  enforce current-law requirement to purchase a qualified health-plan
    Not enforcing the insurance mandate penalty will lead directly to 
enrollment rates dropping among healthy enrollees who may be less 
inclined to purchase health insurance. Insurers would need to increase 
premiums to compensate for the resulting sicker risk pool. Insurance 
companies have already anticipated lax individual-mandate enforcement 
by the administration. For instance, the 2018 Maryland individual 
market rate filing for CareFirst stated that, ``we have assumed that 
the coverage mandate introduced by ACA will not be enforced in 2018 and 
that this will have the same impact as repeal. Based on industry and 
government estimates as well as actuarial judgment, we have projected 
that this will cause morbidity to increase by an additional 20 
percent''.\10\ The CBO predicts that while premiums are rising, tax 
credits that insulate enrollees from rising costs as well as the 
individual mandate ``are anticipated to cause sufficient demand for 
insurance by enough people, including people with low health care 
expenditures, for the market to be stable in most areas.'' CBO also 
States that insurers withdraw from the market due to a variety of 
factors including, ``substantial uncertainty about enforcement of the 
individual mandate and about future payments of the cost-sharing 
subsidies to reduce out-of-pocket payments for people who enroll in 
non-group coverage through the marketplaces established by the ACA.'' 
\11\
---------------------------------------------------------------------------
    \10\ CareFirst Blue Cross Blue Shield. Part III Actuarial 
Memorandum. Accessed http://www.healthrates.mdinsurance.state.md.us/
AllNewRateReq.aspx.
    \11\ Congressional Budget Office. Cost Estimate of H.R. 1628 Better 
Care Reconciliation Act of 2017. June 26, 2017. Accessed at https://
www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/52849-
hr1628senate.pdf.
---------------------------------------------------------------------------
    Congress should avail itself of its oversight authority so that the 
administration effectively enforces the individual mandate under 
current law. Maintaining effective adherence helps balance the market's 
risk pool, attract healthier enrollees, and avoid dramatic premium rate 
increases. In addition, Congress should not enact any legislation to 
weaken or repeal the individual insurance requirement absent an 
alternative that will be equally or more effective. For example, 
automatic enrollment in a qualified health plan has been suggested by 
former CMS Administrator Andy Slavitt and former Majority Leader Bill 
Frist as an alternative to the individual insurance mandate; further 
analysis needs to be done by non-partisan experts, including the CBO, 
to determine if automatic enrollment is a viable alternative.
    ACP supports consideration by Congress of additional steps and 
incentives to encourage younger and healthier persons to enroll, such 
as targeted outreach and education programs, as long as they do not 
increase premiums and out of pocket costs for older and sicker persons 
or erode current law essential benefits and consumer protections.
   enact legislation to expand individual choice in the marketplaces
    Currently, some exchanges have difficulty attracting enough 
insurers and some patients may have only one insurer from which to 
obtain coverage. Congress should enact a public option that would 
provide more options and increase competition. Several avenues exist to 
achieve a range of public options including a buy-in program for 
traditional Medicare and Medicare Advantage, Medicaid, and other 
publicly funded health programs to offer real competition to private 
insurers in the marketplaces.
    For instance, ACP supports the development of a Medicare buy-in 
option for people age 55-64. Older adults would have the opportunity to 
enroll in the popular Medicare program while potentially improving both 
the Medicare and ACA marketplace risk pools and driving down premiums. 
Specifically, ACP recommends that: 1) a Medicare Buy-in Program must 
include financing that assures that premiums and any subsidies are 
sufficient to fully cover expenses without further undermining the 
solvency of the Medicare trust funds; 2) a Medicare Buy-in Program 
should include subsidies for lower-income beneficiaries to participate; 
3) Eligibility for a Medicare Buy-in Program should include adults age 
55-64 regardless of their insurance status; 4) Enrollment in a Medicare 
Buy-in program should be optional for eligible beneficiaries and should 
include the full range and responsibilities of Medicare benefits (Parts 
A, B, Medicare Advantage and Part D); and 5) Reimbursement for 
services, including evaluation and management services, should be no 
less than under the traditional Medicare reimbursement rates.
    The benefits of a Medicare Buy-in program, according to the 
American Academy of Actuaries, may expand patient access to providers 
and enhance the continuity of care for individuals changing over to 
Medicare while at the same time helping to reduce premiums for 
individuals in the marketplace exchanges.\12\
---------------------------------------------------------------------------
    \12\ http://election2016.actuary.org/sites/default/files/Medicare-
Buy-In-Option.pdf.
---------------------------------------------------------------------------
  use existing statutory authority to allow sale of insurance across 
                              state lines
    ACP supports States using authority under existing law to permit 
the sale of insurance across State lines among States that have agreed 
to enter into a regulatory compact to protect patients. Without a 
robust regulatory structure that ensures that such plans meet existing 
essential benefit, community-rating, network adequacy standards, prompt 
claims payment and other consumer protections, the current evidence 
strongly suggests that selling insurance across State lines would not 
likely result in significant cost-savings while at the same could cause 
a ``race to the bottom.'' Instead of pursuing new laws to sell 
insurance across State lines without such protections for patients, 
Congress should strongly encourage the administration to work with 
States to promote and support the development of interstate health 
insurance compacts as already authorized under Section 1333 of the ACA. 
While these compacts could potentially broaden choice of insurance 
options for patients while still maintaining crucial insurance 
regulations, benefit requirements, and other protections that 
characterize health plans under current law, it is unclear if many 
States or insurers are willing and able to sell insurance across State 
lines, and create the necessary regulatory compact structure to allow 
such sales. One limitation is that insurers typically negotiate market-
specific contracts with physicians, hospitals and other providers of 
health care services; insurers located outside of a specific market 
would face challenges in having the relationships needed to negotiate 
effective contractual arrangements. Therefore, some caution is 
appropriate in considering the likely impact that selling insurance 
across State lines, under existing statutory authorities, will have on 
patient choice, access to care, and premiums.
                bipartisan proposals at the state level
    ACP is encouraged by the broad discourse about the individual 
insurance market at both the State and Federal level. Several 
bipartisan proposals, including those put forth by Gov. John Kasich (R-
OH) and Gov. John Hickenlooper (D-CO) along with other State Governors 
and the Bipartisan Policy Center can further the discussion and contain 
some promising ideas. While ACP continues to study these proposals more 
closely, the College agrees that maintaining CSR payments and creating 
reinsurance programs should be the first steps in stabilizing the 
individual market. ACP also supports the overall concept of State 
innovation through Section 1332 waivers, including Congress possibly 
adding structural or procedural improvements to shorten the waiver 
process, as well as offering a public option, as described above. We 
also agree that funding for outreach and enrollment must be 
strengthened. However, ACP strongly believes that Essential Health 
Benefits and other consumer protections (guaranteed issue and 
renewability, modified community rating) must be maintained at the 
Federal level and would be concerned about efforts to give States the 
ability to modify or reduce these benefits.
                               conclusion
    The College would again like to sincerely thank Chairman Alexander 
and Ranking Member Murray for convening this hearing and for your 
shared bipartisan commitment to stabilizing the individual insurance 
market. We greatly appreciate the committee inviting input from the 
physician community and the opportunity to provide recommendations on 
strengthening the health insurance market, and stand ready to work with 
the committee on the development of any reforms where our experience 
and expertise could be of value. Our hope is that the information 
shared today will provide the committee with a clinician perspective 
and we welcome the opportunity to continue to work with you as you 
advance healthcare reforms through the 115th Congress. Please contact 
Jared Frost at [email protected]. with any questions or if 
additional information is needed.
                                 ______
                                 
                            Habilitation Benefits Coalition
Hon. Lamar Alexander,
Hon. Patty Murray,
United States Senate,
Washington DC, 20510.
    Chairman Alexander and Ranking Member Murray Thank you for the 
opportunity to submit testimony for the written record on behalf of the 
Habilitation Benefits (HAB) Coalition on the issue of preserving 
habilitative benefits in connection with your hearing entitled, 
``Stabilizing Premiums and Helping Individuals in the Individual 
Insurance Market for 2018: State Flexibility.'' The undersigned 
organizations are writing as members of the Habilitation Benefits (HAB) 
Coalition to continue to express our deep concern about repealing key 
provisions of the Affordable Care Act (ACA) that would limit access to 
habilitation services and devices for children and adults under 
Medicaid expansion and in ACA insurance plans. The HAB Coalition is a 
group of national nonprofit consumer and clinical organizations focused 
on securing appropriate access to, and coverage of, habilitation 
benefits within the statutory Essential Health Benefits (EHB) category 
known as ``rehabilitative and habilitative services and devices'' under 
Section 1302 of the ACA.
    We last wrote to Congress on April 6, 2017 expressing the 
importance of maintaining access to habilitation services and devices 
in any ACA repeal and replace bill that advanced in the House and 
Senate. The HAB Coalition continues to have significant concerns with 
ongoing efforts to modify the ACA in ways that could decrease access to 
habilitation benefits. One proposed reform would waive Federal EHB 
requirements entirely and delegate to States the determination of the 
scope of Essential Health Benefits. There is little doubt under this 
scenario that access to habilitation services and devices will suffer 
in many areas of the country. Americans needing habilitation services 
and devices rely on their health care coverage to acquire skills and 
functions never developed due to disability, as well as assist in 
maintaining their health and function, and living as independently as 
possible. Often skills acquired through habilitation services and 
devices lead to breakthroughs in functional abilities that would have 
been impossible without access to timely and appropriate habilitation 
benefits. This reduces long-term disability and dependency costs to 
society.
    For these reasons, the HAB Coalition strongly urges Congress to 
maintain the Federal standard for EHB coverage, specifically, coverage 
of rehabilitative and habilitative services and devices, in any ACA 
repeal and replace or ACA stabilization bill that is advanced in the 
future.
            definition of habilitation services and devices
    The ACA created in statute the EHB category of ``rehabilitative and 
habilitative services and devices.'' ACA, Section 1302 (b). In the 
February 2015 Benefit and Payment Parameters Final Rule, the Centers 
for Medicare and Medicaid Services (CMS) defined ``habilitation 
services and devices'' using the definition of ``habilitation 
services'' from the National Association of Insurance Commissioners' 
Glossary of Health Coverage and Medical Terms \1\ plus explicitly 
adding habilitation devices, as follows:
---------------------------------------------------------------------------
    \1\ https://www.cms.gov/CCIIO/resources/files/downloads/uniform-
glossary-final.pdf.

          ``Habilitation services and devices--Cover health care 
        services and devices that help a person keep, learn, or improve 
        skills and functioning for daily living. Examples include 
        therapy for a child who is not walking or talking at the 
        expected age. These services may include physical and 
        occupational therapy, speech-language pathology, and other 
        services for people with disabilities in a variety of inpatient 
        and/or outpatient settings.''\2\
---------------------------------------------------------------------------
    \2\ http://www.gpo.gov/fdsys/pkg/FR-2015-02-27/pdf/2015-03751.pdf, 
at 10871.

    This definition is a floor for individual insurance plans sold 
under the ACA exchanges. In addition, all States that opted to expand 
their Medicaid program must cover Essential Health Benefits at a 
minimum. For the first time, this definition established a uniform, 
understandable Federal definition of habilitation services and devices 
that became a standard for national insurance coverage. We stress that 
this definition is a floor for coverage and includes both habilitative 
services and habilitative devices. The services and devices covered by 
the habilitation benefit should not be limited to the therapies 
enumerated in the Federal regulation which are listed as examples of 
covered benefits.
    In addition to the regulatory definition cited above, examples of 
these types of services typically provided under this benefit include 
rehabilitation medicine, behavioral health services, recreational 
therapy, developmental pediatrics, psychiatric rehabilitation, and 
psycho-social services provided in a variety of inpatient and/or 
outpatient settings. These services should be provided based on the 
individual's needs, prescribed in consultation with a clinician, and 
based on the assessment of an interdisciplinary team and resulting care 
plan.
    The HAB Coalition supports the preservation of the EHB category of 
``rehabilitative and habilitative services and devices,'' and the 
subsequent regulatory definition and related interpretations duly 
promulgated, as a Federal standard of coverage for habilitation under 
any future ACA-related legislation. The HAB Coalition believes that 
adopting the uniform Federal definition of habilitation services and 
devices minimizes the variability in benefits across States and 
uncertainty in coverage for children and adults in need of 
habilitation.
          other hhs reforms positive to habilitation coverage
    The HAB Coalition also supports other regulatory changes that have 
had a positive impact on habilitation coverage, and advises this 
committee to strive to preserve the effectiveness of such regulations 
in future ACA legislative approaches. First, the Department of Health 
and Human Services (HHS) adopted in the regulation defining 
``habilitation services and devices'' that exchange plans cannot impose 
limits on coverage of habilitative services and devices that are less 
favorable than any such limits imposed on coverage of rehabilitative 
services and devices. Further, for plan years beginning on or after 
January 1, 2017, exchange plans cannot impose combined limits on 
habilitative and rehabilitative services and devices. Both of these 
regulatory provisions are strong indicators of a habilitation benefit 
that is designed to meet the needs of individuals who require 
habilitation benefits.
               preserving habilitation is cost-effective
    Removing coverage protections for habilitative services and devices 
will not significantly save the taxpayers' money. While some believe 
that Essential Health Benefits (EHBs) significantly increase premiums, 
evidence suggests that this is not the case, and that other factors 
such as community rating has a greater impact on premiums. To 
illustrate this, Milliman estimated that the total cost of providing 
selected hearing services, speech-language therapy, and hearing 
supplies, devices, and related professional services, in a commercial 
employer group population, noting a utilization rate of approximately 
one per thousand, resulted in PMPM (per member per month) claim costs 
of approximately $1.48 for 2014. Additionally, an analysis from the 
Urban Institute and the Robert Wood Johnson Foundation indicates EHBs 
covered under the ACA, if removed, will not significantly reduce the 
cost of monthly premiums. Instead, this would merely add considerable 
costs for beneficiaries. According to the analysis, habilitative and 
rehabilitative care represent only 2 percent of nongroup premiums in 
2017.
                               vignettes
    The following vignettes help to demonstrate the value of 
habilitation. We ask HELP Committee members and staff to seriously 
consider these illustrations of habilitation services and devices 
before taking legislative action on the Affordable Care Act:
           1. Habilitation Services for Infants and Children
Hearing Screening
    Consistent with the State mandate for infant hearing screening, 
Gavin received a newborn hearing screening test in the hospital 48 
hours after he was born. The newborn hearing screening indicated a 
possible hearing loss, and according to the State protocol, he was 
referred for a repeat outpatient hearing screening. The results of the 
outpatient screening indicated the need for further testing. Therefore, 
he was referred to a pediatric audiologist for a comprehensive 
diagnostic evaluation. The results of the evaluation confirmed a 
moderate sensorineural hearing loss in both ears. The family chose an 
auditory/oral approach for speech and language development for Gavin. 
He was fitted with binaural hearing aids at 3 months of age and 
referred to the State Early Intervention (EI) program. The initial 
recommendations from EI were biweekly early intervention services 
provided by an audiologist and speech-language pathologist (SLP) in the 
home, beginning at 4 months of age that focus on parent education, 
auditory/listening skills, and language development. After 3 years of 
consistent hearing aid use and regular habilitation treatment services, 
Gavin entered preschool with normal receptive and expressive language, 
on par with his hearing peers. Hearing aids, speech-language pathology 
and audiology services are often covered under the EHB category of 
rehabilitative and habilitative services and devices.
Cochlear Implants (CI)
    Olivia was identified with a permanent, sensorineural severe-to-
profound hearing loss at 6 months of age and currently wears hearing 
aids in both ears. Her family chose an auditory/oral communication 
approach. Olivia received a cochlear implant evaluation from an 
interdisciplinary team--including a surgeon, an audiologist, a speech-
language pathologist (SLP), and a social worker--at a hospital 3 hours 
away from her home. An SLP has been providing habilitation services in 
the home since Olivia's hearing loss was diagnosed. The audiologist and 
SLP have been collaborating with the cochlear implant team on 
habilitative treatment and will continue to provide services locally to 
Olivia and her family following the cochlear implantation. This 
professional collaboration will help Olivia develop speech and language 
skills post-cochlear implantation and will help the audiologist in 
programming the cochlear implant to maximize the hearing benefit. 
Without Essential Health Benefits and insurance protections to ensure 
coverage of pre-existing conditions, far too many children would go 
without access to cochlear implantation.
Cleft Palate
    Jessica is a 2-year old child with a bilateral cleft palate that 
was surgically repaired at 11 months of age. She presented with speech 
sound production errors and excessive nasality that impaired her 
ability to communicate. Jessica's care is coordinated by a cleft 
palate/craniofacial team that includes a plastic surgeon, an 
orthodontist, an SLP, a pediatrician, and additional providers. The SLP 
assesses articulation, language, voice, and resonance and determines 
the presence of articulation deficits and nasal emission that requires 
speech-language treatment weekly. Treatment goals focus on correct 
articulatory placement to address sound errors, nasality of speech, and 
oral airflow. With appropriate speech language treatment, Jessica will 
learn techniques to improve her speech intelligibility, allowing her to 
communicate with others at an age-appropriate level. Professional 
collaboration with the craniofacial team and a coordinated care plan 
ensure that Jessica achieves maximum functional communication. Without 
habilitation coverage, it would be difficult for Jessica to access 
services to treat her condition.
Muscular Dystrophy
    Adam is a 14-year-old boy with Duchenne Muscular Dystrophy. He has 
recently experienced a significant decrease in his trunk and arm 
strength. After conducting an occupational profile and evaluating 
Adam's current performance skills, the occupational therapist adapted 
Adam's computer keyboard in order for him to be able to continue to use 
the computer and keyboard for schoolwork and entertainment. She teaches 
Adam compensatory strategies and modifies his silverware so that he may 
continue to feed himself without assistance, and teaches him and his 
family strategies for dressing with minimal assistance from his 
caregivers. The occupational therapist also teaches Adam stretches for 
his shoulders and upper arms to help maintain flexibility and prevent 
the development of muscle contractures. Finally, she teaches Adam new 
strategies for relieving pressure on his buttocks in his wheelchair, as 
he can no longer perform wheelchair pushups. She works with Adam to 
build these techniques into his daily routine so he does not forget, 
since forgetting could result in the development of additional pressure 
sores.
Down Syndrome
    Jill is a 5-month-old girl with Down syndrome (DS). Jill's parents 
were aware of the diagnosis before her birth and they have always 
sought optimal care for her. She is scheduled for surgical repair of a 
congenital heart defect in the near future. Jill has had difficulty 
drinking from a bottle, and her physical therapist has worked with 
other health professionals to assist the parents with a feeding program 
best suited for her. She is seen at home by several health care 
professionals. The pediatric physical therapist has helped the family 
learn how to teach Jill to hold her head upright when she is supported 
when sitting, and how to teach Jill to roll over from her stomach to 
her back and from her back to her stomach. The physical therapist 
includes games and toys with bright colors to stimulate Jill's 
interest, play, and hand skills. The therapist incorporates words and 
pictures with the treatment sessions to help Jill's language 
development.
    The family has already asked for information about starting an 
infant treadmill walking program as soon as Jill has recovered from her 
surgery and can put weight on her feet to stand. The therapist is using 
a large ball to encourage Jill to take some weight on her feet now. As 
Jill continues to develop during her early years of life, the physical 
therapist will encourage progression of motor activities such as 
crawling, walking, climbing stairs, and running. An orthotics (braces 
for the foot and ankle) assessment will be completed once Jill begins 
to initiate weight-bearing activities at 7-9 months. Infants with DS 
are at high risk for delayed standing due to low muscle tone and joint 
instability, which may result in foot deformity and lifelong mobility 
impairments. An orthotics assessment is beneficial, in the first year 
of life, to prevent misalignment.
                  2. Habilitation Services for Adults
Multiple Sclerosis
    A 47-year-old female with Multiple Sclerosis was referred to 
occupational therapy for self-management, specifically management of 
fall risk and fatigue. She reported having difficulty with household 
chores, specifically cleaning and ironing. She also reported becoming 
easily fatigued during the day. Intervention focused on identifying 
adaptive and compensatory strategies to assist her to learn how to 
self-pace her daily routines between demanding and non-demanding 
activities to conserve energy. She was able to continue her daily 
routines with improved energy and satisfaction.
Cochlear Implants
    Raul was diagnosed with congenital hearing loss as a young child, 
but did not have access to hearing aids until age ten. He attended a 
school for the deaf and hard of hearing, and his primary language is 
American Sign Language. As an adult, Raul decided to undergo cochlear 
implant surgery and learn spoken language. He works with an audiologist 
and SLP on open-set speech recognition with amplification. The 
prognosis from the interdisciplinary cochlear implant team--based on 
Raul's motivation, progress in therapy, and use of lip-reading and 
technology--is fair for receptive language abilities. His cochlear 
implant and related new skills will assist him with communication in 
the workplace and community.
                               conclusion
    Habilitation services and devices maximize the health, function, 
and independence of children and adults with disabilities. Each 
vignette outlined above is a real-life example of habilitation services 
and devices being used to address the needs of individuals who require 
habilitation. The Steering Committee of the HAB Coalition firmly 
believes that any Federal legislation to modify the Affordable Care Act 
must preserve access to habilitative services and devices in order to 
continue to meet the needs of children and adults with disabilities and 
chronic, progressive conditions.
            Thank you for your willingness to consider our views. 
            Should you have further questions regarding this 
            information, please contact Peter Thomas, 
            [email protected] Steve Postal, 
            [email protected]. HAB Coalition coordinators.

    Habilitation Benefits Coalition
    Https://Habcoalition.wordpress.com.

    Melanie Dolak, American Academy Of Physical Medicine And 
Rehabilitation; Stephanie Mohl, American Heart Association/American 
Stroke Association; Chuck Willmarth, American Occupational Therapy 
Association; Tim Nanoff, American Speech-Language-Hearing Association; 
Julie Utano, American Therapeutic Recreation Association; Julie Ward, 
The Arc Of The United States; Jan Kaplan, Children's Hospital 
Association
                                 ______
                                 
american academy of family physicians; american academy of pediatrics; 
american college of physicians; american congress of obstetricians; and 
  gynecologists american osteopathic association american psychiatric 
                              association
                     Joint Statement for the Record
                           September 14, 2017
    On behalf of the more than 560,000 physicians and medical students 
represented by the combined memberships of the American Academy of 
Family Physicians, the American Academy of Pediatrics, the American 
College of Physicians, and the American Congress of Obstetricians and 
Gynecologists, the American Osteopathic Association, and the American 
Psychiatric Association, we appreciate this opportunity to submit a 
statement for the record outlining our recommendations to stabilize the 
health insurance market and ensure our patients have access to a wide 
variety of affordable and comprehensive coverage options. Our members 
are the front-line physicians who care for patients in rural, urban, 
wealthy and low-income communities, and are the foundation of the 
American health care system.
    We applaud the committee's efforts to develop bipartisan solutions 
to strengthen and improve the health insurance market. Millions of 
Americans rely on the coverage offered through health insurance 
exchanges (also known as marketplaces) and it is imperative that we 
work together so that insurance is available and affordable to all. We 
submit the following recommendations, as reflected in our joint 
principles:
            provide long-term cost-sharing reduction funding
    Our coalition's joint principles State that policymakers must 
ensure that premium and cost-sharing subsidies are sufficient to make 
coverage affordable and accessible, especially for vulnerable patients 
like children and adults with special health care needs, older adults, 
and low-income individuals and families. Stakeholders as diverse as the 
National Association of Insurance Commissioners and Governors from both 
parties have called for predictable long-term cost-sharing reduction 
funding.\1\,\2\
---------------------------------------------------------------------------
    \1\ http://www.naic.org/documents/
government_relations_170517_letter_omb_costsharing_reduction.pdf.
    \2\ http://Governor.ohio.gov/Portals/0/pdf/
Bipartisan%20Governors%20Blueprint.pdf?ver=2017-08-31-094757-317
---------------------------------------------------------------------------
    Congress should make an immediate commitment to fund cost-sharing 
reduction payments at least through 2019 and, preferably, for the long 
term. Failing to do so could result in higher premiums, reduced insurer 
confidence in the sustainability of the marketplace risk pool, and a 
larger Federal deficit. Preliminary insurer rate filings for plan year 
2018 indicate that insurers are requesting additional premium increases 
of up to 23 percent because of uncertainty related to cost-sharing 
reduction payments.\3\ According to the Congressional Budget Office, 
gross silver plan premiums would increase by 20 percent in 2018 and 25 
percent in 2020 compared to the March 2016 baseline if cost-sharing 
reductions are not continued after 2017.\4\ Although many enrollees 
would receive premium tax credits that would insulate them from rate 
fluctuations to some effect, those who do not qualify for the tax 
credits may be forced to pay higher premiums or shop for cheaper off-
marketplace plans that lack the consumer protections of marketplace 
plans.
---------------------------------------------------------------------------
    \3\ http://www.kff.org/health-reform/issue-brief/an-early 
look-at-2018-premium-changes-and-insurer-participation-on-aca-
exchanges/.
    \4\ https://www.cbo.gov/system/files/115th-congress-2017-2018/
reports/53009-costsharingreductions.pdf.
---------------------------------------------------------------------------
     continue reinsurance and other premium stabilization programs
    Reinsurance and other risk stabilization programs have been an 
effective tool to offset the cost of insuring high-risk individuals and 
curbing excessive premiums. The Affordable Care Act's (ACA) temporary 
reinsurance pool ended in 2016 and the Centers for Medicare and 
Medicaid Services (CMS) has since encouraged States to develop 
reinsurance programs through the Sec. 1332 waiver process.
    Alaska's reinsurance program successfully limited premium hikes to 
a manageable 7 percent, down from a projected 42 percent increase had 
the State not intervened.\5\ A recent CMS report indicated that the 
transitional reinsurance and permanent risk adjustment programs 
successfully prevented exorbitant premium spikes, which kept enrollees 
in the individual marketplace.\6\ We encourage Congress to develop and 
sufficiently fund long-term premium stabilization programs to enhance 
the availability of affordable premiums and encourage insurer 
participation.
---------------------------------------------------------------------------
    \5\ https://aws.state.ak.us/OnlinePublicNotices/Notices/
Attachment.aspx?id=106061.
    \6\ https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-
Stabilization-Programs/Downloads/Summary-Reinsurance-Payments-Risk-
2016.pdf.
---------------------------------------------------------------------------
                 enhance outreach and education efforts
    Millions of Americans remain unaware of premium tax credits, 
community-based Navigator and outreach programs and other assistance 
that can help them afford and enroll in comprehensive health insurance 
coverage. A 2016 Commonwealth Fund report on the uninsured found that 
38 percent of survey participants were unaware of the Healthcare.gov 
website or their state's health insurance exchange/marketplace.\7\ The 
report also found that adults who visited the exchange and received 
personal assistance from a navigator, broker or other assister were 
much more likely to enroll in coverage than the unassisted. More 
intensive outreach and enrollment efforts will be vital since the open 
enrollment period for plan year 2018 has been shortened to only a month 
and a half. In 2017, marketplace enrollment declined after the 
Department of Health and Human Services prematurely ended its open 
enrollment publicity and outreach campaign. CMS has reduced funding for 
open enrollment advertising by 90 percent and cut navigator program 
grant funding by about half, despite evidence of effectiveness and 
promises of enhanced outreach efforts to increase awareness of the 
compressed open enrollment period. Congress should adequately fund 
outreach and education efforts to encourage a better risk pool and 
prevent low enrollment, higher premiums, and market destabilization.
---------------------------------------------------------------------------
    \7\ http://www.commonwealthfund.org/publications/issue-briefs/2016/
aug/who-are-the-remaining-uninsured
---------------------------------------------------------------------------
                enforce current-law consumer protections
    Our coalition's joint principles call for the protection of the 
ACA's patient-centered insurance reforms, including the preservation of 
current coverage of Essential Health Benefits (EHBs). As Congress 
deliberates creative ways to stabilize the individual market and reduce 
costs, it must do so without jeopardizing the coverage our patients 
have today. All marketplace plans must retain EHBs, including maternity 
coverage and mental health and substance use disorder treatment 
services. An estimated 8.7 million Americans gained maternity coverage 
under the ACA, righting a wrong in our health care system and ensuring 
that insured pregnant women have access to prenatal care, leading to 
healthier pregnancies and healthier babies. An estimated 4.8 million 
Americans gained coverage for substance use disorder treatment, and 2.3 
million Americans gained mental health coverage at parity with medical 
and surgical benefits (10). Over time, untreated serious mental illness 
and substance use disorders intensify and increase the number of 
comorbid medical conditions in individuals with those conditions, which 
in the long run increases total individual insurance coverage spending.
    We believe the expanded Sec. 1332 waiver authority proposed in the 
latest ACA repeal effort is the wrong approach, as it significantly 
lowers the standard by which these waivers are approved. While we 
understand that the impact of this waiver authority would vary amongst 
the States and recognize the need to ensure adequate participation in 
the individual insurance market, we do not believe that pregnant women 
or people with a serious mental illness or substance use disorder 
should be denied coverage simply because they live in a State that 
waived vital consumer protections. Efforts to increase State 
flexibility should not come at the expense of coverage of this 
essential coverage. Congress must ensure that these consumer 
protections are preserved.
   enforce current-law requirement to purchase coverage or otherwise 
 ensure incentives for young adults to buy coverage and participate in 
                            insurance pools
    Without the current law's requirement that individuals purchase 
insurance, many healthy individuals would choose to delay or decide not 
to purchase insurance, creating a risk pool comprised primarily of sick 
enrollees, increasing the cost of coverage and further destabilizing 
the insurance market. If the insurance mandate penalty is not 
adequately enforced enrollment rates will drop among healthy enrollees 
who may be less inclined to purchase health insurance, leading insurers 
to increase premiums to compensate for the sicker risk pool.
    Through its oversight authority, Congress should urge the 
administration to enforce the individual mandate to balance the 
market's risk pool, attract healthier enrollees, and avoid dramatic 
premium rate increases. Congress should also explore other appropriate 
incentives for young, healthy individuals to buy coverage so as to 
ensure a balanced risk pool, provided that such incentives do not 
result in increased premiums and out-of-pocket costs for older and 
sicker patients or erosion of current law essential benefits and 
consumer protections.
 expand competition and consumer choice by offering a public insurance 
                     option in all exchange markets
    Many patients shopping for exchange-based coverage face a dwindling 
number of insurance plans from which to choose. To broaden consumer 
choice and invigorate market competition, Congress should establish a 
public option. Possible approaches might include a buy-in program for 
traditional Medicare or Medicare Advantage, Medicaid, or other public 
health programs to compete with private exchange-based plans. For 
example, depending on how it is constructed, a Medicare buy-in program 
limited to individuals age 50-64 could help expand access to physicians 
and other health care professionals and improve continuity of care for 
those transitioning to Medicare and reduce premiums for individual 
market exchange-based plans, according to the American Academy of 
Actuaries.\8\ Whatever the policy option adopted, Congress must ensure 
that reimbursement for physicians' office and hospital visits and other 
evaluation and management services are no less than the rates paid 
under traditional Medicare for comparable services.
---------------------------------------------------------------------------
    \8\ http://election2016.actuary.org/sites/default/files/Medicare-
Buy-In-Option.pdf.
---------------------------------------------------------------------------
    We appreciate the opportunity to provide recommendations on 
strengthening the health insurance market, and stand ready to work with 
the committee on the development of any reforms where our experience 
and expertise could be of value.

                                 ______
                                 
        The American Congress Of Obstetricians And 
     Gynecologists, Women's Health Care Physicians,
                                     Washington Dc,
                                                    August 2, 2017.
Hon. Lamar Alexander, Chair,
Health, Education, Labor and Pensions Committee,
U.S. Senate,
Washington, DC 20510.

Hon. Patty Murray, Ranking Member,
Health, Education, Labor and Pensions Committee,
U.S. Senate,
Washington, DC 20510.

    Dear Chairman Alexander and Ranking Member Murray: The American 
Congress of Obstetricians and Gynecologists (ACOG), representing more 
than 58,000 physicians and partners dedicated to improving women's 
health, thanks you for your leadership and commitment to finding 
sensible bipartisan solutions to improve our Nation's health care 
system. We are eager to work with you and appreciate your approach, 
including transparency and opportunity for public input.
    ACOG is the leading authority on women's health. For more than 65 
years, the US Congress has sought out our moderate voice and our 
commitment to ensuring public policy based on facts, science, and 
evidence-based medicine. We are devoted to ensuring the patients our 
members serve have access to affordable, high-quality, evidence-based 
care.
    We welcome continued reform of our health care system. The 
Affordable Care Act is responsible for landmark women's health gains 
that are now part of the fabric of our society. Reform efforts must not 
result in a loss of coverage or turn back the clock on women's health. 
The goal of any health reform effort must be to continue and expand 
access to safe, affordable, quality care, and reduce health care costs.
    Thank you for putting partisan politics aside to seek real 
solutions for the benefit of your constituents, and our patients. We 
look forward to working closely with you and invite you to contact me 
or ACOG Federal Affairs Director, Rachel Tetlow at [email protected]. or 
202-863-2534, at anytime.
            Sincerely,
                               Haywood L. Brown, MD, FACOG,
                                                         President.
                                 ______
                                 
                Testimony by Margaret Murray, CEO, ACAP
    Chairman Alexander, Ranking Member Murray, and Members of the 
committee: The Association for Community Affiliated Plans (ACAP) thanks 
you for the opportunity to comment on the committee's efforts to 
stabilize the Marketplaces. ACAP is an association of 60 not-for-profit 
and community-based Safety Net Health Plans (SNHPs) located in 29 
States. Our member plans provide coverage to more than 20 million 
individuals enrolled in Medicaid, CHIP, Medicare Special Needs Plans 
for dually eligible individuals, and the Marketplaces. In 2017, 17 of 
ACAP's SNHPs offered qualified health plans (QHPs) to over 700,000 
enrollees in the Marketplaces.
    Looking to 2018, ACAP's SNHPs are in an untenable position of 
facing significant uncertainty. As historically Medicaid-focused plans 
working to improve the health and well-being of lower-income and 
vulnerable populations, ACAP's plans are committed to remaining in the 
Marketplaces wherever possible. Many ACAP plans are part of integrated 
delivery systems with robust safety net provider networks including 
public hospitals, children's hospitals, and community health centers. 
As such, SNHPs are uniquely situated to manage care for Marketplace 
enrollees--many of whom churn between Medicaid and the Marketplaces as 
income levels fluctuate. ACAP members have also stepped up to fill the 
bare counties in at least two States.
    However, because of the significant uncertainty facing the 
Marketplaces, three ACAP plans have announced plans to withdraw their 
QHP products altogether. Still others are waiting to see what happens 
in Washington before signing their final QHP agreements on September 
27th, 2017. Their final decision will likely be determined by the 
outcome of this committee's efforts as well as ongoing guidance from 
the Administration. To date, the constant uncertainty around rules 
moving forward is the single biggest hindrance to plan participation, 
and those that have left the Marketplaces have stated they would like 
to re-enter in the future, once there is greater stability. As Medicaid 
plans owned in many cases by safety-net parent companies, the risk 
posed by current instability is simply greater than they can take on 
without endangering their Medicaid lines of business.
    Accordingly, ACAP has developed the following set of 
recommendations to stabilize the individual market for the committee's 
consideration.
                      fund cost-sharing reductions
    It will come as no surprise to Members of the committee that SNHP's 
single greatest source of concern at present is the lack of certainty 
surrounding repayment of cost-sharing reductions (CSRs) to plans. 3 in 
5 of ACAP plans' Marketplace enrollees receive CSRs, which totaled 
nearly $130 million in 2015. Cost-sharing reductions are simply a pass 
through to low-income consumers to enable them to afford coverage, yet 
CSR payments account for approximately 5 to 10 percent of Marketplace 
plan premiums, and ten to 15 percent of premiums for Safety Net Health 
Plans in particular.\1\ Issuers designed plans and contracts for 2017 
with the understanding that CSR payments would be made. Without 
congressional action to fund CSRs for the rest of 2017, issuers will be 
forced to reevaluate their ability to participate in the Marketplace 
for the rest of year as well as future years.
---------------------------------------------------------------------------
    \1\ Milliman, 2017. Cost-Sharing Reduction Plan Payments Under the 
ACA http://zz4d3fkhud1neijc8ukrnazz-wpengine.netdna-ssl.com/wp-content/
uploads/2017/02/CSR-Funding-White-Paper.pdf.
---------------------------------------------------------------------------
    A mid-year loss of CSR funding would likely result in mid-year 
market withdrawals by issuers that cannot sustain such losses. 
Additionally, looking to 2018, ACAP plans have estimated they would 
need to raise rates an additional 13 to 23 percent to compensate for a 
loss of CSRs. In addition, the Congressional Budget Office (CBO) has 
estimated that the increased rate burden on silver-level plans in 
particular will lead to approximately $6 billion in increased Federal 
spending on Advanced Premium Tax Credits (APTC) in 2018 alone, with 
$194 billion in increased Federal spending by 2026.\2\
---------------------------------------------------------------------------
    \2\ The Congressional Budget Office (CBO). 2017. The Effects of 
Terminating Payments for Cost-Sharing Reductions. https://www.cbo.gov/
system/files/115th-congress-2017-2018/reports/53009-
costsharingreductions.pdf.
---------------------------------------------------------------------------
    Given that House v. Price is likely to remain unresolved in the 
near future, and the month-by-month outlook of the Administration on 
whether to continue funding the payments, we call on Congress to take 
action to guarantee an extension of CSR funding prior to the September 
27th 2018 QHP agreement deadline.
  enforce the individual mandate or adopt an equally strong coverage 
                               incentive
    It is no secret that the individual mandate has been the least-
popular provision of the Affordable Care Act. However, it is also the 
lynchpin that makes the popular market-rule protections feasible. 
Popular market rules, such as the prohibition on pre-existing condition 
exclusions and guaranteed issue require robust consumer participation 
to ensure a stable Marketplace. The individual mandate or other equally 
compelling incentives must be present in order to prevent adverse 
selection, where consumers wait until they become sick to purchase 
coverage. This would force insurers to raise prices or leave the 
market--ultimately leading to a death spiral.
    ACAP recently contracted with an actuarial firm, the Wakely 
Consulting Group, to evaluate alternatives to the individual mandate 
and determine what other options might have a similar impact on the 
risk pool as the mandate. The Wakely Consulting Group evaluated a 
variety of options, including late enrollment penalties, escalating 
penalties, waiting periods, underwriting, auto-enrollment, increased 
outreach, and increased subsidies and concluded that without a 
combination of other policies and increased financial contributions 
from the Federal Government, there is no actuarial equivalent to the 
individual mandate as far as balancing the risk pool. (See Appendix A 
for the report from the Wakely Consulting Group.)
    Accordingly, we call on Congress to work with the Administration to 
enforce the current individual mandate until and if at any point in 
time another equally strong alternative is developed.
                eliminate non-compliant coverage options
    The proliferation of non-compliant plans, such as grandmothered, 
grandfathered, and short-term limited-duration plans has had a 
significant effect on the risk pool; the existence of these plans has 
served to remove healthy enrollees from the single Marketplace risk 
pool, raising premiums for everyone who seeks to purchase coverage 
through the Marketplaces.
    In addition to the dilatory impact on the risk pool, short-term, 
limited-duration plans and many grandmothered and grandfathered 
``transitional'' plans do not offer adequate coverage for consumers. 
While they may be cheaper for some consumers, we remain concerned about 
medical underwriting, coverage for pre-existing conditions, and a slim 
benefit package.
    We believe that efforts from some Senators to expand short-term, 
limited-duration plans would have a truly catastrophic impact on the 
individual market risk pool. These coverage options simply pull healthy 
consumers from the Marketplaces, thus making the risk pool sicker and 
driving up QHP premiums, with the ultimate effect of a death spiral and 
additional issuer exits from the Marketplaces.
               ensure comprehensive, affordable coverage
    ACAP's member plans are dedicated to ensuring that coverage in the 
individual market is both comprehensive and affordable. Some recent 
proposals would advance this aim, where others would not. Specifically, 
ACAP supports changing the age rating bands from 3:1 to 5:1, which will 
allow issuers to offer lower priced options to young enrollees, thus 
improving the risk pool.
    However, this change must be coupled with tax credits structured by 
both age and income so as not to adversely impact older, poorer adults. 
Likewise, we believe coverage should truly be meaningful. Proposals 
that would limit benefits significantly--such as a complete repeal of 
Essential Health Benefits or greater move to catastrophic coverage 
options--would do little to provide comprehensive coverage for those 
who need it. Accordingly, these changes may not be appropriate for a 
short-term stabilization package impacting plan year 2018, but rather 
for future consideration.
                improve risk adjustment transfer formula
    An additional change that ACAP would recommend that may also be 
more appropriate over the longer-term would be to improve the risk 
adjustment program. While CMS has made great strides working to improve 
the program administratively, however, ensuring that the program works 
well and does not unduly advantage particular issuers is key to 
ensuring a stable Marketplace. Accordingly, ACAP believes that Congress 
should consider a statutory change that would permit States to adjust 
the geographic risk adjustment areas, rather than requiring a statewide 
risk pool. This way, plans' risk adjustment transfer formula would 
assess charges or payments across competitors in the same market area--
rather than statewide. ACAP believes that States are best able to 
determine appropriate geographic market areas for risk pooling and 
whether or not a statewide risk pool is appropriate.
            state determination of appropriate grace periods
    As is the case for many other insurers, a large portion of SNHP 
enrollees are enrolled for less than the full 12-month period. Owing to 
the statutory requirement that enrollees be provided coverage even if 
they don't pay their premiums, some enrollees game the system by simply 
not paying a full year's worth of premiums. Enrollees may front-load 
their care and then not pay their premiums for the balance of the year 
(sometimes even just for the last 90 days of the year), only to sign up 
again at the next open enrollment period--effectively having coverage 
if needed but without paying premiums if coverage is not needed. This 
impacts a QHP's risk score, drives up premiums, and creates significant 
hardships on QHPs, particularly small health plans. While CMS has 
worked to mitigate this problem by tightening Special Enrollment 
Periods (SEPs) and increasing SEP verification, ACAP urges Congress to 
permit States to determine a more appropriate grace period timeframe 
than 90 days.
                               conclusion
    In conclusion, ACAP thanks you for the opportunity to provide 
feedback to the committee and for your efforts to stabilize the health 
insurance Marketplaces. ACAP and its member plans are dedicated to 
serving Marketplace enrollees and we appreciate the committee's support 
in doing so. We are particularly pleased by the bipartisan nature of 
this effort and look forward to providing Senators with additional 
feedback or guidance. Please contact Heather Foster, Vice President of 
Marketplace Policy ([email protected]. or 202-204-7510) with 
any questions or for additional information.
                                 ______
                                 

                               Appendix A

                                 Wakely

               Association for Community Affiliated Plans

          evaluation of alternatives to the individual mandate
                           executive summary
    Wakely was retained by the Association for Community Affiliated 
Plans (ACAP) to develop an educational paper describing approaches to 
mitigating adverse selection in the individual health insurance 
market.\3\ Other uses may be inappropriate.
---------------------------------------------------------------------------
    \3\ If this paper is distributed to outside parties, the paper 
should be distributed in its entirety. Anyone receiving this paper 
should retain their own experts in interpreting its contents. The 
opinions expressed in this paper are those of the authors and do not 
necessarily reflect those of Wakely.
---------------------------------------------------------------------------
    The Affordable Care Act (ACA) enacted large changes to the health 
insurance market, particularly the individual market. The changes to 
the individual market included three intertwined policies or pillars. 
The first pillar outlawed discrimination against individuals on the 
basis of health. For the first time, in every State, individuals with 
pre-existing conditions could purchase insurance at the same rates as 
those who do not. The second pillar consisted of subsidies to help low-
income enrollees afford the coverage. The final pillar was a 
requirement for all Americans who can afford coverage to purchase 
coverage (the ``mandate''). If individuals had the option to only 
purchase coverage when they got sick, the individual market would 
become prohibitively expensive. In a world of guaranteed issue, a 
mechanism to ensure sufficient people enroll in coverage to prevent 
adverse selection is necessary.
    Since the beginning, the mandate has been among the least popular 
and most controversial aspects of the Affordable Care Act. This has 
created a conundrum. The ban on discriminating against pre-existing 
conditions, which is among the most popular aspects of the ACA, is only 
possible if a policy like the mandate exists. This paper will examine 
the mandate from an actuarial and policy perspective. It will then 
examine alternatives to the mandate and their relative effectiveness at 
minimizing market destabilization and premium spikes. A number of 
policies have been put forth as alternatives to the individual mandate 
that could potentially maintain or improve the current level of adverse 
selection in the individual market. These policies can broadly be 
categorized into different forms of sticks (late enrollment penalties, 
delayed enrollment, etc.) and carrots (better outreach or larger 
subsidies). This paper evaluates multiple potential alternatives to the 
individual mandate.
    Our review of historical experiences and literature for related 
programs and policies shows that to date no alternative has been found 
to be both as effective as the individual mandate and costs less to the 
government. Policy makers thinking about repealing or changing the 
individual mandate must consider the ramifications to the risk pool and 
to premiums. It is likely only a combination of policies and greater 
government expenses could produce similar risk pool effects to the 
current mandate.

                                Table 1

  summary of alternatives w/ primary advantage(s) and disadvantage(s)

 
----------------------------------------------------------------------------------------------------------------
            Policy Options                   Description               Advantage               Disadvantage
----------------------------------------------------------------------------------------------------------------
Late Enrollment Penalties............  Premium surcharge for    Provides incentives to   Higher premiums may be
                                        non-continuous           maintain continuous      a barrier for entry
                                        coverage.                coverage.                into risk pool if
                                                                                          coverage is lost
Escalating Enrollment Penalties......  Premium surcharges for   Provides escalating      Escalating higher
                                        non-continuous           incentives to maintain   premiums may be
                                        coverage increase        continuous coverage.     barrier for entry into
                                        relative to amount of                             risk pool if coverage
                                        time without coverage.                            is lost
Enrollment Delay.....................  Individuals with non-    Provides incentives for  Likely not strong
                                        continuous coverage      continuous coverage..    enough to prevent
                                        would be barred for a                             deterioration
                                        period of time from                               entirely. Policy
                                        purchasing coverage.                              concerns with
                                                                                          preventing those with
                                                                                          life threatening
                                                                                          disease from gaining
                                                                                          coverage
Underwriting.........................  Individuals with non-    Provides incentives for  May destabilize ACA-
                                        continuous coverage      sick individuals to      compliant market.
                                        only eligible for non-   maintain coverage in     Complex and expensive.
                                        ACA-compliant plans      ACA-compliant plans.
                                        that require medical
                                        underwriting.
Auto-Enrollment......................  Individuals              Increases coverage as    Logistical hurdles to
                                        automatically enrolled   individuals need to      implementation.
                                        in coverage.             act to forego coverage.  Effectiveness unclear.
Increased Outreach...................  Provide greater funding  Increases awareness and  Requires Federal or
                                        for advertising and      enrollment.              State funding
                                        other outreach
                                        activities.
Increased Subsidies..................  Provide subsidies to     Improves affordability   Requires Federal or
                                        enrollees to reduce      of coverage which        State funding
                                        premium costs.           increases enrollment.
----------------------------------------------------------------------------------------------------------------

                              introduction
    The market reform rules were a key lynchpin in the success of the 
ACA. These rules prevent insurance companies from denying coverage or 
charging more to individuals with pre-existing conditions. In this 
environment, healthy individuals may decide not to purchase or delay 
purchase of insurance unless there is a requirement or incentive to do 
so; delaying coverage would not yield any penalties and paying premiums 
without medical needs has a cost. In effect, it would be rational for 
healthy individuals to delay purchasing insurance.
    If that were to happen, the risk pool would contain a greater 
proportion of sick people (also known as adverse selection). As adverse 
selection increases, premiums will proportionately increase to cover 
the increase in average claims costs. The increased premiums in turn 
make it less likely that healthy individuals will enroll and stay 
enrolled, which creates a feedback loop of higher premiums, causing 
greater adverse selection, which in turn again leads to higher 
premiums.
    The Congressional Budget Office (CBO) estimated that if the 
individual mandate were to be repealed, individual market enrollment 
would decrease by 6 million and premiums would increase by 20 
percent.\4\ Greater adverse selection begets higher premiums, which 
begets even greater risk selection. The extreme form of this cycle of 
adverse selection and higher premiums is known as a ``death spiral'' 
since it results in market collapse. Accordingly, Congress instituted 
the individual mandate as a key provision of the ACA to help ensure 
sufficient enrollment to mitigate the potential for such adverse 
selection.
---------------------------------------------------------------------------
    \4\ https://www.cbo.gov/budget-options/2016/52232.
---------------------------------------------------------------------------
             historical experience: the case of washington
    The State of Washington's individual market experience belies the 
idea that a death spiral scenario is purely theoretical. Washington's 
individual market experience in the 1990s demonstrates that an 
individual market with guaranteed issue, but without a mechanism for 
incentivizing healthy individuals to enroll, is at risk for 
catastrophic deterioration. In the early 1990s, Washington passed a 
bill that not only allowed any individual to purchase coverage (in ACA 
terms it required guaranteed issue), it also prohibited underwriting 
(rating based on health). The original bill also included a requirement 
to purchase insurance; however, the law was amended to drop the 
requirement to purchase insurance.
    The result of not including the mandate was disastrous for the 
state. Within 3 years, 17 of the 19 issuers had exited the market. 
Premera, one of the largest issuers in the state, raised premiums over 
75percent within 3 years.\5\ Within 5 years of repealing of the mandate 
without a replacement, it was not possible to purchase a new individual 
market policy as every issuer had pulled out.\6\ In the case of 
Washington, the mandate-less individual market produced a legitimate 
death spiral. Washington was not unique. In the 1990s, eight States \7\ 
experimented with individual markets that had guaranteed issue but did 
not require insurance coverage. Without fail, each of the States 
experienced severe premium spikes. While the ACA market subsidy 
structure provides insulation from the worst of the Washington 
experience, there is every reason to believe that a mandate-less 
individual market would have markedly higher premiums and lower 
enrollment than today's individual market.
---------------------------------------------------------------------------
    \5\ https://www.washingtonpost.com/blogs/ezra-klein/post/health-
reform-without-a-mandate-lessons-from-washington-state/2012/06/16/
gJQAosKghV_blog.html?utm_term=.13ffba15dd29.
    \6\ http://www.seattletimes.com/seattle-news/politics/dismantling-
of-states-health-reforms-in-1993-may-offer-lesson-for-obamacare-repeal/

    \7\ Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New 
York, Vermont, and Washington all adopted guaranteed issue and 
community rating in the 1990s. http://www.statecoverage.org/files/
Updated-Milliman-Report_GI_and_Comm_Rating_March_2012.pdf.
---------------------------------------------------------------------------
                     individual mandate in the aca
    To combat the potential for adverse selection, an individual 
responsibility requirement, often referred to as the individual 
mandate, was included as part of the ACA. The requirement has a tax 
penalty (assessed the following year) for individuals that can afford 
insurance but choose not to purchase coverage. The penalty was phased 
in between 2014 and 2016. In 2016, the penalty was the greater of a 
flat amount, for adults that was $695, or 2.5 percent of a person's 
household income above the tax return filing threshold for his/her 
filing status. That amount is pro-rated for each month without 
insurance (for each month without insurance the penalty is 1/12th of 
the total amount). The result of the policy is that incentives exist 
for healthy individuals to enroll. For coverage relating to the 2015 
benefit year approximately 6.6 million people paid about $3 billion in 
individual responsibility payments or about $457 per tax household.\8\ 
While data from penalties associated with the 2016 coverage year (i.e., 
the first year the mandate was fully implemented) are not yet 
available, there has been criticism of the mandate both from those 
objecting that it is overly prescriptive and from those advocating that 
the current mandate is insufficient to induce enough healthy 
individuals to purchase health insurance.
---------------------------------------------------------------------------
    \8\ https://www.irs.gov/pub/irs-soi/17sprbul.pdf.
---------------------------------------------------------------------------
    One simple potential solution to improving risk selection and 
reducing the number of uninsured is to increase the mandate penalty. 
The effects of the mandate should increase as the size or scope of the 
penalty increases. The American Academy Actuaries recently testified 
that ``a larger financial penalty would increase the incentives for 
individuals to enroll, especially as the amount of the penalty 
approaches the amount of the premium.'' \9\ Individuals that are 
uninsured for multiple years could have higher penalties than 
individuals that are uninsured for a shorter period. In this scenario, 
someone that is uninsured for 2 years would have penalties in excess of 
today's thresholds. Alternatively, exceptions to the mandate could be 
reduced. In 2015, approximately 12 million people claimed an exemption 
to avoid paying the mandate penalty.\10\ One way of reducing the number 
of people eligible for exemptions is to shorten the length of time 
individuals can be uninsured before being affected by the mandate. 
Individuals are currently exempt from the mandate if they are uninsured 
for only one or 2 months. This could be constricted such that an 
individual is only exempt if they are uninsured for one month or less. 
This restriction may increase take-up among individuals that lose 
employer-based coverage and thereby increase continuity of 
coverage.\11\
---------------------------------------------------------------------------
    \9\ http://www.actuary.org/files/publications/
Ways_and_Means_submitted %20_testimony_indiv_mandate_020617.pdf.
    \10\ https://www.cnbc.com/2015/07/20/irs-more-paid-obamacare-fine-
than-expected.html.
    \11\ For example, in 2014 Jonathan Graves and Pranita Mishra found 
that individuals that those that transitioned off employer coverage 
were no more likely to take up coverage than before the mandate existed 
in 2013. https://www.milbank.org/quarterly/articles/evolving-dynamics-
employer-sponsored-health-insurance-implications-forworkers-employers-
affordable-care-act/.
---------------------------------------------------------------------------
    The drawback of this approach is that the individual mandate has 
consistently been the least popular portion of the Affordable Care 
Act.\12\ Increasing penalties or reducing exemptions for life events 
may be politically unpalatable. This problem is currently exacerbated 
by the current lack of choices in issuers. While in the long term 
larger mandate penalties may improve risk selection and mitigate 
premium increases, the delay in seeing the effects may ultimately mean 
this is not a current potential policy avenue. The next section will 
discuss some of the potential alternatives alongside their benefits and 
potential pitfalls.
---------------------------------------------------------------------------
    \12\ http://www.kff.org/health-costs/poll-finding/kaiser-health-
tracking-poll-march-2015/.
---------------------------------------------------------------------------

                          Alternative Policies

                       late enrollment penalties
    In the recent debates on replacing the ACA, the idea of a 
continuous coverage requirement was considered as an alternative to the 
individual mandate. The idea, similar to the individual mandate, was 
that individuals would be required to have continuous coverage of 
health insurance. The difference is that rather than a tax penalty, 
individuals would be assessed a penalty in the form of higher premiums 
should they eventually buy insurance. The American Health Care Act \13\ 
included a provision in which individuals that could not demonstrate 
continuous coverage (defined as gaps of more than 63 days) would be 
charged 30 percent higher premiums if and when they ultimately 
enrolled. The threat of higher premiums in the future is thought to 
incentivize purchase of insurance immediately. The problem is that 
individuals with shorter decisionmaking time horizons may discount the 
future penalties as part of the immediate decisionmaking. Younger or 
healthier individuals, in particular, may think that the chances they 
need healthcare are low enough that the concept of future higher 
premiums may be insufficient to induce immediate action. Furthermore, 
lower-income individuals may not have the means to maintain continuous 
coverage.
---------------------------------------------------------------------------
    \13\ https://www.gpo.gov/fdsys/pkg/BILLS-115hr1628rh/pdf/BILLS-
115hr1628rh.pdf.
---------------------------------------------------------------------------
    Another problem that may arise is that when those individuals 
ultimately wish to purchase insurance, the higher premiums may, at that 
point, provide a disincentive from enrolling. This would be especially 
true for healthier individuals--further perpetuating the cycle. When 
the CBO modeled the continuous coverage provision, this counter-
intuitive phenomenon is exactly what their modeling predicted. The 
continuous coverage provision increased coverage in the immediate-term 
by one million enrollees, as individuals moved to avoid the potential 
of higher premiums. However, over the long term, the continuous 
coverage provision actually reduced enrollment (by 2 million) as the 
higher surcharge proved to be a barrier to enrollment. CBO noted that 
those that would be deterred would be relatively healthier.\14\ The 
continuous coverage provision, over the long term, was estimated to 
have a deleterious effect on the risk pool relative to no mandate.
---------------------------------------------------------------------------
    \14\ https://www.cbo.gov/system/files/115th-congress-2017-2018/
costestimate/americanhealthcareact.pdf.
---------------------------------------------------------------------------
                    escalating enrollment penalties
    Another alternative is escalating the penalties based on length of 
non-coverage. For example, individuals that would be uninsured for 2 
years would face a higher penalty than those that are uninsured for 1 
year. Escalating penalties could incentivize individuals from being 
uninsured for longer periods. However, the same dynamic for a surcharge 
for 1 year would apply to the escalating surcharges. The American 
Academy of Actuaries noted that penalties for lack of continuous 
coverage would need to be sufficiently high to induce compliance, but 
not too high to dissuade healthy enrollees from purchasing coverage. 
Escalating penalties can create too high of a barrier for healthy 
individuals to ultimately enroll.\15\
---------------------------------------------------------------------------
    \15\ http://www.actuary.org/files/publications/
Sustainable_Health_Insurance_Marketplace_042417.pdf.
---------------------------------------------------------------------------
                            enrollment delay
    Instead of monetary penalties for late enrollment, another 
alternative is delayed enrollment. This policy proposal would bar 
individuals that do not maintain continuous coverage from enrolling in 
coverage until after a waiting period. For example, those that go 
without insurance for a year could not sign up for insurance for 6 
months, even during open enrollment. This continuous coverage 
requirement was a part of the recent Senate health care bill 
(BCRA).\16\ The benefit to the risk pool from this proposal is that 
uninsured individuals that have high utilization needs would be barred 
from purchasing insurance for a defined period of time. Individuals, 
regardless of their willingness to pay higher premiums, would be unable 
to enter the individual market.
---------------------------------------------------------------------------
    \16\ http://www.beckershospitalreview.com/hospital-management-
administration/republicans-add-continuous-coverage-provision-to-
bcra.html.
---------------------------------------------------------------------------
    However, similar selection effects would occur with delayed 
enrollment as could occur due to late enrollment penalties. Healthier 
and younger individuals that place less value on having insurance (`I'm 
healthy why should I pay premiums') would also be less likely to value 
maintaining coverage. Many such consumers who are uninsured have 
already made a conscious decision that they can wait until the next 
open enrollment to purchase coverage. It is unlikely that adding an 
additional 6 months (or however long) to that timeframe would change 
such a calculus for a healthy consumer who has already made the 
decision to abstain from coverage rather than paying premiums. The end 
result is that healthy consumers will be forced to remain out of the 
risk pool for an even longer time. Sick consumers who are uninsured 
would also be kept out of the risk pool, which, while it might help in 
the short term, would lead to an even worse risk pool if they delay 
care until the waiting period ends and then are permitted sign up for 
coverage.
    A final consideration is the consequences of barring sick 
individuals from access to health insurance. The Commonwealth Fund 
estimated as many as 21 million individuals, including newborn or 
adopted children, could be locked out of coverage.\17\ For both 
political reasons (refusing insurance to individuals with cancer, for 
example) and for economic reasons (uncompensated care costs would 
increase), locking individuals that are sick out of insurance may not 
be a political bridge that policymakers want to cross.
---------------------------------------------------------------------------
    \17\ http://www.commonwealthfund.org/publications/blog/2017/jun/
      waiting-period-under-senate-aca-repeal-bill.
---------------------------------------------------------------------------
                              underwriting
    Another idea recently put forward as an alternative to the 
individual mandate is to allow a return to underwriting for individuals 
that do not maintain continuous coverage. Individuals that cannot prove 
that they had insurance throughout the year would be unable to purchase 
ACA-compliant coverage (likely for a defined period of time). Instead 
they would only be able to purchase underwritten insurance products 
that are priced according to individuals' health status. Individuals 
would have an incentive to maintain coverage rather than risk having 
higher premiums or be restricted to purchasing coverage with fewer 
benefits than ACA-compliant coverage. A second, non-compliant market 
would develop, consisting of plans that do not protect individuals with 
pre-existing conditions. The plans would be designed to have fewer 
benefits, higher cost-sharing, or premiums based on health status 
(i.e., underwriting). By limiting benefits for individuals with pre-
existing conditions or by discouraging those with pre-existing 
conditions with higher rates, the non-ACA plans would essentially be 
designed to attract healthy enrollees--as they were in the pre-ACA 
individual market.
    Similar to higher premium surcharges or delayed enrollment for 
those without continuous coverage, this potential ``penalty'' could 
initially increase ACA-compliant coverage purchase among a subset of 
individuals. However, one significant drawback of this approach is that 
the incentives for healthy and sick individuals diverge. Underwritten 
plans could offer lower premiums (relative to ACA-compliant plan 
premiums) for healthy consumers. In such an event, healthy individuals 
without continuous coverage would choose the non-compliant plans due to 
lower premiums. Conversely, consumers with pre-existing conditions or 
who are high-utilizers would choose ACA-compliant plans with more 
robust benefits that cover their conditions. For example, someone who 
is thinking about becoming pregnant will choose a plan that provides 
maternity coverage. Conversely, someone for whom maternity coverage is 
not necessary will avoid such a plan, since it will be cheaper. The 
differences in benefits and premiums between the two types of plans 
will directly lead to adverse selection issues and increased premiums 
in ACA-compliant plans.
    An additional concern is that healthy individuals who currently 
have ACA-compliant insurance may purposefully attempt to gain 
underwritten insurance, since those premiums would be cheaper. Both 
AHIP and the Blue Cross Association have noted that the existence of 
short-term, limited-duration plans, which do not have to comply with 
ACA regulations, may have hurt the risk pool.\18\ This scenario could 
lead to bifurcation of the market with healthy individuals enrolled in 
underwritten plans and unhealthy individuals in ACA-compliant plans. 
The American Academy of Actuaries recently wrote that the existence of 
two risk pools, one for ACA-compliant plans and one without, would 
destabilize the ACA-compliant pool.\19\ Individuals with pre-existing 
conditions could face prohibitively high premiums. Matt Fiedler, a 
health policy expert at the Brookings Institute, wrote: ``Creating 
parallel insurance markets that operated under very different rules 
would, as other analysts have noted, cause individual market enrollees 
to sort themselves across the two markets by health status.'' \20\ Such 
sorting would inevitably lead to much higher premiums in the ACA-
compliant market as healthier individuals without the protection of 
subsidies would exit the ACA-compliant risk pool. Underwritten or non-
ACA-compliant products competing with ACA-compliant products would 
inevitably produce higher premiums and less enrollment in ACA-compliant 
plans. The effect of this bifurcation could ultimately lead to only 
subsidized enrollees being able to afford coverage in the ACA-compliant 
individual market.
---------------------------------------------------------------------------
    \18\ https://www.bna.com/shortterm-health-plans-n57982082031/.
    \19\ http://www.actuary.org/files/publications/
RiskPoolingFAQ071417.pdf.
    \20\ https://www.brookings.edu/blog/up-front/2017/07/12/sen-cruzs-
proposed-change-to-senate-health-care-bill-would-undermine-
protections_for-enrollees-with-significant-health-care-needs/.
---------------------------------------------------------------------------
                            auto-enrollment
    Another alternative to the individual mandate is auto-enrollment. 
Auto-enrollment was discussed in Republican Senate working groups and 
among liberal advocates.\21\ Auto-enrollment would automatically enroll 
individuals into coverage and require individuals to take action to be 
dis-enrolled. By putting the default status as enrolled in coverage, 
healthier and younger individuals that have so far avoided signing up 
for coverage would be more likely to be enrolled. Auto-enrollment has 
been used for Medicare. For example, low income individuals are 
automatically enrolled in Medicare Part D. Within 6 months of 
implementation, 74 percent of the population was enrolled.\22\ Auto-
enrollment has also increased participation in programs such as 401(k) 
pensions. Research has found that auto-enrollment increased 
participation in defined contribution plans by over 50 percent.\23\ By 
relying on inaction rather than penalties, enrollment, especially among 
younger or healthier individuals, may be improved.
---------------------------------------------------------------------------
    \21\ https://www.vox.com/policy-and-politics/2017/5/22/15655782/
automatic-enrollment-health-insurance-gop.
    \22\ ibid.
    \23\ Fidelity Investments, ``Fidelity Perspectives: Evaluating Auto 
Solutions'' (2009).
---------------------------------------------------------------------------
    However, there are some potential pitfalls with the auto-enrollment 
policy, including operational constraints. There is no existing, 
reliable data base of those currently uninsured. Therefore, identifying 
the uninsured may prove difficult. Individuals' coverage status can 
also rapidly change, which can result in duplicate coverage. This is 
further complicated by dependents. A large number of the uninsured have 
or are dependents. For example, a family unit could have one spouse 
with insurance and one without. Attempting to create policies that 
ensure that families are on the same policy or, alternatively, that 
avoid double billing a family would be a monumental operational 
challenge. States and plans, in particular, will need to work to 
develop data bases and systems to address these operational 
constraints, which will take significant time, policy consideration, 
and operational work. Policymakers would also need to address a host of 
additional considerations, such as how to decide who would be enrolled 
with which insurance companies and into plans with which benefit 
designs, metal levels, and premiums.
    As the American Academy of Actuaries stated: ``Auto-enrollment, 
successful in increasing participation in retirement savings plans, has 
the potential to achieve high participation rates if logistical hurdles 
such as how to identify eligible enrollees could be overcome. The 
residual and transitional nature of the individual market could make 
those efforts especially difficult, however.''\24\
---------------------------------------------------------------------------
    \24\ http://www.actuary.org/files/publications/
Sustainable_Health_Insurance_Marketplace_042417.pdf.
---------------------------------------------------------------------------
    Beyond operational issues, there are theoretical reasons that auto-
enrollment may be less effective for the uninsured population than a 
Medicare population. Medicare Part D premiums generally represent a 
smaller percentage of income than premiums would generally be for ACA-
compliant coverage. High costs, as measured by a percent of an 
individual's income, make it less likely for a person to maintain 
coverage. Therefore, people may be more likely to opt out under ACA 
auto-enrollment than the Medicare Part D experienced showed.\25\ 
Jonathan Gruber estimated that the ACA with auto-enrollment would have 
approximately eight million more uninsured over the long term than the 
ACA with the mandate.\26\
---------------------------------------------------------------------------
    \25\ https://www.americanprogress.org/wp-content/uploads/issues/
2011/02/pdf/gruber_mandate.pdf.
    \26\ ibid.
---------------------------------------------------------------------------
                           increased outreach
    Ultimately the goal of the mandate and other alternative policies 
is to improve the risk mix and increase the number of individuals in 
the market. The Commonwealth Fund studied 2016 Open Enrollment to 
better understand what factors were most important in maximizing 
enrollment.\27\ Their research found that ``in-person outreach and 
enrollment assistance were critical to facilitating sign-upsa'' The 
Urban Institute noted that in 2016 there were approximately 6.9 million 
uninsured individuals that were eligible for Exchange tax credits and 
of that total, 3.2 million uninsured individuals were eligible for both 
tax credits and significant cost-sharing reductions.\28\
---------------------------------------------------------------------------
    \27\ http://www.commonwealthfund.org/publications/issue-briefs/
2016/jul/insurance-enrollment-aca-state-marketplaces.
    \28\ http://www.urban.org/sites/default/files/publication/79051/
2000691-Who-Are-The-Remaining-Uninsured-And-What-Do-Their-
Characteristics-Tell-Us-About_How-To_Reach_Them.pdf.
---------------------------------------------------------------------------
    Enrollment of even a portion of these remaining uninsured would 
have a positive effect on the risk pool and put downward pressure on 
premiums. Urban posits that additional outreach and enrollment efforts 
would be the most successful for these individuals. Increasing funding 
for outreach could ultimately provide a cost-effective way of improving 
the risk pool.
    Additional research had found a direct causal relationship between 
increased outreach and enrollment. Ben Sommers' et al analysis of State 
policies among low income enrollees found that application assistance 
was the strongest predictor of enrollment.\29\ In 2017, state-based 
marketplaces maintained or increased outreach efforts while the 
federally facilitated marketplaces reduced outreach efforts. State-
based marketplaces, relative to their Federal counter-parts, had more 
success increasing enrollment. As the Commonwealth Fund stated 
``Maintaining stable marketplaces with affordable premiums will likely 
require continued outreach by Federal and State authorities.''\30\
---------------------------------------------------------------------------
    \29\ http://content.healthaffairs.org/content/34/6/1010.short.
    \30\ http://www.commonwealthfund.org/publications/blog/2017/may/
2017-Federal-state-marketplace-trends-show-value-of-outreach.
---------------------------------------------------------------------------
    Recently, HHS announced a 72 percent cut in outreach spending, 
impacting both advertising and navigators.\31\ Given the ample 
statistical evidence on the relationship between outreach spending and 
enrollment gain, the reduction in outreach funding is likely to result 
in decreased enrollment and a worse risk pool. To compensate for 
decreased outreach, other policy levers to improve the risk pool may 
become more important.
---------------------------------------------------------------------------
    \31\ https://www.vox.com/2017/8/31/16236280/trump-obamacare-
outreach-ads.
---------------------------------------------------------------------------
                          increased subsidies
    Finally, increasing the number of individuals eligible for 
subsidies would likely increase enrollment. According to the Urban 
Institute, approximately 12.5 percent of the remaining uninsured (over 
3 million individuals) are ineligible for subsidies solely because 
their income is too high. The current tax credit subsidy has a steep 
cliff in its structure. Households with incomes above 400 FPL are not 
eligible for any subsidy. Additionally, given income fluctuations, 
there may be disincentives for individuals with incomes near the 
threshold from accessing premium tax credits because if they earn more 
than expected, they may ultimately have large tax liabilities. 
Increased subsidies would provide a ``carrot'' to enroll more 
individuals.
    As the American Academy of Actuaries noted, weaker sticks could be 
compensated by having stronger carrots.\32\ They note that increased 
subsidies, specifically targeting younger enrollees, could have 
benefits to the risk pool. Lower premiums for moderate and middle 
income families could be achieved by expanding tax credit eligibility. 
For example, the Century Foundation proposed a fixed dollar tax credit 
to individuals that do not meet the current subsidy eligibility 
requirement as one of the key fixes to the ACA.\33\ By reducing 
premiums for a larger pool of individuals, it would provide incentives 
for the previously uninsured individuals to enroll in coverage. The 
major drawback of increased subsidies is that such policies potentially 
create higher Federal costs than currently budgeted for.
---------------------------------------------------------------------------
    \32\ http://www.actuary.org/files/publications/
Sustainable_HealthI_nsurance_arketplace0_42417.pdf.
    \33\ https://tcf.org/content/report/key-proposals-to-strengthen-
the-aca/.
---------------------------------------------------------------------------
                               conclusion
    The individual mandate was included as part of the Affordable Care 
Act to prevent the individual market from the destabilization that 
characterized some State markets in the 1990s that attempted to have an 
individual market with guaranteed issue without a mandate. If 
policymakers wish to have an individual market that does not 
discriminate against those with pre-existing conditions, then policies 
are needed to incentivize healthy individuals to enroll in plans. 
Historical experience, such as Washington's experience in the 1990s, 
has demonstrated the damage that can be done to the individual market 
if the mandate were to be repealed without an effective replacement or 
if the mandate is not enforced moving forward. Alternative policies in 
the form of penalties for individuals that lack continuous coverage, 
from higher premiums to delayed enrollment, have some benefits but 
ultimately may not incentivize healthier individuals to enroll and, 
paradoxically, may actually serve as a barrier to enrollment. Auto-
enrollment has the potential to increase participation, but significant 
operational shortcomings may be difficult, if not impossible to 
overcome. Escalating mandate penalties would be more effective than the 
current mandate penalty; however, the political environment may not 
accommodate such ideas. Spending in the forms of better outreach or 
subsidies for middle income households may provide the appropriate 
``carrot'' for individuals to enroll but would require additional 
budget resources.
    Finally, the alternatives considered are not mutually exclusive. 
While further modeling is needed, it is possible that a combiof delayed 
enrollment penalties, increased tax credits for middle income 
individuals, and better outreach can produce similar risk pool outcomes 
to that of the individual mandate. Ultimately, the individual mandate 
appears be the most cost effective way, from a Federal budget 
perspective, to maintain a stable risk pool. However, policymakers may 
decide that greater flexibility is needed. To avoid replicating 
mistakes of the past and ensure a strong risk pool, a combination of 
policies may ultimately be required if the mandate is to be replaced.
                                 ______
                                 
                                                  October 19, 2017.
Hon. Lamar Alexander,
Chairman, Health, Education, Labor and Pensions Committee,
U.S. Senate,
Washington, DC 20510.
    Dear Chairman Alexander: I am writing to submit responses to 
questions posed by Senator Whitehouse for the record of the September 
14th Hearing on Stabilizing Premiums and Helping Individuals in the 
Individual Insurance Market for 2018.
    Thank you for the opportunity to elaborate on our testimony and 
provide the following response:
    Question 1. Which of these areas should be a priority for the HELP 
Committee going forward?
    Answer 1. Of the five areas noted, Marshfield Clinic Health System 
believes the following should be considered the top two:
        1. Advancing payment reform to encourage prevention and primary 
        care.
        2. Addressing the dramatic variations in care quality and 
        outcomes across States.
     In addition to the areas noted above, the committee should also 
look at adding a priority around supporting site of care innovation. 
Marshfield Clinic Health System is innovating in moving care out of 
expensive places of service, such as a hospital, to lower cost places 
of service that save health care costs while maintaining quality and 
improving patient experience.
    Question 2. What strategies would you suggest to lower costs and 
improve quality in these areas?
    Answer 2. Fee for service is deeply entrenched in the medical 
reimbursement methodology in the U. S. It's been said that the medical 
system's addiction to fee for service is as bad as or worse than the 
opioid epidemic. Some newer payment methodologies fall short, but they 
are beginning the process of linking quality to services. To be 
successful, payment methodologies need to inextricably link quality of 
care and efficiency of care to the reimbursement that is provided.
    Question 3. Is there innovative work in your States and communities 
that you would like to highlight?
    Answer 3. There are many innovations happening throughout Wisconsin 
that deserve being highlighted. Wisconsin is an incredibly competitive 
State both on care delivery and health insurance. To that end, below 
are two internal programs to highlight and one external program that 
show how, even in a competitive environment, organizations can come 
together to positively impact patient outcomes.
Pay for performance models: Security Health Plan and Marshfield Clinic 
have entered into several innovative pay for performance models that 
have improved the quality and reduced the cost of care for our shared 
consumers. Our Medicare Advantage pay for performance model 
incentivizes improvements in quality and has helped Security Health 
Plan maintain our 4.5 star status as measured by the Centers for 
Medicare and Medicaid Services. Few plans across the United States 
achieve a 4.5 or 5 star rating, but Security Health Plan has maintained 
this status for 7 years. The 4.5 star rating would not be possible 
without the aligned incentive created through our innovative payment 
arrangements.
Comfort and recovery suites: MCHS expanded its ambulatory surgery 
centers in Marshfield, Eau Claire and Wausau, Wisconsin to include 
comfort and recovery suites for post-surgical procedures performed in 
their ambulatory surgical centers. The comfort and recovery suites 
offer the same high quality, post-operative care received in a hospital 
but at a considerably lower cost. This approach has saved the MCHS 
insurance subsidiary, Security Health Plan, more than $3 million in 
just under 2 years and patient satisfaction is extremely high with an 
average rating between 4.5 and 5 on a 5-point scale.
Wisconsin Health Informatics Organization: The Wisconsin Health 
Information Organization (WHIO) is a non-profit organization dedicated 
to improving the quality, affordability, safety and efficiency of 
health care in Wisconsin. With its unique All-Payer Claims Data base, 
WHIO makes high quality, reliable, integrated data available to all 
stakeholders seeking to transform healthcare.
    WHIO's goals are to:

          Aggregate health care data to create a comprehensive, 
        reliable data source to be used by multiple stakeholders to 
        decrease unwarranted variations in efficiency, quality, safety 
        and cost;
          Improve the quality, cost, safety and efficiency of 
        health care in Wisconsin by partnering with providers, 
        purchasers and consumers;
          Inform and support provider, payer and purchaser 
        quality improvement and value-based initiatives; and
          Encourage consumer engagement by publishing usable 
        information.

    Marshfield Clinic and Security Health Plan apply advanced analytics 
to the WHIO information to lower costs and improve quality through 
collaborative solutions that minimize unwarranted variations in health 
care resource use.
Home Hospitalization: Marshfield Clinic Is submitting a proposal for a 
Physician-Focused Payment Model entitled ``Home Hospitalization: An 
Alternative Model for Delivering Acute Care in the Home'' for 
Physician-Focused Payment Model Technical Advisory Committee (PTAC) 
review. In the model physicians could provide hospital level care 
delivery to Medicare fee-for-service beneficiaries in their homes for a 
meaningful number of medical and surgical conditions. In a hospital at 
home model that we presently are involved in for commercial and 
Medicare advantage patients we have already demonstrated success 
through high quality care focused on superior outcomes, excellence in 
patient experience and lower health care costs.
    I considered it an honor to appear before the committee and would 
welcome the opportunity to serve as a resource for you and the 
committee at your discretion.
    Thank you for the opportunity to share our views. Please contact 
Brent Miller, Director of Federal Government Relations (202 756-5027) 
with any questions.
            Sincerely
                       Susan L Turney MD, MS, FACP, FACMPE,
     Chief Executive Officer, Marshfield Clinic Health System, Inc.
                                 ______
                                 
  RESPONSES BY MANNY K. SETHI, M.D. TO QUESTIONS OF SENATOR WHITEHOUSE
    Question. Following the HELP Committee's work to stabilize the 
individual market, I hope the committee will move on to other efforts 
to address cost and improve quality in our health care system.
    I believe the following areas are ripe for bipartisan 
collaboration:

        a. Improving patient safety by preventing medical errors and 
        healthcare-acquired infections;
        b. Addressing the dramatic variations in care quality and 
        outcomes across States;
        c. Identifying ways to reduce administrative overhead and 
        dispute, specifically the bureaucratic warfare between 
        insurance companies and providers over reimbursement;
        d. Ensuring that a patient's wishes are honored at the end of 
        his or her life; and
        e. Advancing payment reform to encourage prevention and primary 
        care.
    Which of these areas should be a priority for the HELP Committee 
going forward? What strategies would you suggest to lower costs and 
improve quality in these areas? Is there innovative work in your States 
and communities that you would like to highlight?
    Answer. Senator Whitehouse, thank you so much for the question. I 
agree with you that each of the issues that you raise are critical to 
solving our crisis of rising costs. I feel that the encouragement of 
prevention (e) is the most important to address cost and improve the 
quality of care. For too long, we have focused on treating disease 
rather than encouraging or promoting health. It is time that we shift 
our healthcare investments to get on the front side of major health 
problems before it's too late. For example, each dollar we invest in 
education of diabetic patients saves roughly ten dollars on the back 
end in preventing hospitalizations and associated costs.
    We must spend more time as a Nation educating patients about the 
benefits of pursuing a healthy lifestyle and helping our citizens to 
better understand how simple lifestyle decisions can dictate their 
health in the long term. Currently, healthcare in America is much too 
focused on disease.
    As you have suggested, if we shift our payment models to place a 
stronger focus on primary care, we could better align incentives with 
the direction we must take our healthcare.
                                 ______
                                 
   RESPONSES BY RAYMOND G. FARMER TO QUESTIONS OF SENATOR WHITEHOUSE
    Question. Following the HELP Committee's work to stabilize the 
individual market, I hope the committee will move on to other efforts 
to address cost and improve quality in our health care system.
    I believe the following areas are ripe for bipartisan 
collaboration:

        a. Improving patient safety by preventing medical errors and 
        healthcare-acquired infections;
        b. Addressing the dramatic variations in care quality and 
        outcomes across States;
        c. Identifying ways to reduce administrative overhead and 
        dispute, specifically the bureaucratic warfare between 
        insurance companies and providers over reimbursement;
        d. Ensuring that a patient's wishes are honored at the end of 
        his or her life; and
        e. Advancing payment reform to encourage prevention and primary 
        care.
    Which of these areas should be a priority for the HELP Committee 
going forwardWhat strategies would you suggest to lower costs and 
improve quality in these areas? Is there innovative work in your States 
and communities that you would like to highlight?

    Answer. Thank you, Senator. I completely agree that the next step 
for Congress must be to address the cost of health care. While 
stabilizing the markets is important to ensure there is access to 
coverage options for consumers, the biggest challenge facing the 
country is the ever-growing cost of health care. Reforming health 
insurance will not solve the underlying cost issue. It is long past 
time for serious, bipartisan discussions on how to improve health, 
enhance quality, and lower the cost of care.
    As to your specific suggestions, below please find my responses on 
behalf of the membership of the National Association of Insurance 
Commissioners:
        a. States, large employers, and insurance carriers are 
        experimenting with payment models to encourage patient safety 
        and prevent medical errors. These include penalties for re-
        admission, better reimbursement for prevention programs, and 
        increased oversight of care providers. Medicare and Medicaid 
        can play a major role in leading in this area, and have in many 
        cases.
        b. Enhanced data collection--including data from Federal 
        programs--and sharing of that data can improve care quality and 
        outcomes across the country. We must also ensure those that are 
        educating and training the providers also have access to the 
        latest data and have the resources to use it to improve 
        provider practices.
        c. States have been working to address issues like balance 
        billing disputes and fair compensation. According to a recent 
        report by The Commonwealth Fund, at least 21 States have 
        enacted some protections from balance billing, but more work 
        needs to be done. State regulators also remain concerned about 
        the administrative burdens placed on carriers as these lead to 
        increased costs for consumers. And we need to also look at the 
        regulatory burdens placed on providers. As the NAIC has said in 
        several comment letters, coordinating Federal and State 
        oversight would go a long way in this area.
        d. End of life legislation has been adopted in States like CA, 
        WA, OR and VT, but this is an extremely personal and sensitive 
        subject that should be reviewed carefully and with compassion 
        and consideration to those on all sides of the issue.
        e. The most successful insurance companies and employer plans 
        have developed creative payment systems that encourage 
        prevention, primary care, and consumer education and shopping. 
        Federal programs have also been part of this effort. 
        Congressional review of the successes, and failures, could help 
        spur further improvements.
    The NAIC is in the process of surveying States to gather 
information on programs that effectively reduce health care costs and 
improve quality of care. We would be happy to share that information 
with you and the committee when it is completed.
    I hope Congress will act quickly to stabilize the markets, which 
will then allow us to focus our attention on what must really be done 
to ensure the long-term viability of our health care system: bending 
the cost curve.
    The NAIC and I look forward to working with you on this all-
important task.
                                 ______
                                 
          QUESTIONS FOR THE RECORD FROM CHRISTINA POSTOLOWSKI
    Thankfully, the Affordable Care Act (ACA) has resulted in 
significant progress in reducing the uninsured rate among young people, 
cutting it from 28.8 percent to 14.6 percent as of 2016.\1\ But more 
can be done to ensure younger, healthier people can get covered. As I 
stated in my testimony, we need bipartisan efforts to further stabilize 
the individual health insurance markets by making clear that cost-
sharing reduction payments will be made, creating a permanent 
reinsurance program, and reversing cuts to enrollment promotion and 
assistance.
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    \1\ Data derived from US Census Bureau, American Community Survey 
1-year Estimates for 2010-2016, using American FactFinder, https://
factfinder.census.gov/faces/nav/jsf/pages/index.xhtml.
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    But health insurance, although a big part, is only one piece of the 
puzzle in making sure that our health care system works for all young 
people, as well as their parents, grandparents, and children. For 
example, in 2013, 17.1 percent of the nation's gross domestic product 
went toward health care,\2\ nearly 50 percent more than the second 
highest spending Nation, France.\3\ Health care costs can have a 
significant impact on the lives of young people and their families, 
both directly and indirectly.
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    \2\ D. Squires and C. Anderson, U.S. Health Care from a Global 
Perspective: Spending, Use of Services, Prices, and Health in 13 
Countries (Washington, DC: The Commonwealth Fund, 2015), http://
www.commonwealthfund.org/publications/issue-briefs/2015/oct/us-health-
care-from-a-global-perspective.
    \3\ Ibid.
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    Directly, young people need health care services, but may have to 
forego this care because of cost. Despite being thought of as ``young 
invincibles,'' young adults spend about $174 billion on health expenses 
every year, making up 12 percent of all health care expenses 
nationally.\4\ The most common expenses are for treatment for mental 
health conditions, followed by trauma-related disorders, chronic 
obstructive pulmonary disease/asthma, and childbirth.\5\ By far, 
childbirth accounts for the highest costs, $34 billion a year, for 
young adults.\6\ Even for those who do not need routine treatment or 
care, unexpected health care costs can be devastating. Without health 
insurance, for instance, non-surgical treatment for a broken arm can 
cost up to $2,500 or more while a typical appendectomy costs over 
$33,000.\7\ When the average young worker's income is $30,000 per 
year,\8\ even a routine injury can be financially devastating.
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    \4\ Tom Allison, How Millennials Use Their Health Insurance, 
(Washington, DC: Young Invincibles, 2016), http://younginvincibles.org/
wp-content/uploads/2017/04/how millenials use health are.pdf.
    \5\ Ibid.
    \6\ Ibid.
    \7\ Cost Helper Health, How Much Does a Broken Arm Cost?, http://
health.costhelper.com/broken-arm.html; Renee Hsia MD, Health Care as a 
``Market Good?'' Appendicitis as a Case Study, (Chicago, IL: Journal of 
American Medicine Association, 2012), https://jamanetwork.com/journals/
jamainternalmedicine/fullarticle/1151669.
    \8\ Young Invincibles' analysis of 2016 Current Population Survey, 
Annual Social and Economic Supplement, Median person income for 18-34 
year-old, 2016.
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    High health care costs also have major indirect effects on our 
generation. According to AARP, nearly one-in-four Millennials are 
family caretakers,\9\ many of whom care for aging parents who cannot 
afford long-term care, in-home assistance, or prescription drug costs 
even with Medicare or Medicaid. As costs go up, so too does economic 
hardship for young people who are working to support their loved ones 
and themselves. More generally, resources spent on health care are 
funds that cannot go toward other investments in our future such as 
higher education and workforce training.
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    \9\ Amy Goyer, Report: Millennials Now Almost 25% of Family 
Caregivers, (Washington, DC: AARP, 2015), http://blog.aarp.org/2015/06/
05/amy-goyer-caregiving-in-the-us-2015/.
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    Given these issues, I very much agree with the need to further 
address the cost of health care and improve the quality of our system. 
Doing so will ultimately help reduce premiums (which will help more 
young people enroll in health insurance) and result in lower out-of-
pocket costs (which will help more young people access the health care 
they need). Addressing underlying health care costs will also reduce 
Federal spending and save taxpayers money. I look forward to continuing 
to work with you and your staff to advance efforts to address health 
care costs and modernize our health care system in a way that reflects 
the needs of young adults across the country. With respect to the 
specific questions you have posed, I offer the following comments.
        a. Improving patient safety by preventing medical errors and 
        healthcare-acquired infections (HAIs). I urge Congress to build 
        upon the progress that has already been made in this area under 
        the ACA, which established the Hospital-Acquired Condition 
        Reduction Program (HACRP), the Hospital Readmission Reduction 
        Program (HRRP). These programs have shown early signs of 
        success by incentivizing hospitals to reduce their HAI and 
        readmission rates.\10\ The ACA's Prevention and Public Health 
        Fund also provided funding in 15 States for 1 year to reduce 
        hospital bloodstream infections. A study in the American 
        Journal of Public Health found that the funding was associated 
        with a 33 percent reduction in standardized infection ratios 
        for bloodstream infections in the States that received funding, 
        and that the return on investment from the funding was $1.10 to 
        $11.20 per $1 invested.\11\ The study also found that the 
        reduction in infections stopped after the funding ended.\12\ 
        Reducing HAIs and excess readmissions is critical: although 
        many HAIs are preventable, they affect thousands of patients 
        and cost tens of thousands of dollars to treat.\13\ Although 
        there is no ``silver bullet'' to address this issue, I urge 
        Congress to build on the ACA's progress in this area to improve 
        patient safety and reduce preventable dangers, such as HAIs.
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    \10\ Cristina Boccuti and Giselle Casillas, Aiming for Fewer 
Hospital U-turns: The Medicare Hospital Readmission Reduction Program 
(Washington, DC: The Henry J. Kaiser Family Foundation [KFF], 2017), 
https://www.kff.org/Medicare/issue-brief/aiming-for-fewer-hospital-u-
turns-the-Medicare-hospital-readmission-reduction-program/;. 
``Hospital-Acquired Conditions (HAC) Reduction Program,'' Eloquest 
Marketing, last updated June 9, 2017, https://
www.eloquesthealthcare.com/hospital-acquired-conditions-hac-reduction-
program/.
    \11\ Melanie D. Whittington, Cathy J. Bradley, Adam J. Atherly, 
Jonathan D. Campbell, Richard C. Lindrooth, ``Value of Public Health 
Funding in Preventing Hospital Bloodstream Infections in the United 
States,'' American Journal of Public Health 107, no. 11 (November 1, 
2017): pp. 1764-1769.
    \12\ Ibid.
    \13\ Understanding the Hospital-Acquired Condition (HAC) Reduction 
Program, Cook Medical, 2017, https://www.cookmedical.com/
interventional-radiology/understanding-the-hospital-acquired-condition-
hac-reduction-program/.
---------------------------------------------------------------------------
        b. Addressing the dramatic variations in care quality and 
        outcomes across States. Young adults should have access to the 
        same quality health insurance and health care no matter who 
        they are or where they live. Yet, there is often dramatic 
        variation in health care quality, costs, and outcomes across 
        States and even within a state. There are also significant 
        regional disparities in health care access and outcomes for 
        low-income people specifically.\14\ Studies show that low-
        income and Latinx individuals are more likely to be uninsured 
        or underinsured than those with higher incomes and are thus 
        less likely to have a usual source of or receive recommended 
        care.\15\
---------------------------------------------------------------------------
    \14\ C. Schoen et al, Health Care in the Two Americas: Findings 
from the Scorecard on State Health System Performance for Low-Income 
Populations, 2013, (Washington, DC: The Commonwealth Fund, 2013), 
http://www.commonwealthfund.org/publications/press-releases/2013/sep/
first-ever-scorecard-evaluates-how-well-state-health-care-systems
    \15\ Ibid; S. R. Collins et al, Who Are the Remaining Uninsured and 
Why Haven't They Signed Up for Coverage? Findings from the Commonwealth 
Fund Affordable Care Act Tracking Survey, February-April 2016, 
(Washington, DC: Commonwealth Fund, 2016 http://
www.commonwealthfund.org/publications/issue-briefs/2016/aug/who-are-
the-remaining-uninsured.
---------------------------------------------------------------------------
    The ACA provides a strong foundation upon which to continue to 
address these challenges, but more can and should be done. Research 
shows, for instance, that States that expanded their Medicaid program 
made some of the most significant gains in ensuring that their 
residents are able to get the health care they need.\16\ And people on 
Medicaid are happy with their coverage and access to care. In my State 
of Colorado, a recent statewide survey found that ``81.0 percent of 
Medicaid clients say their family's needs are being met by the health 
care system, higher than any insurance type, including employer-
sponsored insurance.''\17\ Beyond Medicaid expansion, there is a need 
to strengthen primary care, reduce reliance on emergency services, and 
improve care for individuals with chronic disease. To make real 
progress, these efforts should be targeted to low-income and other 
underserved communities to help improve population health.
---------------------------------------------------------------------------
    \16\ M. Mahon, New State Health Care Scorecard Finds Improvements 
in Access and Quality nationwide Following ACA's Major Coverage 
Expansions; States That Expanded Medicaid Saw Some of the Biggest 
Gains, (Washington, DC: Commonwealth Fund, 2017), http://
www.commonwealthfund.org/publications/press-releases/2017/mar/state-
scorecard-release.
    \17\ ``2017 Colorado Health Access Survey: The New Normal,'' 
Colorado Health Institute, last updated September 18, 2017, https://
www.coloradohealthinstitute.org/research/colorado-health-access-survey.
---------------------------------------------------------------------------
    Continued data collection and measurement on quality, cost, and 
access is critical to understanding why these variations exist and how 
to develop solutions to address this issue. Thus, I support continued 
research, evaluation, and analysis of health care access and value by 
Federal agencies such as the Agency for Healthcare Research and 
Quality, the Center for Medicare and Medicaid Innovation, and the 
Centers for Medicare and Medicaid Services.
        c. Identifying ways to reduce administrative overhead and 
        dispute, specifically the bureaucratic warfare between 
        insurance companies and providers over reimbursement. 
        Unnecessary administrative overhead and lengthy dispute 
        processes hurt all consumers through higher premiums. No 
        consumers, including young adults, should be put in the middle 
        of a dispute between an insurance company and a provider over 
        reimbursement or any other issue. Unfortunately, this happens 
        far too often, especially in the context of surprise medical 
        billing, which has affected nearly one-third of privately 
        insured Americans.\18\ This can occur even when a consumer has 
        done due diligence by checking to see if their hospital or 
        doctor is in-network only to find that someone who saw them 
        during the course of treatment, such as a specialist at the 
        hospital or an anesthesiologist during surgery, was out-of-
        network, resulting in higher than expected bills. In Colorado, 
        for example, State regulated insurance companies cannot require 
        consumers to pay out-of-network rates if they go to an in-
        network facility but unexpectedly see an out-of-network 
        provider. However, Colorado law does not prevent providers from 
        sending a bill for the out-of-network costs to consumers, 
        resulting in confusion and leading some consumers paying higher 
        bills that they are not required to pay.\19\ In addition, self-
        funded employer plans, which cover roughly 100 million people 
        nationally, are exempt from these types of State 
        regulation.\20\ To address this issue, Congress should consider 
        policies that better hold consumers harmless from high 
        unexpected out-of-pocket demands from providers. I also support 
        continued efforts begun under the ACA to address overhead and 
        consumer disputes. These include a strong medical loss ratio 
        for insurers and new internal and external appeals standards 
        that allow consumers to contest a claims denial.
---------------------------------------------------------------------------
    \18\ Consumer Reports survey finds nearly one third of privately 
insured Americans hit with surprise medical bills, (Washington, DC: 
Consumer Reports, 2015), https://consumersunion.org/news/consumer-
reports-survey-finds-nearly one-third-of-privately insured-americans-
hit-with-surprise-medical-bills/.
    \19\ ``A Consumer Guide to Surprise Medical Bills,'' The Colorado 
Consumer Health Initiative, accessed October 17, 2017, http://
cohealthinitiative.org/surprise-medical-bills.
    \20\ Loren Adler, et al., ``Stopping Surprise Medical Bills: 
Federal Action Is Needed,'' Health Affairs Blog, February 1, 2017, 
http://healthaffairs.org/blog/2017/02/01/stopping-surprise-medical-
bills-Federal-action-is-needed/.
---------------------------------------------------------------------------
        d. Ensuring that a patient's wishes are honored at the end of 
        his or her life. As noted above, nearly one in four Millennials 
        are caretakers for an older family member.\21\ As a result, 
        end-of-life care is an unexpected, but critical, issue for 
        young adults as well as their parents and grandparents. The 
        lack of a clear, unambiguous understanding of someone's final 
        wishes can result in the provision of costly and, in some 
        cases, inappropriate health care and a reduced quality of life. 
        Because most people are covered under Medicare at the end of 
        their life, roughly one-quarter of traditional Medicare 
        spending on health care is for services provided in the last 
        year of a Medicare beneficiary's life.\22\ For these reasons, 
        it is important for everyone to talk to their family members 
        and providers about the qualify of life they want to have and 
        the type and extent of the medical treatment they are willing 
        to get to prolong their life.
---------------------------------------------------------------------------
    \21\ Amy Goyer, Report: Millennials Now Almost 25 percent of Family 
Caregivers, (Washington, DC: AARP, 2015), http://blog.aarp.org/2015/06/
05/amy-goyer-caregiving-in-the-us-2015/.
    \22\ 10 FAQs: Medicare's Role in End-of-Life Care, Kaiser Family 
Foundation, 2016, https://www.kff.org/Medicare/fact-sheet/10-faqs-
Medicares-role-in-end-of-life-care/.
---------------------------------------------------------------------------
    Although I do not make specific policy recommendations at this 
time, I encourage Congress to help make sure that appropriate at-home 
end-of-life care is available to all who need it and to consider the 
recommendations on end-of-life care that were issued by the Institute 
of Medicine in 2014 in its report, Dying in America: Improving Quality 
and Honoring Individual Preferences Near the End of Life.\23\
---------------------------------------------------------------------------
    \23\ Dying in America: Improving Quality and Honoring Individual 
Preferences Near the End of Life, The Institute of Medicine, 2014, 
http://www.nationalacademies.org/hmd/Reports/2014/Dying-In-America-
Improving-Quality-and-Honoring-Individual-Preferences-Near-the-End-of-
Life.aspx.
---------------------------------------------------------------------------
        e. Advancing payment reform to encourage prevention and primary 
        care. The ACA made significant advances in encouraging the use 
        of primary and preventive care by, for instance, requiring 
        plans to cover annual physicals, screenings, and other 
        preventive care without cost-sharing. This has resulted in a 
        significant benefit to young adults who value these services 
        and are motivated to get the preventive care they need because 
        it is now covered at no extra cost. For example, a study in the 
        American Journal of Public Health found that the ACA resulted 
        in increased use by young adults of routine and preventive 
        care, and decreases in the number of young adults forgoing care 
        and experiencing delays in care as a result of high costs.\24\ 
        Other studies cited by the American Journal of Public Health 
        have also shown an increase in the percentage of young adults 
        who sought routine health care.\25\ The nonprofit that I work 
        for, Young Invincibles, has conducted focus groups and 
        trainings with young adults across the country on
---------------------------------------------------------------------------
    \24\ Charlene Wong et al, Changes in Young Adult Primary Care Under 
the Affordable Care Act, American Journal of Public Health, 2015, 
http://ajph.aphapublications.org/doi/10.2105/AJPH.2015.302770.
    \25\ Ibid. covered preventive services. What we have found, 
anecdotally, is that the fact that these services are now free with a 
health plan is the No. 1 motivating factor for young adults to get 
preventive care, followed by the piece of mind a preventive check-up 
can provide.
---------------------------------------------------------------------------
    Unfortunately, like many Americans, young adults are affected by an 
ongoing primary care physician shortage, especially in rural areas of 
the country.\26\ This is particularly true in States that have not 
expanded their Medicaid program.\27\ To address this, I urge Congress 
to consider policies that would incentivize primary care, particularly 
in rural areas. This may include reauthorizing and increasing 
investments in the National Health Service Corps,\28\ increases in 
Medicaid fees for primary care as was done temporarily under the 
ACA,\29\ and further addressing emerging models of primary care such as 
telemedicine and direct primary care. Additionally, many young adults 
rely heavily on safety net providers, such as federally Qualified 
Health Centers, community health centers, and local Planned Parenthood 
affiliates. Continued access to and funding for these types of primary 
care providers should also be a key consideration for Congress moving 
forward.
---------------------------------------------------------------------------
    \26\ Graves, John A., PhD et al, ``Role of Geography and Nurse 
Practicioner Scope-of-Practice in Efforts to Expand Primary Care System 
Capacity: Health Reform and the Primary Care Workforce, Medical Care, 
2016, http://journals.lww.com/lww-medicalcare/Abstract/2016/01000/Role 
of Geography and Nurse Practicioner.13.aspx.
    \27\ Ibid, 83.
    \28\ Sebastian Negrusa et al, National Health Service Corps--An 
Extended Analysis, Assistant Secretary for Planning and Evaluation, US 
Department of Health & Human Services, 2016, https://aspe.hhs.gov/
system/files/pdf/255496/NHSCanalysis.pdf.
    \29\ Stephen Zuckerman et al, Medicaid Physician Fees after the ACA 
Primary Care Fee Bump, (Washington, DC: Urban Institute, 2017), https:/
/www.urban.org/research/publication/Medicaid-physician-fees-after-aca-
primary-care-fee-bump
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    [Whereupon, at 12:22 p.m., the hearing was adjourned.]