    [Senate Hearing 117-727]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-727

                     HEALTH INSURANCE COVERAGE IN AMERICA:
                           CURRENT AND FUTURE ROLE OF
                                FEDERAL PROGRAMS

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

                                    HEARING

                                   before the

                              COMMITTEE ON FINANCE
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                OCTOBER 20, 2021

                                   __________

                    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Printed for the use of the Committee on Finance

                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    53-154--PDF                WASHINGTON : 2023

                              COMMITTEE ON FINANCE

                          RON WYDEN, Oregon, Chairman

    DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
    MARIA CANTWELL, Washington           CHUCK GRASSLEY, Iowa
    ROBERT MENENDEZ, New Jersey          JOHN CORNYN, Texas
    THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
    BENJAMIN L. CARDIN, Maryland         RICHARD BURR, North Carolina
    SHERROD BROWN, Ohio                  ROB PORTMAN, Ohio
    MICHAEL F. BENNET, Colorado          PATRICK J. TOOMEY, Pennsylvania
    ROBERT P. CASEY, Jr., Pennsylvania   TIM SCOTT, South Carolina
    MARK R. WARNER, Virginia             BILL CASSIDY, Louisiana
    SHELDON WHITEHOUSE, Rhode Island     JAMES LANKFORD, Oklahoma
    MAGGIE HASSAN, New Hampshire         STEVE DAINES, Montana
    CATHERINE CORTEZ MASTO, Nevada       TODD YOUNG, Indiana
    ELIZABETH WARREN, Massachusetts      BEN SASSE, Nebraska
                                         JOHN BARRASSO, Wyoming

                        Joshua Sheinkman, Staff Director

                    Gregg Richard, Republican Staff Director

                                      (II)

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee
      on Finance.....................................................     1
    Crapo, Hon. Mike, a U.S. Senator from Idaho......................     3

                            CONGRESSIONAL WITNESSES

    Scott, Hon. Rick, a U.S. Senator from Florida....................     5
    Warnock, Hon. Raphael, a U.S. Senator from Georgia...............     7

                                   WITNESSES

    Isasi, Frederick, J.D., MPH, executive director, Families USA,
      Washington, DC.................................................    10
    Holtz-Eakin, Douglas, Ph.D., president, American Action Forum,
      Washington, DC.................................................    11
    Collins, Sara R., Ph.D., vice president, health care coverage and
      access, The Commonwealth Fund, New York, NY....................    13
    Blumberg, Linda J., Ph.D., institute fellow, Urban Institute,
      Washington, DC.................................................    15

                   ALPHABETICAL LISTING AND APPENDIX MATERIAL

    Bennet, Hon. Michael F.:
        Prepared statement with attachment...........................    59
    Blumberg, Linda J., Ph.D.:
        Testimony....................................................    15
        Prepared statement...........................................    64
        Responses to questions from committee members................   102
    Collins, Sara R., Ph.D.:
        Testimony....................................................    13
        Prepared statement...........................................   107
        Responses to questions from committee members................   123
    Crapo, Hon. Mike:
        Opening statement............................................     3
        Prepared statement...........................................   129
    Holtz-Eakin, Douglas, Ph.D.:
        Testimony....................................................    11
        Prepared statement...........................................   130
        Responses to questions from committee members................   136
    Isasi, Frederick, J.D., MPH:
        Testimony....................................................    10
        Prepared statement...........................................   148
        Responses to questions from committee members................   154
    Scott, Hon. Rick:
        Testimony....................................................     5
    Scott, Hon. Tim:
        Submissions for the record...................................   157
    Thune, Hon. John:
        Letter from Phillip L. Swagel to Representative Jason Smith,
          October 19, 2021...........................................   164
    Warnock, Hon. Raphael:
        Testimony....................................................     7
    Wyden, Hon. Ron:
        Opening statement............................................     1
        Prepared statement...........................................   173

                                 Communications

    Americans for Prosperity.........................................   175
    Center for Fiscal Equity.........................................   183
    Consumers for Affordable Health Care.............................   188
    First Focus Campaign for Children................................   190
    Healthcare Leadership Council....................................   194
    HR Policy Association and American Health Policy Institute.......   197
    National Association of Health Underwriters......................   198
    National Retail Federation.......................................   200
    National Taxpayers Union.........................................   201
    Partnership for Employer-Sponsored Coverage......................   207
    Patients Rising..................................................   209
    Stanfield, Lee...................................................   211
    Western PA Coalition for Single Payer Healthcare.................   212

                     HEALTH INSURANCE COVERAGE IN AMERICA:
                           CURRENT AND FUTURE ROLE OF
                                FEDERAL PROGRAMS

                                  ----------

                          WEDNESDAY, OCTOBER 20, 2021

                                           U.S. Senate,
                                          Committee on Finance,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 10 a.m.,
    via Webex, in Room SD-215, Dirksen Senate Office Building, Hon.
    Ron Wyden (chairman of the committee) presiding.
        Present: Senators Stabenow, Cantwell, Cardin, Bennet,
    Casey, Whitehouse, Hassan, Cortez Masto, Warren, Crapo,
    Grassley, Cornyn, Thune, Portman, Toomey, Cassidy, Lankford,
    Daines, and Young.
        Also present: Democratic staff: Shawn Bishop, Chief Health
    Advisor; Elizabeth Dervan, Health Counsel; Eva Dugoff, Senior
    Health Advisor; Peter Fise, Health Counsel; Michael Evans,
    Deputy Staff Director and Chief Counsel; and Kristen Lunde,
    Health Policy Advisor. Republican staff: Caleb Graff, Senior
    Health Policy Advisor; Kellie McConnell, Health Policy
    Director; Stuart Portman, Senior Health Policy Advisor; and
    Gregg Richard, Staff Director.

       OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM
                 OREGON, CHAIRMAN, COMMITTEE ON FINANCE

        The Chairman. The committee will come to order.
        So many of the major health policy debates happening in the
    Senate today come down to the same basic challenge: health care
    is a human right. But without insurance coverage, you cannot
    exercise that right fully. The emergency room is no substitute
    for high-quality insurance and a doctor who takes your call.
        The committee, handling our Federal health programs and tax
    credits for health care, is right at the center of the effort
    to close the coverage gap and move the U.S. closer to universal
    health coverage. There is a lot of work to be done.
        And the fact is, when you look back at the events of the
    last few years, the historic change, for example, to eliminate
    discrimination against those with preexisting conditions will
    always be regarded as a hallmark of public health policy.
        Right now, we are working on crucial efforts; for example,
    to show that we can provide relief to people at the pharmacy
    counter who feel they are getting mugged, while at the same
    time promoting innovation. And we are on the cusp of a historic
    opportunity to provide coverage to seniors and the disabled
    through home and community-based services.
        So these are all a handful of the particularly promising
    opportunities for the days ahead. And we are going to start
    this morning with Senator Reverend Warnock, who has become the
    conscience of the Senate on the basic question of closing these
    coverage gaps.
        Reverend Warnock was a crusader for health care long before
    he was a member of the Senate. His home State of Georgia is one
    of a handful of States where Republican leaders have blocked
    the expansion of Medicaid. Instead of getting health coverage
    to many of the most vulnerable people in their State, they are
    clinging to a decade-old political grudge against the
    Affordable Care Act.
        That is one aspect of the health coverage challenge the
    committee is going to discuss today. The committee will also
    talk about building on what worked in the response to COVID-19.
        Earlier this year, reversing a Trump policy that restricted
    coverage to people during the pandemic, President Biden
    announced a special enrollment period for health insurance.
    Nearly 3 million people signed up for coverage. As part of the
    American Rescue Plan that passed in March, Democrats in
    Congress made signing up for that coverage more affordable.
    Democrats made coverage more affordable during the eye of the
    pandemic, and we did it by expanding the ACA's tax credits for
    health care.
        All in all, consumers who updated their health coverage
    during that special enrollment period saved on their net
    monthly premiums an average of 40 percent. Nearly two of three
    consumers could get a plan with zero premium now after tax
    credits. Extending those improvements, in my view, ought to be
    seen as a no-brainier, as a way to improve health coverage and
    put money back in the pockets of Americans.
        Now, in addition to expanding coverage, today's hearing is
    also an opportunity to discuss how to make that coverage more
    valuable to patients themselves. We Democrats believe deeply in
    updating the Medicare guarantee, because we know that seniors
    need dental care and vision and hearing assistance. It is
    unthinkable that these gaps in Medicare coverage are allowed to
    persist.
        Similarly, as I noted, we are working on a plan to let
    seniors and people with disabilities get the care they need in
    the place where they are most comfortable: at home. And Senator
    Casey, a valued member of the committee, deserves enormous
    credit for that effort.
        Now, before I wrap up, I want to deal with some of the
    distortions that are offered up with respect to health care.
    And I am going to deal with one kind of central issue that I
    think deserves special attention.
        None of the plans I have talked about will reduce the
    solvency of Medicare's hospital insurance trust fund at all--
    not one bit. Those benefits will have different sources of
    funding. They will not be part of Medicare Part A, which is
    what the trust fund covers.
        So, let's be clear and make sure the public understands it.
    None of the plans that we are talking about will reduce by one
    bit the solvency of Medicare's hospital insurance fund.
    Furthermore, Republicans trot out this same attack in all the
    advertisements and campaigns every time Democrats propose a
    significant improvement to health care--and it is never true.
    The Affordable Care Act, for example, extended the solvency of
    Medicare by 12 years, but Republican political campaigns
    falsely claimed just the opposite. And they continued to make
    the claim even after it was fully and repeatedly debunked.
        Also, we know that stated concerns by Republicans over
    Medicare's finances did not stop them from attempting to repeal
    the ACA, which would have devastated Medicare's finances had
    they succeeded. The Trump tax law even reduced payments into
    Medicare's trust fund. Just think about that one. That flawed,
    horrendous 2017 tax bill actually reduced payments into
    Medicare's trust fund.
        Now, we are all going to work together on the hospital
    insurance trust fund going forward. We are going to work in a
    bipartisan way. We are going to extend the olive branch to our
    colleagues to do that, rather than create another artificial
    crisis.
        The fact is, Democrats here in the Senate have been working
    constantly to uphold Medicare's finances, while upholding the
    promise of guaranteed benefits.
        So we have a lot to discuss today. We are going to have a
    lively hearing, I am sure. I want to thank particularly
    Reverend Warnock for being here to discuss some of these
    crucial access issues today, and we are looking forward to Q&A.
        Senator Crapo?
        [The prepared statement of Chairman Wyden appears in the
    appendix.]

                 OPENING STATEMENT OF HON. MIKE CRAPO,
                       A U.S. SENATOR FROM IDAHO

        Senator Crapo. Thank you, Mr. Chairman, and welcome to our
    witnesses. I would like to especially thank Senator Scott for
    coming today and for highlighting the critical role that States
    play in our health-care system, as well as how we can work to
    address affordability issues for all Americans. He has proven
    that he knows how to do it.
        As we look forward to our future in the health-care system,
    we have a responsibility to enhance care quality, to increase
    affordability, and to improve access to life-saving services
    and treatment options, from diagnostics to cutting-edge
    therapies.
        Any reforms we adopt moving forward should build on what
    works within our current system, in addition to addressing
    hurdles to high-quality, low-cost health care. We should look
    to the unprecedented success of Medicare Part D and Medicare
    Advantage, which empower consumers to choose what works best
    for them.
        In contrast with top-down, bureaucratic health-care models,
    these programs leverage choice and competition to expand
    coverage while lowering costs and enhancing care quality.
    Outside of Medicare, these same core principles have driven a
    wide range of promising reforms. Employers who provide coverage
    to roughly half of the population have adopted diverse tools
    and models to incentivize workers to seek out lower-cost,
    higher-quality care options.
        States have adopted waivers and flexibilities to tailor
    their Medicaid programs to best meet their needs and strategic
    goals. Our health-care system has substantial room for
    improvement, but these creative and market-based models provide
    a compelling blueprint for bipartisan reform.
        We have seen strong bipartisan backing for proposals to
    expedite Medicare coverage for cutting-edge devices, to avoid a
    telehealth access cliff for seniors, and to cap out-of-pocket
    spending under Part D. I have also worked with multiple members
    of this committee on both sides of the aisle to ensure Medicare
    beneficiary access to tests that detect dozens of cancers at an
    early stage, reducing mortality and allowing for proactive
    care.
        These types of policies have the potential to lower
    consumer costs while improving health-care outcomes.
    Unfortunately, some of the proposals currently under
    consideration risk moving in the opposite direction, with
    potentially dire unintended consequences for Americans. In
    addition to exacerbating inflation and weakening our economic
    recovery, the trillions of dollars in taxing and spending
    proposed by House Democrats would advance a range of policies
    that could hinder health-care outcomes and drive up costs, with
    taxpayers paying the burden.
        The proposed drug price controls, imposed under the guise
    of negotiation, impose a threat to our global leadership in
    biomedical innovation. A recent University of Chicago study
    found that the price-fixing policies included in the bill would
    slash research and development funding by up to 60 percent,
    reduce the number of new drugs approved in the next 20 years by
    as many as 342, and trigger a loss of life as much as 20 times
    what the COVID-19 pandemic has inflicted on our Nation.
        House Democrats have also proposed making their poorly
    targeted Obamacare premium subsidy hike permanent. This
    proposal does nothing to improve Obamacare plans or to address
    the underlying health-care costs.
        The administration has also taken a series of steps that
    risk constraining consumer choices, delaying or weakening
    coverage, and undermining innovation. A number of States that
    had devoted months, if not years, to crafting comprehensive
    improvements to their Medicaid programs saw their hard work
    thrown away overnight as the administration rescinded their
    waivers, seemingly for political purposes.
        This approach undermines the State-Federal partnership at
    Medicaid's core and creates tremendous uncertainty, in addition
    to eliminating opportunities for innovation. The administration
    also announced plans to roll back a popular rule aimed at
    expediting access to lifesaving medical devices for seniors.
    This regulation would be a game-changer for patients suffering
    from cancer, diabetes, and a broad range of other conditions.
    Disappointingly, it may never go into effect.
        I stand ready and eager to work with the administration and
    members of both parties to pursue policies that improve health-
    care outcomes, expand access to lifesaving drugs and devices,
    and drive costs down for both the consumer and the taxpayer.
    From telehealth expansion to outcomes-based payment
    arrangements, there are endless opportunities for us to come
    together on common ground and meet the needs of the American
    people. We should set aside needless tax hikes and wasteful
    spending and instead take advantage of these opportunities.
        Again, I thank our witnesses for their time, and I look
    forward to hearing from all of you.
        [The prepared statement of Senator Crapo appears in the
    appendix.]
        Senator Stabenow [presiding]. Well, good morning, and thank
    you very much, Senator Crapo. Our chair, Senator Wyden, has had
    to step out for a moment, so I will step in in his stead. We
    are going to hear from two colleagues, as we know: Senator
    Scott and Senator Warnock. I am going to pass the gavel back to
    Senator Crapo to introduce Senator Scott.
        Senator Crapo [presiding]. Well, thank you, Madam
    Chairwoman, and I appreciate that. I think Senator Scott really
    needs no introduction. The former Governor of Florida has
    extensive experience in working with these health-care issues,
    particularly the Medicaid and other issues, and showing how the
    kinds of solutions I have talked about in my opening statement
    work on the ground.
        So, I want to thank Senator Scott for coming and sharing
    his expertise and the experiences that Florida has shown us can
    work.

                     STATEMENT OF HON. RICK SCOTT,
                      A U.S. SENATOR FROM FLORIDA

        Senator Scott. Thank you. Thank you, Senator Crapo. Thank
    you for holding this hearing on the Federal Government's role
    in our health system. It is an important topic, and one that is
    deeply personal to me.
        Growing up, my family lived in public housing and often
    failed to have health insurance. My brother had a rare disease,
    and because my mom did not have health insurance, she had to
    drive to a charity hospital 4 hours away for his treatment. It
    was really hard on my mother.
        I am a business guy, and everything I do is goal-driven.
    Everything I do is driven by my mother--by the experience of
    watching my mom struggle to feed five children. It is with that
    in mind that I set the following goals for government's role in
    health care.
        We must ensure access to affordable health care. We must
    ensure families receive quality care. We must ensure that the
    available services for those truly in need are never inhibited
    by poor management of government programs. And we must never
    promise something we cannot afford.
        None of us would make promises to our children we could not
    fulfill. We should not over-promise to the American public.
    With those goal sets, we also need to abide by some governing
    principles. Without these guidelines, we cannot measure our
    success in properly serving the American people.
        First, we must acknowledge that more Federal control is
    never a solution. Our goal is to ensure American families have
    access to affordable health care that States individually
    choose.
        We believe we must empower patients first with information
    transparency. Think about how easy it is to find the price of
    milk or an oil change. Now, how easy is it to find the price of
    a mammogram or the price of a common blood test?
        The biggest fix for our health-care system is price and
    outcome transparency. Through price transparency, up-front
    pricing, and service and outcome measurements, consumers would
    be empowered to choose suppliers that best fit their needs, and
    providers would be driven to offer services based on price,
    quality, and service, like any other important amenity.
        How do we make choices now? We ask, is it in network? Is it
    close to our home or work? Those are not factors that drive
    quality, value, or lower prices. But real price transparency
    would be a paradigm shift away from providers and insurers to
    empowered consumers.
        Second, for those who are truly in need, we need to achieve
    better outcomes to target subsidies to the consumer. We already
    do this through Federal food assistance programs. The
    government does not run the grocery store or the farm. Stores
    compete against each other for business, and that competition
    drives down the cost of food, increases the quality of food,
    and gives customers the freedom to choose.
        Similarly in health care, it is critical that we do not
    allow government to be the provider or insurer for the American
    people. That is the role of the private market, and the private
    market can do it much better than government.
        We need more competition and less government control. The
    core to this is two concepts: consumer choice and price
    transparency--two concepts completely absent from health care.
    Of course we need to ensure that those receiving these benefits
    truly qualify. As with all government programs, I am a strong
    supporter of requirements that recipients who are not disabled
    are actively working or looking for work. We cannot allow
    people to simply ride along on government programs with no
    qualifiers. It is not fair to the people who are working.
        In addition, we cannot make promises to Americans that a
    country with nearly $30 trillion in debt, and staggering budget
    deficits, cannot fulfill.
        Third, we must preserve Medicare and Medicaid. I believe
    Medicaid is best when States are allowed flexibility. The
    Governors should have control over how their States spend their
    State tax receipts and serve their vulnerable populations.
        This is best done through per capita funding. It is a
    system that ensures total fairness and has complete
    flexibility. Let each Governor build a plan that reflects their
    priorities for vulnerable populations. There should be 50 State
    labs with custom plans for their priorities and populations.
        For Medicare, we must ensure that we do not allow this
    program to go insolvent. Part A is already forecast to go
    bankrupt by 2026. Part B, which pulls directly from the
    Treasury, is going to be a larger and larger stress to our
    Nation's budget.
        And let us remember, our Nation cannot meet its existing
    financial obligations. I have said about Social Security and
    other critical programs, we cannot allow cuts to the main
    services. This is just another example of the importance of
    eliminating reckless government spending and stopping the
    current path towards unsustainable debt we are on. This is the
    best way to protect Medicare.
        In conclusion, everyone should have access to affordable
    care. As I said in my opening, everything I do is driven by my
    mom's experience. We can and must set a course for government
    to have a productive role ensuring access to affordable care
    for every American family--families like mine growing up. But
    we have to do it by living within our means. Government's role
    should be absolutely limited. We cannot over-promise or under-
    deliver.
        I look forward to working toward the goals I have outlined
    here today with each of you, and I thank you for allowing me to
    speak in front of the Finance Committee. Thank you.
        Senator Stabenow [presiding]. Well, thank you, Senator
    Scott.
        We will now turn to our colleague from Georgia. And I will
    say, since coming to the Senate, that Senator Warnock has given
    a voice to so many Georgians who lack health insurance
    coverage, and I know he is here today to speak about the
    importance of expanding Medicaid in States like Georgia that
    have yet to expand under the Affordable Care Act.
        So welcome, Senator Warnock.

                  STATEMENT OF HON. RAPHAEL WARNOCK,
                      A U.S. SENATOR FROM GEORGIA

        Senator Warnock. Well, thank you so much, Senator Stabenow.
    And thank you for your leadership on so many issues. I am
    grateful to Chairman Wyden and Ranking Member Crapo for having
    me here today to talk about health coverage, an issue that is
    near and dear to my heart.
        In my home State of Georgia, there are 275,000 Georgians in
    the coverage gap--this is an equity issue--47 percent of whom
    are Black, 9 percent who are Latino; 63 percent are working
    families. There are still 500,000 Georgians who are uninsured,
    646,000 Georgians who would quality for free and affordable
    health coverage if Georgia joined the 38 other States and the
    District of Columbia in expanding Medicaid.
        So our mission today for me is very clear. Today we have
    the opportunity to uphold the promise we made 11 years ago when
    we passed the Affordable Care Act, and provide quality,
    affordable, and comprehensive health coverage to 4.4 million
    Americans. And every day that we delay is another day that the
    least among us continue to suffer, as we debate whether and how
    to expand health-care coverage here in a State where lives are
    literally caught in the crosshairs.
        We need to remember the faces of those who are affected by
    the policies we choose to create and not create, the human cost
    of the policy work we do here in the Senate. There are real
    consequences for real people when we fail to do what we were
    sent here to do.
        So today I just want to recount a story that I told on the
    Senate floor not long ago, and I want to lift up the life of a
    Georgian who fought to expand Medicaid as she and other
    Georgians lived in the coverage gap.
        Every time I talk about this issue, I think about Lorie
    Davis of Covington, GA. She was one of our heroes, and she
    spent much of her life serving her neighbors. She was a trauma
    nurse at the Grady Memorial Hospital, a hospital not far from
    my home and my church. I have seen the incredible work they do
    there every day.
        But while working as a health-care professional in Atlanta
    at Grady Hospital, Lorie was diagnosed with pelvic adhesive
    disease. The chronic pain associated with this condition
    eventually pushed her to leave the nursing profession. And
    after that, while also working to manage her own chronic
    condition, she struggled to maintain steady employment in
    restaurants.
        During this time, Lorie could not afford health insurance.
    She made too much to qualify for Medicaid, but not enough to
    qualify for subsidies and afford other insurance plans. I am
    hearing a lot of talk about ``choice.'' Choice is an illusion
    if you do not have the resources.
        This left Lorie unable to purchase health insurance because
    it was financially out of reach. She lived in the health-care
    coverage gap. And she went without coverage for years, relying
    on her own medical training and free health-care clinics to
    treat her chronic condition.
        And then in August 2020, Lorrie began feeling ill. Her
    condition got worse. And fearful of costs, she delayed seeking
    health-care coverage. Think about that. Lorie, who spent her
    life treating her neighbors in the Grady Memorial Hospital,
    living in the wealthiest Nation on the planet, delayed seeking
    health-care coverage because she could not afford it.
        It seems to me that, as members of this body, we should be
    ashamed that in the richest Nation in the world, and a country
    with some of the best health-care coverage in the world, some
    citizens would choose not to seek treatment because they fear
    they cannot afford it, the price tag of lifesaving care.
        So the next month, in September 2020, Lorie was admitted to
    the hospital with pneumonia. And while there, she learned she
    had lung cancer, a treatable condition had she received an
    earlier diagnosis. Put together, it was too much. And on
    September 17, 2020, Lorie passed away after her short battle
    with pneumonia.
        Lorie's story would have been different, could have had a
    different ending, if she lived in Oregon, if she lived in
    Idaho, or most of the other States represented here. Can you
    imagine Medicare in 38 States? Can you imagine Social Security
    in 38 States? Conventional Medicaid in 38 States? We cannot
    imagine it because it is the law of the land.
        Well, 11 years later, the Affordable Care Act is the law of
    the land. This is not about rewarding States with bad behavior.
    This is not about your State, or my State, a red State, or a
    blue State. This is about a very basic principle: in the United
    States of America, access to quality, affordable health care
    should not depend on where you live. And we should not allow
    State politicians to undermine that basic principle. Americans
    are literally dying for lack of health-care coverage. And so,
    let me be clear, as I wrap up. I am a little bit over time--
    forgive me, I am a Baptist preacher.
        I am not asking for additional benefits for Georgia, or
    better coverage for those in Georgia, or those in the 11 other
    non-expansion States. I am asking for basic fairness and
    equity. I am asking especially that we give the working poor--
    because largely that is what we are talking about in the
    coverage gap--give the working poor a chance.
        I am asking that every American everywhere in every State
    and every ZIP code have the same opportunity and the same right
    to live. Dr. King said that, of all the injustices, inequality
    in health care is the most shocking and the most inhumane. I
    believe that health care is a human right, and in America it
    ought to look that way in every single State.
        Thank you so much.
        Senator Stabenow. Well, thank you very much, Senator
    Warnock.
        We will proceed now with today's hearing. We have an
    excellent panel of witnesses who bring deep, substantial
    expertise on health-care coverage and Federal programs. I will
    introduce each one, and then we will proceed with their
    testimony.
        First, Frederick Isasi, who is the executive director of
    Families USA, a leading nonprofit, nonpartisan health-care
    advocacy organization providing a voice for consumers, focused
    on improving access to affordable health care in America. Mr.
    Isasi previously served in roles at the National Governors
    Association and the Advisory Board Company. Prior to that, he
    served as Legislative Counsel on Health Care for Senator Jeff
    Bingaman, a former member of this committee. And he holds a
    juris doctorate from Duke University School of Law, a masters
    in public health from the University of North Carolina, and a
    bachelor of science from the University of Wisconsin. So,
    welcome.
        Next we will hear from Dr. Douglas Holtz-Eakin, who is the
    president of the American Action Forum. From 2003 to 2005, Dr.
    Holtz-Eakin served as the Director of the Congressional Budget
    Office. He also has previously served on the Financial Crisis
    Inquiry Commission, as well as serving as the Paul A. Volcker
    Chair of International Economics at the Council of Foreign
    Relations. He earned his Ph.D. in Economics from Christian
    University and his bachelor of arts in economics and
    mathematics from Denison University. Welcome.
        Then we will hear from Dr. Sara Collins, who is the vice
    president for health-care coverage and access at the
    Commonwealth Fund. Dr. Collins directs the Fund's program on
    coverage and access, and has led several multiyear national
    surveys on national health insurance. Prior to joining the
    Commonwealth Fund, she served as associate director and senior
    research associate at the New York Academy of Medicine. Dr.
    Collins received her Ph.D. in economics from George Washington
    University and her bachelor's degree in economics from
    Washington University.
        And finally, we will hear from Dr. Linda Blumberg. Dr.
    Blumberg is an institute fellow in the Health Policy Center at
    the Urban Institute. Dr. Blumberg is an expert on private
    health insurance coverage, health-care financing, and health
    systems reform. Her recent work includes analysis of the
    implication of congressional proposals to repeal and replace
    the Affordable Care Act, as well as analysis of strategies to
    improve the ACA, and other policy proposals to expand health
    insurance coverage. Dr. Blumberg received her Ph.D. in
    economics from the University of Michigan--go Blue--and her
    bachelor of arts in economics from the University of Illinois.
        So let us start first with Mr. Isasi, and we welcome you.

               STATEMENT OF FREDERICK ISASI, J.D., MPH,
            EXECUTIVE DIRECTOR, FAMILIES USA, WASHINGTON, DC

        Mr. Isasi. Thank you very much, Senator Stabenow, Ranking
    Member Crapo, and members of the Finance Committee. Good
    morning, and it is an honor to speak with you. My name is
    Frederick Isasi. I am the executive director of Families USA.
    For over 40 years we have been a leading national nonpartisan
    voice for health care for consumers here in DC, in States, and
    State capitols.
        I have been asked to testify on the current State of health
    insurance and health-care affordability across the country. Let
    me start by saying, looking back over the last 15 years, we
    have made some real gains, with much more work left to do.
        For example, after the Affordable Care Act passed in 2010,
    20 million people gained health insurance, many for the first
    time in their lives, either through new Medicaid access or
    through health insurance marketplaces. Over the next 6 years,
    coverage numbers continued to go up until 90 percent of our
    Nation was insured.
        Then, in 2017, the Trump administration began slashing
    programs to help families find coverage, and authorized the
    sale of junk health insurance. All told, at least 2 million
    people lost coverage because of President Trump's policies.
    Most sadly, for the first time in over 20 years we watched as
    children lost coverage. Three-quarters of a million children
    became uninsured.
        And then the COVID-19 pandemic hit our Nation so very hard.
    As millions of Americans lost their jobs, about 6 million
    people lost their employer-sponsored coverage. Almost three-
    quarters were able to secure coverage through Medicaid or the
    marketplaces. In fact, the only measurable increase in the
    uninsured occurred in the States that have refused to extend
    Medicaid to their poorest residents.
        And let me describe to you what this experience is like for
    so many millions of Americans. Let me tell you about a very
    courageous woman named Della Young. In 2004, Della was
    diagnosed with lupus. This can be a really painful illness in
    which the immune system starts attacking the body. Patients are
    left with terrible weakness and fatigue, which without medical
    care worsens over time, and can even lead to organ failure or
    death. Because Della lives in Rhode Island and New York, she
    was able to access the critical services she needed through
    Medicaid and Medicare. Eventually, when her immune system
    attacked her kidneys, she was even able to receive an organ
    transplant.
        However, in 2015, this all changed. Della moved to Georgia
    to be with her mother battling cancer. Georgia is one of the 12
    States that has refused to extend Medicaid coverage to its
    poorest people. To help support herself, Della took a part-time
    job that included walking 4 miles, taking a train and two
    buses, so she could work her 4-hour shift.
        Unbelievably, despite being far below the poverty level,
    Della was ineligible to receive Medicaid because her income was
    over the State allowance by less than $100. Let me say that
    again. Despite being far below the poverty level, less than
    $100 stood between Della and her ability to continue to receive
    health care.
        So, what happened? Tragically, but predictably, Della could
    not afford to pay for the expensive medications, and she lost
    her kidney. Della was forced to return to a life of costly and
    exhausting dialysis. She has even less ability to work, and as
    each day passes she goes deeper and deeper into medical debt.
    Della's mom lost her battle with cancer, and Della is now
    relying on a GoFundMe page to finance her care.
        Simply put, it is a national disgrace. Nearly half of the
    adults in our Nation report they do not seek medical care when
    they need to because of cost. One-third indicate the cost of
    medical care interferes with their ability to secure basic
    things like food, heat, and housing. And a third, nearly 80
    million people, skip doses or cut medication because of cost.
    And let us not forget, despite spending so much more than other
    wealthy nations, just about $4 trillion, our moms and babies
    die at much higher rates, live shorter lives, and our health-
    care system is much more likely to fail us, leading to a
    patient's death.
        There is more to say, and it is good news. The American
    Rescue Plan you passed earlier this year made critical
    investments and improved the affordability of health care for
    hardworking families. As a result, nearly 3 million people
    signed up for coverage in the marketplaces, and, incredibly,
    average premium costs for these families were cut in half.
        And now, the Build Back Better legislation gives all of you
    an opportunity to finish the job you started. You can deliver
    for our Nation's families. Making premium subsidies permanent,
    ensuring kids have 12 months of eligibility in Medicaid, and
    authorizing a Federal Medicaid fallback, are three critical
    ways to deliver for our families.
        Tackling the outrageous and abusive prices charged by drug
    companies is also essential to making health care affordable,
    as is creating new dental, vision, and hearing benefits in
    Medicare. These are interrelated policies, and they are the
    greatest opportunity in at least a decade to help our Nation's
    families achieve health and economic well-being.
        On behalf of Della and the tens of millions of Americans
    struggling with health-care affordability, let us get this
    done. Thank you very much for the opportunity to testify on
    behalf of our Nation's families, and I really look forward to
    your questions.
        [The prepared statement of Mr. Isasi appears in the
    appendix.]
        Senator Stabenow. Thank you so much.
        We would now like to turn to Dr. Douglas Holtz-Eakin, and
    we appreciate your testimony.

     STATEMENT OF DOUGLAS HOLTZ-EAKIN, Ph.D., PRESIDENT, AMERICAN
                      ACTION FORUM, WASHINGTON, DC

        Dr. Holtz-Eakin. Senator Stabenow, Ranking Member Crapo,
    and members of the committee, thank you for the privilege of
    being here today to discuss health insurance coverage. I hope
    to make three brief points in my remarks, and I look forward to
    your questions.
        Point number one is that the vast majority of Americans are
    covered by insurance. Over half, 54 percent, have employer-
    sponsored insurance. About 18 percent each are in Medicare and
    Medicaid. And 10 percent are covered by the individual market.
        The second major point is that, with the onset of the
    pandemic, we saw government programs serve as a very effective
    safety net. With the coronavirus arrival on the North American
    continent, there were predictions of large-scale losses in
    employment. As we have seen, the overall uninsured rate has
    barely budged over that time. This is really attributable to
    both the fact that a lot of the job losses were concentrated in
    sectors of the economy where
    employer-sponsored insurances are more scarce--and so they were
    not covered to begin with--but also that Medicaid did its job
    and picked up some of those who lost their ESI.
        Then the third point, and the one I want to really
    emphasize, is that for about the past 15 years we have had a
    conversation about health-care reform, the need for affordable
    coverage for Americans, and for lower-cost, higher-quality
    care. And for the past 15 years, I think the coverage
    discussion has dominated the thinking about government
    programs. And I would like to urge you to shift the focus
    somewhat to make sure that those programs deliver high-value
    care; that we see cost controls and improvements in quality in
    the programs that are so important to Americans.
        For example, Medicare Advantage has been a great success
    story. About 41 percent of seniors are in MA, and it is
    forecast to be the majority of Medicare beneficiaries in the
    near future. It provides incentives for cost control because of
    its capitated features. Plus, with the improved quality
    metrics, especially outcome measures for high-quality care, MA
    can provide a vehicle for driving a better delivery system in
    the United States. MA offers individuals lots of choices for
    which plan they choose, and it is different in every part of
    the country because population and health care differs across
    the country. It is an excellent vehicle for driving high-value
    care in the U.S., and I urge you to focus on that.
        As was mentioned in his opening remarks by the ranking
    member, Part D is a fantastic program, but it is now 15 years
    old and could use some additional reforms and improvements.
    There have been a lot of proposals to redesign the Part D
    benefits to accomplish really two big objectives.
        The first would be to have a genuine cap on out-of-pocket
    cost and insulate our seniors from catastrophic costs from
    their prescription drugs. And the second would be to rearrange
    the reimbursement so that the taxpayers are no longer
    responsible for costs in the catastrophic region--that is about
    80 percent of the cost of Part D right now--but instead, have
    insurers and manufacturers of prescription drugs liable for the
    cost in that region. That would give them an incentive to
    negotiate and develop cheaper drugs that didn't drive people
    into the catastrophic region, and also for prescription drug
    plans to manage seniors so that they did not have utilization
    that landed them in the catastrophic region.
        That would enhance the basic features of private
    negotiation that have made the Part D program our most
    successful entitlement. Since Part D is also about 25 percent
    of drug spending in the United States, this would have
    spillover benefits across all of the economy and be a step in
    the right direction for preserving innovation, but reducing the
    cost of prescription drugs.
        And lastly, we have seen a lot of success in managed care
    organizations in Medicaid in many States across the country. A
    system of competition among Medicaid care organizations as a
    foundation for the future of Medicaid would offer the same
    promises as the system of competition in the MA plans and
    deliver higher-quality, higher-value care to the less affluent
    Americans.
        So I applaud you for having this hearing. Coverage remains
    something that people care a lot about, and appropriately so,
    but what that coverage delivers in the way of the value of
    health care, I think should be an increasingly large focus of
    the committee and the Congress as a whole.
        Thank you.
        [The prepared statement of Dr. Holtz-Eakin appears in the
    appendix.]
        Senator Stabenow. Thank you very much for your testimony.
        And we will now hear from Dr. Sara Collins, who I believe
    is with us electronically.

      STATEMENT OF SARA R. COLLINS, Ph.D., VICE PRESIDENT, HEALTH
     CARE COVERAGE AND ACCESS, THE COMMONWEALTH FUND, NEW YORK, NY

        Dr. Collins. Thank you, Madam Chair, members of the
    committee, for this invitation to testify on the current status
    of employer health insurance coverage. My comments will focus
    on trends in enrollment, worker costs of employer insurance,
    and policy options to improve workers' coverage.
        Employer health insurance is the backbone of the U.S.
    health insurance system, and it proved to be resilient during
    the pandemic. More than half the population under age 65, about
    163 million people, get their health insurance through an
    employer.
        This has changed very little over the last decade. Nearly
    all companies with 200 or more workers offer insurance to their
    employees. Small firms and employers in some sectors of the
    economy, including food services and retail, are far less
    likely to offer coverage.
        Only about 6 percent of working-age adults reported that
    they lost employer coverage during the pandemic. This is
    because the hardest-hit industries were the least likely to
    offer coverage, and many companies who furloughed workers
    continued to pay at least part of their workers' premiums.
        The Affordable Care Act's coverage expansions provided a
    safety net for people who lost employer coverage. The safety
    net was enhanced by Federal relief efforts such as the American
    Rescue Plan Act, enhanced marketplace subsidies, and
    marketplace special open enrollment periods. Two-thirds of
    workers who lost employer coverage gained other coverage.
    Still, nearly three in 10 became uninsured, which reflects
    ongoing holes in our coverage system and a lack of awareness of
    options.
        The key issue for many workers with employer coverage is
    affordability. The U.S. has a health-care spending problem in
    commercial insurance plans, and many people with employer
    coverage are paying the price. New data out this month indicate
    that per-person spending in employer plans grew by nearly 22
    percent over 2015 to 2019, outpacing bills, inflation, and GDP
    growth.
        The data show that prices paid for health-care services and
    prescription drugs were the primary drivers, and accounted for
    nearly two-thirds of overall growth. These high prices are
    associated with higher employer premiums. And, because
    employers share their premium costs with their workers, worker
    premium contributions and deductibles are also rising. Worker
    premium contributions and deductibles in employer plans
    together accounted for 11.6 percent of median household income
    in 2020, up from 9 percent in 2010.
        Across the country, premium contributions and deductibles
    were 10 percent or more of median income in 37 States in 2020,
    up from 10 States in 2010. High deductibles are a barrier to
    care and leave millions of people underinsured and exposed to
    medical bills.
        The Commonwealth Fund estimates that about one-quarter of
    people on employer plans have such high out-of-pocket costs and
    deductibles relative to their incomes that they are effectively
    underinsured. Across the country, average deductibles in
    employer plans relative to median income were 5 percent or more
    in 22 States. A deductible that is 5 percent or more of income
    is our threshold measure of someone who is underinsured.
        In a 2020 Commonwealth Fund survey, more than one-third of
    adults with a deductible of $1,000 or more said they had not
    gotten needed health care due to costs. In the same survey, 40
    percent of adults with a deductible of that size reported they
    had experienced problems paying medical bills, or paying off
    medical debt over time.
        In a 2021 Commonwealth Fund survey among adults in employer
    plans who had problems paying medical bills or were paying off
    debt over time, 40 percent said they had received a lower
    credit score because of their medical bills; 40 percent had
    taken on credit card debt to pay their bills; and 35 percent
    had used up most of their savings to pay their bills.
        Medical bill problems are endemic to our health-care system
    and are ruining many families' financial health. There are
    several actions that could help workers burdened by employer
    premiums and deductibles. They include making the American
    Rescue Plan Act marketplace subsidies permanent; providing
    comprehensive and affordable coverage for people eligible for
    Medicaid in the 12 non-
    expansion States; increasing awareness among workers of their
    options to enroll in marketplace plans and Medicaid; fixing the
    Affordable Care Act's family coverage glitch, which is
    preventing millions of family members from accessing
    marketplace subsidies; and lowering the ACA's employer premium
    affordability threshold from 9.8 to 8.5 percent.
        With this, if combined with the fix to the family coverage
    glitch, no one would have to spend more than 8\1/2\ percent of
    their income for health insurance, lowering deductibles and
    out-of-pocket costs in marketplace plans. In addition to the
    historic No Surprises Act, imposing stronger consumer
    protection rules for people struggling to pay their medical
    bills, addressing the high commercial provider prices that are
    the primary driver of employer premiums and deductibles, and
    finally, developing an auto-enrollment mechanism, would help
    people enroll and stay enrolled in comprehensive coverage.
        Thank you.
        [The prepared statement of Dr. Collins appears in the
    appendix.]
        Senator Stabenow. Thank you very much. We very much
    appreciate your testimony.
        And finally, we will hear from Dr. Linda Blumberg. Welcome.

                STATEMENT OF LINDA J. BLUMBERG, Ph.D.,
           INSTITUTE FELLOW, URBAN INSTITUTE, WASHINGTON, DC

        Dr. Blumberg. Thank you for inviting me to address current
    issues related to health insurance in the U.S. While I am an
    employee of the Urban Institute, the views expressed in this
    testimony are my own and should not be attributed to the Urban
    Institute, its trustees, or its funders.
        Research has demonstrated that the Affordable Care Act has
    increased health insurance coverage in the U.S. among the non-
    elderly by more than 20 million people. The enhancements of
    premium tax credits provided by the American Rescue Plan Act
    have increased coverage further, albeit temporarily given the
    limited duration of the enhanced credit period. These have also
    improved affordability of insurance coverage and increased
    access to care for millions of Americans.
        As a result, the U.S. health insurance system provided a
    stronger safety net during the pandemic and economic downturn
    than in prior recessions. According to the Urban Institute's
    Health Monitoring Survey, the number of non-elderly adults with
    employer-based insurance fell by approximately 5\1/2\ million
    people between March 2019 and April 2021. Yet, unlike prior
    recessions, the number with Medicaid increased even more.
        As a consequence, the number of uninsured held steady,
    instead of increasing nationwide. However, while nationwide
    data is encouraging, the number of uninsured rose in non-
    expansion States because smaller shares of people who lost
    employer coverage were eligible for Medicaid. Still, nationwide
    the private non-elderly insurance marketplaces are by all
    indications fundamentally stable.
        In 2021, the national average benchmark premium fell for
    the third year in a row, with average decreases in 43 States,
    only one State where the increase was more than 6 percent,
    following very large premium increases in 2018. In addition,
    insurer participation in the marketplaces has increased since
    2017 in many population centers. However, in areas with lower
    insurer participation and/or consolidation among health
    providers, premiums and premium growth tends to be higher.
        Even recognizing the successes, significant gaps remain in
    the health insurance system, for more than 3 million people
    living below the poverty line, and 1.2 million near-poor
    people, are uninsured and ineligible for any financial
    assistance because they live in States that have not expanded
    Medicaid eligibility
        In addition, ARPA services temporarily increased our
    marketplace subsidies. My Urban Institute colleagues estimate
    that the number of uninsured nationally will reach 30 million
    in 2022. Conversely, they estimate that making the ARPA
    subsidies permanent and extending them to lower-income people
    in non-expansion States would decrease the uninsured by another
    7 million people at a net Federal cost of $27.7 billion in 2022
    dollars, or $333 billion over 10 years. In addition, these
    estimates indicate that such policies would increase
    marketplace enrollment while decreasing marketplace premiums by
    18 percent on average, because of the relatively better average
    health of the new enrollees.
        Taking lower premiums and out-of-pocket costs into account,
    the average per-enrollee health-care cost for those insured
    through the marketplaces would be over $1,100 lower per year.
        While such opportunities exist with this coverage, further
    action also must be considered, because the ending of the
    national public health emergency will also end the requirement
    that States keep people enrolled in Medicaid. And this
    transition poses future challenges for coverage.
        Urban Institute estimates indicate that Medicaid enrollment
    could decrease by as many as 15 million people during 2022,
    once the PHE-related maintenance requirement ends, including
    8.7 million adults and 5.9 million children. These numbers are
    partly offset by the projection that one-third of those adults
    who qualify for subsidized private health coverage are in the
    marketplaces. About two-thirds of the children would be
    eligible for assistance, much of it through CHIP.
        However, others have postulated that the number losing
    Medicaid coverage at the end of the PHE could exceed 15 million
    people, given the difficulty of contacting still-eligible
    people to reverify and renew enrollment when they have not been
    in contact with the Medicaid system for close to 2 years. Thus,
    the risk of a significant increase in the number of people
    uninsured following the end of the PHE is substantial, and such
    risk merits legislative and administrative consideration.
        As I have outlined, permanent enhanced premium tax credits
    should encourage more people to move from Medicaid to the
    marketplace once they lose Medicaid eligibility. Further,
    aggressive outreach and enrollment efforts at the State and
    Federal levels, in addition to streamlining Medicaid
    redetermination and enrollment processes, are among viable
    options available to address the potential for a near-term
    increase in the number of uninsured Americans.
        Thank you for the opportunity to share information with you
    on these important issues, and I would be happy to answer any
    of your questions.
        [The prepared statement of Dr. Blumberg appears in the
    appendix.]
        Senator Stabenow. Well, thank you so much to all of our
    witnesses, and we will now proceed with comments and questions
    from the committee.
        First let me start by saying that whenever we have a
    discussion--and I have been involved in the committee now for a
    long time, and in health-care coverage policy for a long time--
    there really is a fundamentally different view between
    Democrats and Republicans about health care and about, is it a
    fundamental right? Is it about privilege if you have a job that
    has insurance, if you are able to afford health care? There is
    just a fundamentally different view that gets the same kind of
    arguments coming out all the time about whether or not we
    should act and move forward on things.
        Fifty-five years ago, only about half of the seniors over
    age 65 had health insurance that would cover a stay in the
    hospital. And far fewer had insurance that would cover surgery
    or outpatient physician visits. And at the time, the private
    insurance industry could just refuse to cover higher-risk,
    older people. They would get sick. They would get dumped from
    their insurance plan, and it was likely if you got sick, you
    could end up in bankruptcy, which means that the elderly were
    the group most likely in the United States to be living in
    poverty. That is what was happening then. And many hospitals
    around the country were rigidly segregated as well.
        We believe, as Democrats, that it was critical to expand
    access to quality, affordable health insurance. And after
    decades of fighting for it, in July 1965 it finally happened
    with President Lyndon Johnson signing Medicare and Medicaid
    into law.
        In the decades since, we have continued to fight for
    expanded coverage and benefits. And as we have talked about, in
    2010 the Affordable Care Act, the biggest improvement to health
    care since the creation of Medicare and Medicaid, brought
    insurance to 31 million Americans. And that includes 14.8
    million Americans through the expansion of Medicaid coverage.
    In my State, that is about 950,000 people who are now covered.
    And I should say, this was a bipartisan effort in Michigan,
    which I appreciated very much.
        I share Senator Warnock's concerns for the millions of
    Americans left without health care because of the refusal of
    Republicans in 12 States to expand Medicaid. So, expanding
    Medicaid is the right thing to do. It is the smart thing to do.
    It also saves money in Michigan, because people are not going
    to emergency rooms who do not need it, who just need to see a
    doctor. So we have seen hundreds of millions of dollars in
    savings.
        But this year then, if I could say a bit more, we addressed
    health care again in the American Rescue Plan, lowering health-
    care premiums in insurance exchanges by about 40 percent--a
    pretty big cut. And we created an option to provide 12 months
    of post-partum coverage under Medicaid.
        And I will say, as we have been going through this, that
    one bright light I appreciate so much is the bipartisanship
    that we have done together on behavioral health. Mental health
    and substance abuse treatment should be viewed as health care,
    funded as health care. I appreciate Senator Blunt and my
    colleagues on this committee who have been working together to
    make progress on that.
        But the bottom line is, there is just a fundamental
    difference in how we view health care moving forward.
        Mr. Isasi, what do you think are the biggest gaps right now
    in the Medicare program? And what should we be doing about
    them?
        Mr. Isasi. Thank you so much, Senator Stabenow. The three
    main things that I would point to--first, let us be really
    clear. We have heard this over and over again. Right now the
    biggest crisis in American health-care coverage is price. We
    cannot currently negotiate fair drug prices. We have got to
    tackle the abuses of drug companies. It is very popular. The
    American people want this across the political spectrum. We
    have got to get this done.
        Second, Medicare does not cover essential services like
    dental, vision, and hearing benefits. It does not make any
    sense. These are core to the needs of Medicare beneficiaries,
    in particular seniors. We have got to solve that problem.
        And then finally, I agree strongly with my colleague, Dr.
    Holtz-Eakin. Currently the way that we are paying for health
    care incentivizes waste, and it incentivizes high-margin, high-
    profit services over actual health. We have got to change the
    way that we pay for health care.
        I do want to say, Medicare Advantage is not the answer. We
    know that, underneath Medicare Advantage payments, what we see
    is just traditional fee-for-service volume-based payments. We
    have to actually make sure that the new incentives are reaching
    the doctors, the nurses, the hospitals, and making sure the
    people who are actually improving health, maintaining health,
    and solving health problems do well under the system, and the
    people who are just driving towards volume and high price fail.
        Thank you very much, Senator Stabenow.
        Senator Stabenow. Well, thank you very much.
        And our distinguished chairman has returned, trying to be
    two places at once. I think we need to figure out how to do
    ``beam me up, Scotty'' so we can all do that at the same time.
    But, Senator Wyden?
        The Chairman. In fact, Senator Crapo, if we could reverse
    it and you could start with questions, and then I would go,
    just for purposes of breath-catching----
        Senator Crapo. I would be glad to let you catch your
    breath, Mr. Chairman.
        Dr. Holtz-Eakin, I want to start out with what is a big
    threat to the ability of our country to be able to deal with
    the cost of health care, and that is the impact of some of the
    proposals before Congress for some massive new taxation and
    spending that is going to have macroeconomic impacts on
    everything, including the health care that we are talking about
    today.
        In addition to numerous and major expansions of government
    into health markets, the administration's Build Back Better
    plan contains many concerning tax proposals that threaten the
    economic recovery in the short term, and threaten economic
    growth and American competitiveness in global markets in the
    long term.
        Your organization provided results in April from economic
    models to assess the macroeconomic implications of the Build
    Back Better plan, including the tax provisions. The tax
    proposals in the plan appear from that analysis to have
    significant negative macroeconomic implications.
        Can you discuss those findings, please?
        Dr. Holtz-Eakin. Certainly. We heard during the course of
    the campaign for the Presidency about the Build Back Better
    plan, so in the aftermath of the election we commissioned this
    study so that it was done by some scholars at Rice University
    using models that are essentially identical to the Joint
    Committee on Taxation's macro models.
        So we have some idea of what the implications of those
    proposals would be. The basic findings are that imposing
    trillions of dollars in new taxes is a severe headwind to
    economic growth and would diminish it considerably. I think
    there was a lot of consensus on that. But what we heard from
    the other side was that the spending programs are going to be
    so effective that they are going to outweigh that, and we will
    get better economic growth.
        So we had them literally modeled, taking all the money and
    spending it--no deficit finance--spending it entirely on
    productive infrastructure and R&D, the highest return things
    that they could identify in the research literature, and the
    net effect was negative for the economy over 10 years.
        And so, if you compare that modeling exercise--lots of tax
    increases, highly targeted and effective spending--with what is
    actually in the legislation, the spending is far less targeted
    on productive infrastructure and R&D. And so the impacts are
    going to be even more negative than our model indicated.
        Senator Crapo. All right; thank you. And I think it is very
    important to understand that we have to stop the injuries to
    the economy if we want to deal with helping people afford
    health care.
        Let me move again, Dr. Holtz-Eakin, with you, to drug
    pricing. Driving down premiums and expanding coverage requires
    us to tackle not just the price of insurance products, but also
    the underlying cost of care. When we look at the key drivers of
    health-care spending growth, there is no doubt that certain
    specialty prescription drugs have a substantial impact, at
    least when they first come to market. That said, the
    nonpartisan Congressional Budget Office has repeatedly noted
    that medications can also play a crucial role in reducing costs
    elsewhere in the health-care system, including at more
    expensive sites of care.
        Moreover, once products go off patent and their
    exclusivities expire, the prices generally drop dramatically.
    And I would note that currently, more than 90 percent of all
    prescriptions are filled with generic drugs, not patent-
    protected brand-name products.
        The House Democrats' proposed drug pricing controls,
    unfortunately, would undermine the current balance, drastically
    reducing the number of new treatments coming into the market
    and deterring innovative R&D.
        In your view, Dr. Holtz-Eakin, what impact would the House
    drug pricing proposals have on health-care access and quality?
    And what types of policies do you see as the right ones? I know
    you touched on this, talking about Part D in your statement,
    but would you just respond to that generally?
        Dr. Holtz-Eakin. Certainly. I am quite concerned about the
    proposals that were in H.R. 3 and are now in the Ways and
    Means-passed legislation. Those proposals essentially--the
    international reference price is a price control. The supposed
    negotiation with the Secretary of HHS is really not a
    negotiation. The threat is a 95-percent sales tax on domestic
    sales. It is not deductible for income tax purposes, so the
    effective rate is over 100 percent.
        So essentially, you know, you have the Secretary in the
    position of being judge and jury. It is just demanding the
    price they want. We know from looking at other countries that,
    while prices are lower, access to medicines is much more
    limited. In many cases, the most innovative therapies do not
    arrive for 2 and 3 years, if they arrive at all. In many cases,
    they do not.
        In the U.S., 90 percent of innovative therapies are on the
    market in 3 months, if people have access to care. So, while it
    looks like those other countries are not paying much, they are
    paying for it in less high-quality care, less access to the
    most innovative therapies. And I think the reforms that I
    outlined on Part D would be a very good starting point.
        They are bipartisan in nature. They have been in
    legislation proposed by Democrats, legislation proposed by
    Republicans. Presidents have supported them. They would improve
    the negotiation incentive in Part D, and thus lower prices
    broadly going into the commercial markets as well. And they
    would protect seniors from catastrophic costs, and that is
    overdue.
        So, I think that is a good place to start. It does not
    threaten innovation in the system. It does promise access to
    high-quality drugs for seniors.
        Senator Crapo. Thank you.
        The Chairman. Thank you, Mr. Chairman, and thank you for
    the fact that, whenever we have to juggle in the morning, you
    are always trying to help out.
        I want to make sure we get a quick and accurate accounting
    of the Medicare ledger, because we have heard, back and forth,
    various kinds of analyses.
        Dr. Collins, you have been an expert in this, and I want to
    have you lay out for us, on the record, a direct response to
    the key question. And the key question is, would proposals like
    a public option or a dental, vision, and hearing benefit in
    Medicare Part B have a negative impact on the Medicare Part A
    trust fund?
        I would like you to give us a ``yes'' or ``no'' answer to
    that question, and then if you could, amplify why that is the
    case. Because I think that is absolutely central to our
    discussion going forward. And I had mentioned, colleagues, that
    we are kind of looking back a little bit today to the
    accomplishments of the Affordable Care Act. And I said, if
    nothing else had been done in the Affordable Care Act other
    than finally ending the insane proposition that you
    discriminate against people with preexisting conditions, that
    would have been an incredible accomplishment. And you listed
    others.
        So we are talking about looking back, and we are talking
    about looking forward. And I see our friend, Senator Casey, who
    is a huge part of looking forward, because he has got us on the
    cusp of an incredible change with respect to seniors and the
    disabled, frankly one I have dreamed about since the days when
    I was codirector of the Oregon Gray Panthers.
        So, exciting days are coming up. And part of what we want
    to make sure we are clear on today is where we stand on some of
    these key issues like the Medicare Part A trust fund. So my
    question for you, Dr. Collins, apropos of just briefly
    restating it: would these proposals like a public option, or
    dental, vision, and hearing benefits in Medicare Part B, have
    any negative impacts on the Medicare Part A trust fund?
        Dr. Collins. No, they would not, because they are financed
    out of other revenue sources. So the trust fund would not be
    affected because it is for Part A benefits.
        And to your point on the Affordable Care Act, those three
    important provisions extended the Medicare trust fund solvency
    and reduced the scheduled updates to Part A providers, reducing
    the Medicare disproportionate share payments and also,
    importantly, increasing the payroll tax for upper-income
    households. So the Affordable Care Act had a very positive
    impact----
        The Chairman. Dr. Collins, just one other point on that,
    because I have already said that we are all in a position--and
    Senator Crapo and I have worked on so many big issues in a
    bipartisan way, and in fact Senator Grassley and I teamed up on
    the prescription drug issue. I think we ought to be teaming up
    again on the question of the Part A trust fund going forward.
        And just so we are clear, Dr. Collins, I think you said,
    had the Affordable Care Act been repealed--as there was an
    effort to do in the Senate--that would have hurt the Medicare
    Part A trust fund further. Is that correct?
        Dr. Collins. That is correct.
        The Chairman. All right; thank you very much. It is very
    helpful that we really, colleagues, have an accurate and
    straightforward accounting of the Medicare ledger by dint of
    Dr. Collins's comments.
        So let me ask you one other question in the short bit of
    time that I have. And that is, it seems to me that the
    Affordable Care Act was an extraordinary lifeline to millions
    of Americans during the pandemic.
        We were hit like a wrecking ball with this virus that
    nobody imagined, and it seems to me that the Affordable Care
    Act and the American Rescue Plan stepped in and served as a
    lifeline for families during the pandemic and economic
    downturn. Families who had a loved one at home were trying to
    figure out how they were going to deal with all the costs. When
    job losses mounted, workers not only lost their jobs. The
    Affordable Care Act marketplaces and Medicaid were there during
    that pandemic to make sure that millions of families had access
    to the health care they needed.
        So my question to you, Dr. Blumberg, is--you know, I do not
    think you can just go out and magically recession-proof
    everything, but I think we would be very much better off if we
    knew the details of how Medicaid and the ACA premium tax
    credits for insurance coverage met the needs of American
    families during the pandemic.
        Dr. Blumberg. Sure. Senator, this recession related to the
    pandemic is really the first test of the safety net that was
    enhanced and strengthened by the Affordable Care Act. And the
    ARPA subsidies just enhanced that further. So it was the first
    time in a recession in memory where the number of people
    uninsured did not increase.
        In fact, the only areas in which the number of those
    without health insurance coverage did increase was in the
    States that had not expanded Medicaid under the Affordable Care
    Act. So, while employer-sponsored insurance did fall
    significantly, as it has in every prior recession on record,
    the number of uninsured nationally stayed basically constant
    because some people moved into a marketplace coverage that was
    there and available to them, and then people who lost much more
    income were enrolled in the Medicaid program.
        So, without it, we would have seen a significant increase
    in the uninsured, as we have over the years. But ARPA subsidies
    made that coverage even more affordable to people during this
    crisis. And so that was also important.
        The Chairman. Thank you. And I thank all our witnesses. We
    have been working with the leadership and all the members this
    morning in trying to deal with Build Back Better, and I
    apologize for being out.
        Senator Grassley is next. I am going to go vote. And,
    colleagues, what we are going to try and do is keep this
    moving. A number of colleagues on both sides of the aisle have
    asked that we hold this hearing to kind of start airing ideas
    for the future. That is the point of it.
        Senator Grassley, I am going to run and vote. Thank you for
    your courtesy. You are next, and let me also give you the list
    so you have a sense of the order.
        Okay; thank you, colleagues.
        Senator Grassley. Most of my questions will be to Dr.
    Holtz-Eakin because of his background being CBO Director. I
    have worked for 3 years to pass a bipartisan bill to lower
    prescription drug prices. While Democrats attempt to advance
    their partisan drug-pricing program, I hope that common sense
    will prevail and that we will pass a bipartisan prescription
    drug bill.
        I have engaged with colleagues on both sides of the aisle
    in both the House and Senate. All of the Republicans and
    Democrats I have contacted have expressed eagerness to find a
    solution to meaningfully lower prescription drug prices.
        Dr. Holtz-Eakin, for decades the Congressional Budget
    Office, the nonpartisan referee, has said government drug price
    dictation does not save money unless you restrict access to
    patients through limiting formularies.
        First, is that correct, Dr. Holtz-Eakin?
        Dr. Holtz-Eakin. Yes, that is correct.
        Senator Grassley. Okay. Also to you: is government drug
    pricing negotiation a real negotiation? Or is the government
    dictating prices?
        Dr. Holtz-Eakin. It is the government dictating prices. And
    you cannot do a real negotiation unless you have a restriction
    on the formula, or a restriction for access in some way. Or, in
    this instance, another lever, which is a 95-percent tax on
    sales in the U.S. market. So that is not a negotiation, that is
    dictating the prices.
        Senator Grassley. Okay. I would note that, in 2019, this
    committee held three hearings on prescription drug pricing,
    followed by a markup, along with numerous other bipartisan
    conversations. Given the bipartisan interest in this committee
    in lowering prescription drug costs--and many questions the
    American people ought to have answered about the package the
    majority is now considering--I am very curious if this
    committee will be holding any hearings on prescription drug
    pricing in the future.
        So getting back to you, Dr. Holtz-Eakin, President Obama's
    own OMB Director has said this about changes to the
    noninterference clause, quote: ``Negotiating ability alone is
    largely feckless,'' end of quote.
        Can you save money if you do not limit access, like
    restricting the formulary, or dictating prices based on
    domestic or international reference pricing?
        Dr. Holtz-Eakin. No. Every CBO Director since the American
    Modernization Act passed has come to the conclusion that there
    is no additional genuine negotiating leverage that the
    Secretary of HHS would have. Prescription drug plans have lots
    of beneficiaries, but they have market shares, and they have
    formularies which they can offer as a way to expand their
    sales, and that is how you get a lower price. The Secretary of
    HHS does not have any of those things.
        Senator Grassley. Dr. Holtz-Eakin, in your previous
    testimony you stated that government price dictation would
    restrict access if you want to achieve savings. Academic
    research has also confirmed that. Can you expand on how
    patients will be hurt by the proposed government drug pricing
    dictation policy?
        Dr. Holtz-Eakin. The spirit of these proposals has always
    been to look to other countries as the reference price as a
    starting point of dictating the prices. And, if you look at the
    experience in those countries, the way prices are lowered is,
    the government is saying ``no'' to many drugs. And they are not
    available to their citizens.
        As we know--and the ranking member pointed this out; it is
    an important point--there is not a general drug pricing
    problem, but we have high prices for some specialty drugs on
    patent, largely oncology drugs. Those are the most innovative,
    most effective modern treatments. And their arrival on the
    market in the U.S. comes in the first 3 months. By and large,
    they simply do not arrive, and certainly not in a timely
    fashion, in these other countries.
        So we would be saying to our citizens, ``We do not want you
    to have the best care.'' That is what those proposals would
    produce.
        Senator Grassley. Okay.
        I think maybe you have just now answered this question, but
    let me ask it anyway. If we disincentivize the private sector
    to produce cures, will we give up our status as the world's
    leading research and development country?
        Dr. Holtz-Eakin. Yes. We are the leading biopharmaceutical
    innovator on the globe, but that is not our God-given right. It
    is due to the incentives that are in the system. And if we went
    ahead with these proposals, there would be less incentive for
    venture capitalists to fund startups that have generated these
    advances. Those startups often then sell them to the larger
    pharmaceutical companies. They would not be interested in
    buying them because there would be no return. And the
    innovation would dry up. It is a real threat.
        Senator Grassley. Nonpartisan independent analyses show
    changes to the noninterference clause hurt innovation and
    cures. CBO says H.R. 3 would reduce the number of drugs
    created. One CBO report says 38 fewer drugs this decade and
    next. Another report from the University of Chicago says we
    could miss out, with 342 fewer drugs in the next 20 years.
        Should we be pursuing policies that produce less cures?
        Dr. Holtz-Eakin. No. Directionally, everyone agrees there
    would be fewer cures. The only debate is over how many and how
    innovative they might be.
        Senator Grassley. Thank you.
        Senator Cardin?
        Senator Cardin. Thank you, Mr. Chair. Let me thank all of
    our witnesses who are here in our committee room, and those who
    are with us virtually, for your help on these issues. I
    appreciate the fact that we have an innovative health-care
    environment here in America. The question is, are all of our
    people getting access to it?
        And I appreciate that we have a robust pharmaceutical
    industry in America that we want to keep, but there is
    something to be said about competitive pricing. There is
    something to be said about those that are in this very
    complicated structure that we have and the profits they are
    making, and are they giving us value added for the profits that
    they are making.
        So we want to keep the innovative environment here in
    America, but we also want to pay a fair price. And we recognize
    that the technologies that are available are not available to
    all in America.
        So I want to ask the question--maybe I will start first
    with Dr. Collins--and, Mr. Isasi, if you want to add some
    comments to this, I would appreciate it.
        Those who are underinsured, or uninsured, it is a problem
    for them individually in getting access to our care. But it
    also presents a problem for our system that causes disruptions
    and inefficiencies in our health-care system. The Affordable
    Care Act reduced the number of uninsured in America by about 20
    million, if my numbers are correct. We still have uninsured in
    America, and there are higher percentages in underserved
    minority communities. We have the underinsured, and that is one
    of the reasons why the expansion of Medicare to include dental,
    vision, and hearing becomes an important issue to deal with the
    underinsured.
        My question to you is, can you give us some additional
    tools that we can use to reach particularly those in
    underserved communities, minority communities, to make sure
    that they have adequate third-party coverage? What
    recommendations would you make for us to be able to deal with
    that gap we have in our system today?
        Dr. Collins. Thank you, Senator. One, the Affordable Care
    Act had a very significant impact on reducing disparities in
    coverage across racial and ethnic groups. That happened in all
    States, but the States that saw the biggest improvements in
    coverage, and the biggest decreases in disparities, were
    Medicaid expansion States. So expanding coverage in all States
    would help further reduce those disparities that are endemic--
    have been endemic to our system--and that the Affordable Care
    Act has addressed so well.
        On the underinsured side, this is an ongoing, chronic
    problem in employer coverage and in individual market plans for
    people who are outside of the cost-sharing reduction subsidy
    threshold. So extending the cost-sharing reductions in
    marketplace plans further up the income scale would help reduce
    deductibles in marketplace plans, and allowing more people in
    employer plans to access those enhanced protections in the
    marketplaces would also address the underinsured issues that we
    constantly see in employer-based plans, and which have been
    growing over time.
        Senator Cardin. Thank you for that.
        Mr. Isasi, I want to perhaps expand on that a little bit.
    Maybe you could share with us the impact from the coming
    Medicaid redeterminations at the end of the public health
    emergency, and how Congress can support individuals and States
    to prevent a significant disruption and coverage loss.
        Mr. Isasi. Thank you very much, Senator Cardin, for that
    really important question. Many folks may be surprised to know
    that currently, because of the public health emergency, States
    are under what is called a maintenance factor requirement,
    which means that they cannot disenroll people from Medicaid
    because we are in a public health emergency.
        When that ends--right now it is just extended until
    January--but when it ends, States will have to go through a
    redetermination process. What we know from history here is that
    when that happens, thousands, and across the country millions
    of people who are eligible for Medicaid, who should be getting
    it, lose coverage.
        They lose coverage because--really it is a paperwork,
    administrative burden. All of a sudden they may have moved
    home. They may have language access issues. They may not have
    access to the Internet, so they cannot actually maintain their
    enrollment.
        And so it is really important that, as we move into this
    period where the redeterminations will be made, that we do so
    thoughtfully and carefully. And one of the most important
    things we need to do, particularly for kids, is ensure that
    they have continuous eligibility. It is currently an option for
    States. We should make sure that all kids automatically have
    continuous eligibility as the public health emergency ends, and
    for 12 months--and also consider extending that to adults.
        Senator Cardin. Thank you. I appreciate that.
        Thank you, Mr. Chairman.
        Senator Crapo [presiding]. Senator Cornyn?
        Senator Cornyn. Thank you, Mr. Chairman.
        Dr. Holtz-Eakin, my figures here indicate that about 90
    percent of Americans have health insurance coverage. And I know
    the goal of our friends, and frankly all of us, is to make sure
    that everybody has access to quality health care. But one of
    the problems with getting everybody health care is, we have a
    large non-citizen population here in our country, roughly
    estimated to be 11 million people who did not come here through
    the regular legal process.
        I believe, and I bet you do too, that legal immigration has
    been one of the best things we have going in this country, but
    illegal immigration creates a crisis like we are seeing at the
    border right now, when we learned this morning that the number
    of people detained since the Biden administration came into
    being is about 1.7 million migrants. It is the most since 1986.
        The reason I mention that is that the more undocumented, or
    illegal migrants that come into the country, the worse our
    uninsured or uncovered population problem is. Do you agree with
    that?
        Dr. Holtz-Eakin. That is correct.
        Senator Cornyn. So actually, the policies of the Biden
    administration are making the problem worse, not better.
        Dr. Holtz-Eakin. Certainly that 1.7 million is an
    extraordinary flow.
        Senator Cornyn. Yesterday--you may have missed it because
    you had other things to do--but we had the nominee for Customs
    and Border Protection here in front of the committee, and I
    asked him about the policies of nonenforcement announced by
    Secretary Mayorkas, where he said that no one will be detained
    or removed from the United States simply for the offense of
    illegal entry into the country. And he agreed with me that that
    was one of the pull factors that encourages people to come to
    our country.
        Would you agree that things that have been proposed by the
    Biden administration like cash tax credits, things like
    additional health-care coverage benefits, and other welfare
    benefits, provide another part of the pull factors that
    encourage people to come to the United States by other than
    legal means?
        Dr. Holtz-Eakin. Certainly, the pursuit of a better
    standard of living, whether it be through illegal employment or
    benefits from the government, is a big part of the pull factor.
        Senator Cornyn. And I guess the solution by our friends
    across the aisle is just to continue to use tax dollars to
    encourage and incentivize illegal immigration by providing
    those benefits. And I bet you believe that we have spent a lot
    of money, and that our current level of debt as a result of the
    pandemic is unsustainable, and that additional deficit spending
    or debt is probably not a great idea. Do you agree with that?
        Dr. Holtz-Eakin. I am concerned about that. We entered the
    pandemic with a structural deficit that would put the U.S. on
    an unsustainable fiscal trajectory. We have added an enormous
    amount of debt so that it now exceeds the size of the economy
    during the pandemic. And the proposed legislation--if all the
    programs were put in place for 10 years, you would have $5.5 or
    $6 trillion of spending, and we would have $2 trillion of
    taxes. That is a structural deficit that is even larger and
    accelerates the trajectory that is already so dangerous.
        So I think that would be a misstep from the viewpoint of
    macro policy and fiscal policy.
        Senator Cornyn. And that is on top of the annual increases
    in mandatory spending for entitlements, things like Medicare
    and Social Security, that threaten ultimately the solvency of
    those trust funds.
        Let me ask you about the enhanced premium tax credit that
    the administration is proposing. CBO says it would lead to a
    reduction of 1.6 million people with employer-provided
    coverage. In other words, instead of their employer providing
    the coverage, then taxpayers would be paying for it.
        All of these tax credits are paid to private insurance
    companies, are they not?
        Dr. Holtz-Eakin. Yes.
        Senator Cornyn. And in fact the Affordable Care Act was one
    of the biggest boons to insurance companies that Congress has
    granted in decades. They benefited enormously, did they not?
        Dr. Holtz-Eakin. They certainly did.
        Senator Cornyn. Are you aware of the fact that of the
    people who would be covered by the enhanced premium tax credit,
    that 65 percent of those would have incomes over 400 percent of
    the Federal poverty level? Twenty percent would be at 600
    percent, which is $159,000 for a family of four. And 10 percent
    would be at 700 percent of the Federal poverty limit. In other
    words, families of four making $185,500 would receive this
    taxpayer subsidy in the form of the premium tax credit.
        Would that make our debt problems and our fiscal problems
    worse, instead of better?
        Dr. Holtz-Eakin. Yes. And as a whole, the proposal has that
    character. These are large increases in the structural deficit
    that we already have, and are a step in the wrong direction
    from a fiscal point of view.
        Senator Cornyn. Thank you.
        Senator Crapo. Senator Bennet?
        Senator Bennet. Thank you, Mr. Chairman. I appreciate
    having a chance to ask questions of this panel. I want to thank
    the panel for being here, and for your holding this hearing.
        I am glad that we are here to talk about the importance of
    health coverage and the need to achieve universal coverage,
    which should be a priority for every member of the U.S. Senate,
    I think. It has been over 4 years since we had a dedicated
    hearing on coverages. Unfortunately, at that moment we were in
    the middle of combating an unsuccessful threat to the
    Affordable Care Act, and millions of Coloradans who have been
    affected are deeply grateful that it failed. And on that note,
    Mr. Chairman, I would ask consent to insert a longer statement
    into the record highlighting the times that Senator McConnell
    actually attempted to take away the Affordable Care Act.
        Senator Crapo. Without objection.
        [The prepared statement of Senator Bennet appears in the
    appendix.]
        Senator Bennet. Thank you, Mr. Chairman.
        I would also like to ask consent to insert into the record
    a new National Academy for State Health Policy analysis on 13
    SBMs (State-based marketplaces) and the impact of enhanced
    premium support authorized under the ARPA.
        Senator Crapo. Without objection.
        [The statement appears in the appendix beginning on p. 60.]
        Senator Bennet. Thank you, Mr. Chairman. I appreciate it.
    Again, this is a real opportunity to highlight the benefits of
    our work on the ACA and how improvements have increased
    coverage and reduced the cost to so many families and other
    folks across the country.
        I am glad that earlier this year the American Rescue Plan
    made some changes to the premium supports for individual
    marketplace plans that were identical to changes that I
    proposed in my
    Medicare-X Choice Act with Senator Kaine.
        In Colorado, this made a significant difference. After the
    law went into effect, there was a 50-percent reduction of
    premium prices on average. And in fact, the law reduced premium
    payments entirely for some people.
        Nearly three in four customers on the Connect for Health
    Colorado State exchange received financial support. For
    example, a barista in El Paso County shared with me that the
    improved support saved her $115 a month. She is able to
    purchase a silver level plan and can now afford a crib and
    other supplies for the baby she is expecting.
        An uninsured couple showed up to an enrollment center in
    Colorado and left in tears when they found out they could
    obtain high-quality health insurance for $2.38 a month. There
    are countless stories about how meaningful the support is, and
    it is critical that this be made permanent.
        So, Dr. Blumberg, your testimony had some critical data on
    this premium support. Could you share with us how these premium
    subsidies under the ACA, and further expanded under the
    American Rescue Plan, have improved coverage and reduced cost?
        Dr. Blumberg. Sure, Senator. By Urban Institute estimates,
    the ARPA subsidy enhancements reduce the average household
    spending on health care for families by 23 percent, for those
    buying in the non-group insurance market. That is about $1,140
    per enrollee.
        For low-income enrollees, spending is reduced by 32 percent
    on average. This obviously makes the insurance more accessible
    for many people, and could decrease the uninsured by, in our
    estimates, over 4 million people, if made permanent.
        And lowering the premium costs through the premium tax
    credit enhancements also provides them extra funds if families
    should want to use that to buy coverage that has lower cost
    sharing requirements than they would otherwise.
        Senator Bennet. For the last 19 months we have faced an
    unprecedented public health and economic crisis. Early in the
    pandemic, there was deep fear that the uninsured rates would
    skyrocket. For example, during the economic crisis in 2009,
    14,000 people were losing coverage every single day. The
    uninsured increased by 4.3 million. Although the type of
    insurance may have changed, the uninsured rate remained steady.
    And I believe it is a product of the ACA creating a more
    resilient system.
        Dr. Blumberg, I do not have much--and, Dr. Collins, as
    well--I've only got about a minute left, but I know that both
    of your organizations have done research on this. Do you agree
    that the ACA played an essential role in creating this
    stability?
        Dr. Blumberg. Absolutely, because prior to the ACA, when
    people lost their employer-sponsored insurance coverage, very
    few of them would be eligible for financial assistance or other
    coverage, and this time it was there through Medicaid and the
    marketplace.
        Dr. Collins. And I would agree with Professor Blumberg.
        Senator Bennet. Thank you, Dr. Collins, and I will yield
    back, Mr. Chair, the last 20 seconds to my colleague from
    Louisiana.
        Senator Crapo. Thank you, Senator.
        Senator Cassidy?
        Senator Cassidy. Thank you.
        First I want to address--I am sorry she is not here--a
    couple of things that Senator Stabenow said, making the point
    that somehow Democrats are for coverage and Republicans are
    not, and then worming in there something about an association
    with segregation in hospitals. As a physician who worked in a
    public hospital for the uninsured and dedicated my life to
    bringing access to others who did not have it, I take umbrage
    at that.
        I also point out that the segregation in the south was by
    Democrats who were the ones promoting that, and it was
    Republican judges who fought back--and, that it was Dwight
    Eisenhower that passed the first civil rights bill.
        So, if we want to say that, oh, my gosh, we can just
    promise the store and somehow pat ourselves on the back without
    consequences, or without even regard to sustainability, oh, I
    will give that to my Democratic colleagues. And if we want to
    say, oh, my gosh, we were responsible for segregation but
    somehow we are going to worm that in, insinuating that we were
    not, I will maybe give that to you. But I am going to let you
    know that that is not true. That history is wrong. And that
    history is false.
        And by the way, as long as we are speaking about
    sustainability, Medicare is going bankrupt in 2026. We have a
    bunch of people who want to expand coverage in Medicare, which
    will further strain its finances, so that those who are on it
    are less likely to get it.
        Think about this: Medicare is going insolvent in 2026. And
    when it goes insolvent, by law, it will only pay the providers
    that which they currently receiving, which will result in
    roughly a 25-percent decrease in what they shall receive. That
    will be a crisis of access, and this is a program that the
    other side is actually wanting to put others on, endangering
    access to the seniors who are currently on Medicare.
        Now again, if folks want to pat themselves on the back for
    expanding access, let us dig a little big deeper. Republicans
    are for access, but they are also for sustainability. If you
    cannot sustain, then you do not have a program. You merely have
    a talking point for your next election. And in this body, we
    should be more about sustainability as opposed to a talking
    point for the next election.
        So I wish Senator Stabenow were here to hear that, because
    I think it is something which I am glad to disagree with.
        Now with that said, Dr. Holtz-Eakin, you point out that it
    is not just about paying for care; it is about lowering the
    cost and having better quality care, I presume, because
    otherwise it is not sustainable. Correct?
        Dr. Holtz-Eakin. That is right.
        Senator Cassidy. So I was struck that, in Obamacare, there
    was a big effort to put on the Cadillac tax to otherwise
    restrain the amount of subsidized health care, because we knew
    that subsidies of health care drive demand, which overall
    drives up the cost. Is that a fair analysis?
        Dr. Holtz-Eakin. Yes. That is right.
        Senator Cassidy. But, Dr. Collins, you are speaking about
    how we need to further subsidize health care. That actually
    seems to go against the principle that the more the subsidy,
    the more demand, which drives up the cost. And yes, you lower
    the out-of-pocket to the individual, but for society you drive
    up the cost, which therefore calls into question sustainability
    unless you have unlimited dollars.
        Dr. Collins, how would you respond to that?
        Dr. Collins. Well, the new data out from the health-care
    costs--and, Senator Cassidy, thank you for the question,
    first--really does show that prices, not utilization, are
    driving our cost problem in commercial insurance. So increased
    coverage, that would be the thing----
        Senator Cassidy. Let me ask you--just a second. I have
    limited time. So prices, not utilization. But there is pretty
    good data from the Rand Corporation--that is kind of a time-
    honored study that has been shown elsewhere--that if you ask an
    ER patient to pay a de minimis amount, you decrease
    utilization. You decrease utilization without negatively
    impacting health-care outcomes for those who do not have
    chronic illnesses.
        Now, is it fair to say that, in that case, totally
    immunizing somebody from the cost of health care indeed
    increases utilization, and therefore would increase demand and
    increase total expense?
        Dr. Collins. I mean, health insurance coverage is the most
    important----
        Senator Cassidy. But my question right there is, if you
    totally immunize somebody from any cost-sharing whatsoever, you
    do increase utilization, therefore demand, therefore total
    expense. Is that not correct?
        Dr. Collins. None of our insurance plans, or very few,
    except for very low-income people, have zero cost sharing.
        Senator Cassidy. In the silverization, so I am told, of the
    Obamacare exchange policies, there are those who currently do
    not have any cost share whatsoever. And, of course, I am
    speaking of the particular of no cost share whatsoever. But at
    some point cost-share becomes significant enough that
    somebody--it impacts their behavior. Correct?
        Dr. Collins. It does. But we know that high cost sharing
    really discourages people from getting needed care. So the----
        Senator Cassidy. I am not talking about high cost sharing.
    I am talking about the general principle that the more health
    care is subsidized, the more demand is generated, and the more
    people become cost-insensitive to a higher price. The more they
    are cost-
    sensitized--and the sweet spot is where it does not discourage
    needed care--the more it contributes to total global cost. Is
    that a fair statement?
        Dr. Collins. I think cost sharing is an important part of
    health policies, particularly for care that is necessary. But
    we do want to make sure that people have the right incentives
    to get the care that they need.
        Senator Cassidy. I am totally in acceptance with that.
    Really we are talking about sustainability. I am sorry, I am
    already a minute over my time, but I will just say that if we
    do not have a sustainable system, everybody patting themselves
    on the back at the expanded coverage is really just sewing the
    seeds for a health and economic crisis. I say that because, as
    a physician in a public hospital, we always ran out of money at
    the end of the fiscal year. And at that point, we were denying
    services, or postponing them to the next year.
        There has to be sustainability built into whatever we do to
    expand access. Thank you.
        The Chairman. My understanding is that Senator Hassan may
    be available now on the web. Is that true?
        [No response.]
        The Chairman. Senator Portman, are you out there in
    cyberspace?
        Senator Portman. I am. I am, Mr. Chairman; thank you.
        The Chairman. Wonderful. Go ahead.
        Senator Portman. I thank the witnesses for being here
    today, and for the good information that they have provided. I
    want to focus on a couple of issues.
        One is what is in the reconciliation plan that is being
    talked about. One thing is expansion of Medicaid. And this is
    something that I think is important for all of us to take a
    look at, because States like mine in Ohio did expand Medicaid.
    We took on a lot of new expenses with that.
        My understanding is that this is to create a Federal
    Medicaid program that essentially will force those States that
    have not expanded Medicaid to partake in a federally run,
    federally funded health-care program.
        First of all, is that fair to States like Ohio that took on
    this cost themselves? The Medicaid program now in Ohio makes up
    a significant amount of our spending every year. Prior to its
    expansion, we were at about 24 percent of our total State
    expenditures, and now it is about 38 percent of our
    expenditures.
        So this new program, as I understand, would be paid for by
    Federal taxpayers, by the Federal Government, and it would go
    to some of these States that chose not to expand Medicaid, with
    no benefits for States like Ohio. And also, it is a blatant
    disregard for State choice, which has been the subject of a
    number of cases before the Supreme Court--that States have the
    opportunity under Medicaid to make these decisions.
        I guess what I would say is, to Dr. Holtz-Eakin, is this
    the right way to go: taxpayers being forced to fund an
    expensive expansion at the Federal level? By the way, the cost
    is about $323 billion based on CBO, or $635 billion based on
    other analyses. So between $300 and $600 billion, and again a
    direct departure from the original intent of the Medicaid
    program to allow States flexibility, not just to make this
    choice, but once they have Medicaid under this Federal program,
    the existing flexibility to test new and innovative ways to
    deliver care would be gone.
        For example, in Ohio we have a big issue with regard to
    opioids, as many of you know, and so we have a substance abuse
    disorder demonstration waiver that allows us to have the
    flexibility to provide essential services like substance abuse
    disorder treatment services that we use to battle the opioid
    crisis in Ohio.
        Apparently that kind of flexibility would not be
    permissible. So, Dr. Holtz-Eakin, I know you have looked at
    this. How would this new proposal inhibit the ability of States
    to innovate?
        Dr. Holtz-Eakin. Well, first of all, Senator, with regard
    to that range in the numbers, I would just point out that we
    are responsible for the high end of that range. And the
    difference between CBO and the Center for Health and Economy is
    really not in the proposals. It is the fact that CBO has, in
    its baseline, anticipated expansions in Medicaid.
        And so we do not do that. So all of the Medicaid here would
    be new coverage, whereas CBO would only be doing the increment
    above the anticipated expansions. And so there is not a great
    mystery to why that range is there. It has to do with the
    assumptions about the future in the CBO baseline.
        With regard to the structure of the program, this is a
    dramatic change in Medicaid. Medicaid has always been a
    Federal-State partnership. And States have always been
    responsible for the business model that they want to pursue in
    their State.
        And as I mentioned in my opening remarks, there is an
    enormous track record of success in moving into managed care
    organizations as a central plank of Medicaid. Competition among
    them is even better. And that gives the opportunity to have the
    basic approach of a capitated payment for cost incentives, and
    quality metrics to make sure that we get high-value care. And
    to my eye, there is no guarantee of that strategy in what is
    being proposed in the reconciliation bill.
        Senator Portman. Yes, because it pulls away that
    flexibility. It is also--do you agree with me that States like
    mine would be unfairly penalized by this if we have gone ahead
    and made these decisions, and now the Federal Government comes
    in in other States?
        Dr. Holtz-Eakin. Yes, there is clearly a dissimilar
    treatment with the Federal taxpayers picking up the entire tab.
        Senator Portman. Let's talk about inflation for a minute.
    Everybody is concerned about it, as we should be. Everything
    costs more. The food we are buying at the grocery store, gas
    that has a 42-
    percent increase this year on average at the gas pump--
    unbelievable. And inflation is being driven in part by the fact
    that we have dumped so much stimulus into the economy. That is
    what economists say. That is what Larry Summers warned about,
    who was a former Democratic Treasury Secretary. The Federal
    Reserve Bank of San Francisco just released a report saying
    that the large spending plan passed, the $1.9 trillion earlier
    this year, contributed to inflation.
        So there seems to be a consensus among economists. Now we
    are talking about a lot more money, $300 to $600 billion on
    this Medicaid program, the Medicare expansions, hundreds of
    billions of dollars depending on what you do. I know there is
    discussion about various ways to change Medicare.
        We talked earlier, I know--and I am a big supporter of the
    Medicare Advantage programs in Ohio and elsewhere, because they
    work to provide seniors with choices. But this would be a
    Federal expansion of hundreds of billions of dollars, and the
    Affordable Care Act expansion is about $200 billion, the last
    numbers that I saw.
        So these hundreds of billions of dollars start to add up.
    And the question is, what is going to be the impact on
    inflation? Can you give us a sense of that?
        Dr. Holtz-Eakin. Well, certainly what we have heard in the
    discussions about the structure, one strategy is to shorten the
    amount of time that the spending programs are in place. So you
    front-load all that spending, leave in place permanent tax
    increases, and essentially back-load the pay-fors, and that is
    a stimulus bill. The $1.9 trillion in March was poorly timed.
    The economy was growing at 6.5 percent. It was way too big for
    any macroeconomic problem we faced, and it was poorly designed.
        This would be a repeat of exactly that exercise.
        Senator Portman. So, bad timing in terms of spending this
    kind of money--even if you believe that some of this was a good
    idea--because of its impact on inflation.
        The other concern I have in here is the home and community-
    based services. I am a big fan of what it is called HCBS, which
    is again, home and community-based services. If you look at
    this proposal, it creates some problems. It does not give
    States the opportunity to use it as flexibly as we would like.
    Right now we have a long waiting list and a shortage of
    qualified providers, and shortages of affordable and accessible
    housing for these programs. And the funding here that is in
    this proposal would make it even more difficult for some States
    to use this HCBS proposal in a flexible way.
        Do you anticipate that all States will get a big advantage
    with this enhanced funding to bolster the HCBS programs, given
    the new requirements that they would put on home-based care?
        Dr. Holtz-Eakin. I think that is a real concern. My remarks
    were about creating a high-value system. To do that, you have
    to allow the flexibility to innovate and find cheaper ways to
    reach quality outcomes. Getting the money with a whole bunch of
    restrictions is at odds with that approach.
        Senator Portman. Well, I think my time is ended, or close
    to being ended, but I do think there are a bunch of bipartisan
    proposals we should look at--including our Senior Care Act that
    Bob Casey and I have, including the Ticket to Work program--
    that are bipartisan and do make sense in this area. And my hope
    is that we do not put too many restrictions on the home care
    and community-based health care system, because that, to me, is
    a way to save costs and improve care.
        Thank you.
        Senator Stabenow [presiding]. Thank you very much. We will
    next hear from Senator Brown, and then Senator Toomey.
        Senator Brown?
        Senator Brown. Thank you, Madam Chair.
        One of the witnesses just said that the Recovery Act passed
    in March, signed by the President, was, I believe his words
    were, ``a bad idea'' and, quote, ``poorly timed.'' I think the
    100,000 retirees in Ohio who had their pensions restored, who
    had earned them by negotiating at the bargaining table, and the
    2.2 million children in Ohio and hundreds of thousands of
    families who have benefited 4 months in a row--July, August,
    September, October--from the Child Tax Credit of $250 or $300
    and the poverty rate dropping by 40 percent, would disagree, if
    I can say that.
        Dr. Blumberg, I have a little bit of an unusual request.
    Would you please reread the second paragraph of your written
    testimony, the part beginning with ``Research has demonstrated
    that the Affordable Care Act''--would you read that again?
        Dr. Blumberg. Research has demonstrated that the Affordable
    Care Act has increased health insurance coverage in the U.S.
    among the nonelderly by more than 20 million people. The
    enhancements of premium tax credits provided by the American
    Rescue Plan Act have increased coverage further, albeit
    temporarily, given that limited duration of the enhanced credit
    period. These reforms also have increased the affordability of
    insurance coverage and increased access to care for millions of
    Americans.
        Senator Brown. Thank you. Shout that from the highest
    rooftops. For 20 million Americans, coverage was made more
    affordable by the American Rescue Plan, which one witness was
    just very critical of, which Democrats wrote and President
    Biden signed into law earlier this year. We know that.
        Dr. Blumberg, another quick question. If Congress extended
    the enhanced subsidies from the American Rescue Plan and
    expanded them to lower-income Americans in nonexpansion States,
    how many Americans stand to benefit?
        Dr. Blumberg. An estimate of my colleagues at the Urban
    Institute is an additional 7 million people would have health
    insurance coverage from that.
        Senator Brown. An additional 7 million. Okay, thank you for
    those numbers.
        Mr. Isasi, thanks for being here and for all the work
    Families USA has done over the years to ensure Americans have
    high-
    quality, affordable health care. A few ``yes'' or ``no''
    questions, if I could do that in the last 3 minutes or so. If
    you would, bear with me and answer ``yes'' or ``no.''
        Would permanently extending funding for CHIP, the
    Children's Health Insurance Program, help ensure coverage for
    the children of working families for years to come?
        Mr. Isasi. Absolutely.
        Senator Brown. Would providing continuous eligibility--
    ``absolutely'' counts as a ``yes'' or ``no,'' so you can keep
    doing that. Would providing continuous eligibility for kids and
    post-partum individuals in Medicaid and CHIP help new moms and
    their kids stay healthier and reduce disparities and improve
    the continuity of their coverage?
        Mr. Isasi. Yes, and you have been a tremendous champion on
    this issue.
        Senator Brown. Thank you.
        Could adding a public option to the ACA, or allowing older
    Americans to buy in voluntarily to Medicare before 65, help to
    reduce disparities and give Americans more health coverage
    options that they can afford?
        Mr. Isasi. Absolutely. And the policies provide real
    security, and also allow the government to finally start
    addressing the pricing abuses that we are dealing with.
        Senator Brown. Thank you for that.
        Would extending ACA provisions allowing children to remain
    on their parent's health insurance policies till age 26 to
    CHAMPVA enrollees help to ensure that children of disabled
    veterans have stronger coverage options?
        Mr. Isasi. Absolutely.
        Senator Brown. Would fixing the so-called family glitch in
    the ACA help give working families more affordable coverage
    options?
        Mr. Isasi. Absolutely it would ensure that families are not
    being unfairly penalized and held to an individual standard
    instead of their family income standard. Really important.
        Senator Brown. Thank you for that insight and illumination.
        Last question. Would extending guarantee issue protections
    to Medigap policies help provide seniors and individuals with
    disabilities with more coverage options and greater out-of-
    pocket protections for those individuals affected?
        Mr. Isasi. One hundred percent. And it would ensure that in
    Medigap, you could not be denied coverage for preexisting
    conditions--that should be the law of the land in this country.
        Senator Brown. Thank you very much.
        Madam Chair, these ideas would help bring down health
    insurance costs. As was illustrated, they would give families
    more options. We ought to share those goals. Yet, my Republican
    colleagues continue to oppose all of these policies. It should
    be past time for them to end their decade-plus long attacks on
    the Affordable Care Act.
        We remember them year by year by year. Finally, work with
    us on ways to give our constituents more coverage options, what
    Democrats have been focused on from the Affordable Care Act a
    decade ago to the American Rescue Plan. Today's hearing is an
    opportunity to discuss ways to build on those efforts--not
    subtract from them--like permanently funding CHIP, ensuring
    continuous eligibility of children and post-partum individuals,
    and extending the Enhanced Rescue Plan subsidy as a part of the
    Build Back Better plan.
        These are important steps forward that we could take, Madam
    Chair, right now. I yield back my time.
        Senator Stabenow. Well, thank you very much, Senator Brown.
    That is a wonderful list of things that we should be focused
    on.
        We now will turn to Senator Toomey, and then go to Senator
    Thune, who I understand had been bypassed at an earlier point.
    So we will go to Senator Thune, and then Senator Casey.
        So, Senator Toomey?
        Senator Toomey. Thank you, Senator Stabenow. Can you hear
    me okay?
        Senator Stabenow. Yes.
        Senator Toomey. Okay. Terrific. Thank you.
        First, I want to register my continuing disappointment that
    our Democratic colleagues are still trying to ram through this
    reckless $3.5-trillion tax and spend bill, despite significant
    reservations even from their own caucus. And, given the really
    unprecedented scope and scale of this legislation, the
    Republican request to hold hearings and a markup, I think at a
    minimum, should be considered an obligation.
        I am not aware of any plans to do that, and I suspect that
    is related to the fact that this bill is going to do a lot of
    damage. It is going to make millions of middle-class Americans
    dependent upon government. It is going to raise taxes on
    employers. It is going to diminish investment by increasing
    capital gains taxes. It is going to give the IRS, despite its
    history of abuses, access to financial information of ordinary
    Americans. It is going to put U.S.-based multinationals and
    their workers at a competitive disadvantage.
        These are the kinds of things that ought to be scrutinized
    in public and subject to debate and amendment. But apparently
    that is not the path that we are on. So let me drill down on
    one specific aspect of our Democratic colleagues' plan, and
    that is, the expansion of Medicare that they are contemplating.
        So, first of all, let us be clear. The Medicare trust fund
    is on track to be bankrupt in 5 years. That is not even the
    full story. CBO projects the program to have a $78-trillion
    shortfall over the next 30 years--not billions, $78-trillion
    shortfall--more than a $6-trillion shortfall just over these
    next 10 years alone.
        And now what we understand is our Democratic colleagues
    want to expand benefits for a program that we know cannot keep
    its current promises. And by the way, they want to include
    coverages, including dental, vision, and hearing, for people
    who, to a large degree, already have these benefits. So 42
    percent of all Medicare beneficiaries are currently enrolled in
    a Medicare Advantage plan, and the Medicare Advantage plans
    have individual participants. Ninety-nine percent of them get a
    vision benefit. Ninety-seven percent get a hearing benefit.
    Ninety-four percent get dental benefits. So that is the 42
    percent of people in Medicare Advantage.
        By the way, about 99 percent of Medicare beneficiaries
    either are in Medicare Advantage or could choose to be in
    Medicare Advantage. So it is available to everyone already. So
    what is the problem that our Democratic colleagues are trying
    to solve?
        It is certainly not to make the program sustainable. They
    have not identified a problem in terms of lack of coverage or
    availability of coverage. What it seems to be mostly about is
    making taxpayers pay for coverages that are already in place or
    available alternatively.
        Dr. Holtz-Eakin, let me ask you this. I am trying to get a
    handle on how we should think about the actual cost of this
    Medicare benefit expansion. Democratic colleagues are saying
    the cost is $350 billion over 10 years. But CBO thinks it will
    be $80 billion per year, once all three benefits are
    implemented. But we know there is this phase-in. So could you
    tell us, what should we think about? What is the true cost of
    this expansion of Medicare?
        Dr. Holtz-Eakin. So I think the expectation is that this
    benefit will be available indefinitely. And so the $80 billion
    number over 10 years is the correct estimate of the cost--$800
    billion.
        Senator Toomey. And why do you suppose it is being phased
    in gradually?
        Dr. Holtz-Eakin. It is a way to make it appear cheaper, and
    to make it fit into some sort of budgetary restriction.
        Senator Toomey. So my understanding is there is another
    proposal that is under consideration, which is to make
    permanent the changes to the premium tax credits that occurred
    on an entirely partisan basis under the American Rescue Plan.
    And our Democratic colleagues expanded Obamacare to provide
    more money to insurance companies, to those already in
    Obamacare, and to make individuals eligible for the premium tax
    credit regardless of income during 2021 and 2022.
        And now just yesterday, CBO estimated the extent to which
    these benefits will go to people who do not need the benefit.
    Sixty-five percent of those set to receive more subsidies have
    incomes over 400 percent of the Federal poverty line. And $26
    billion will go to cover individuals who make over 700 percent
    of the Federal poverty line.
        So tell me--this is what CBO has told us, Dr. Holtz-Eakin.
    Is it your view that these benefits are going to go to people
    with substantial income and alternative ways of obtaining
    insurance?
        Dr. Holtz-Eakin. This is an unsurprising finding. The
    proposal to get rid of the cap at 400 percent of the Federal
    poverty level means it is targeted on people who are relatively
    affluent. And this is what CBO is saying.
        Senator Toomey. Does it strike you that a program that is
    on a highway towards insolvency, running massive deficits,
    should be expanded to include people whose income is many
    multiples of the poverty line? Does that sound like a good idea
    to you?
        Dr. Holtz-Eakin. I think targeting all of these proposals
    much more carefully at the low-income and needy would be a good
    step in the right direction.
        Senator Toomey. Thanks very much. I see I have consumed my
    time.
        Thanks, Madam Chairman.
        Senator Stabenow. Thank you very much.
        Senator Thune?
        Senator Thune. Thank you, Madam Chair.
        And I would like to associate myself with the comments from
    Senator Toomey with respect to the process. I think this looks
    like maybe the only hearing where we are likely to have an
    opportunity where this committee can engage in a public forum
    to discuss what are the sweeping policy changes and massive
    expansion of government that Democrats have embarked upon. And
    I think it should be noted that, even for bills that resulted
    in a partisan outcome, this committee has always followed
    regular order, debated and voted on amendments. And I think it
    is a shame that, after promises of bipartisanship and
    cooperation, even here today, we are facing policies that are
    fundamentally changing the tax code, affecting the economy and
    the way consumers access health-care coverage, on a completely
    partisan basis. The American public ought to be included in
    that conversation, and that to me suggests we ought to be
    having a process that includes regular order, hearings, and a
    markup.
        Based on that recent CBO letter that Senator Toomey
    referred to about the House version of the Democrats' tax and
    spending spree, we now know that the proposed coverage
    provisions would cost more than half a trillion dollars to
    cover about 4 million people over 10 years. The CBO also
    predicts this means that 2.8 million Americans are going to
    lose their job-based coverage, which sounds like another ``if
    you like your health-care plan, you can keep it'' falsehood.
        Dr. Holtz-Eakin, could you talk about what drives this
    shift away from private coverage into plans heavily subsidized
    by the Federal Government? And what does it mean for the long
    term?
        Dr. Holtz-Eakin. This has been a concern since ACA was
    passed. If you ran the numbers, the subsidies were already so
    rich that for anyone up to about 300 percent of the Federal
    poverty line, the employer could stop offering coverage, put
    the individual into the exchange, give them a raise, and make
    more money.
        So the bottom line is, there was so much money on the table
    in the exchanges that it was really an incentive for employers
    to stop offering coverage. This is an increase in those premium
    tax credits, and we are just seeing the same behavior in the
    CBO estimates. You know, they have been watching this
    carefully, and there are clear incentives for employers to stop
    offering insurance--and in the process, to pay their workers
    more and make more money simultaneously.
        Senator Thune. Does the Democrat proposal to make the
    expanded ACA tax subsidies permanent include anything to
    prevent exchange premiums increasing? In other words, if
    insurers increase premiums, do the taxpayer-funded subsidies
    keep increasing too? And what does that mean, long-term?
        Dr. Holtz-Eakin. The answer is ``yes.'' I mean, that is how
    these subsidies are calculated. And this is the concern I have
    about the discussion exclusively about access and coverage. In
    the end, insurance is a financial part to shift the medical
    bill around. The real problem is the national medical bill is
    too big and delivers too low-quality care. So getting control
    of the bill allows you to keep insurance premiums down directly
    and does not require as much taxpayer subsidy.
        So I think the sustainability issue that was raised by
    Senator Cassidy, this is right where it hits.
        Senator Thune. And just as a quick follow-up, is it correct
    that these expanded taxpayer-funded subsidies could form plans
    to cover elective abortions?
        Dr. Holtz-Eakin. Yes.
        Senator Thune. And that is, again, a violation of a policy
    that has been in place literally for 50 years, since the early
    1980s.
        This year the administration allowed special enrollment
    periods on the exchanges that lasted more than 6 months. The
    Democrats are now proposing to create a continuous enrollment
    period for individuals at certain income thresholds through
    2024.
        For years we have heard about issues of adverse selection
    in the insurance markets. So what has changed?
        Dr. Holtz-Eakin. Nothing. Our analysis indicates the
    special enrollment periods would raise premiums because of the
    adverse selection issue, and that would make this program more
    expensive, on top of everything else.
        Senator Thune. Let me shift gears for just a minute. And
    again, I think Senator Toomey covered well what the Medicare
    trustees have told us about the insolvency being faced by the
    program in 2026, and the question of dramatically expanding
    some of these fee-for-service program benefits and what that is
    going to mean long-term in terms of the financial viability of
    Medicare more generally.
        But I want to ask you about your past experience as CBO
    Director and just ask if you could perhaps provide some context
    to the CBO report recently about Federal revenues for the first
    time hitting $4 trillion, and increasing individual income
    taxes 27.5 percent, 80 percent of that coming from the top 10
    percent of earners, corporate-rate income taxes rising 75
    percent to $370 billion.
        With revenues coming in at historically high levels, what
    would be the fiscal or economic impacts of raising taxes on
    American workers and businesses?
        Dr. Holtz-Eakin. The impact on the economy is decidedly
    negative. We are recovering well from the near-term losses due
    to the pandemic. We still have a long-term growth problem. The
    proposals that are on the table would inhibit the accumulation
    of intellectual property, capital, and other productivity-
    enhancing investments, and that would be negative over the long
    term for productivity, real wages, and the standard of living.
        Senator Thune. Thank you.
        Senator Stabenow. Thank you very much----
        Senator Thune. Madam Chair, I have this--I want to include
    this CBO letter in the record, if I might.
        Senator Stabenow. Without objection.
        [The letter appears in the appendix beginning on p. 164.]
        Senator Stabenow. Senator Casey?
        Senator Casey. Thank you, Senator Stabenow. I appreciate
    our witnesses being here. Thank you for your testimony.
        I wanted to start with, I guess, more of a comment on the
    testimony of Mr. Isasi. On page 5 of your testimony--I am going
    to read it into the record, because it is, I think, very
    important for the American people to know this. You said on
    page 5, ``An impressive research base now confirms that
    Medicaid expansion''--and I am enumerating here, it is not in
    your text, but--number one, saves lives; number two, protects
    people from cancer and other serious diseases; number three,
    helps combat the scourge of addiction; number four, prevents
    bankruptcy; number five, saves money for State budgets; number
    six, boosts employment; and number seven, keeps the doors open
    in rural--I will say that again--rural hospitals, all benefits
    of Medicaid expansion, a program much maligned by Republicans
    in the Senate and the House, maligning it over and over again,
    and they all voted against it, by the way, despite all the
    benefits.
        You also were talking about the Affordable Care Act and the
    impact on people's lives in a very direct way. One expansion
    that we are trying to undertake in this Build Back Better
    budget is to make it more available at a State level, home and
    community-based services for seniors and people with
    disabilities.
        That is never going to happen when the Republicans have a
    majority because they are hostile, not just to making the
    expansion, but they are hostile to the Medicaid program itself.
    That is not an opinion. You just need to look no further than
    their budgets. Budget after budget, especially during the Trump
    presidency, cutting Medicaid, proposed cuts to Medicaid of $500
    billion and up. In fact, there is a House budget proposal to
    cut it by a trillion dollars over 10 years--Medicaid.
        So if we are going to have home and community-based
    services expanded, it is not going to happen with Republicans
    because they are hostile to Medicaid itself, and Medicaid
    itself makes that possible. So that is my comment for today.
        But I wanted to turn to Dr. Collins. Dr. Collins, you had
    extensive testimony about the considerable burdens that
    families face when it comes to both the impact of premiums and
    the impact of deductibles. How have Medicaid expansion and
    marketplace policies both lowered costs to help families save
    money when it comes to those burdens?
        Dr. Collins. Thank you, Senator. There is a considerable
    body of research, as Mr. Isasi's testimony indicates, that you
    just quoted, showing that the expansions led to huge increases
    in people's ability to access care. So lowering the financial
    barriers to health care, lowering out-of-pocket costs across
    the population--we know that has also occurred. And Medicaid
    expansion in particular improves the financial protection for
    low-income families, with an average decline of more than 4
    percentage points of the share of people who are spending more
    than 10 percent of their income out of pocket for health care.
        This improved health-care access for people eligible for
    Medicaid and improved their overall financial well-being. Low-
    income families saw reductions in the number of unpaid bills
    and the amount of debt sent to collection agencies, reduced
    their use of payday loans, and resulted in declines in housing
    evictions as a result. So these had dramatic spillover effects
    into other areas of people's lives.
        Senator Casey. Thanks for that. And I was going to turn
    back to Mr. Isasi on the reference I made earlier to home and
    community-based services. We all have had the real blessing and
    the privilege of meeting folks along the way who tell their
    story and inspire us to work on these issues. I think that is
    true in both parties.
        One of the people I met throughout the course of this
    debate on these services was Kelly Barrett from Erie, PA. She
    has cerebral palsy and she lives--fortunately, lives
    independently in her own apartment for the last 4\1/2\ years.
    She says the difference between having these services and not
    having these services is, quote, ``the difference between life
    and death.''
        So I would ask you, what are the current barriers to
    coverage for home and community-based services? And how would
    investments in these services help Americans like Kelly
    Barrett?
        Mr. Isasi. Thank you very much for the question, Senator
    Casey, and also for your championing these issues and health
    for families and children. You are an amazing ally in this
    work.
        So home and community services, as you point out, these are
    the key services that allow people who are aging, who are
    disabled, with chronic conditions, to be able to stay in the
    community and not end up in an institutional setting like a
    nursing home. They allow people to continue to be independent
    and to work, or to be close to their family. That is critically
    important, but right now in this country we have such a
    shortage. In fact, 800,000 people at least, almost a million
    people, are on waiting lists all over this country to get
    access to these services. It is a huge, huge need.
        And as a result, we have people who are languishing and
    people who are in institutions. This is critically important.
    There is a deep investment we should make. The House bill makes
    well over $100 billion of investment in these services. And by
    doing this, we can really ensure that our elderly or disabled
    and those with a chronic illness have a shot at living in the
    community, being closer to families, having jobs, and things
    like that.
        Senator Casey. Thanks very much.
        Thank you, Senator Stabenow.
        Senator Stabenow. Thank you very much.
        Senator Whitehouse?
        Senator Whitehouse. Thank you, Madam Chair.
        This first question is going to be about the public option
    idea. Years ago, Senator Brown and I drafted the original
    public option that we tried very hard to get into the
    Affordable Care Act. And when we did so, there was a landscape
    of Americans who had no health insurance.
        The ACA has been a huge success. It has rolled out
    effectively in almost all places, and it has changed the
    landscape of who cannot get affordable health insurance.
        What is the population, Mr. Isasi--and then Dr. Blumberg--
    what is the population that you think, as we are designing a
    public option here in the Finance Committee, we should make
    sure we are attending to?
        Mr. Isasi. So, from my perspective, I think that the first,
    of course, are folks who are, for example, self-employed,
    owning their own small businesses, who simply cannot get access
    to high-quality global health insurance.
        Senator Whitehouse. Even through the exchanges?
        Mr. Isasi. Well, in some cases, depending on where they
    live, they may or may not have access to high-quality
    insurance. And let me just point out--and you know, given your
    role of Insurance Commissioner in Rhode Island--one of the most
    important things about a public option is, it finally allows
    the government to get in there and demand a fair price and
    address the pricing crisis that we are in.
        Senator Whitehouse. Ben Franklin in his Almanac years ago
    said, ``the best way to show that one stick is crooked is to
    lay a straight stick next to it.''
        Mr. Isasi. Beautiful.
        Senator Whitehouse. And we rather hope that the public
    option would be the straight stick.
        Mr. Isasi. That is right. That is right.
        Senator Whitehouse. And where should it be offered? Should
    it be offered through Medicare? Should it be offered through
    exchanges? How would you think it should be administered?
        Mr. Isasi. Well, the answer to that question is, how can we
    get it through the Senate and through the Congress? That is the
    most important thing. But the bottom line is, it has to have
    several dimensions.
        The first is, is it available to everyone? The second is,
    does it actually provide affordable high-quality insurance that
    provides financial security? And that has to do with prices. As
    you said, the stick right now in America is incredibly crooked,
    right? And then the third piece is, the coverage has to be
    available in all kinds of communities--rural communities, urban
    communities. Things that have highly consolidated markets need
    to have more competition.
        Senator Whitehouse. Dr. Blumberg, anything to add to that?
        Dr. Blumberg. Sure. Our analysis, Senator, about places
    where the public option would have the greatest impact are
    those areas that have either few insurers offering coverage in
    the area and/or have very highly consolidated providers, so
    that the prices for obtaining care are higher and, as a
    consequence, premiums are higher.
        So those areas are often areas that are not big population
    centers, but not always. So, looking at where the prices are
    highest, and where the competition in the insurer and provider
    markets is below expectations and below where it would be in
    other areas, are really the prime areas where the public option
    would have the greatest impact.
        You could----
        Senator Whitehouse. Let me ask Dr. Collins this. In Rhode
    Island, we have had two experiences. One was a Health Insurance
    Commissioner who required insurers to focus on primary care
    first. And that drove the market towards primary care being a
    center point for service, as opposed to people hopping from
    specialist to specialist.
        And the second has been the Accountable Care Organizations
    that have really done stunningly well in Rhode Island. They
    have been national champs. One is Coastal Medical, a primary
    care practice in Rhode Island, and the other is gathered
    together as the Integra program, it is called, with Rhode
    Island primary care physicians. And both of them have proven
    that significant savings in cost per patient can be achieved by
    improvements in care that lead to better health outcomes for
    those same patients. And that has always been the sweet spot
    that we have tried to hit. The Obamacare so-called ``triple
    aim'' was focused in that space.
        What should we be looking at now to try to maximize these
    proven cost-reducing, quality-improving, better outcomes for
    Americans strategies?
        Dr. Collins. Thank you, Senator. I think what you highlight
    is the innovation that is happening on this issue in States
    across the country. Rhode Island is a standout. The other thing
    that Rhode Island has done too is, they empowered their
    Insurance Commissioner--your Insurance Commissioner--to review
    rates, premium rates, and also review hospital rates.
        So taking an active stance on the pricing problem that I
    highlight in my testimony and that has come up repeatedly in
    the hearing today--but we are also seeing lots of activity in a
    lot of States. So I think it is an indication of what we can
    learn from what States are experimenting with, watching the
    States on the public option experiments. Montana is looking at
    changes to their State employee benefit program on hospital
    pricing. I think Rhode Island is a leader, and a lot of other
    States are innovating in this space in very creative ways.
        Senator Whitehouse. Thanks.
        I will just close with a comment, if I may, Madam Chair,
    which is that, once you free up doctors from having to march to
    the fee-for-service treadmill and give them the ability to
    adapt the way they treat patients to a patient-first way of
    dealing with the patients, you then open up this arena in which
    all three of those things happen at once. Patients are happier
    and healthier, costs go down, and everybody wins.
        So we need to continue to work on that. And I would note
    that, in the quarrels about the Affordable Care Act, there were
    no quarrels about these provisions. Nobody is against
    Accountable Care Organizations. They are across the States.
    They are doing really well, and we can make a lot of progress.
    So thank you.
        Senator Stabenow. Thank you so much, Senator Whitehouse. We
    have seen the same results in Michigan; so, thank you so much.
        Senator Hassan?
        Senator Hassan. Well, thank you, Madam Chair. And I want to
    thank the chairman and the ranking member for having this
    hearing. And I want to thank the witnesses for being here
    today.
        I want to start with a question to Dr. Collins. Dr.
    Collins, as my colleagues have mentioned throughout this
    hearing, the COVID-19 pandemic led to a drop in health
    insurance coverage, as many working-age adults lost their jobs
    and, with it, their insurance. Fortunately, though, many who
    lost their insurance had an opportunity to find new coverage,
    thanks to the special enrollment period, increased subsidies,
    and additional cost-sharing assistance for Affordable Care Act
    marketplace plans that were included in the American Rescue
    Plan last spring.
        During the special enrollment period created by the
    American Rescue Plan, almost 6,700 Granite Staters enrolled in
    a new health plan, roughly double that of the same period in
    2019 and 2020. Dr. Collins, we have talked about the numbers of
    people who gained access to coverage through these provisions,
    but can you speak a little bit about the impact that these
    expansions have had? You talked in a previous answer about the
    impact on working families' finances, but what has it meant for
    families to be able to access needed health-care services
    during the pandemic? What kind of services have they accessed?
        Dr. Collins. Thank you, Senator; that is a great question.
    First of all, we know that the majority of people who are
    unvaccinated do not have insurance coverage. It is not because
    the vaccines are required to be covered by insurance, it is
    because people do not have a relationship with the health
    system that insurance coverage affords them, so they are not
    getting the information they need about vaccines.
        It has been very important in terms of access to health
    care, particularly for people who did get sick with COVID,
    having the ability to get the care they need; having that
    relationship with a physician. So it has been important not
    only for COVID, but also across the spectrum of care that
    people get, in ensuring access to that care.
        Senator Hassan. Thank you.
        Let me ask you a little bit more of a specific question. As
    I think you probably know, New Hampshire, like some other
    States, has been ravaged by the substance use disorder crisis.
    And we have seen firsthand how Medicaid-covered behavioral
    health care has improved access to treatment.
        As Governor of New Hampshire, I worked to expand Medicaid
    to ensure that Granite Staters would have access to the care
    that they need, which includes treatment for substance use
    disorder. Since that time, this access to coverage has been a
    critical part of our State's response to the substance use
    disorder crisis.
        Dr. Collins, can you speak specifically to the important
    role that Medicaid coverage has played in expanding access to
    treatment for substance use disorder and improving health
    outcomes?
        Dr. Collins. Yes. Medicaid has been so important for
    substance abuse issues--also, just mental health generally
    across the population. States that have not expanded Medicaid
    have denied this access to their residents, which has been a
    critical part of our ability to address this crisis that we are
    seeing in substance abuse and drug overdose deaths. The
    marketplaces have also required insurance plans to cover mental
    health and substance abuse services, which has also been a
    critical part of this fight.
        Senator Hassan. Well, thank you for that. I will just note
    too the number of people I have talked to who have recovered
    from their substance use disorder and then become employed, and
    then gotten private insurance through their employment. So it
    can be a win/win in a lot of different ways.
        To Linda Blumberg: post-partum depression and other
    perinatal health challenges can obviously exacerbate substance
    use disorders. Expanded Medicaid and ACA plans have helped
    ensure that mothers with substance use disorders have access to
    the specialized care that they need. In New Hampshire,
    Dartmouth Hitchcock's Moms in Recovery program provides access
    to mental health professionals, child care, women's health
    care, and medication-assisted treatment, among other supports.
        So, Dr. Blumberg, can you speak to how expanded health
    coverage has helped pregnant women and new parents impacted by
    substance use disorders, as well as their children, through
    innovative programs such as Moms in Recovery and other avenues?
        Dr. Blumberg. Sure. Having health insurance coverage
    through either Medicaid or private health insurance for mothers
    has a very positive impact not only on their own health, but on
    the health of their children. So, if the mothers are getting
    mental health care and treatment, then that has positive
    outcomes for the children. And there is a great deal of
    research that supports that.
        So it is also the reason why a lot of folks are interested
    in looking at longer-term care for women post-partum, not just
    for birth-related care, but also for general health care,
    because of those outcomes.
        Senator Hassan. Thank you very much, and thank you, Madam
    Chair.
        Senator Stabenow. Thank you so much.
        Next we will hear from Senator Daines, and then Senator
    Cantwell.
        Senator Daines. Thank you, Senator Stabenow. Thanks to our
    witnesses today.
        President Biden and the Democrats sadly are pushing forward
    a purely partisan, multi-trillion-dollar great big push towards
    big government, a reckless tax and spending spree that I think
    is going to reshape the foundation of this country. It is going
    to create new entitlement programs. It is going to increase
    Americans' dependence on government-subsidized, government-
    controlled insurance coverage. It is also going to increase
    Washington's control over the American people's lives. As they
    have seen what has happened here in this city over the course
    of the last year, they do not like it, especially when it comes
    to medical decisions. And it is the last thing that Montanans
    want to see happen.
        The Democrats want to spend trillions on new and expanded
    government programs, when we are already in desperate need to
    fix the essential existing programs like Social Security and
    Medicare. There are unsustainable promises of benefits that we
    simply cannot afford. What the Democrats are trying to do and
    pass here is the definition, I would say, of fiscal insanity.
        I am deeply concerned that this bill would violate the
    principles of the Hyde Amendment, despite a 45-year precedence,
    and mandate taxpayer funding for abortion and new Federal
    Medicaid-like entitlements through Obamacare.
        Dr. Holtz-Eakin, for 45 years the Hyde Amendment has
    prevented Medicaid and other Federal health programs funded in
    the Labor/HHS appropriations bill from funding elective
    abortions, and it has saved nearly 2\1/2\ million lives.
        The Democrats' tax and spend bill would create a new
    Federal health entitlement that mimics Medicaid. But rather
    than being funded through Labor/HHS where the Hyde Amendment
    would apply, it would receive an automatic, unlimited, and
    permanent appropriation in the bill itself.
        Dr. Holtz-Eakin, is it accurate to say that the Hyde
    Amendment would not apply to this new Federal health
    entitlement and therefore that abortions would be covered and
    paid for by the Federal taxpayers under this program?
        Dr. Holtz-Eakin. Yes.
        Senator Daines. Interestingly enough, it was recently
    suggested that the Democrats' $3.5-trillion tax and spending
    plan would cost nothing, that there would be a zero price tag.
    Now, I do not know where those folks went and studied math, but
    I am a chemical engineer. I studied a lot of math. I am not
    sure I would define that as being nothing.
        Dr. Holtz-Eakin, can you help us make some sense of that
    claim? And would the Democrats' tax and spending plan increase
    Federal spending and grow the Federal Government's role in the
    lives of everyday Americans, everyday Montanans?
        Dr. Holtz-Eakin. I think the simplest presentation of the
    budgetary impacts is to have each of the proposed programs be
    made permanent so we can look at them over 10 years. That is
    clearly the intent, in the end. And that is about $5.5 or $6
    trillion worth of new spending.
        The taxes that came out of Ways and Means are about $2
    trillion, a bit above. So that is a huge structural deficit
    that is being added to the existing structural deficit, largely
    driven by Social Security and Medicare. So the scale is
    enormous, but the scope is also enormous.
        This is a climate bill, an education bill, a health bill, a
    social safety net bill, a tax bill, education, housing--it is a
    big intrusion into these parts of the economy.
        Senator Daines. I think to try to simplify something that
    can be a bit confusing right now, because it is a very fluid
    situation, this is the largest spending bill in the history of
    the United States of America. It is the largest tax increase we
    have seen in 50 years. And of course we will see what the final
    product is, but you brought up a very important point, and that
    is, the underlying consequences here. If you want to see what
    will happen in the United States, look at what is going on in
    Europe at the moment, with natural gas prices up 500 percent,
    coal up 200 percent, oil up 80 percent. That is the movie
    trailer to what is coming to the United States of America if
    they get these Green New Deal policies passed.
        Dr. Holtz-Eakin. I am concerned about the inflation
    outlook. We discussed that earlier. And certainly there is a
    concerted effort to reshape the energy portfolio of the United
    States, and the strategy that is embedded in this bill, and
    more broadly, is to essentially run the electricity sector
    solely on renewables, run everything in the way of factories,
    homes, and vehicles on electricity, and somehow develop a
    national grid we have never had to connect them. It is not a
    low-risk bet, that is for sure.
        Senator Daines. There can be severe consequences to not
    getting this right, and we are seeing that, of course, right
    now in Europe. They moved away from nuclear and coal, and they
    are in a world of trouble.
        The last question: the recent CBO analysis found that
    health-care policy in the Democrats' tax and spend bill will
    cause at least 2.8 million Americans to lose their job-based
    coverage. Dr. Holtz-Eakin, could you elaborate on this analysis
    and how it might impact taxpayers?
        Dr. Holtz-Eakin. Well, as I mentioned earlier, the basic
    phenomenon is that there is too much money on the table in the
    exchanges, so much money that it is possible for employers to
    stop offering health insurance and use those savings to give
    their workers a raise, and send them off to get their insurance
    in the individual markets, and actually make more money as a
    firm.
        That is strictly the result of the subsidies, being played
    large. That was true of the original ACA for everyone up to
    about 300 percent of the Federal poverty level. These are
    richer subsidies, and so the same phenomenon is taking place.
        Senator Daines. Thanks, Dr. Holtz-Eakin.
        Thank you, Senator Stabenow.
        Senator Stabenow. Well, thank you very much. I do need to
    make one editorial comment at this point, and just indicate
    that I do not consider asking billionaires to pay more than
    zero a tax increase.
        So, Senator Cantwell?
        Senator Cantwell. Thank you.
        I would like to ask Dr. Blumberg about a couple of things,
    and this discussion is about a lot of aspects of the Affordable
    Care Act. One that I authored was the basic health plan. The
    basic health plan's final rules and regulations were written
    and implemented in, I think it was 2015 or 2016, finally. The
    basic health plan in New York covers approximately 800,000
    people. In the essential plan, it costs less than $500 annually
    for a family of four buying separate coverage.
        If you compare that to, on the exchange somewhere, the
    silver plan--basically these families are saving $1,000 in
    premiums. So I know you mentioned some innovation. Obviously
    the State of Washington is involved in a lot of innovation.
        What can we do to get more people to look at the basic
    health plan as a way to deal with the working-class population
    above the Medicaid rate? And anybody else who wants to answer
    that question may as well.
        Dr. Blumberg. I am happy to talk about that, Senator. So,
    from the perspective of experience, the basic health plan has
    had a very targeted interest in the State of New York, and in
    Minnesota, in terms of lowering the costs for private health
    insurance plans for the very low-income people below 200
    percent of the Federal poverty level, above the Medicaid
    threshold. This has led to much higher participation, more
    enrollment, more coverage in those States, clearly, from the
    lower premiums. So extending the ARPA subsidies and making them
    permanent moves toward that direction nationwide without States
    having to make that jump into the basic health plan.
        The basic health plan has a lot of positives for consumers.
    Unfortunately, it also pulls people out of the risk pool, the
    insurance pool, the marketplace, and separates them. And doing
    so can have impacts on the premiums and the attractiveness of
    the core marketplaces for insurers. So there are clearly a lot
    of positives that have come in the States that have been able
    to do it, but----
        Senator Cantwell. What----
        Dr. Blumberg [continuing]. It does have some down sides as
    well. There are tradeoffs, to be sure.
        Senator Cantwell. What proof points do you have on that?
        Dr. Blumberg. Well, our analysis looks at the risks, the
    health-care risks, and expected expenditures of individuals who
    are eligible and enrolled in the marketplaces, and how that
    would change on average when moving individuals who are up to
    200 percent of the Federal poverty level out into a separate
    program.
        Not all of those under 200 percent of poverty are very
    high-cost. They have medical care needs like others do, but
    oftentimes they are healthier on average. So in some States,
    moving them out of that insurance pool would both decrease the
    size of the marketplace enrollment appreciably, and could also
    increase the average health-care risk of people in the
    marketplace.
        By contrast, if you provide those more generous subsidies
    for those low-income people as the ARPA extensions do, and
    would if made permanent, with those that remain in the
    marketplace up to 200 percent of poverty, then those people
    stay in the pool and those pools have more strength.
        Senator Cantwell. Yes. I am not clear what you are
    suggesting on the pool, but I would say this: I disagree. The
    notion that we are--the market never bundled up these people.
    The market never served these people. The reason why we got
    this passed is because people realized that for these people,
    the market could not figure out a way to serve them. And so the
    fact that New York and Minnesota took the chance and did it,
    and now deliver more affordable health care for a population
    that was hard to serve--and guess what, you found a price
    point. And the answer was ``yes'' because of the price point.
        So now, to continue this fallacy, this hooey, is what I
    call it, just plain hooey that somehow we should continue to
    subsidize very expensive silver plans when you could make a
    market for people at a price point and deliver savings and
    deliver more affordable health care, is just a big mistake.
        And so people can keep talking all they want, but show me
    on the exchange where you have an affordable plan. You look at
    the basic health plan, you have an affordable plan.
        I see one of the witnesses there--do you want to respond to
    that?
        Mr. Isasi. I just wanted to say that I think that the
    concerns that my colleague is raising are real and important,
    which is what is the interplay between exchange coverage and
    the basic health plan options. However, what we have seen and
    experienced, as you are pointing out, Senator, is that those in
    New York and Minnesota, they only saw a 2-percent change in
    costs as that was offered.
        And to your point, what you are doing is, you are allowing
    the State to negotiate on behalf of a very large group of
    people and get really high-value coverage at lower costs. That
    is a home run.
        So I think the concern is real, but there has to be a way
    that we can allow that to happen. And what we saw in New York
    and Minnesota, the change was only 2 percent.
        Senator Cantwell. Exactly. So my point is--this is why I am
    saying it is hooey--if you look at the amount of money that we
    are going to continue to be asked for, as we were in the last
    COVID package--you know, hundreds of millions, billions of
    dollars to subsidize expensive health insurance when you do not
    have to. Why? Because you offered up a plan for a market that
    was not very interesting to insurers. You made it interesting,
    and you gave the States the right to negotiate on price. You
    got a price, and the answer was ``yes.''
        So 800,000 people in the State of New York have more
    affordable insurance, and in Minnesota. So I would say that you
    can contrast that to this experiment where people are trying to
    say, ``Oh, here is what I am going to do; I am going to offer
    you something on the exchange.'' It is not working to drive
    down the costs. It is not.
        So at least for this population--now I get it, if you start
    talking about maybe 300 percent, or maybe 250, I can see where
    people start saying that that impacts the marketplace. But when
    you think about who these individuals are, they were people who
    did not have insurance, worked for somebody who did not carry
    insurance. You were trying to make them interesting in the
    marketplace, and this, I would have to say, was a home run. And
    the cost to all of us on subsidizing more expensive insurance
    just is not--you know, we could take those same savings and do
    what my colleagues down the dais were just talking about in
    other reforms in health care, and get more traction.
        Mr. Isasi. And I think our position is that those policies
    are critically important. Not every State is going to be that
    forward and really take that on and make that kind of
    investment in building that basic health plan option. And it is
    really important that, at the end of the day, every family has
    access to high-quality insurance.
        So we think both policies are really important. But
    underneath all of this, I think, Senator, what you are pointing
    out and being such a champion on is that we have to get much
    more aggressive with our health insurers, to demand that they
    negotiate good prices. And that is part of what the basic
    health plan does. It gives volume, and gives real weight to
    that negotiation so they can get in there and stop the pricing
    abuse.
        Senator Cantwell. Well, I will not disagree with you there.
    I mean, that is what we liked about it. We liked the fact that
    they could negotiate again in helping to create a market that
    people were happy to bid in. I call it ``the Costco model.'' If
    you are going to buy in bulk, people are happy to give you a
    discount. And so this is a model that has successfully worked.
        Okay, do I--am I over my time? I am over my time, I am
    sure, thank you. I am going to submit a telehealth question for
    the record. Look, I do not know that anybody has asked about
    that. I really think it is very important that we also get very
    granular about that.
        Look, this is the information age. We should be taking
    information about health care, getting very granular about it,
    and coming up with better results. I think that is what we
    strive to do all the time on this side of the aisle, on the
    innovation side, and you have heard it from all of my
    colleagues here, whether it is the ACOs, or patient-centered
    health care, or the innovative work that the chair has been
    doing on integrating mental health and behavioral health. Look,
    these are all numbers.
        On telehealth, we just do not--I think we do not have the
    reimbursement rate that is truly incentivizing telehealth, and
    we are going to be in an information age where we have to have
    both the broadband and the reimbursement rate that allows
    physicians to move to this area where it is cost-effective. But
    I will submit a question for the record.
        Thank you.
        Senator Stabenow. Well, thank you very much, Senator
    Cantwell, and I could not agree more on the basic health plan
    and your leadership. Since we worked on the ACA together, it
    has been incredible. So, thank you very, very much.
        We now have virtually Senator Cortez Masto, Senator
    Lankford, and I believe Senator Young.
        So, Senator Cortez Masto?
        Senator Cortez Masto. Thank you, Madam Chair. Thanks for
    holding this hearing. Thanks to the witnesses for being here. I
    have listened most of the morning to the testimony this
    morning.
        Let me just say this. The last 2 years of the COVID-19
    pandemic have been an unbelievable test on our health system's
    ability to respond to the dramatic changes in the economy. And
    as many of you know on this panel, insurance rates in 2020
    remained generally stable, which tells us that there was much
    less disruption than we had anticipated.
        But here is an important caveat: Congress played a key role
    in shoring up so many of the various plans and programs where
    individuals can get coverage. Our work to prevent families from
    going uninsured during this period of time was critical. I
    know. I come from the State of Nevada. We had the highest
    unemployment rate at one point in time, 30 percent during this
    pandemic. And we really needed to strive to make sure we were
    bringing health-care relief during the middle of the health-
    care pandemic to individuals, however we could. That is why I
    so appreciate that we are getting into the details here about
    health care in this country.
        So, Mr. Isasi, let me start with you on the ACA tax
    credits. Prior to the pandemic, small businesses employed just
    under half the workforce in Nevada. These entrepreneurs are a
    critical part of our State's economy, but many of them are too
    small to offer health-care coverage.
        The American Rescue Plan included a handful of temporary
    subsidies to support the purchase of health insurance,
    including an expansion of the ACA tax credit. Can you talk
    about how these tax premiums, or these tax credits in the
    Rescue Plan, might benefit small business owners and their
    employees who are still in recovery from the disruption of the
    pandemic?
        And let me just add to this, Nevada is one of the States
    still in progress. We are not running at full capacity here.
    The hospitality industry is still stressed. The business
    travelers are not back. The international travelers are not
    back. We are still in the recovery mode.
        So if you could address that, I would appreciate it. And if
    you would also talk about gig workers, and the retail and
    hospitality workers who move from job to job as well, and how
    those tax credits, the tax credits we put in the Rescue Plan,
    might be essential to help them?
        Mr. Isasi. Thank you so much for the question. It is a
    terrific and important one.
        First and foremost, as you have heard, there are two main
    provisions within both the American Rescue Plan and now what is
    being considered in Build Back Better. The first, of course, is
    to provide support for small businesses to provide health
    insurance. Now in that regard, what we have to remember is, it
    is the most volatile source of employer-sponsored coverage;
    that is the hardest place. Small businesses oftentimes have the
    hardest time offering coverage.
        So we know, for example, if the American Rescue Plan
    provisions were extended, that businesses and employers would
    receive at least $5.1 billion in additional support for making
    health insurance affordable. But that second prong is really
    important to talk about. Not all small businesses will be able
    to offer their employees coverage. And those employees I just
    described--employees who are between jobs, or employees who
    want to start new businesses--the second piece of this is
    making sure that coverage in the exchanges is affordable.
        And what we have heard is, this question has been asked and
    answered. The subsidies have cut premium costs in half for
    families--in half--and that allows for a lot more mobility, a
    lot more economic development, as employees change jobs, lose
    jobs, et cetera. So these are really important provisions
    within both the American Rescue Plan and Build Back Better that
    protect employees and employers.
        Senator Cortez Masto. I appreciate that. Thank you.
        And then, Dr. Blumberg, today there are more than 845,000
    people enrolled in Nevada Medicaid. That is nearly one in three
    Nevadans. Over the course of the pandemic, the State took on
    more than 200,000 additional lives of Nevada's families who
    lost their income and their job-based health insurance, and
    really rely on the support that we were providing them.
        This would not have been possible without bipartisan work--
    and let me stress that--bipartisan work that we did to provide
    States with an enhanced FMAP to keep folks on the rolls during
    the public health emergency.
        Dr. Blumberg, let me ask you this. Can you describe--this
    may be difficult, but I am curious--can you describe how
    different the rates of uninsurance and underinsurance might
    have been had Congress not stepped in to support the Medicaid
    programs?
        Dr. Blumberg. Yes, it is a difficult question to answer.
    Clearly, by our estimates, millions more people would have been
    uninsured. We have done estimates of what the implications are
    in making these changes, the changes to the subsidies that were
    provided. If they were permanent, that would extend coverage by
    about 4 million people. So I think between the presence of the
    Medicaid expansion and the enhanced subsidies, we are talking
    about, Nationwide another 4 million people uninsured during the
    course of the pandemic, and maybe a little bit more than that
    in the short term.
        Senator Cortez Masto. Thank you. And I know my time is up,
    but let me just stress this abour my State. Again, many of our
    employees were furloughed. The COVID subsidies that we did, 100
    percent were needed. The American Rescue Plan in my State was
    supported in a bipartisan way, because of the nature of the
    devastation from the health-care pandemic.
        So it is important for us to work together to really
    address the health-care needs of so many families and
    businesses and entrepreneurs and individuals across the
    country. We should be working together. But I will tell you
    what, if we cannot get there in a bipartisan way, that is not
    going to affect our efforts in looking at how we address the
    needs of people in my State that will have a positive impact in
    other States as well. So thank you.
        Senator Stabenow. Thank you so much, Senator Cortez Masto,
    for your incredible leadership on these issues.
        We will now hear from Senator Young, remotely.
        Senator Young. Thank you so much.
        Dr. Holtz-Eakin, welcome to the committee. As my colleagues
    on the other side of the aisle move forward with a very large
    spending bill, $3.5 trillion--the largest tax and spending bill
    in American history--I think it is really important that we
    examine what I regard as the dangerous consequences this
    legislation will have on hardworking Americans across the
    country.
        Repeatedly, throughout the 2020 election, and since taking
    office, the Biden-Harris administration has pledged not to
    raise one single penny in taxes on anyone making less than
    $400,000 a year. That was a pledge, a promise. So I introduced
    an amendment during our August vote-a-rama to ensure my
    colleagues on the other side of the aisle had an opportunity to
    go on record in support of the Biden tax promise. My amendment
    received 49 votes from my friends on the other side of the
    aisle, and it successfully passed the Senate 99 to 1. It now
    binds this partisan budget package. Unfortunately, my Democrat
    colleagues seem poised to violate the Biden tax promise by
    proposing tax hikes on folks making less than $400,000.
        According to the nonpartisan Joint Committee on Taxation,
    over 15 percent of taxpayers earning between $75,000 and
    $100,000 a year will experience a tax hike in 2023. By 2027,
    that number will jump to more than 50 percent of taxpayers.
        So with that said, Dr. Holtz-Eakin, can you please speak
    for a moment on how the House Democrat package will raise taxes
    on people earning less than $400,000 per year?
        Dr. Holtz-Eakin. Well, certainly. There are really two
    mechanisms in play. One is simply the direct impact of some of
    the tax proposals, most notably taxes on cigarettes, e-
    cigarettes, where the buyers will have incomes under $400,000.
    So they get a direct tax increase.
        The second mechanism is the result of the fact that some
    taxes will be shifted onto workers, and those workers will be
    in the sub-$400,000 range. So for example, if you raise the
    corporation income tax, a large body of research shows that
    that tax cannot be borne entirely by shareholders or they will
    get an inadequate rate of return that cannot be borne entirely
    by customers, because that is a big price increase. That prices
    the firm out of the market, so it gets shifted back to workers
    in the form of lower wages.
        The Joint Committee has recognized this in their scoring of
    tax proposals for a long time. And so, the large increase in
    the corporation tax rate, the larger minimum taxes on global
    earnings, all of that will have impacts on people making less
    than $400,000.
        Senator Young. Well, thank you for explaining that. It
    gives some academic and economic respectability to the
    sentiment I hear on the ground in Indiana from regular people,
    who seem to understand that their taxes are going to go up
    should some variant of that House Democrat package pass the
    United States Senate and be signed into law.
        Dr. Holtz-Eakin, I really am grateful for your perspective
    on how the Medicare program's coverage gaps for cutting-edge
    innovations and medical technology impact access for patients
    today and also impact innovation in the future.
        I was disappointed with CMS's recent proposal to repeal the
    Medicare Coverage Innovative Technology rule 3 months prior to
    implementation. CMS developed MCIT in part due to concerns that
    delays and uncertainty in Medicare coverage limited seniors'
    access to important new and innovative technologies.
        How could the delay in CMS's coverage and reimbursement
    process impact innovation of lifesaving diagnostic tools,
    preventive technologies, and treatment, Doctor?
        Dr. Holtz-Eakin. So the rule is intended to provide
    automatic CMS reimbursement for those therapies that got a
    breakthrough designation by the FDA. And in doing so, you would
    accelerate the movement of that product into earning some
    revenue. That has clear incentives on innovation. If you have
    an innovation that never generates any revenue, you are not
    going to pursue that. If the revenue's impact is years and
    years into the future, you might not be able to survive, so you
    will not undertake that innovation. So, if you can accelerate,
    essentially the marketability of an innovative technology, or a
    pharmaceutical, or a device, that is going to help innovation.
        Senator Young. Do you have--very briefly--do you have any
    recommendations on how CMS could revive the proposed rule,
    rather than kill it outright?
        Dr. Holtz-Eakin. I think the concern that arises is that
    every therapy that gets a breakthrough designation
    automatically gets reimbursement. It is not obvious what the
    appropriate reimbursement is. So I think that what CMS should
    have the ability to do is to--essentially, the default is in,
    but if they can make the case that it will be too costly, or
    they do not know how to reimburse it, they could opt some
    therapies out.
        Senator Young. Thanks so much.
        [Pause.]
        Senator Young. Mr. Chairman?
        The Chairman. Yes, I think----
        Senator Young. My time has expired. My apologies.
        The Chairman. I thank my colleague. And I appreciate
    particularly Senator Stabenow filling in for so much of this,
    and Senator Crapo's courtesy.
        I believe our last questioner will be Senator Lankford.
    Senator Lankford, are you out there in cyberspace?
        Senator Lankford. I am, Mr. Chairman.
        The Chairman. Wonderful. Have at it.
        Senator Lankford. Thank you. And last means final for
    everyone who is on the panel as well. Thank you for being on
    the panel, for answering questions from us remotely, and
    physically. We appreciate your engagement on this. There is a
    lot of conversation that needs to happen on the health-care
    front.
        I have worked across the aisle on health-care solutions,
    trying to work to find innovative market-based solutions.
    Senator Brown and I have worked on issues with DIR fees, which
    are very significant in the drug pricing issue and keeping our
    independent pharmacies open. I have worked with Senator
    Menendez on the issue of tiering for drugs, also Senator Cardin
    on that issue of tiering for drugs, making sure that new drugs,
    when they come out, actually end up on the right tier to have
    the right pricing to be able to help the consumer. There are
    lots of market-based things that need to be done in this.
        Dr. Holtz-Eakin, I have a question for you--you have raised
    several of these issues. What do you see as the key market-
    based solutions that are not going to be a government-
    controlled health-care system that could actually bring lower
    prices and more innovation?
        Dr. Holtz-Eakin. I think the central set of attributes is
    to have it be highly decentralized, so the competition takes
    place on the ground with recognition of the population health-
    care districts.
        It should involve essentially capitated payments to
    insurers and managed care organizations and give them strong
    incentives to manage their costs and not let them become large.
    But there has to be with that a set of quality metrics that are
    easy to implement, and which allow observation of whether we
    have high-quality outcomes. And then you are moving the system
    towards something that pays for value, does so in a way that is
    suitable for the population characteristics--it might even
    include things outside of the traditional range of health
    services. You will get better health, and you will have
    incentives to keep costs down.
        Senator Lankford. Do you see a good example of that
    currently in our system?
        Dr. Holtz-Eakin. There have been attempts at this kind of
    thing all through the system. So we have seen bundles in
    traditional Medicare, where the idea is to look at a set of
    services and provide a bundled payment for that. Clearly, you
    have to ensure the quality of the outcome. Medicare Advantage
    is essentially one big bundle. And with the Medicare Advantage
    stars program, we have quality metrics. I think we could
    improve on that dramatically in the years going forward, and
    that would be a good place to start.
        Because with Medicare being such an important payer in the
    system, it is an important determinant of practice patterns.
    And using Medicare Advantage to drive a high-value delivery
    system that differs across the country, I think is a very smart
    strategy.
        Senator Lankford. Dr. Holtz-Eakin, none of us really know
    what this proposal is, this reconciliation proposal. It is
    sometimes $3.5 trillion, it is sometimes $2 trillion, it is
    sometimes $1.5 trillion. It has been a moving targets on
    things, so it has been difficult to be able to articulate some
    of the issues that are in it. From what you have seen in the
    public arena, how do you think that some of the proposals would
    affect R&D for the future in the United States for new drugs,
    new treatments, new therapies, new procedures?
        Dr. Holtz-Eakin. Well, certainly the tax proposals would
    hit, directly, a lot of the firms, and that would be a drain on
    their ability to pursue R&D. Some of the individual proposals
    on capital gains top rates are likely to affect the venture
    financing that is such an important part of the
    biopharmaceutical ecosystem and provides the financing for the
    startups that have been leaders in the innovative new oncology
    drugs, in particular recently.
        So I would worry about the impact of these proposals--which
    are sort of viewed as just benign ways to raise money--what
    they will do to the culture for investments, innovation, and
    the accumulation of intellectual property in the United States.
        Senator Lankford. So again, none of us have seen text on
    this. We are all just reading bits and pieces of it back and
    forth on the reconciliation proposal. We have had an agreement
    for decades across the government that we do not use Federal
    dollars, Federal taxpayers' dollars, to pay for the taking of
    life--that is, an abortion. We use health-care dollars to
    provide for protecting life, not actually taking life.
        So we have had what we call the Hyde Amendment--which you
    know extremely well--since the 1970s that has said we do not
    use Federal tax dollars to take the life of children. This
    seems to be a method to try to get around that and to actually
    now take Federal tax dollars for the first time and use them
    for abortion funding. Is that your best understanding, that the
    new mechanisms being put in place in this reconciliation
    proposal will allow for Federal tax dollars to be used for the
    taking of life in abortion?
        Dr. Holtz-Eakin. Yes.
        Senator Lankford. How far do you think that expansion could
    go, based on what you have seen?
        Dr. Holtz-Eakin. I hate to speculate. As near as I can
    tell, at the moment it is centered in the proposal to have a
    Federal
    Medicaid-like program in the States that did not expand
    Medicaid, and that program begins with 3 years of participation
    in the individual market for those targeted beneficiaries. It
    is certainly at least that.
        And as you say, until we see the final legislative text, we
    cannot know exactly where the boundaries might lie.
        Senator Lankford. Well, that will definitely be an
    incentive to--obviously I am very supportive of health care,
    and have been very, very engaged on community health centers
    and Federally Qualified Health Centers, and for all kinds of
    health-care innovation. We need a lot of innovation. We need a
    lot of marketplace ideas. But I have been strongly opposed to
    using health-care dollars to actually take the life of
    individuals, of children.
        I would like to be able to see our health-care dollars
    invested towards actually protecting life in the future.
        So, Mr. Chairman, thank you for allowing me to be the last
    questioner and to be able to jump into the conversation today.
    Thanks again to all the witnesses.
        The Chairman. We are doing--and let me thank our witnesses
    for being so extraordinarily patient. We are waiting for
    Senator Warren. I am supposed to be in another place, and
    Senator Warren will finish it up and will liberate you all.
        [Pause.]
        The Chairman. Okay, we are continuing to await Senator
    Warren.
        Apropos of this question of costs and the critiques of
    them, clearly expanding health coverage to the uninsured is
    important. And we also have to help families that have coverage
    who are getting crushed by health-care costs that drain their
    pocketbooks. And I am so pleased that Senator Warren is here. I
    am going to finish my question.
        And, Senator Warren, with your leave, when I finish this
    question, we will allow you to ask your questions and close the
    hearing. Is that acceptable to you?
        Senator Warren. Very acceptable. Yes.
        The Chairman. Okay. Here is the question. Apropos of you,
    Dr. Collins, these health plans with sky-high deductibles, and
    monthly premiums that are also in the stratosphere, can
    threaten people's access to care and are not worth the paper
    they are written on. If you want to reduce these out-of-pocket
    costs for families and make sure coverage is meaningful, we
    need to address the underlying costs here, which are the high
    prices we pay in this country for health care. We have been
    talking about that for upwards of 3 hours.
        And I just want to have Dr. Collins answer this question,
    and then I am going to turn it over to Senator Warren.
        What does it mean to these low- and middle-income families
    when we see the deductibles and out-of-pocket costs account for
    a larger and larger share of their income? Dr. Collins?
        Dr. Collins. Thank you, Senator Wyden.
        First of all, spending more on your premiums already
    burdens households that are struggling with the housing prices,
    food prices, child care prices. So that just adds to their
    burden at the front end.
        But then having high deductibles also impacts people's
    ability to access needed health care. And we know from years
    and years of surveys that high deductibles lead people to make
    decisions that go against their best health-care interests.
        The other dynamic that is happening is--and this has also
    been consistent--high deductibles lead people to be unable to
    pay their bills and to accumulate debt over time. And that has
    long-running financial implications for people, including
    having their credit scores ruined; accumulating credit card
    debt; depleting their savings; not being able to pay for food,
    heat, or their rent.
        So this is really an affordability crisis for lower-income
    people that we do need to address, first by protecting people,
    but then also addressing the underlying problem, which is high
    prices in the commercial insurance markets.
        The Chairman. Very important, Doctor. And the last point I
    am going to make is, Donald Trump's effort to repeal the
    Affordable Care Act would have more than doubled the
    deductibles under the proposal as written. And you got a sense
    from Dr. Collins about the pain that people are already going
    through when they are purchasing deductibles. Another good
    reason why it made sense to resist that Trump effort.
        Senator Warren, we have been 3 hours into it. It is very
    fitting that you wrap it up. And, after you have completed your
    questions, I appreciate your adjourning the Finance Committee.
        Senator Warren. I will do that. Thank you. Thank you very
    much, Mr. Chairman.
        As many people have talked about today, health-care
    coverage continues to be out of reach for millions of
    Americans. And right now Congress has this historic opportunity
    to take a big step in the right direction by passing the Build
    Back Better agenda to close the Medicaid coverage gap; to
    expand Medicare coverage for dental, vision, and hearing; to
    tackle affordability; and more.
        So let me start with you, Dr. Blumberg. You have written
    about many of these proposals. Now, if all of the remaining
    States expanded their Medicaid programs, how many of the
    uninsured people who would become eligible for health-care
    coverage have incomes below the poverty line?
        Dr. Blumberg. My colleagues estimate about 3 million of the
    newly eligible uninsured in those 12 States would currently
    have incomes below poverty.
        Senator Warren. Okay. And unless a person in this coverage
    gap gets a job that offers them health insurance, or unless
    they move to another State that has already expanded Medicaid,
    do these people have any other coverage opportunity?
        Dr. Blumberg. They do not have adequate and affordable
    other opportunities, no.
        Senator Warren. Okay. All right, so 3.2 million people
    below the poverty line--they do not have any other coverage
    options. The people caught in the Medicaid coverage gap are not
    boxed out of care because they are too wealthy, or because they
    have some other option available to them. Instead, these
    individuals, 60 percent of whom are people of color, have no
    health-care coverage because they are poor. That should not
    happen in America.
        So, Dr. Blumberg, if the 12 States that have not taken up
    the Medicaid expansion decided to do so tomorrow, how much new
    Federal money would the Federal Government be expected to find
    to finance these expansions?
        Dr. Blumberg. It would cause no increase and no need for
    revenue because it was already covered by the Affordable Care
    Act of 2010.
        Senator Warren. So this has already been budgeted for?
        Dr. Blumberg. Correct. There is a lot of money left on the
    table that has not been used by those States since 2014.
        Senator Warren. Okay. Money left on the table. If Congress
    passed a bill to close the coverage gap and found new money to
    cover the costs, would Congress be paying twice to cover this
    same population?
        Dr. Blumberg. Essentially, yes, that is the truth, since it
    was already funded--the same people and the same benefits.
        Senator Warren. All right; thank you.
        You know, this is an important point to focus on,
    especially in light of the CBO estimates that were released
    yesterday. To anyone saying that it is too expensive to cover
    the Medicaid coverage gap, or that we can only afford to cover
    this gap for a few years, I have some good news for you.
    Congress has already paid to insure this population. And it is
    time for the Federal Government to deliver these individuals
    the coverage that they have long been promised. And there is no
    reason to pay for it a second time.
        Now, Mr. Isasi, last year 9.5 million Medicare
    beneficiaries said that they could not access dental, vision,
    or hearing services that they needed. Can you just give us a
    little bit of a description about who those people were?
        Mr. Isasi. Absolutely. Thank you for the question.
        So we are talking about--it is really important to say
    this--three times as many folks are having trouble who have
    incomes below $10,000, than the people who have higher incomes.
    These are--in large, large part we are talking about the most
    vulnerable Medicare recipients. Also, it is many, many people
    of color compared to White Medicare beneficiaries; twice as
    many Black beneficiaries who cannot see a dentist and one-third
    as many Hispanics. Twice as many Black adults have lost all
    their teeth, as compared to the national average. And three
    times as many Mexican-American older adults have untreated
    tooth decay.
        So this is very much an issue for some of our most poor,
    vulnerable, and beneficiaries of color.
        Senator Warren. And they are the ones who would benefit
    most if Medicare were expanded to cover vision, dental, and
    hearing?
        Mr. Isasi. Without a question. Without a question.
        Senator Warren. Thank you very much for this. Low-income
    Americans, and people of color, will disproportionately benefit
    from Medicare dental, vision, and hearing coverage. Of the
    millions of Medicare beneficiaries who do not have access to
    these services, about 70 percent have said it is just because
    they cannot afford it.
        The best approach to getting universal coverage is through
    a
    single-payer system, but we should not overlook how powerfully
    important the provisions in the Build Back Better agenda are.
        We have a historic opportunity to make a real difference in
    people's lives, and we should do that.
        Mr. Isasi. I could not agree more.
        Senator Warren. Thank you very much.
        Senator Scott wishes to ask questions? Is that right? Oh,
    he wants to enter--sorry, I did not read the note--wants to
    enter documents into the record. Without objection, so ordered.
        [The documents appear in the appendix beginning on p. 157.]
        Senator Warren. And with that, I close this hearing. We
    will keep it open for questions for the record, and comments.
    Thank you very much.
        [Whereupon, at 1:08 p.m., the hearing was concluded.]

                                A P P E N D I X

                  Additional Material Submitted for the Record

                                  ----------

                 Prepared Statement of Hon. Michael F. Bennet,
                          a U.S. Senator From Colorado
    Mr. Chairman, I want to thank you for holding this hearing. I am glad
    we are here to talk about the importance of health coverage and the
    need to achieve universal coverage, which should be a priority for
    every single one of us on this committee.

    It has been over 4 years, September 12, 2017 to be exact, since we've
    had a dedicated hearing on coverage. Unfortunately, at that moment we
    were in the middle of combating an unsuccessful threat to the
    Affordable Care Act (ACA), and millions of Coloradans who would have
    been affected are deeply grateful it failed. One Urban Institute study
    found that under just partial repeal of the ACA, similar to legislation
    vetoed by President Obama in January 2016, 588,000 Coloradans would
    have tragically lost their insurance.\1\
    ---------------------------------------------------------------------------
        \1\ http://www.urban.org/sites/default/files/publication/86236/
    2001013-the-implications-of-partial-repeal-of-the-aca-through-
    reconciliatio_0.pdf.

    This hearing is essential to remind the American people of how the ACA
    led to increased health insurance coverage for millions of Americans
    while reducing the cost and improving the quality of plans available on
    the individual market. The American Rescue Plan Act (ARPA), signed into
    law earlier this year, expanded the Advance Premium Tax Credits (APTCs)
    identical to provisions in my Medicare-X Choice Act, which reduced the
    cost of health insurance for individuals and families purchasing non-
    group health insurance. Although I believe there are still steps we
    should take to achieve universal health coverage, like establishing a
    public option to finish the work of the ACA, I want to make it
    abundantly clear that it has been Democrats who have taken major
    ---------------------------------------------------------------------------
    legislative steps to improve coverage for Americans.

    Under the leadership of Senator Mitch McConnell and President Donald
    Trump, there were only efforts to reduce coverage, increase the
    availability of subpar health insurance, and remove patient protections
    like allowing insurance plans to deny coverage for preexisting
    conditions. In fact, Mitch McConnell has forced the Republican caucus
    to vote countless times to undermine the ACA and the needs of
    constituents across the country.

    Notably, five times proposals were brought to the floor, and five times
    those bills failed to become law:

    (1) In February 2011, Senator McConnell proposed an amendment to S.
    223, the FAA Air Transportation Modernization and Safety Improvement
    Act. This amendment would have prevented the ACA from being implemented
    in its entirety. It failed by a vote of 47 to 51.\2\
    ---------------------------------------------------------------------------
        \2\ https://www.senate.gov/legislative/LIS/roll_call_lists/
    roll_call_vote_cfm.cfm?congress=112&
    session=1&vote=000.

    (2) In December 2015, Senator McConnell led the effort to pass the
    Restoring Americans' Healthcare Freedom Reconciliation Act of 2015.
    This legislation would have repealed premium support, Medicaid
    expansion, and the individual and employer mandate penalties, among
    other provisions. The bill passed by a vote of 52 to 47.\3\ President
    Barack Obama rightfully vetoed this legislation.
    ---------------------------------------------------------------------------
        \3\ https://www.senate.gov/legislative/LIS/roll_call_lists/
    roll_call_vote_cfm.cfm?congress=114&
    session=1&vote=00329.

    (3) In July 2017, Senator McConnell, with the full support of President
    Donald Trump, brought to the floor a series of proposals to undermine
    the ACA. The first Senate proposal, the Better Care Reconciliation Act,
    repealed and replaced the ACA with a proposal that would increase the
    uninsured by 22 million.\4\ The proposal failed by a vote of 43 to
    57.\5\
    ---------------------------------------------------------------------------
        \4\ https://www.commonwealthfund.org/sites/default/files/documents/
    media_files_publications
    _issue_brief_2017_jul_ku_bcra_economic_effects_states.pdf.
        \5\ https://www.senate.gov/legislative/LIS/roll_call_lists/
    roll_call_vote_cfm.cfm?congress=115&
    session=1&vote=00168.

    (4) Just a day later, Senator McConnell and President Trump continued
    their efforts to repeal the ACA by putting forward a budget resolution
    amendment titled the Obamacare Repeal Reconciliation Act of 2017. This
    would have repealed Medicaid expansion and premium support in 2020,
    right as the Coronavirus Disease 2019 unexpectedly created a public
    health and economic crisis. This amendment failed by a vote of 45 to
    55.\6\
    ---------------------------------------------------------------------------
        \6\ https://www.senate.gov/legislative/LIS/roll_call_lists/
    roll_call_vote_cfm.cfm?congress=115&
    session=1&vote=00169.

    (5) Finally, after a few days of further discussion on a wide range of
    careless proposals, Senator McConnell put forward his final proposal,
    the Health Care Freedom Act of 2017, a ``skinny'' repeal of the ACA,
    without a replacement, that would have reduced coverage for 15 million
    Americans.\7\ This failed by a vote of 49 to 51.\8\
    ---------------------------------------------------------------------------
        \7\ https://www.cbo.gov/system/files/115th-congress-2017-2018/
    costestimate/s.a.667.pdf.
        \8\ https://www.senate.gov/legislative/LIS/roll_call_lists/
    roll_call_vote_cfm.cfm?congress=115&
    session=1&vote=001.

    Over and over, Senator McConnell took actions that communicated that
    the party he leads will not work to increase coverage, often burdening
    ---------------------------------------------------------------------------
    the very individuals that they represent.

    Time and time again, Democrats have worked to improve and increase
    coverage for all Americans, regardless of income, geography, race/
    ethnicity, or any other background.

    I will continue work with my colleagues and fight to protect the ACA,
    the improvements made under the ARPA, and take further actions, like
    creating a public option, to achieve a shared goal of universal
    coverage.

    This hearing is just the next step to accomplish this, and I thank my
    colleagues and the witnesses for their efforts in realizing this goal.

                                     ______

                    National Academy for State Health Policy

     State-Based Marketplaces Report Savings and Growth for Older Adult and
                        Moderate Income Populations

    _______________________________________________________________________

    The American Rescue Plan Act (ARPA) had a significant impact on the
    ability of Americans to access and afford health insurance through the
    federally facilitated marketplace and state-based exchanges across the
    country. ARPA's dual policies of enhancing existing tax credits used to
    purchase coverage and providing first time tax credits for moderate
    income households (those above 400% of the federal poverty level (FPL))
    enabled millions to access \1\ coverage through marketplace plans since
    the law's enactment in March of 2021.
    ---------------------------------------------------------------------------
        \1\ https://www.hhs.gov/about/news/2021/09/15/biden-harris-
    administration-announces-2-8-million-people-gained-affordable-health-
    coverage-during-2021-special-enrollment.html.

    The National Academy for State Health Policy (NASHP) recently analyzed
    how ARPA has impacted enrollees in state-based health insurance
    marketplaces (SBMs) across different age and income groups.
    Specifically, NASHP examined households with individuals over 55 years
    of age for whom health insurance is often cost- prohibitive because of
    higher charges associated with age (known as age rating) and
    ---------------------------------------------------------------------------
    individuals with income over 400% FPL who newly qualify forsubsidies.

    To conduct this analysis, NASHP collected data from 13 SBMs operating
    in CO, CT, DC, ID, MD, MA, MN, NV, NJ, NY, PA, VT, and WA. This
    analysis was conducted as part of NASHP's work with the State Based
    Exchange Leadership Network--a consortium of state leaders and staff
    operating the SBMs. Data are current as of September 2021, except where
    otherwise indicated.

     Increased Enrollment and Affordability for Pre-Retirees in SBM Plans

    Over a half million (552,069) 55+ year-olds are currently enrolled in
    plans through the 13 SBMs reporting data, with the majority of SBMs
    (CO, CT, ID, MD, MA, MN, VT, WA) \2\ reporting increased enrollment of
    this population when compared to this time last year. For example,
    Colorado reported an increase in enrollment of 11 percent and two
    States, Idaho and Maryland, reported a significant increase in
    enrollment of 63 and 55 percent, respectively.
    ---------------------------------------------------------------------------
        \2\ 2020 data not available for NJ and PA during which they
    operated on the federally facilitated marketplace. Data from NV
    unavailable at the time of reporting.

    Enrollment increases may be a result of lower out-of-pocket premium
    costs resulting from ARPA's premium tax credit enhancements. Eleven
    SBMs report lower average premiums paid by 55+ year-olds after the
    enactment of APRA. Average premiums for 55+ year-olds fell by over 20
    percent in eight States (CT, DC, MD, NV, NJ, PA, RI, WA), with six of
    those States reporting decreases in premiums of over $100 per month (or
    $1,200 per year) (CT, DC, NV, NJ, PA, WA).\3\
    ---------------------------------------------------------------------------
        \3\ Analysis is based on premium data reported as of April 1, 2021.
    Data not available for MA and NY which do not allow for age-based
    rating of premiums.

    Increased affordability may also be driving this population to seek
    higher value coverage in the form of silver and gold level plans
    available through the marketplaces. Growth was especially notable in
    gold-level enrollments, as SBMs saw a 17% increase compared with last
    year.\4\ Overall 63% of 55+ enrollees elected either a silver or gold
    plan across the 13 SBMs.
    ---------------------------------------------------------------------------
        \4\ 2020 data not available for NJ and PA during which they
    operated on the federally facilitated marketplace. Data from NV
    unavailableat the time of reporting.

     ARPA Yields Significant Savings for Some Pre-Retirees

    Subsidy enhancements have enabled single digit coverage for the first
    time for older adults. For example, a 60-year-old in Connecticut making
    $19,000 a year can now access a silver-level plan through the SBM for
    as low as $3/month or $36 per year (a 95 percent savings from pre-ARPA
    rates).

     Affordability and Enrollment Gains for Moderate-Income Enrollees in
                        SBM Plans

    ARPA imposed a first-time ever cap \5\ on monthly premium expenses
    households must pay toward marketplace coverage, regardless of income.
    This meant that, for the first time, households earning at or above
    400% FPL ($104,800 for a family of four in 2021), could qualify for
    premium tax credits available through the marketplaces. The
    availability of tax credits has led to significant savings, with eight
    States (CO, DC, ID, MA, MD, NV, NY VT) reporting that average out-of-
    pocket premiums has fallen by greater than $100 per month (or $12,000
    per year) since ARPA's enactment. The District of Columbia and Idaho
    report that average premiums have fallen over $300 per month (or $3,600
    per year), while Colorado reports savings of $497 per month (or $5,964
    per year).\6\
    ---------------------------------------------------------------------------
        \5\ Under ARPA, the cap is set at 8.5% of household income.
        \6\ Based on households electing to receive financial assistance in
    the form of advanced premium tax credits. Data not available for CT,
    MN, NJ.

    The increased affordability of SBM plans for those with income at or
    above 400% FPL may have triggered more of these moderate income
    households to enroll in coverage through SBMs. Since the enactment of
    ARPA, the U.S. Department of Health and Human Services reports that an
    estimated 88,600 individuals from households with income above 400% FPL
    have enrolled in coverage through the SBMs.\7\
    ---------------------------------------------------------------------------
        \7\ U.S. Department of Health and Human Services, ``2021 Final
    Marketplace Special Enrollment Period Report.'' Report, September 15,
    2021. Accessed at: https://www.hhs.gov/sites/default/files/2021-sep-
    final-enrollment-report.pdf.

    Looking ahead, SBMs are preparing for the next open enrollment season,
    launching on November 1, and working to ensure that customers, new and
    old, continue to leverage their resources to access the best value
    coverage. NASHP will continue to monitor emerging SBM trends. See
    addendum and infographic below for some additional details.

     Customer Testimonials on ARPA and Marketplace Coverage

    Since enactment of ARPA, customers of the Washington Health Benefit
    Exchange report greater ability to afford and use coverage through the
    marketplace. As shared by one 57-year old customer: ``My bill [is] $242
    less than I presently pay. . . . If this continues, I could afford to
    get better insurance or pay out of pocket for occupational therapy that
    my insurance and the third party employer tell me I can't have.''
    Another consumer reported that the additional subsidies enabled them to
    move from bronze to silver-level coverage which, in-turn, enabled them
    to afford prescription medicines the individual had previously been
    unable to purchase.

                                    Addendum

     Additional Customer Testimonials as Reported by State-based
            Marketplaces

    Massachusetts Health Connector

    Responses reported from a customer survey of enrollees over 55 years of
    age:

    ``The American Rescue Plan helped me tremendously. I was struggling
    paying high rent, high insurance of $ 498.00 a month plus dental
    insurance, bills, food, and personal protective equipment. I know I
    would not be able to pay insurance without the help of The American
    Rescue Plan I can use the extra money for transportation back and forth
    to work.'' --Sheila (Boston, MA)

    ``My husband passed away in May 2020 from the coronavirus. We owned our
    own construction business and since we were self-employed, we had no
    help with health insurance. I had to sell my home and close our
    business, and I didn't know what I was going to do for health insurance
    as I was out of a job. Thank goodness the American Rescue Plan helped
    me continue to have health insurance coverage.'' --Debra (Peabody, MA)

    ``I have been a diabetic for 58 years and having no premium and very
    low cost on prescription has been huge. I have never made a lot of
    money and shelling out what I used to held me back from doing a lot of
    things. Diabetes is a rich man's disease. Prices on everything are
    going up and what I save in medical costs leaves me with more money for
    living.'' --Lisa (Brockton, MA)

    Pennie/Pennsylvania

    ``I had an incident a year ago. I retired from the Harrisburg school
    district. I tore my Achilles heel and was in a cast for longer than 6
    weeks. I needed to transfer to a `boot'--[but could not get] one
    without insurance. I [paid] $2,000 per month for health insurance. This
    was too much, but we made it work. This year, Pennie has made things
    very, very affordable. I was diagnosed with Lupus and Prostatitis if I
    did not have this insurance there is no way in the world that I would
    be protected. I am getting the proper help now I pay $40 for therapy or
    $15 for an office visit--before it was $100 per visit. I used to have
    to cancel my appointments so that my wife could go to her appointment.
    This year, my wife has Crohn's disease--under Pennie, she's protected!
    My wife and I now have the help that we need.'' --Keith, Age >55

    Since enactment of ARPA, Keith and his wife now pay only $99.84 a month
    for coverage, a savings of $22,802 per year.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                     __

               Prepared Statement of Linda J. Blumberg, Ph.D.,*
                       Institute Fellow, Urban Institute
    ---------------------------------------------------------------------------
        * The views expressed are my own and should not be attributed to
    the Urban Institute, its trustees, or its funders.
    ---------------------------------------------------------------------------
        Chairman Wyden, Ranking Member Crapo, and distinguished members of
    the committee, thank you for inviting me to address current issues
    related to health insurance in the U.S. While I am an employee of the
    Urban Institute, the views expressed in this testimony are my own and
    should not be attributed to the Urban Institute, its trustees, or its
    funders.

        Research has demonstrated that the Affordable Care Act has
    increased health insurance coverage in the U.S. among the nonelderly by
    more than 20 million people.\1\ The enhancements of premium tax credits
    provided by the American Rescue Plan Act (ARPA) have increased coverage
    further, albeit temporarily, given the limited duration of the enhanced
    credit period. These reforms also have improved affordability of
    insurance coverage and increased access to care for millions of
    Americans.
    ---------------------------------------------------------------------------
        \1\ Linda J. Blumberg, Michael Simpson, Matthew Buettgens, Jessica
    Banthin, and John Holahan, ``The Potential Effects of a Supreme Court
    Decision to Overturn the Affordable Care Act: Updated Estimates''
    (Washington, DC: Urban Institute, 2020).

        As a result, the U.S. health insurance system provided a stronger
    safety net during the pandemic-induced economic downturn than in prior
    recessions. According to the Urban Institute's Health Reform Monitoring
    Survey, the number of nonelderly adults with employer-based insurance
    fell by approximately 5.5 million between March 2019 and April 2021.\2\
    Yet unlike prior recessions, the number with Medicaid increased even
    more. As a consequence, the number of uninsured held steady instead of
    increasing nationwide. However, while nationwide data is encouraging,
    the number of uninsured rose in nonexpansion States because smaller
    shares of people who lost employer coverage were eligible for Medicaid.
    ---------------------------------------------------------------------------
        \2\ Michael Karpman and Stephen Zuckerman, ``The Uninsurance Rate
    Held Steady during the Pandemic as Public Coverage Increased: Trends in
    Health Insurance Coverage between March 2019 and April 2021''
    (Washington, DC: Urban Institute, 2021).

        Still, nationwide, the private nongroup insurance Marketplaces are,
    by all indications, fundamentally stable. In 2021, the national average
    benchmark premium fell for the third year in a row, with average
    decreases in 43 States and only 1 State with an increase of more than 6
    percent, following very large premium increases in 2018.\3\ In
    addition, insurer participation in the Marketplaces has increased since
    2017 in many population centers. However, in areas with lower insurer
    participation and/or consolidation among health providers, premiums and
    premium growth tend to be higher.
    ---------------------------------------------------------------------------
        \3\ John Holahan, Jessica Banthin, and Erik Wengle, ``Marketplace
    Premiums and Participation in 2021'' (Washington, DC: Urban Institute,
    2021).

        Even recognizing the successes, significant gaps remain in the
    health insurance system. First, more than 3 million people living below
    the poverty line and 1.2 million near-poor people are uninsured and
    ineligible for any financial assistance because they live in States
    that have not expanded Medicaid eligibility.\4\ In addition, absent the
    temporarily increased ARPA Marketplace subsidies, my Urban Institute
    colleagues estimate that the number of uninsured nationally would reach
    30 million in 2022.\5\ Conversely, they estimate that making the ARPA
    subsidies permanent and extending them to lower-income people in
    nonexpansion States would decrease the uninsured by another 7 million
    people at a net Federal cost of $27.7 billion in 2022, or $333 billion
    over 10 years. In addition, these estimates indicate that such policies
    would increase Marketplace enrollment while decreasing Marketplace
    premiums by 18 percent, on average, because of the relatively better
    average health of the new enrollees.\6\ Taking lower premiums and out-
    of-pocket costs into account, the average per enrollee health-care
    costs for those insured through the Marketplaces would be over $1,100
    lower per year.\7\
    ---------------------------------------------------------------------------
        \4\ Michael Simpson, Jessica Banthin, and Matthew Buettgens, ``Most
    Uninsured People Gaining Medicaid Eligibility under Potential Expansion
    Would Have Incomes below the Federal Poverty Level'' (Washington, DC:
    Urban Institute, 2021).
        \5\ Jessica Banthin, Michael Simpson, and Andrew Green, ``The
    Coverage and Cost Effects of Key Health Insurance Reforms Being
    Considered by Congress'' (New York: Commonwealth Fund, 2021).
        \6\ Jessica Banthin, Matthew Buettgens, Michael Simpson, and Robin
    Wang, ``What If the American Rescue Plan's Enhanced Marketplace
    Subsidies Were Made Permanent? Estimates for 2022'' (Washington, DC:
    Urban Institute, 2021).
        \7\ Banthin, Buettgens, Simpson, and Wang, ``What If the American
    Rescue Plan's Marketplace Subsidies Were Made Permanent?''

        While such opportunities exist to expand coverage, further action
    also must be considered, because the pending end of the national public
    health emergency (PHE) will also end the requirement that States keep
    people enrolled in Medicaid, and this transition poses future
    challenges for coverage. Urban Institute estimates indicate that
    Medicaid enrollment could decrease by as many as 15 million people
    during 2022 once the PHE-related maintenance-of-effort requirement
    ends, including 8.7 million adults and 5.9 million children. These
    numbers are partly offset by the projection that one-third of those
    adults would qualify for subsidized private health coverage in the
    Marketplaces. About two-thirds of the children would be eligible for
    assistance, much of it through CHIP. However, others have highlighted
    that the number losing Medicaid coverage at the end of the PHE could
    exceed 15 million people, given the difficulty of contacting still-
    eligible people to reverify and renew enrollment when they have not
    been in contact with State Medicaid systems for up to 2 years.\8\
    ---------------------------------------------------------------------------
        \8\ Kinda Serafi, Cindy Mann, and Nina V. Punukollu, ``The Risk of
    Coverage Loss for Medicaid Beneficiaries as the COVID-19 Public Health
    Emergency Ends,'' To the Point (blog), Commonwealth Fund, September 23,
    2021, https://www.commonwealthfund.org/blog/2021/risk-coverage-loss-
    medicaid-beneficiaries-covid-19.

        Thus, the risk of a significant increase in the number of people
    uninsured following the end of the PHE is substantial, and such risk
    merits legislative and administrative consideration. As I have
    outlined, permanent, enhanced premium tax credits should encourage more
    people to move from Medicaid to the Marketplace once they lose Medicaid
    eligibility. Further, aggressive outreach and enrollment efforts at the
    State and Federal levels, in addition to streamlining Medicaid
    redetermination and enrollment processes, are among viable options
    available to address the potential for a near-term increase in the
    ---------------------------------------------------------------------------
    number of uninsured Americans.

        Thank you for the opportunity to share information with you on
    these important issues. I'd be happy to answer any of your questions.

                                     ______

     The Coverage and Cost Effects of Key Health Insurance Reforms Being
                        Considered by Congress

    _______________________________________________________________________
    by Jessica S. Banthin, Michael Simpson, and Andrew Green

    Errata

    On October 5, 2021, we corrected errors in this brief resulting from a
    coding error that did not apply all cost-sharing reductions to
    household spending. In the ``Changes in Household Spending'' section
    and Appendix Table 3, the increase in households' out-of-pocket
    spending is $0.6 billion and households' overall savings is $8.2
    billion in 2022. Previously, these estimates were $7.0 billion and $1.8
    billion.

    Highlights

          Making ARPA premium subsidies permanent and filling the Medicaid
    coverage gap would reduce the number of people without insurance by
    nearly one-
    quarter, or 7.0 million people, in 2022.

          All States would see a drop in their uninsured population, with
    the largest percentage declines in States that have not yet expanded
    Medicaid eligibility.

          Enrollment in subsidized marketplace plans would nearly double,
    while premiums would fall by 18 percent on average.

          Federal spending would increase by an estimated $442 billion
    over 10 years and, after accounting for increased revenues because of
    higher wages and some offsetting savings, this reform would increase
    the Federal deficit by an estimated $333 billion if no other changes in
    policy were made.

    Introduction

    As part of the budget process for fiscal year 2022, Congress is
    considering a package of two reforms to the Affordable Care Act (ACA).
    Under the package, the enhanced premium subsidies included in the
    American Rescue Plan Act (ARPA) would become permanent. Additionally,
    the so-called Medicaid coverage gap would be filled by extending
    eligibility for marketplace subsidies to people earning below 100
    percent of the Federal poverty level (FPL) in 12 States that have not
    yet expanded Medicaid.

    Following is a closer look at the two reforms.

    Making the ARPA Premium Subsidies Permanent

    Passed in the wake of economic disruption and job losses because of the
    COVID-19 pandemic, the ARPA temporarily enhances premium tax credits in
    the marketplace for 2021 and 2022. The law lowers the limits on
    premiums paid by families who were eligible for subsidies before ARPA
    and expands eligibility for subsidies to individuals and families who
    were previously ineligible because their incomes were greater than 400
    percent of FPL (more than $106,000 for a family of four).

    The new subsidy schedule substantially reduces households' premium
    payments (see Appendix Table 1). Making these changes permanent would
    have significant effects on coverage, as we've previously estimated.\1\
    ---------------------------------------------------------------------------
        \1\ Jessica Banthin et al., What If the American Rescue Plan's
    Enhanced Marketplace Subsidies Were Made Permanent? Estimates for 2022
    (Urban Institute, Apr. 2021).
    ---------------------------------------------------------------------------

     Extending Eligibility for Marketplace Subsidies in Nonexpansion States

    Under current law, people with incomes below 100 percent of FPL are not
    eligible for marketplace subsidies. Because of the large gap between
    traditional Medicaid eligibility levels in some States and 100 percent
    of FPL, about 5.8 million uninsured adults living in the 12
    nonexpansion States do not have access to affordable health insurance
    coverage. (For example, Texas covers parents below 17 percent of FPL
    while Alabama covers those below 21 percent of FPL; childless adults
    are generally not covered in nonexpansion States.)

    Although health insurance coverage through the marketplace is not as
    comprehensive as Medicaid coverage, expanding eligibility for
    marketplace subsidies to this group results in large increases in
    coverage.\2\
    ---------------------------------------------------------------------------
        \2\ John Holahan et al., Filling the Gap in States That Have Not
    Expanded Medicaid Eligibility (Commonwealth Fund, June 2021).

    For this analysis, we examined the coverage and cost impact of these
    two key reforms together, using the Urban Institute's Health Insurance
    Policy Simulation Model (see ``How We Conducted This Study.'') Our
    analysis incorporates the effect on enrollment of increased Federal
    spending on outreach.

    Findings

    Changes in Coverage

    Implementing these two policies would increase insurance coverage,
    reducing the number of uninsured people by nearly one-quarter. The
    number of uninsured people would fall by 7.0 million, from 30.3 million
    to 23.3 million (Exhibit 1).

    EXHIBIT 1

     Coverage of the Nonelderly Population Under Pre-ARPA Law and Permanent
        ARPA Subsidies with Medicaid Gap Filled by the Marketplace, 2022

     Thousands of people    Pre-ARPA      Reform       Change     Change (%)

    Employer                  149,214      148,543         -670        -0.4%

    Subsidized nongroup         9,219       17,252        8,033        87.1%

    Unsubsidized                5,636        5,301         -335        -5.9%
     nongroup

    Medicaid/CHIP              71,896       72,242          346         0.5%

    Other coverage *           11,213       10,832         -381        -3.4%

    Uninsured                  30,269       23,276       -6,993       -23.1%

    Total                     277,446      277,446            0         0.0%

    Notes: Reform includes permanent ARPA subsidies and filling the Medicaid
      gap by expanding subsidies for marketplace plans below 100 percent of
      the Federal poverty level. ARPA = American Rescue Plan Act. CHIP =
      Children's Health Insurance Program.
    * Other coverage includes Medicare and other public coverage and a small
      amount of Affordable Care Act noncompliant nongroup coverage.
    Data: Urban Institute, Health Insurance Policy Simulation Model (HIPSM),
      2021.
    Source: Jessica Banthin, Michael Simpson, and Andrew Green, The Coverage
      and Cost Effects of Key Health Insurance Reforms Being Considered by
      Congress (Commonwealth Fund, Sept. 2021, updated Oct. 5, 2021), https:/
      /doi.org/10.26099/4gyx-ry85.

    The enhanced subsidies would motivate many people who were previously
    eligible for marketplace subsidies but uninsured to sign up for
    coverage. Enrollment in the subsidized nongroup marketplace would jump
    by 8.0 million people, nearly doubling in size to 17.3 million people
    across the health-care.

    We also estimate 670,000 fewer people would be covered by employer-
    sponsored insurance (ESI). Most of the people who would leave ESI are
    those whose employers still sponsor health insurance but whose
    offerings are not deemed affordable; only a very small number would
    likely leave ESI because their companies would stop offering health
    coverage. This number does not include the reduction in ESI because of
    an administrative change in the so-called family glitch, which is
    discussed later in this brief.

    We project that Medicaid and Children's Health Insurance Program (CHIP)
    enrollment would increase slightly by 346,000 people. Higher enrollment
    in the marketplace would likely trigger eligibility determinations that
    prompt family members to enroll in Medicaid. (Additional details on
    coverage changes are available in Appendix Table 2.)

    Changes in Marketplace Premiums

    An important result of the large increase in marketplace enrollment is
    the effect on premiums. We estimate that lower health risk scores among
    new enrollees would reduce premiums by about 18 percent in 2022 if
    insurers were able to adjust premiums immediately. The main reason
    average health risk would fall under these policies is that those with
    greater health-care needs are more likely to have already obtained
    coverage before passage of the ARPA.

    Changes in Coverage by Income

    Exhibit 2 shows that reductions in uninsured people would be
    concentrated in the lowest income categories. About 3.3 million
    uninsured people with income below 138 percent of FPL would gain
    coverage, largely because more residents of the 12 nonexpansion States
    would be eligible for marketplace subsidies. Nearly 600,000 uninsured
    people with income between 138 percent and 200 percent of FPL would
    gain coverage, while 2.2 million uninsured people with income between
    200 percent and 400 percent of FPL would become covered as well, mainly
    because of more generous premium subsidies. Among those with income
    above 400 percent of FPL, 830,000 uninsured people would obtain
    coverage because of lower premiums and expanded eligibility for premium
    subsidies under the ARPA.

    Changes in Coverage by Race and Ethnicity

    As a result of the new policy, all racial and ethnic groups would
    experience large declines in the numbers of nonelderly people without
    insurance (Exhibit 3). According to our estimates, Black non-Latino/
    Hispanic and white non-Latino/Hispanic groups would see the largest
    percentage reductions--33.5 percent and 26.9 percent, respectively.

    People of Latino/Hispanic ethnicity have the highest rate of uninsured
    people (20.9 percent, data not shown) compared to other groups, owing
    to the undocumented immigrant population. Under this policy, they would
    see the smallest percentage reductions in uninsured people, 15.7
    percent, compared to other groups.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    EXHIBIT 3

       Number of Uninsured Nonelderly People, Pby Race and Ethnicity, 2022

     Thousands of people    Pre-ARPA      Reform       Change     Change (%)

    American Indian and           596          455         -141       -23.6%
     Alaska Native

    Asian and Pacific           1,640        1,366         -274       -16.7%
     Islander

    Black, non-Latino/          3,638        2,421       -1,217       -33.5%
     Hispanic

    Latino/Hispanic            10,539        8,883       -1,656       -15.7%

    White, non-Latino/         13,458        9,836       -3,622       -26.9%
     Hispanic

    Other                         398          316          -83       -20.7%

    All racial and             30,269       23,276       -6,993       -23.1%
     ethnic groups

    Notes: Reform includes permanent ARPA subsidies and filling the Medicaid
      gap by expanding subsidies for marketplace plans below 100 percent of
      the Federal poverty level. ARPA = American Rescue Plan Act.
    Data: Urban Institute, Health Insurance Policy Simulation Model (HIPSM),
      2021.
    Source: Jessica Banthin, Michael Simpson, and Andrew Green, The Coverage
      and Cost Effects of Key Health Insurance Reforms Being Considered by
      Congress (Commonwealth Fund, Sept. 2021, updated Oct. 5, 2021), https:/
      /doi.org/10.26099/4gyx-ry85.

    Changes in Spending and Effects on Deficits

    By making the ARPA premium subsidies permanent and extending
    eligibility for marketplace subsidies, we estimate Federal spending on
    marketplace subsidies and Medicaid and CHIP would increase by $36.9
    billion in 2022 (see Appendix Table 3). This increased spending would
    be offset partly by savings from reductions in the demand for
    uncompensated care. Although we include all of the estimated $7.5
    billion reduction in uncompensated care in our calculation, only about
    half would be realized as savings directly through a reduction in
    Medicare Disproportionate Share Hospital (DSH) payments. The net effect
    on the deficit would amount to $27.7 billion in 2022 after accounting
    for higher Federal revenues because of reductions in ESI coverage,
    which is generally exempt from income and payroll taxes.

    The increased cost of marketplace subsidies and Medicaid from 2022 to
    2031 would add up to $442 billion (Exhibit 4). After accounting for
    increased revenues because of reductions in ESI and reductions in
    uncompensated care, we estimate that the net effect on the Federal
    deficit would be $333 billion over 10 years, from 2022 to 2031. The
    costs would likely be somewhat lower than presented here because
    consumers and insurers may take more time than we assumed to fully
    respond to the new options.

    EXHIBIT 4

      Federal Spending for the Nonelderly Population Under Pre-ARPA Law and
      Permanent ARPA Subsidies with Medicaid Gap Filled by the Marketplace,
                                    2022-2031

           Billions of dollars           Pre-ARPA      Reform       Change

    Federal spending on acute health         5,655        6,007          353
     care

        Medicaid                             4,578        4,603           25

        Marketplace tax credits                689        1,106          418

        Marketplace cost-sharing                 0            0            0
         reductions

        Reinsurance                             16           16            0

        Uncompensated care *                   372          282          -90

    Increase in Federal revenue **             n/a          n/a           20

    Total net change in deficit                n/a          n/a          333

    Notes: Reform includes permanent ARPA subsidies and filling the Medicaid
      gap by expanding subsidies for marketplace plans below 100 percent of
      the Federal poverty level. ARPA = American Rescue Plan Act. CHIP =
      Children's Health Insurance Program. n/a = not applicable; HIPSM
      computes only changes for revenues and deficits.
    * Uncompensated care represents demand for care by the uninsured. At the
      Federal level, about half the change in demand resulting from a
      decrease in the number of uninsured people would automatically be
      realized as Federal savings to Medicare disproportionate share
      hospitals.
    ** Change in Federal revenue include the income and payroll tax effects
      of employer-sponsored insurance crowd-out.
    Data: Urban Institute, Health Insurance Policy Simulation Model (HIPSM),
      2021.
    Source: Jessica Banthin, Michael Simpson, and Andrew Green, The Coverage
      and Cost Effects of Key Health Insurance Reforms Being Considered by
      Congress (Commonwealth Fund, Sept. 2021, updated Oct. 5, 2021). https:/
      /doi.org/10.26099/4gyx-ry85.

    Changes in Household Spending

    We estimate that household spending on premiums would fall $8.8 billion
    in 2022 even as enrollment increases. However, household spending on
    out-of-pocket costs for health-care services (including deductibles and
    copayments) would increase by an estimated $0.6 billion in 2022 as
    access to and utilization of health-care increases. Overall, households
    would save $8.2 billion, according to our estimates. In previous work,
    we found the ARPA by itself would reduce average household spending per
    enrollee by 23.1 percent.\3\
    ---------------------------------------------------------------------------
        \3\ Banthin et al., What If the American Rescue Plan's Enhanced
    Marketplace Subidies Were Made Permanent?, 2021.
    ---------------------------------------------------------------------------

    Changes in Coverage by State

    If passed, this proposal would reduce the number of uninsured people in
    every state. We find that the largest percentage declines would occur
    in States that have not yet expanded Medicaid (Appendix Table 4).
    Declines in the proportion of uninsured people range from nearly 44
    percent in Alabama to less than 6 percent in Utah.

     Impact of Additional Reforms Through Administrative Action

    Our estimates incorporate the effect on enrollment of administrative
    changes designed to increase participation, including a longer open
    enrollment period starting with the 2022 plan year and additional
    Federal spending on navigators, advertising, and other types of
    outreach activity.

    Under current law, families are generally ineligible for marketplace
    subsidies if a family member is offered ``affordable,'' worker-only
    coverage through an employer. The cost of covering the entire family is
    not considered and may be unaffordable, resulting in the so-called
    ``family glitch.'' If this policy were changed through administrative
    action to allow family members to become eligible for marketplace
    subsidies, we estimate that about 710,000 additional people would
    enroll in the subsidized nongroup market, most switching out of ESI. In
    addition, about 90,000 family members, mainly children, would newly
    enroll in Medicaid or CHIP as their parents seek marketplace coverage.
    There would be 190,000 fewer uninsured people as a result of this
    change. Families switching from ESI would save about $400 per person in
    premiums on average. These changes in coverage were estimated
    separately in a previous report and are not included in the numbers
    discussed here.\4\
    ---------------------------------------------------------------------------
        \4\ Matthew Buettgens and Jessica Banthin, Changing the ``Family
    Glitch'' Would Make Health Coverage More Affordable for Many Families
    (Urban Institute, May 2021).

    We are not able to specifically model the provision of continuous open
    enrollment for people below 150 percent of FPL for this report. In our
    assessment, however, this provision would increase enrollment into the
    marketplaces by between 100,000 and 200,000 people.

    Conclusion

    We estimate that making the enhanced ARPA subsidies permanent and
    filling the Medicaid coverage gap by expanding marketplace eligibility
    to those earning below 100 percent of FPL would have significant
    changes on coverage. Together, these two policies would broadly expand
    eligibility for marketplace subsidies, reduce the number of uninsured
    people especially at lower income levels, and lessen household
    financial burdens for health care.

    _______________________________________________________________________

    HOW WE CONDUCTED THIS STUDY

    Our estimates use the Urban Institute's Health Insurance Policy
    Simulation Model's (HIPSM) baseline for 2022. HIPSM is a detailed
    microsimulation model of the health-care system designed to estimate
    the cost and coverage effects of proposed health-care policy options.
    HIPSM is based on 2 years of the American Community Survey, which
    provides a representative sample of families large enough for us to
    produce estimates for individual States and smaller regions, such as
    cities.\5\
    ---------------------------------------------------------------------------
        \5\ Matthew Buettgens and Jessica Banthin, The Health Insurance
    Policy Simulation Model for 2020: Current-Law Baseline and Methodology
    (Urban Institute, Dec. 2020).

    For the pre-American Rescue Plan Act (ARPA) baseline of our analysis we
    chose 2022, a year when economic conditions should be more stable,
    following the COVID-19 pandemic and consequent recession in 2020. We
    assume, consistent with Congressional Budget Office projections, that
    the economy will have partly recovered from the pandemic recession by
    ---------------------------------------------------------------------------
    that time.

    For this analysis, we also assume that Medicaid's enhanced Federal
    Medical Assistance Percentage (FMAP) and the maintenance of effort
    provisions in the Families First Coronavirus Response Act will have
    expired before 2022. However, in a letter to governors sent in late
    January 2021, the acting secretary of the U.S. Department of Health and
    Human Services indicated the public health emergency declaration will
    be extended through calendar year 2021.\6\ This means Medicaid's
    Maintenance of Eligibility (MOE) requirements, which prohibit States
    from disenrolling Medicaid enrollees unless they request it, are
    expected to last through January 2022. After that, the increased
    enrollment because of the MOE requirements will start to decline as
    States resume normal eligibility determinations.
    ---------------------------------------------------------------------------
        \6\ Norris W. Cochran IV, Acting Secretary, U.S. Department of
    Health and Human Services, letter to Governors regarding the public
    health emergency, Jan. 22, 2021.

    Although recent guidance allows States up to 12 months to unwind the
    MOE provisions, it remains uncertain how fast this will happen. As a
    result, Medicaid enrollment may be higher in early 2022 than indicated
    in our estimates. Also, the enhanced FMAP is expected to be available
    through March 2022. The Federal Government will pay a higher share of
    ---------------------------------------------------------------------------
    Medicaid costs in the first quarter of 2022 than we indicate.

    The baseline and estimates presented here differ from earlier national
    HIPSM projections of coverage and costs in that we now treat Missouri
    and Oklahoma as Medicaid expansion States. Both States passed ballot
    measures in 2020 to expand Medicaid but had not actually begun coverage
    when we published earlier projections.

    The ARPA includes an additional financial incentive for States that
    have not expanded Medicaid to do so; newly expanding States receive a
    boost of 5 percentage points to their FMAP for 2 years. Because neither
    Oklahoma nor Missouri had begun covering Medicaid expansion
    beneficiaries as of March 2021 when the ARPA became law, they are
    eligible for the incentive payment. We estimate that the incentive
    would shift $808 million of state costs to the Federal Government in
    2022. As limited duration incentive payments, these costs are not
    included in our baseline or in the estimates presented in this paper.

    Acknowledgments

    We thank John Holahan for his careful review of this report.

    CITATION

    Jessica S. Banthin, Michael Simpson, and Andrew Green, The Coverage and
    Cost Effects of Key Health Insurance Reforms Being Considered by
    Congress (Commonwealth Fund, Sept. 2021, updated Oct. 5, 2021), https:/
    /doi.org/10.26099/4gyx-ry85.

                                     ______

                                Urban Institute

                          Design of Public Option and
                         Capped Provider Price Reforms

       Important Interactions Between Provider and Other Program Features

    Linda J. Blumberg
    September 2021
    The 2020 presidential election brought discussions of introducing a
    public option into U.S. health insurance markets back to the forefront
    of health policy debates. A public option would consist of a
    government-designed and administered (directly or via contract) health
    insurance plan or set of insurance plans that would be introduced in
    one or more health insurance markets. The federal government would
    determine payments made to providers (e.g., doctors, hospitals,
    pharmaceutical manufacturers) participating with a public option or
    negotiate prices with providers to attract them to participate;
    alternatively, state governments or a quasi-governmental or nonprofit
    entity could govern a public option. Conversations about public option
    plans have also prompted discussions about a related policy option,
    capping payments made to providers by commercial insurers. This
    strategy would require providers participating in particular insurance
    markets to accept prices from commercial insurers at or below a
    government-designated level. Thus, these capped prices would apply to
    providers participating in any private insurance plan offering coverage
    in the specified markets, whereas a public option would apply
    government-designated rates in new government-administered insurance
    plans alone.

        These two health reform approaches are related in that both seek to
    provide insurance options to consumers that would pay providers based
    upon payments determined (in the case of the public option) or limited
    (in the case of capped provider prices) by the federal government or
    its chosen agent. As noted, the public option would do so via a new
    insurance plan or set of insurance plans administered by the
    government, and the capped prices would do so via private insurers
    participating in the markets chosen. Depending on where these rates or
    rate limits are set, either approach could reduce premiums relative to
    current levels. Either policy could be used alone or in tandem with the
    other.

        Though people broadly support the idea of a public option and/or
    lowering the costs of health care (Politico 2020),\1\ implementing such
    policies requires numerous design decisions, can have significant
    unintended consequences, and is politically challenging. Design
    decisions profoundly affect such policies' abilities to meet their
    stated objectives, disruptions to the U.S. health-care system, and
    health-care providers' finances. Many of these design decisions
    interact with one another, meaning they ought to be considered
    together. This is especially true of how the chosen schedule of
    provider prices interacts with other design choices. Here I delineate
    the major design choices that must be made for public option and/or
    capped provider price reforms and outline their trade-offs in
    government costs, household costs, impacts on providers, and access to
    care. I explicitly recognize that a public option and capped provider
    prices paid by commercial insurers can be implemented independently or
    simultaneously.
    ---------------------------------------------------------------------------
        \1\ Gaby Galvin, ``About 7 in 10 Voters Favor a Public Health
    Insurance Option. Medicare for All Remains Polarizing,'' Morning
    Consult, March 24, 2021, https://morningconsult.com/2021/03/24/
    medicare-for-all-public-option-polling/.

        What follows is a summary and interpretation of an extended
    discussion in 2020 with a small group of health policy experts that
    included, in addition to me, Michael Chernew, Jack Ebeler, Matt
    Fiedler, Richard Frank, Sherry Glied, Tim Gronniger, John Holahan, Mark
    Miller, and Cori Uccello. No particular view presented below should be
    attributed to any particular participant or organization with which
    they are affiliated. The central conclusions of the discussion include
    ---------------------------------------------------------------------------
    the following:

            Advocates of public option and capped provider price reforms
    do not always agree on the reforms' intended objectives. Some see a
    public option primarily as a cost-containment mechanism, intended to
    lower public and private health-care spending and thereby increase
    insurance coverage and access to care. Others view a public option as
    most importantly an alternative to commercial insurance that could
    better serve the interests of consumers; these supporters may have
    little interest in designing a system to reduce the costs of care.
    Capped provider prices could reduce health-care spending, increase
    coverage, and improve access to care as well but would not provide an
    alternative to commercial insurance.

            Both reforms could reduce health-care spending, but the extent
    of savings depends on the prices the reforms rely on and the markets in
    which the reforms are introduced.

            In designing either reform, the interaction of the provider
    price schedule and the size of the markets included will have powerful
    implications for the magnitude of system-wide savings and effects on
    provider revenue. The lower the price schedule and the larger the
    markets to which they apply, the greater the potential for public and
    private savings. But greater, too, is the potential to disrupt health-
    care provider markets.

            In either reform, the provider price schedule will directly
    affect providers' voluntary participation in the insurance plan
    networks. Lower price schedules will tend to decrease voluntary
    provider participation and thus make it more difficult to establish
    broad provider networks. However, prohibiting providers refusing to
    participate with the public option or commercial insurers relying on
    capped prices from participating with other insurers in the same market
    could increase participation.

            A public option reform requires many additional design
    decisions beyond those required of a capped provider price reform.
    These include whether state variation in essential health benefit
    requirements would be permitted, the actuarial value tiers in which a
    public option would be introduced, risk adjustment participation,
    applicability of premium taxes, reserve fund requirements, and
    financing of start-up and administrative costs.

            Setting capped provider prices at a relatively high point in
    the provider price distribution (e.g., the 75th or 80th percentile)
    would reduce the prices of the highest-priced insurance plans, and such
    a reform could be introduced into both employer group and nongroup
    markets with little anticipated health care delivery disruption.
    Introducing a public option in nongroup insurance markets would provide
    new competition in markets dominated by monopolistic providers and/or
    insurers and would constitute a new tool that could evolve into a
    valuable option for consumers dissatisfied with private insurance
    options.

     Objectives: Cost Containment versus Availability of Noncommercial
                        Broad Network Plans

    Central to the effective design of any public policy is clarity in the
    policy's intended objectives. Advocates of a public option are not
    unanimous in their objectives, and design choices will determine which
    objectives are most likely to be met by the program ultimately
    introduced.

        Some see a public option as a cost-containment mechanism. In many
    areas of the country, lack of competition among insurers and/or health-
    care providers is associated with high premiums, generally because of
    high provider prices.\2\ Regardless of the source of high medical
    prices, many support lowering them to improve access to care and free
    up public and private funds for other priorities. A public option run
    by the federal government could make payments to health-care providers
    that are lower than those paid by most commercial insurers. Doing so
    would mean public option plans could offer consumers actuarially fair
    premiums lower than many of those offered by commercial insurers. Lower
    premiums translate into household savings on out-of-pocket costs for
    people enrolled in the option, and lower premiums may put competitive
    pressure on private insurers in markets where the public option is
    introduced (Blumberg et al. 2019). A public option introduced in the
    employer market could provide a lower-premium insurance option for
    employers and their workers. Likewise, a public option offered in the
    private nongroup insurance market could offer a lower-premium option to
    nongroup enrollees, especially those with higher incomes that make them
    ineligible for federal financial assistance (Blumberg 2021). In
    addition, if a public option were to decrease the nongroup Marketplace
    benchmark premium (currently set at the second-lowest silver
    Marketplace premium in a person's area of residence), federal spending
    on premium tax credits would decrease as well, leading to government
    savings. Likewise, placing caps on provider prices for commercial
    insurers in all or some markets could generate both private and
    government savings.\3\ Depending on how it is administered, a public
    option could also operate with lower administrative costs than those
    typical of private insurers, another possible source of savings that
    could lower premiums.
    ---------------------------------------------------------------------------
        \2\ Though monopolistic (or otherwise strongly consolidated)
    insurers should have substantial leverage to reduce provider prices and
    thus reduce premiums, many areas with highly concentrated insurance
    markets also have highly concentrated provider markets. Even when that
    is not the case, dominant insurers do not face strong incentives to be
    tough negotiators with providers, and thus they seldom use that
    leverage to significantly reduce prices. For example, highly
    concentrated insurance markets are strongly correlated with high
    premiums in the nongroup market (Holahan, Banthin, and Wengle 2021).
        \3\ The greatest savings resulting from lower nongroup Marketplace
    premiums accrue to people with incomes sufficiently high that they pay
    for full premiums independently, without federal premium subsidies.
    However, lower premiums can also generate savings for people eligible
    for premium subsidies who choose insurance options that are more
    expensive than the second-
    lowest silver (benchmark) premium available, since these consumers are
    liable for the full difference between premiums for the benchmark and
    the more expensive plan. In addition to government savings resulting
    from lower nongroup Marketplace benchmark premiums, lower commercial
    insurance premiums in the employer market can also generate government
    savings. Economic theory and empirical research suggest lower employer
    spending on health insurance premiums tends to translate into higher
    wages. Because wages are taxable as income but health insurance
    contributions are not, lower premiums in the employer market tend to
    increase government tax revenue.

        Lower health-care spending during the first year of the COVID-19
    pandemic reduced the sense of urgency some felt in addressing rising
    health-care spending via a public option or provider price caps.
    However, the drivers of increased health-care spending in private
    markets that many were concerned about before the pandemic have not
    changed, meaning those concerns will return. Moreover, an ongoing focus
    has been placed on the extent to which Medicare and private insurers
    overspend on prescription drugs, and concerns remain about how Medicare
    Advantage plan pricing potentially increases health-care costs. In
    addition, the Biden administration has already issued an executive
    order instructing federal agencies to work on addressing broad issues
    related to the economic consequences of market consolidation, including
    in the health-care sector. This signals that health-care cost
    ---------------------------------------------------------------------------
    containment strategies remain an important policy interest.

        Others see a public option as an alternative insurance vehicle that
    would be more responsive to the interests of consumers than profit-
    motivated insurers. Some people are concerned with the narrow provider
    networks offered in many nongroup insurance market plans in particular,
    and they see a public option as a way to offer consumers broad provider
    networks at an affordable premium, not unlike the traditional Medicare
    program. Some people value a single insurance plan being available to
    everyone across the country, particularly one theoretically less likely
    to deny claims or limit important benefits. Some view a public option
    as a vehicle for providing subsidized coverage to populations currently
    without coverage options (e.g., those in the Medicaid eligibility
    gap),\4\ whereas others see it as a first step toward a Medicare for
    All program.
    ---------------------------------------------------------------------------
        \4\ Currently, 12 States continue to refuse to expand Medicaid
    eligibility to all lawfully present residents with incomes up to 138
    percent of the federal poverty level (FPL). Because the Affordable Care
    Act was written assuming Medicaid expansion would be implemented in all
    States, its drafters only made people with incomes above the FPL
    eligible for premium tax credits through the Marketplaces.
    Consequently, many people with incomes below the FPL are ineligible for
    any financial assistance obtaining health insurance in 11 of those
    States, because those States' traditional Medicaid eligibility rules
    exclude nonparents and are generally very limited for parents. For
    example, in Alabama, only parents with incomes up to 18 percent of FPL
    are eligible for Medicaid and nonparents are ineligible regardless of
    income. In Texas, parents with incomes up to 17 percent of FPL are
    eligible and all nonparents are ineligible. The one notable exception
    is Wisconsin, which has not expanded Medicaid eligibility under the
    Affordable Care Act but extended its traditional Medicaid program to
    all adults with incomes up to the FPL. In addition to people with
    incomes below the FPL in these States, others with incomes between 100
    and 138 percent of FPL are excluded from Marketplace assistance if
    someone in their family is eligible for worker-only employer-based
    insurance deemed affordable to them.

        Capping provider prices for all commercial insurers could create
    public and private health-care savings, as noted above, regardless of
    whether capped prices are implemented alongside a public option. In
    fact, because most insurer premiums could be affected by the caps,
    depending on where they are set, the caps could lead to greater
    aggregate private savings than a public option alone. However, capping
    prices paid by commercial insurers cannot satisfy the desire for an
    alternative to insurers motivated by profit or other interests that
    benefit certain private entities (e.g., private nonprofit insurers), as
    the public option could do. Consequently, the primary purpose of capped
    provider prices is to reduce health-care spending by reducing
    providers' and/or insurers' market power over prices while maintaining
    sufficient quality of and access to care. In addition, such an approach
    can improve equity in the markets by reducing the variation in prices
    ---------------------------------------------------------------------------
    paid across providers and markets.

        These different objectives will often be in some tension with one
    another. Creating and maintaining broad provider networks, for example,
    generally requires paying providers higher prices to attract their
    participation. Higher provider prices, in turn, will generally
    translate into higher premiums and reduce the opportunities for private
    and public savings. Plans with lower rates of claims denials will also,
    however, tend to increase provider participation even at lower prices
    (Dunn et al. 2021), but they may lead to increased costs as well.\5\
    Therefore, I refer to these somewhat competing objectives while
    presenting the advantages and disadvantages of specific design choices.
    ---------------------------------------------------------------------------
        \5\ Lower claims denial rates will generally mean higher total
    amounts of claims paid. Higher spending on claims payments translates
    into higher premiums.

        Private and public savings resulting from lowering payments to
    providers under either a public option or capped provider prices can
    increase health insurance coverage. Combined with current medical loss
    ratio restrictions, lower payments to providers per service should
    translate into lower premiums. In turn, lower premiums facing consumers
    can increase the number of people purchasing coverage in the nongroup
    market. For employers, lower premiums can translate into greater
    enrollment by workers and some current premium spending being
    transformed into higher taxable wages. Government savings from lower
    premium tax credits in the nongroup market and/or greater tax revenue
    from increased wages in the employer market make more dollars available
    to enhance financial assistance in the nongroup market (e.g., improved
    premium tax credits) or expand eligibility for public programs (e.g.,
    ---------------------------------------------------------------------------
    filling in the Medicaid coverage gap).

        Though related, the public option and caps on private insurers'
    provider prices will likely affect different insurance markets
    differently. Capped provider prices constrain the range of prices of
    participating insurers but otherwise leave the markets structured as
    they are today. The public option introduces a new and potentially
    lower-priced insurer into the market, but it does not explicitly
    constrain commercial insurers' pricing. Depending on the
    characteristics of particular insurance and provider markets, the
    resulting competitive responses could differ.

     The Foundation for Developing Provider Price Schedules

    Both a public option and capped provider prices for private insurers
    require delineating provider price schedules. With a public option, a
    schedule would determine the reimbursements for medical services
    provided to enrollees. With capped prices, a schedule would limit
    commercial insurers' provider payments to no more than specified
    levels. Schedules could be based on services for health care
    professional payments and per admission diagnostic related groups for
    hospital payments, for example, as is the case for the Medicare
    program. Under either approach, payment schedules or limits on prices
    should reflect the intensity of services provided. The main foundations
    considered for creating such payment schedules are the traditional
    Medicare schedule and commercial insurer fees. Both have distinct
    advantages and disadvantages for public option and capped provider
    price policies.
    The Medicare Fee Schedule
    This schedule is an existing set of prices that accounts for geographic
    variation in the costs of providing care. Consequently, the Medicare
    schedule could be applied to new programs or plans quickly. A small
    number of services, particularly those for pediatric care, may need to
    be added to the existing schedule, but it already accounts for the vast
    majority of care. The Medicare fee schedule has also been developed
    with the intent to reimburse providers at levels relative to each other
    based on variations in input costs and the relative value of different
    services provided. Thus, price differences across the schedule have a
    rational basis. Depending on how high policymakers want prices to be,
    multiples of Medicare prices could be used, for example, 110 or 160
    percent of Medicare prices. Different multiples could be used for
    hospital versus professional care. This would account for current
    commercial rates for professionals already being closer to Medicare
    rates than are hospital rates. And, institutionally, provider
    participation issues for public insurance programs have been a greater
    concern for physicians than for hospitals. More complexity could be
    introduced by varying the percent adjustments more finely, for example,
    by treating different types of hospitals differently (e.g., teaching
    hospitals, rural hospitals) or treating various physician specialties
    differently.

        The Medicare fee schedule--based approach also has the advantage of
    containing a ready-made measure of provider volume. One risk of
    lowering provider prices is that some providers could respond to the
    ensuing reduction in revenue by increasing the volume of services they
    provide per patient on average. Medicare's relative value units and
    diagnostic related groups can be aggregated for each provider, as
    measures of each provider's volume. These can be used as a basis for
    further price adjustments should the average volume of services
    provided per patient increase significantly under reform.

        The trade-off of using the Medicare payment schedule, however, is
    that it could complicate the general Medicare rate setting process and
    the process of establishing these rates (e.g., the recommendations of
    the Relative Value Scale Update Committee). If a public option or
    commercial provider price limits were to rely on the Medicare schedule,
    then any discussion or debate over modifications to Medicare rates
    (e.g., productivity adjustments, growth rates) would have implications
    for provider prices more generally. Lobbying around the Medicare
    schedule would become more complicated and fraught, and these pressures
    could push Medicare rates higher than they otherwise would be, because
    a larger share of provider revenues would be at stake, leading
    providers to lobby harder to keep prices up. However, the savings to
    government and consumers would be commensurately larger, potentially
    leading policymakers to pursue them more aggressively; consequently,
    the ultimate impact of a public option or capped provider prices on
    Medicare payment rates is uncertain.
    Provider Prices Used by Commercial Insurers
    These prices vary dramatically across insurers, providers, and even
    plans offered by the same insurers. A substantial part of the variation
    in commercial insurers' provider prices likely relates to geographic
    variation in provider and/or insurer competition. A schedule for a
    public option or capped prices could be developed using a specified
    percentile of the distribution of commercial provider prices, say the
    median, depending on the payment schedule desired. The advantages of
    relying on a payment schedule based in commercial rates are that the
    schedule (1) may be more politically palatable to health-care providers
    and (2) would not interfere with negotiations between providers and the
    federal government over Medicare rates. However, that political appeal
    may fall appreciably if provider prices are set well below the median
    of current rates (e.g., at the 35th percentile).

        If a schedule based on a low percentile of national commercial
    rates were chosen, the impact of consolidation and noncompetitive
    markets that have inflated prices in some areas would be less likely to
    affect the delineated schedule. For example, if the 20th percentile of
    the commercial rate distribution for each service were chosen as a
    benchmark, those rates could be multiplied by a factor greater than 1
    to increase payment levels without having the relative prices for
    different services affected by existing monopolistic behavior.
    Geographic cost adjustments could be applied after the fact. In
    addition, the commercial rate approach does not require providers or
    insurers to change the definition of services they use to be consistent
    with Medicare definitions; however, commercial insurers' definitions of
    services likely vary, so some disruptions and system modifications
    would be required to standardize these definitions regardless.

        The first disadvantage of the commercial benchmark is that
    determining the distribution for every existing medical service would
    be a significant data-collection undertaking. This information does not
    currently exist, so collecting it will take considerable time and
    resources. In addition, market forces, not relative value, determine
    commercial providers' prices, an important difference from the Medicare
    schedule, which explicitly accounts for relative value. Consequently,
    the current variation in commercial prices across the country is
    tremendous. Any particular point in the pricing distribution may not
    appear to make sense based on rational criteria, because the pricing
    distribution is the product of market distortions. Plus, many
    commercial insurers pay hospitals based on days instead of admissions,
    which tends to increase spending by private payers. Further, coding
    across private insurers is seldom comparable, which creates
    considerable complexity in comparing current prices across these
    insurers.

        Regardless of which benchmark is used, the final payment schedule
    and annual update approach chosen will determine a reform's effect on
    the provider market (i.e., savings and access to care). Theoretically,
    using an upwardly adjusted Medicare schedule as a benchmark (e.g., 120
    percent of Medicare rates) could achieve similar savings as using the
    distribution of commercial prices as a benchmark, depending on which
    percentile is chosen and whether any additional adjustments are
    applied. The same is true regarding the annual adjustment chosen. The
    closer rates remain to current ones, the lower the risk of disruption
    to the health-care system, but the lower, too, are savings from the
    reform.

        Managing a public option or capped prices, including the level and
    growth of prices, could be entrusted to an active administrator or
    possibly to a state department of insurance if national variation were
    permitted. In this way, the administrator could adjust prices
    (including for geographic variation) as a function of information
    collected on access to different types of care, provider participation,
    the quality of care provided, and aggregate spending. Such discretion
    would create some additional uncertainty about ultimate public and
    private savings, but the flexibility would provide the administrator
    with the nimbleness necessary to modify prices and correct for
    unintended consequences of over or underpricing particular services.
    Limits on the flexibility provided to such an administrator would
    likely be needed, however. Otherwise, providers with market strength
    could effectively negotiate prices with the public option and drive
    prices higher than appropriate or desirable. In addition, the
    capabilities of different departments of insurance vary considerably
    across States. Thus, if they were to administer a public option or
    capped prices, they could define important economic parameters
    differently, which could lead to some positive and some negative
    outcomes.

     Interaction of the Provider Price Schedule and the Size of Markets
                        Included in a Reform

    As analysts have shown (Holahan and Simpson 2021), introducing a public
    option or capped provider prices into nongroup insurance markets alone
    is unlikely to generate large aggregate savings. This is purely because
    the number of people buying coverage in those markets is small, an
    estimated 15 million people in 2022 (Banthin et al. 2020). The employer
    group market is roughly 10 times as large, an estimated 150 million
    people in 2022. Consequently, implementing these types of reforms in
    the employer group market creates more potential for private and public
    savings and disruption of the health care delivery system. Commercial
    insurers' payments to providers in many nongroup insurance markets are
    also likely already significantly lower than those paid in employer-
    sponsored insurance markets, an additional reason why these types of
    reforms have greater savings potential in the employer market than the
    nongroup market (Blumberg et al. 2020). For example, according to Urban
    Institute estimates, introducing a public option paying providers rates
    modestly above Medicare's (Medicare plus 10 percent for professionals
    and Medicare plus 25 percent for hospitals) in nongroup insurance
    markets alone would reduce health system spending (public and private
    combined) by $15 billion in 2022 (Holahan and Simpson 2021).
    Introducing that same public option into both nongroup and employer
    markets would reduce health system spending by $156 billion in 2022,
    more than a 10-fold difference. Capping provider prices across both
    markets at the same rates would reduce health system spending by more
    than double that amount, $331 billion in 2022.

        Lower prices applied to a smaller number of consumers will affect
    overall provider revenues less, and thus the risk of health care
    delivery system disruption is rather small. That means that reforms
    using provider prices well below commercial levels only for public
    option enrollees in the nongroup market would carry less risk of
    delivery system disruption than broad caps on provider prices for all
    insurers in both the employer group and nongroup insurance markets. But
    the former reform would also achieve smaller aggregate savings than
    would the latter.\6\ In addition, lower provider prices could limit the
    number of providers willing to participate with these plans, especially
    if the enrollees constitute a small percentage of the providers'
    expected revenue.
    ---------------------------------------------------------------------------
        \6\ If a public option or capped provider prices were available
    only in the nongroup market, these large price differences between the
    employer and nongroup markets could, at least theoretically, pressure
    more people to seek nongroup insurance coverage and decrease incentives
    for some employers to provide insurance. However, evidence shows the
    provider prices in nongroup insurance markets made competitive by
    Affordable Care Act reforms are considerably lower than prices in
    employer markets, yet employer-provided coverage has not decreased. The
    value of the tax subsidy provided for those with employer-based
    insurance, benefits tailored to worker preferences, frequently broader
    provider networks, and ease of enrollment seem to keep workers in their
    employer-provided policies.

        A more limited public option or capped prices targeted solely to
    nongroup insurance consumers could also phase in lower prices more
    quickly without significantly disrupting health-care delivery (Skopec
    and Holahan 2021). Conversely, the larger the share of health-care
    consumers affected by lower prices, the longer it will likely take for
    health-care providers to respond with the organizational changes
    ---------------------------------------------------------------------------
    necessary to preserve supply and quality.

        One policy option that has been discussed is creating a public
    option solely to provide coverage for adults with low incomes caught in
    the Medicaid eligibility gap. In the 12 States that continue to refuse
    to expand Medicaid eligibility under the Affordable Care Act, more than
    3 million uninsured people living in poverty are ineligible for any
    financial assistance to enroll in insurance coverage, because their
    incomes are too low to qualify for Marketplace subsidies but too high
    to be eligible for their States' traditional Medicaid programs
    (Simpson, Banthin, and Buettgens 2021). Because the population in the
    eligibility gap in these States is largely uninsured today, providing
    them coverage through a federal public option, even one paying Medicare
    rates, would put additional revenue into the health care delivery
    system, not less. Consequently, such a narrow program should not risk
    significantly disrupting health-care delivery.

     Interaction of Provider Price Schedule and Network Breadth

    In recent years, many nongroup insurers have built narrow provider
    networks to be able to offer price-competitive plan options to
    consumers (Wengle et al. 2020). Including only health-care providers
    willing to take lower prices in a provider network translates into
    lower insurance premiums. Creating broader provider networks generally
    requires paying some providers at higher prices or having some other
    type of purchasing leverage that attracts more providers to
    participate.\7\
    ---------------------------------------------------------------------------
        \7\ For example, the traditional Medicare program offers enrollees
    a very broad network of providers, even though it pays providers at
    rates below those of commercial insurers, because few providers can
    turn down the large volume of Medicare enrollees and their high average
    use of medical services.

        Consequently, ensuring voluntary participation of a broad network
    of providers is difficult if a public option pays providers
    substantially below typical commercial prices. Relying on voluntary
    provider participation will most likely lead to a trade-off between
    network breadth and premium savings. Requiring providers participating
    with the Medicare program (or the Medicaid program) to also participate
    in the public option may increase provider participation, even at
    relatively low payment levels. However, this could also risk some
    providers leaving the Medicare or Medicaid programs instead. In
    addition, physician participation is difficult to enforce. Thus, one
    option is to require hospitals to participate, say, as a requirement of
    participation in the Medicare program, but not requiring the same of
    physicians. Because all hospitals participate with the Medicare and
    Medicaid programs and those programs constitute a large share of
    hospital revenues, hospitals are far less likely to stop participating
    in those programs, even if public option participation is tied to them.
    The most challenging network breadth issue is related to physicians in
    this context. Failing to enforce consequences for physicians declining
    to participate with the public option could lead to a significantly
    ---------------------------------------------------------------------------
    narrower provider network than envisioned, however.

        Another option for increasing physician participation is
    prohibiting physicians who decline to participate with the public
    option from participating in other plans serving that same market.\8\
    For example, if a public option were introduced into the nongroup
    market in a given area, a physician refusing to participate in the
    public option would be prohibited from participating with the private
    nongroup insurers offering coverage in that area. If physicians'
    decisions not to participate with the public option depend on their
    desires to protect their pricing leverage with private insurers, this
    approach could significantly increase physician participation. In
    addition, it would not risk a decrease in Medicare or Medicaid
    participation. The same approach could be used for hospitals as well.
    ---------------------------------------------------------------------------
        \8\ This approach is discussed in Fiedler (2020) and (2021).

        Capping provider prices for commercial insurers at low levels
    raises similar concerns about physician participation. However, if
    providers are reticent to participate with the public option over
    concerns that doing so could jeopardize their pricing negotiation
    leverage with private insurers, capping prices for all insurers in a
    given market minimizes participation concerns. In general, though, the
    larger the number of insured people in the markets where the caps are
    implemented, the harder it is for physicians to avoid accepting those
    prices. For example, capping commercial prices in the nongroup market
    alone would affect physician revenues less than would capping them in
    the nongroup and employer group markets, because the employer insurance
    markets are so much larger. But at the same time, physicians can more
    easily refuse to participate with nongroup insurers than they can
    refuse to take patients with employer-based insurance, because the
    number of enrollees in the former is so much smaller than the number in
    the latter.

     Provider Payment Schedules and the Interaction of a Public Option with
                        Capped Prices for Commercial Insurers

    At least theoretically, the reach of a public option is smaller than
    that of capped provider prices for commercial insurers. The primary
    effect of a public option would be on the people who choose to enroll
    in it, though some evidence shows that a public option could alter the
    dynamics of provider-insurer negotiations and lead to somewhat lower
    private insurer prices as well, particularly in highly concentrated
    markets (Blumberg et al. 2019). Capping commercial insurer prices,
    depending on where the rates are set, could affect all commercial
    insurance enrollees to some degree, thereby affecting a larger group of
    people and potentially to a greater extent. Consequently, the prices
    used for a public option could be set below capped prices for all
    commercial insurers. Either of these policies could be implemented
    alone or together, using different price schedules for the two
    strategies. With such an approach, the public option can provide
    broadly available insurance options designed by the government and not
    motivated by profit, whereas the capped prices play the central cost-
    containment role and somewhat improve equity of payments among
    providers and markets.

     Additional Design Considerations for a Public Option

    Though capping provider prices used by commercial insurers has various
    benefits, as noted earlier, it is primarily designed to lower insurance
    premiums. This is achieved by either reducing the most extreme prices,
    by setting capped prices at a higher point in the price distribution,
    or by reducing prices more broadly, by setting the capped prices at a
    lower point in the price distribution. Capped provider payments do not,
    however, provide an insurance product that is not subject to profit
    motives or other private entities' interests. To address the latter, a
    government-designed and administered plan, the public option, is
    needed. Because it would create a new public source of insurance, a
    public option would require additional design considerations beyond the
    prices the plan pays to providers.
    State Variation in Essential Health Benefit Requirements
    Although the 10 categories of essential health benefits defined in the
    Affordable Care Act must be covered in each state's nongroup and small-
    group markets, the rules surrounding benefit definitions and the
    quantity limits on some of these benefits vary (dollar limits on
    benefits are prohibited, however). Benefits covered by a public option
    could be made uniform nationally or could vary modestly by state to be
    consistent with the other qualified health plans sold in each state.

        Though a public option offering a uniform set of benefits ensures
    everyone in the country has access to at least one plan, offering a
    public option plan (or plans) that differs from the other plans offered
    in the markets where the public option is sold carries significant
    risks. Benefit variations can make it more difficult for consumers to
    compare their options, but more importantly, they can lead to adverse
    selection either into the public option or private plans. To the extent
    that either the public option's or private plans' benefits in a state
    are more or less attractive to higher-risk enrollees, the risk-
    adjustment system may be unable to completely compensate for the
    difference. Consequently, if uncorrected adverse selection escalates
    premiums in the plan(s) selected against, the public option or the
    private health plans may be unable to compete for consumers in the long
    term.
    Actuarial Value Tier Participation
    Likewise, if no private insurers offer a particular actuarial tier of
    coverage (current law only requires insurers to offer silver and gold
    levels), introducing a public option in that tier could create
    selection problems. For example, a significant number of Marketplace
    rating areas currently lack an insurer offering a platinum (90 percent
    actuarial value) option, largely because these high-value plans are
    felt to attract enrollees with higher medical needs. If a platinum
    public option were introduced in these areas, all else staying the
    same, it could attract enrollees with higher-than-average health-care
    costs. Given the imperfection of risk adjustment, this outcome could
    make it hard for the public option to compete with private insurers in
    the area.\9\
    ---------------------------------------------------------------------------
        \9\ If, however, the premium tax credit benchmark plan were changed
    to gold (instead of the current silver) under broader reforms, platinum
    plans could be much more attractive, leading more private insurers to
    offer them.
    ---------------------------------------------------------------------------
    Level Playing Field Issues
    The politics of the public option are also extremely challenging. Many
    consumer advocates' distaste for for-profit commercial insurance leaves
    them uninterested in designing a system that provides these insurers
    with the level playing field they feel they need to compete with a
    public option. In other words, some are happy to let an uneven playing
    field lead to a fully public system, like Medicare for All. Meanwhile,
    the private insurers with which a public option would compete are
    focused on any possible unfair advantages a government insurer would
    have over them in their markets. And, in truth, a large financial
    advantage that allows a public option to set its premiums well below
    those of private insurers could drive at least some current private
    options out of the markets--for better or for worse, depending on one's
    perspective. Beyond the core component of provider payments discussed
    above, at least four categories of expenses can affect the extent to
    which a public option competes with private insurers on a level playing
    field: risk adjustment, premium taxes, reserve funds, and start-up and
    management costs.

    Risk adjustment. In nongroup insurance markets, risk adjustment
    reallocates a portion of insurers' premium revenues to compensate
    insurers that disproportionately enroll people with higher-than-average
    health-care costs in a year. The objective of this strategy is to allow
    all insurers to set premiums in a manner that reflects the average risk
    of the entire pool of people enrolled in nongroup insurance in the
    state, enabling insurers with higher-cost enrollees to remain
    attractive and affordable to potential enrollees with various medical
    needs. Risk adjustment also undermines the incentives for insurers to
    attempt to enroll healthier people and to dissuade people with greater
    medical needs from enrolling in their plans.

        Consequently, creating a level playing field within an insurance
    market that includes a public option would require that the public
    option participate in the risk-adjustment system. It is unclear a
    priori whether a public option would attract disproportionately healthy
    or sick enrollees, or neither. Therefore, excluding the public option
    from the system could help or hurt private insurers and similarly
    increase or decrease actuarially fair premiums associated with the
    public option based on the risk profile of those enrolled. In turn,
    this could make it difficult, if not impossible, for either the public
    option or private insurers to remain viable.

        Likewise, including the public option in risk adjustment could
    result in the government plan making payments to some private insurers
    or vice versa. The Affordable Care Act's risk adjustment payments are
    calculated as a function of the differential risk of enrollees and the
    average premium in a state. As such, if a public option were to lower
    the average premium in a state, it would also lower the size of risk-
    adjustment payments between insurers. This could disadvantage some
    higher-priced private insurance plans should they be selected against,
    which would benefit plans enrolling healthier people.

    Premium taxes. Almost every state and the District of Columbia imposes
    taxes on insurers' gross premium revenues. The most common tax rate is
    2.5 percent, though such rates range as high as 4 percent (Grace,
    Sjoquist, and Wheeler 2007). Usually, these taxes take the place of
    corporate income taxes on insurers and are likely passed on to
    consumers purchasing insurance through higher premiums.\10\
    Consequently, private insurers would be at a direct pricing
    disadvantage if equivalent taxes were not imposed on a public option
    plan introduced in the state. Leveling the playing field to improve
    private insurers' abilities to compete would therefore require the
    public option to pay premium taxes as well.
    ---------------------------------------------------------------------------
        \10\ The precise incidence of premium taxes depends on elasticities
    of demand and supply, which may differ by market and geography.

    Reserve funds. Typically, state laws require insurers to maintain
    reserve funds that ensure the company would be able to pay enrollee
    claims even if premium revenue for the year fell short of actual
    claims. States regulate the level of required surpluses, but they
    typically range from 15 to 25 percent of expected annual claims.
    Insurers cannot increase premiums in subsequent years to cover costs
    associated with underestimates in prior years; doing so could run afoul
    of medical loss ratio requirements, and insurers doing so would be
    placed at a competitive pricing disadvantage. Though the federal
    government could obviously use general revenues to cover any public
    option shortfalls in a given year, doing so would create, at minimum, a
    perception of an unfair competitive advantage from private insurers'
    perspectives. Including small premium add-ons to build up reserve funds
    for a public option may be unnecessary as a practical manner but could
    ---------------------------------------------------------------------------
    enhance private insurers' sense of competitive fairness.

    Start-up and ongoing administrative costs. The administrative costs
    associated with starting a private insurance plan and supporting its
    ongoing operations are generally recouped by the administrative load
    added on to expected annual claims when computing premiums. These costs
    include such necessities as provider network development, data
    infrastructure development and maintenance, claims payment, and
    customer service. The instinct with a public option may be to build off
    the government's existing infrastructure for the Medicare and Medicaid
    programs in the Centers for Medicare and Medicaid Services, for
    example. Depending on one's perspective, using existing infrastructure
    could be considered good savings or an unfair advantage, however.
    Start-up costs could, for example, be amortized in the premium or
    absorbed via general revenues along with those for the other existing
    public insurance programs. Adding something small to the premiums to
    account for a reasonable level of such costs may be unnecessary but,
    again, could improve private insurers' perceptions of fairness.

    Discussion

    Public option advocates do not always share the same objectives for
    establishing such a program. However, the central design choices
    necessary to develop a public option are inextricably tied to the
    intended objectives. The level and growth of payments to providers are
    critical features of a public option, and these choices have tremendous
    implications for premium affordability and cost-savings potential,
    network breadth, and disruption to the health care delivery system.
    Sufficient political support for a public option will likely require
    greater agreement on such a program's objectives than is apparent
    today; some people currently focus on a public option's cost-savings
    potential, whereas others focus on the availability of a consumer-
    motivated, instead of profit-motivated, broad-network plan.

        As research has indicated (Holahan and Simpson 2021), a public
    option alone has limited power to contain health care system costs
    broadly, particularly when only made available in the nongroup
    insurance market. It would, however, provide new competition in markets
    dominated by monopolistic providers and/or insurers. It would also be a
    new tool that could evolve into a valuable consumer-oriented,
    administratively efficient entity that serves as an alternative
    coverage option for those dissatisfied with their commercial insurance
    options.

        Capping provider prices paid by commercial insurers is primarily a
    cost-
    containment tool that could be implemented with or without a public
    option. In the presence of a public option, capping commercial prices
    paid to providers may allow private insurers to lower their premiums
    and compete more effectively. Setting such caps at a relatively high
    point in the provider price distribution (e.g., at approximately the
    75th or 80th percentile) would primarily reduce the prices of outlier
    plans, whereas setting the caps at a lower percentile would reduce
    costs more broadly.

        Regardless of the presence of a public option, caps on provider
    prices would have the greatest effect when applied broadly to insurers
    in the group and nongroup markets, as opposed to nongroup markets
    alone. Caps could be set high initially, thereby lowering provider
    prices and associated premiums only in the highest-priced markets to
    start. Caps could then be lowered over time in conjunction with a
    significant data collection and monitoring effort that could be used to
    prevent provider price adjustments from significantly disrupting the
    health care delivery system, a particularly important consideration if
    the caps are implemented across all commercial insurers.

    References

    Banthin, Jessica, Matthew Buettgens, Michael Simpson, and Robin Wang.
        2021. ``What If the American Rescue Plan's Enhanced Marketplace
        Subsidies Were Made Permanent? Estimates for 2022.'' Washington,
        DC: Urban Institute.

    Blumberg, Linda J. 2021. Comparing Public Option and Capped Provider
        Payment Rate Proposals. Washington, DC: Urban Institute.

    Blumberg, Linda J., John Holahan, Stacey McMorrow, and Michael Simpson.
        2020. Estimating the Impact of a Public Option or Capping Provider
        Payment Rates. Washington, DC: Urban Institute.

    Blumberg, Linda J., John Holahan, Erik Wengle, and Caroline Elmendorf.
        2019. ``Is There Potential for Public Plans to Reduce Premiums of
        Competing Insurers?'' Washington, DC: Urban Institute.

    Dunn, Abe, Joshua D. Gottlieb, Adam Shapiro, Daniel J. Sonnenstuhl, and
        Pietro Tebaldi. 2021. ``A Denial a Day Keeps the Doctor Away.''
        Working Paper 29010. Cambridge, MA: National Bureau of Economic
        Research.

    Fiedler, Matthew. 2020. Capping Prices or Creating a Public Option: How
        Would They Change What We Pay for Health Care? Washington, DC:
        Brookings Institution.

    ---. 2021. ``Designing a Public Option That Would Reduce Health Care
        Provider Prices.'' Washington, DC: Brookings Institution.

    Grace, Martin, David L. Sjoquist, and Laura Wheeler. 2007. ``Insurance
        Premium Taxes.'' Paper presented at the 100th Annual Conference on
        Taxation, Columbus, OH, November 15th.

    Holahan, John, Jessica Banthin, and Erik Wengle. 2021. Marketplace
        Premiums and Participation in 2021. Washington, DC: Urban
        Institute.

    Holahan, John, and Michael Simpson. 2021. ``Introducing a Public Option
        or Capped Provider Payment Rates into Private Insurance Markets:
        Updated Estimates.'' Washington, DC: Urban Institute.

    Politico. 2020. ``Americans' Domestic Priorities for President Trump
        and Congress in the Months Leading up to the 2020 Election.''
        Washington, DC: Politico and Harvard University, T. H. Chan School
        of Public Health.

    Simpson, Michael, Jessica Banthin, and Matthew Buettgens. 2021. ``Most
        Uninsured People Gaining Medicaid Eligibility under Potential
        Expansion Would Have Incomes below the Federal Poverty Level.''
        Washington, DC: Urban Institute.

    Skopec, Laura, and John Holahan. 2021. ``Reducing Private Insurance
        Hospital Payments Will Require a Lengthy Phase-In Period.''
        Washington, DC: Urban Institute.

    Wengle, Erik, Emily Curran, Brigette Courtot, Caroline Elmendorf, and
        Kevin Lucia. 2020. ``Effects of Medicaid Health Plan Dominance in
        the Health Insurance Marketplaces.'' Washington, DC: Urban
        Institute.

    Acknowledgments

    This brief was funded by the Robert Wood Johnson Foundation. The views
    expressed do not necessarily reflect the views of the Foundation.

        The views expressed are those of the author and should not be
    attributed to the Urban Institute, its trustees, or its funders.
    Funders do not determine research findings or the insights and
    recommendations of Urban experts. Further information on the Urban
    Institute's funding principles is available at urban.org/
    fundingprinciples.

        The author thanks all the participants in the discussion on which
    this paper is based: Michael Chernew, Jack Ebeler, Matt Fiedler,
    Richard Frank, Sherry Glied, Tim Gronniger, John Holahan, Mark Miller,
    and Cori Uccello. However, no particular statement should be attributed
    to any of the participants or the organizations from which they are
    affiliated. The author is also grateful for editorial assistance from
    Rachel Kenney.

                                     ______

                                Urban Institute

                  The Uninsurance Rate Held Steady During the
                     Pandemic as Public Coverage Increased

     Trends in Health Insurance Coverage Between March 2019 and April 2021

    Michael Karpman and Stephen Zuckerman
    August 2021
    Rapid job losses in the early months of the COVID-19 pandemic raised
    fears that millions of people would lose their health insurance
    coverage and become uninsured (Banthin et al. 2020; Garfield et al.
    2020; Garrett and Gangopadhyaya 2020). In previous recessions, laid-off
    workers who lost employer-sponsored insurance (ESI) faced limited
    coverage options through Medicaid and the private nongroup insurance
    market and the number of people uninsured increased (Holahan and Chen
    2011). The Affordable Care Act (ACA) significantly expanded access to
    those options in 2014, driving the uninsurance rate to record lows
    (ASPE 2021; Obama 2016). And as the pandemic posed the first test of
    the post-ACA health insurance safety net during an economic downturn,
    Congress further supported access to coverage by not allowing
    disenrollment from Medicaid through the March 2020 Families First
    Coronavirus Response Act (Brooks and Schneider 2020).\1\
    ---------------------------------------------------------------------------
        \1\ The Families First Coronavirus Response Act has provided all
    States with a temporary increase in federal matching funds for Medicaid
    beneficiaries not in the ACA Medicaid expansion population. To receive
    the higher rate, States must follow several maintenance-of-effort
    requirements, including not disenrolling people from Medicaid unless
    they request termination of coverage or move to a different state.
    These provisions will remain in place at least until the end of the
    calendar quarter when the secretary of health and human services
    declares the end of the public health emergency.

        In this brief, we examine changes in health insurance coverage
    among nonelderly adults ages 18 to 64 during the pandemic using data
    from the Urban Institute's Health Reform Monitoring Survey (HRMS).
    Since it was launched in 2013, the HRMS has provided timely information
    on coverage before data from federal surveys become available (Long et
    al. 2014). Our analysis focuses on changes in coverage across three
    rounds of the survey: March 2019; March/April 2020, just after the
    pandemic caused a steep decline in employment; and April 2021, more
    than 1 year after the secretary of health and human services declared a
    national public health emergency on January 31, 2020. We estimate
    regression-adjusted changes for the national nonelderly adult
    population overall, by state Medicaid expansion status,\2\ and by
    annual family income as a percentage of the federal poverty level
    (FPL). We focus on adults with low incomes targeted by the ACA Medicaid
    expansion (with incomes at or below 138 percent of FPL) and adults with
    moderate incomes eligible for ACA Marketplace premium tax credits (with
    incomes between 139 and 399 percent of FPL).\3\ We find the following:
    ---------------------------------------------------------------------------
        \2\ The States that did not expand Medicaid by April 2021 are
    Alabama, Georgia, Florida, Kansas, Mississippi, Missouri, North
    Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas,
    Wisconsin, and Wyoming. Wisconsin has used state funding to expand
    eligibility to nonelderly adults with incomes up to the FPL. In other
    nonexpansion States, parents generally must have very low incomes to
    qualify for Medicaid, and nonpregnant, nondisabled adults who are not
    parents living with dependent children are ineligible. In 2020, voters
    in Missouri and Oklahoma approved ballot initiatives to expand Medicaid
    by July 1, 2021. Oklahoma's expansion took effect as scheduled.
    However, the Missouri legislature did not provide funding for the
    expansion in the state budget, and the governor withdrew the state plan
    amendment for the expansion. On July 22, 2021, the Missouri Supreme
    Court ruled that the state must implement the Medicaid expansion. For
    this analysis, we treat Missouri and Oklahoma as nonexpansion States
    because they did not implement their expansions by April 2021.
        \3\ Under the American Rescue Plan Act, many people with incomes
    above 400 percent of FPL are eligible for premium tax credits, but
    expanded eligibility is set to expire after 2022.

            Between March 2019 and April 2021, the share of nonelderly
    adults reporting ESI declined from 65.0 to 62.3 percent, a decrease of
    approximately 5.5 million adults. The share reporting public coverage
    increased from 13.6 to 17.5 percent, an increase of approximately 7.9
    million adults. The national uninsurance rate held steady at
    ---------------------------------------------------------------------------
    approximately 11 percent.

            The share of adults reporting public coverage increased
    between 2019 and 2021 in both States that had and had not expanded
    Medicaid under the ACA (hereafter called expansion and nonexpansion
    States). Such coverage increased from 14.9 to 19.2 percent in expansion
    States and from 10.7 to 14.3 percent in nonexpansion States.

            In Medicaid expansion States, the uninsurance rate was near 8
    percent across all three study years. In nonexpansion States, the
    uninsurance rate was higher in 2021 (18.2 percent) than in 2020 (16.5
    percent) and 2019 (17.2 percent), though the difference between 2019
    and 2021 was not statistically significant. Adults in nonexpansion
    States were more than twice as likely as adults in expansion States to
    be uninsured in 2021 (18.2 percent versus 7.7 percent).

            Declines in ESI and increases in public coverage between 2019
    and 2021 were concentrated among adults with low and moderate incomes.
    Uninsurance rates among the national nonelderly adult population did
    not change significantly for any income group examined.

            The share of adults with low incomes reporting public coverage
    increased in both expansion States (from 54.6 to 62.9 percent) and
    nonexpansion States (from 30.4 to 37.3 percent) between 2019 and 2021.
    More than one in three adults with low incomes in nonexpansion States
    (37.7 percent) were uninsured in 2021, compared with about one in seven
    of such adults in expansion States (14.5 percent).

        Between 2019 and 2021, the rise in public coverage helped offset a
    decline in ESI, and unlike in previous recessions, the uninsurance rate
    did not change. Medicaid and, to a lesser extent, private nongroup
    insurance sold through the Marketplaces have provided many adults with
    coverage options following unprecedented job and income losses.
    However, more than 1 in 10 adults were uninsured in April 2021,
    including nearly 1 in 5 adults in nonexpansion States.

        Maintaining the current uninsurance rate will require protecting
    coverage for current and prospective Medicaid enrollees as the economy
    improves and the disenrollment freeze is lifted (which is unlikely to
    occur before early 2022). Adults eligible for Medicaid may be at risk
    of having their applications or renewals erroneously rejected if States
    resume normal operations for reviewing eligibility too rapidly
    (Rosenbaum, Handley, and Morris 2021). Other adults will no longer be
    eligible for Medicaid when their incomes recover and will need to seek
    private coverage to remain insured. For those without access to
    affordable ESI, outreach efforts can raise their awareness of the
    enhanced premium tax credits for Marketplace plans made available under
    the March 2021 American Rescue Plan Act (Haley and Wengle 2021). States
    will also need to assess eligibility for subsidized Marketplace
    coverage for people losing Medicaid eligibility after the public health
    emergency ends (Musumeci and Dolan 2021). Permanently extending the
    American Rescue Plan Act's enhanced tax credits could further reduce
    the number of uninsured people over the long term, and adults with
    moderate incomes would experience the largest decline in uninsurance
    (Banthin et al. 2021). Policymakers can also build on coverage gains
    under the ACA by addressing the persistently high uninsurance rates
    among adults with low incomes, particularly in nonexpansion States.

    Results

    Between March 2019 and April 2021, the share of nonelderly adults
    reporting ESI declined and the share reporting public coverage
    increased; the national uninsurance rate held steady.

    Approximately 65 percent of nonelderly adults reported having ESI
    coverage in March 2019 and March/April 2020 (figure 1).\4\ This share
    had declined to 62.3 percent by April 2021, when many adults remained
    out of work just over 1 year after the pandemic recession began.\5\ The
    2.7 percentage-point decline in ESI between 2019 and 2021 represents a
    decrease of approximately 5.5 million adults (95 percent confidence
    interval: 2.5 million, 8.5 million).\6\ During this period, the share
    of adults reporting public coverage--including Medicare, Medicaid, the
    Children's Health Insurance Program (CHIP), and other state or
    government plans based on income or disability \7\--increased from 13.6
    percent in 2019 to 17.5 percent in 2021, representing an increase of
    approximately 7.9 million adults (95 percent confidence interval: 5.4
    million, 10.4 million).\8\
    ---------------------------------------------------------------------------
        \4\ Coverage estimates often vary across surveys because of
    differences in survey design (Au-Yeung and Hest 2019). In this brief,
    we discuss statistically significant changes in coverage over the study
    period. Previous analyses have found HRMS estimates of coverage changes
    to be consistent with estimates from other surveys (Karpman and Long
    2015).
        \5\ U.S. Bureau of Labor Statistics, ``The Employment Situation--
    May 2021,'' news release, June 4, 2021, https://www.bls.gov/
    news.release/pdf/empsit.pdf.
        \6\ We multiplied the estimated 2.7 percentage-point change in ESI
    between March 2019 and April 2021 by the projected number of adults
    ages 18 to 64 in 2021. We used national population predictions from the
    U.S. Census Bureau stratified by race, ethnicity, and sex for people of
    all ages from 2016 to 2060, based on estimated birth, death, and net
    migration rates over the period. Using the ``main series'' file, we
    summed the 2021 population projections for all nonelderly adults to
    arrive at 203,018,143 such adults that year. See ``2017 National
    Population Projections Datasets,'' U.S. Census Bureau, February 20,
    2020, https://www.census.gov/data/datasets/2017/demo/popproj/2017-
    popproj.html.
        \7\ In this brief, we combine Medicare, Medicaid, CHIP, and other
    government- or state-
    sponsored health plans into a single measure of public coverage because
    survey respondents may confuse the names of these coverage types
    (Pascale 2008). For a previous fact sheet based on data from the March/
    April 2020 HRMS and the Urban Institute's September 2020 Coronavirus
    Tracking Survey, we excluded Medicare from estimated changes in public
    coverage (Karpman and Zuckerman 2020). Estimates in this brief also
    differ slightly from estimates in that analysis because of differences
    in the survey weights and the regression adjustment, which we describe
    in the Data and Methods section.
        \8\ Administrative data show an increase of approximately 6 million
    adults enrolled in Medicaid between February 2020 and January 2021 in
    the 49 States and DC that report adult and child enrollment separately
    (Corallo and Rudowitz 2021). Differences between the HRMS estimates of
    changes in public coverage and administrative data for Medicaid
    enrollment may reflect several factors, including differences in the
    study period; inclusion of 18-year-olds as adults in the HRMS;
    inclusion of Medicare, CHIP, and state programs other than Medicaid in
    the definition of public coverage in the HRMS; survey sampling error;
    and measurement error in coverage type reported in the survey.

        We did not observe a statistically significant change in private
    nongroup coverage, which approximately 8 percent of adults reported in
    each year and includes plans purchased through and outside the ACA
    Marketplaces.\9\ But the share of adults with unspecified coverage
    (i.e., reporting the name of a comprehensive health plan but not the
    type of coverage) declined by 1.1 percentage points between 2019 and
    2021.\10\ The share of adults with unspecified coverage was also
    slightly higher in 2019 than in March 2018, suggesting an anomalous
    result in 2019 (data not shown). Despite the significant loss of ESI,
    the uninsurance rate held steady nationally at approximately 11 percent
    in each study year.
    ---------------------------------------------------------------------------
        \9\ The number of people selecting Marketplace plans increased from
    11.4 million during the 2019 open enrollment period (November 1-
    December 15, 2018) to approximately 12 million during the 2021 open
    enrollment period (November 1-December 15, 2020). The Centers for
    Medicare and Medicaid Services reported an additional 940,000 people
    enrolled in Marketplace coverage during the special enrollment period
    between February 15 and April 30, 2021, compared with 266,000 and
    391,000 people who signed up through special enrollment periods based
    on qualifying life events during the same periods in 2019 and 2020.
    Though the 2021 special enrollment period was extended to August 15,
    about half of new enrollment during the period's original time frame
    (February 15-April 30, 2021) occurred in April. Thus, some of these
    enrollments may have occurred after the HRMS was fielded. See ``2021
    Open Enrollment Report,'' Centers for Medicare and Medicaid Services,
    accessed June 30, 2021, https://www.cms.gov/files/document/health-
    insurance-exchanges-2021-open-enrollment-report-final.pdf; and ``2021
    Marketplace Special Enrollment Report,'' Centers for Medicare and
    Medicaid Services, May 6, 2021, https://www.cms.gov/newsroom/fact-
    sheets/2021-marketplace-special-enrollment-period-report-1.
        \10\ The shares of adults with an unspecified coverage type were
    2.3 percent in 2019, 1.4 percent in 2020, and 1.3 percent in 2021.

        Net changes in ESI, public coverage, and private nongroup coverage
    do not fully capture the transitions across coverage types that may
    have occurred during the pandemic. Income losses made some adults
    eligible for Medicaid and others eligible for subsidized Marketplace
    coverage, regardless of whether they were previously covered by ESI.
    The lack of net change in nongroup coverage could indicate that new
    Marketplace enrollment among people who became eligible for premium tax
    credits was not large enough to offset transitions from Marketplace or
    non-
    Marketplace nongroup coverage to Medicaid. In addition, the sample size
    of the HRMS may not be large enough to detect statistical significance
    for the relatively small changes in Marketplace enrollment found in
    ---------------------------------------------------------------------------
    administrative data.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    The share of adults reporting public coverage increased in both
    Medicaid expansion and nonexpansion States.

    As shown in figure 2, ESI coverage declined between 2019 and 2021 in
    expansion States (from 67.0 to 64.6 percent) and nonexpansion States
    (from 61.3 to 57.9 percent). But public coverage increased during this
    period in both groups of States, from 14.9 to 19.2 percent in expansion
    States and from 10.7 to 14.3 percent in nonexpansion States. These
    patterns are consistent with Centers for Medicare and Medicaid Services
    data showing rapid Medicaid enrollment growth in both expansion and
    nonexpansion States during the pandemic (Corallo and Rudowitz 2021;
    Khorrami and Sommers 2021).\11\
    ---------------------------------------------------------------------------
        \11\ Joan Alker and Allie Corcoran, ``What Is Happening with
    Medicaid Enrollment in Q1 of 2021?'' Say Ahhh! (blog), Georgetown
    University Health Policy Institute, Center for Children and Families,
    May 21, 2021, https://ccf.georgetown.edu/2021/05/21/what-is-happening-
    with-medicaid-enrollment-in-q1-of-2021/.

        The higher rates of public coverage in expansion States than in
    nonexpansion States in both 2019 and 2021 largely reflect the former's
    more generous eligibility for Medicaid; nearly all adults living in
    expansion States with incomes below 138 percent of FPL are
    eligible.\12\ In nonexpansion States, nondisabled, nonpregnant parents
    typically must have very low incomes to qualify for Medicaid (e.g., 17
    percent and 18 percent of FPL in Texas and Alabama) and nonparents are
    ineligible.\13\ The increase in reported public coverage in
    nonexpansion States over the study period was concentrated among the
    groups most likely to be eligible for Medicaid or CHIP.\14\
    ---------------------------------------------------------------------------
        \12\ Noncitizens' eligibility for Medicaid depends on several
    factors, including whether they are lawfully present, considered
    qualified noncitizens based on their immigration status, and subject to
    the 5-year waiting period after receiving qualified status. See
    ``Coverage for Lawfully Present Immigrants,'' Centers for Medicare and
    Medicaid Services, accessed June 30, 2021, https://www.healthcare.gov/
    immigrants/lawfully-present-immigrants/.
        \13\ ``State Health Facts: Medicaid and CHIP,'' Kaiser Family
    Foundation, accessed June 30, 2021, https://www.kff.org/state-category/
    medicaid-chip/medicaidchip-eligibility-limits/.
        \14\ The increase in public coverage between 2019 and 2021 in
    nonexpansion States was concentrated among the group of adults most
    likely to be eligible for Medicaid or CHIP: 18-year-olds (who qualify
    for Medicaid or CHIP based on eligibility thresholds for children),
    adults living with children under 18 in the household (who potentially
    qualify as parents or caregivers), and adults in Wisconsin, which has
    used state funds to provide coverage to adults with incomes up to the
    FPL (data not shown). The increase in public coverage for other adults
    was statistically significant but small in magnitude.

        The uninsurance rate in Medicaid expansion States was approximately
    8 percent between 2019 and 2021. In nonexpansion States, the
    uninsurance rate was higher in 2021 (18.2 percent) than in 2020 (16.5
    percent) and 2019 (17.2 percent), though the difference between 2019
    and 2021 was not statistically significant. As in prior years, adults
    in nonexpansion States were more than twice as likely as adults in
    expansion States to be uninsured in 2021 (18.2 versus 7.7 percent).
    However, differences in uninsurance are not entirely attributable to
    differences in Medicaid eligibility, because other factors (e.g.,
    access to ESI, funding for outreach and enrollment assistance) likely
    ---------------------------------------------------------------------------
    affect coverage status.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Declines in ESI and increases in public coverage between 2019 and
    2021 were concentrated among adults with low and moderate incomes.

    Adults with low and moderate incomes were hardest hit by the recession
    (Karpman, Zuckerman, and Kenney 2020)\15\ and reported the largest
    declines in ESI over the study period. Among adults with past-year
    incomes at or below 138 percent of FPL, the share with ESI fell from
    21.4 to 16.0 percent during this period (table 1). Among adults with
    incomes between 139 and 399 percent of FPL, the share with ESI fell
    from 64.5 to 60.0 percent. We did not find a statistically significant
    change in ESI among adults with incomes at or above 400 percent of FPL.
    ---------------------------------------------------------------------------
        \15\ ``Opportunity Insights Economic Tracker,'' Harvard University,
    accessed July 14, 2021, https://www.tracktherecovery.org/.

        Increased public coverage among adults with low incomes, from 45.0
    to 52.6 percent, and those with moderate incomes, from 9.7 to 14.3
    percent, helped offset declines in ESI among these groups. Most adults
    must have incomes below 138 percent of FPL to qualify for Medicaid in
    expansion States, and eligibility in nonexpansion States is limited to
    parents with even lower incomes and generally nonexistent for nonparent
    adults. However, eligibility is based on current monthly income,
    meaning an adult whose annual family income in the past year was above
    the eligibility threshold may qualify if they experience a loss of
    ---------------------------------------------------------------------------
    income that places them below the threshold.

        The uninsurance rate did not change significantly in any of the
    income groups examined. Nearly one in four adults with low incomes
    (23.7 percent) and about one in eight with moderate incomes (12.8
    percent) were uninsured in April 2021.

    TABLE 1. Health Insurance Coverage among Adults Ages 18 to 64, by Family
                        Income, March 2019 to April 2021
                                     Percent
    ------------------------------------------------------------------------
      Family income       March 2019      March/April 2020      April 2021
    ------------------------------------------------------------------------
    At or below 138%
     of FPL
    ESI                          21.4                 21.5       16.0***LLL
    Public coverage              45.0               48.5**        52.6***LL
    Private nongroup              6.8                  5.5              5.6
     coverage
    Uninsured                    24.3                 22.4             23.7
    139-399% of FPL
    ESI                          64.5                 64.0       60.0***LLL
    Public coverage               9.7                 10.8       14.3***LLL
    Private nongroup             11.3                 10.8             11.8
     coverage
    Uninsured                    11.8                 12.9             12.8
    At or above 400%
     of FPL
    ESI                          86.9                 88.1             87.8
    Public coverage               1.5                  1.6            2.1**
    Private nongroup              6.1                  5.8              5.3
     coverage
    Uninsured                     3.6                  3.5              3.7
    ------------------------------------------------------------------------
    Source: Health Reform Monitoring Survey, March 2019 through April 2021.
    Notes: FPL is federal poverty level. ESI is employer-sponsored
      insurance. Estimates are regression adjusted. Estimates are not shown
      for the share of adults with an unspecified coverage type, which is
      between 1 and 3 percent across income groups and years.
    */**/***  Estimate differs significantly from that for March 2019 at the
      0.10/0.05/0.01 level, using two-tailed tests.
    L/LL/LLL Estimate differs significantly from that for March/April 2020
      at the 0.10/0.05/0.01 level, using two-tailed tests.

    The share of adults with low incomes reporting public coverage
    increased in both Medicaid expansion and nonexpansion States between
    2019 and 2021. More than one in three adults with low incomes in
    nonexpansion States were uninsured in 2021, compared with about one in
    seven of such adults in expansion States.

    Among adults with incomes at or below 138 percent of FPL, the share
    reporting public coverage increased from 54.6 to 62.9 percent in
    Medicaid expansion States and from 30.4 to 37.3 percent in nonexpansion
    States between 2019 and 2021 (table 2). The uninsurance rate for adults
    with low incomes was statistically unchanged in both groups of States,
    but wide disparities by Medicaid expansion status persisted. In 2021,
    more than one in three adults with low incomes (37.7 percent) in
    nonexpansion States were uninsured, compared with about one in seven
    (14.5 percent) of such adults in expansion States. Adults with moderate
    incomes in nonexpansion States were nearly twice as likely as those in
    expansion States to be uninsured (17.8 versus 10.1 percent).

      TABLE 2. Health Insurance Coverage among Adults Ages 18 to 64, by State Medicaid Expansion Status and Family
                                            Income, March 2019 to April 2021
    ----------------------------------------------------------------------------------------------------------------
                       Percent                            Expansion States                 Nonexpansion States
    ----------------------------------------------------------------------------------------------------------------
                                                             March/                            March/
                    Family income                   March     April    April 2021     March     April    April 2021
                                                    2019      2020                    2019      2020
    ----------------------------------------------------------------------------------------------------------------
    At or below 138% of FPL
    ESI                                              20.7      21.2    15.7***LLL      22.7      22.2      16.2*LLL
    Public coverage                                  54.6      57.3    62.9***LLL      30.4      34.3        37.3**
    Private nongroup coverage                         5.3     3.7**           4.4       8.8       8.3           7.6
    Uninsured                                        16.5      15.0          14.5      36.3      34.3          37.7
    139-399% of FPL
    ESI                                              65.4      64.8     61.2**LLL      63.1      62.6     57.7***LL
    Public coverage                                  11.4      12.2    16.6***LLL       6.2      8.0*     10.3***LL
    Private nongroup coverage                        11.5      10.7          11.3      10.9      10.8          12.9
    Uninsured                                         9.3      10.8          10.1      16.8      16.8          17.8
    At or above 400% of FPL
    ESI                                              87.9      88.3          88.4      84.6    87.3**          86.4
    Public coverage                                   1.3       1.5        2.1***       2.2       1.8           2.5
    Private nongroup coverage                         5.9       5.7           5.5       6.5       6.1        4.9***
    Uninsured                                         2.9       3.2           3.0       4.9       4.2           5.3
    ----------------------------------------------------------------------------------------------------------------
    Source: Health Reform Monitoring Survey, March 2019 through April 2021.
    Notes: FPL is federal poverty level. ESI is employer-sponsored insurance. Medicaid expansion States implemented
      expansions by April 2021. Estimates are regression adjusted. Estimates are not shown for the share of adults
      with an unspecified coverage type, which is between 0 and 3 percent across income levels, state groups, and
      years.
    */**/*** Estimate differs significantly from that for March 2019 at the 0.10/0.05/0.01 level, using two-tailed
      tests.
    L/LL/LLL Estimate differs significantly from that for March/April 2020 at the 0.10/0.05/0.01 level, using two-
      tailed tests.

    Discussion

    Despite losses of jobs, income, and ESI during the pandemic, the
    uninsurance rate did not change between March 2019 and April 2021.
    Increased public coverage helped counter ESI losses, protecting many
    adults from becoming uninsured both in Medicaid expansion and
    nonexpansion States. But in April 2021, the uninsurance rate in
    nonexpansion States was higher than it had been in March/April 2020 and
    was more than double the uninsurance rate in expansion States.

        The growth in public coverage reflects several factors, including
    expanded Medicaid eligibility under the ACA that has strengthened the
    safety net in 37 States and the District of Columbia, the freeze on
    Medicaid disenrollment under the Families First Coronavirus Response
    Act, and the historic pattern of rising Medicaid enrollment during
    recessions (Corallo and Rudowitz 2021).\16\ Assessing how each factor
    has affected coverage during the pandemic is beyond the scope of this
    brief. However, the study findings highlight several challenges and
    opportunities for protecting and expanding coverage in the near term.
    ---------------------------------------------------------------------------
        \16\ Alker and Corcoran, ``What Is Happening with Medicaid
    Enrollment in Q1 of 2021?'' Say Ahh!.

        Though the public health emergency and Medicaid disenrollment
    freeze will likely be extended at least until early 2022,\17\ States
    will need to process a backlog of coverage renewals and
    redeterminations when the freeze is lifted (Musumeci and Dolan 2021).
    Resuming normal operations too quickly could lead to a surge in
    erroneously rejected applications and renewals, putting coverage at
    risk for people who are eligible for Medicaid (Rosenbaum, Handley, and
    Morris 2021). The Centers for Medicare and Medicaid Services recently
    issued updated guidance stating Medicaid eligibility and enrollment
    backlogs should be processed within 12 months of the end of the public
    health emergency.\18\ The guidance also prohibits States from
    terminating Medicaid coverage for people deemed ineligible during the
    public health emergency until the state has completed an additional
    redetermination of eligibility after the emergency ends. Finally, under
    previous guidance from December 2020, the Centers for Medicare and
    Medicaid Services expected States to prioritize eligibility and
    enrollment actions for people most likely to no longer be eligible for
    coverage (Musumeci and Dolan 2021). The updated guidance requires
    States to consider how their approaches for processing these actions
    will ensure continuity of coverage for eligible people and limit delays
    for those who become newly eligible. State officials can begin
    preparing for the end of the public health emergency now and avoid
    terminating coverage based on outdated information for eligible
    enrollees, many of whom experienced disruptions to their employment and
    housing during the pandemic (Wagner 2020).
    ---------------------------------------------------------------------------
        \17\ Norris Cochran (acting secretary, U.S. Department of Health
    and Human Services), letter to governors regarding the public health
    emergency, January 22, 2021, https://ccf.
    georgetown.edu/wp-content/uploads/2021/01/Public-Health-Emergency-
    Message-to-Governors.pdf.
        \18\ Daniel Tsai (deputy administrator and director, Centers for
    Medicare and Medicaid Services), letter to state health officials
    regarding, ``Updated Guidance Related to Planning for the Resumption of
    Normal State Medicaid, Children's Health Insurance Program (CHIP), and
    Basic Health Program (BHP) Operations upon Conclusion of the COVID-19
    Public Health Emergency,'' August 13, 2021, https://www.medicaid.gov/
    federal-policy-guidance/downloads/sho-21-002.pdf.

        Medicaid enrollees whose incomes have risen above the eligibility
    threshold in their state will no longer qualify for coverage when the
    disenrollment freeze expires. If such adults lack access to affordable
    ESI, they will need to turn to the private nongroup market to remain
    insured. The temporarily expanded Marketplace premium tax credits under
    the American Rescue Plan Act will make Marketplace plans more
    affordable, but some adults may not be aware of the availability of
    zero-
    premium or low-cost plans. Outreach and enrollment assistance can help
    adults transition from Medicaid to Marketplace coverage and avoid
    disruptions in care (Haley and Wengle 2021). State agencies will also
    need to assess eligibility for subsidized Marketplace coverage and
    other insurance affordability programs for adults who lose Medicaid
    eligibility after the public health emergency ends (Musumeci and Dolan
    ---------------------------------------------------------------------------
    2021).

        The American Rescue Plan Act increased the subsidy amounts of
    Marketplace premium tax credits, reducing the percentage of income
    people have to pay toward premiums, and expanded eligibility for
    premium tax credits to adults with incomes above 400 percent of FPL. If
    Congress does not extend these changes, they will expire at the end of
    2022. Making the enhanced subsidies permanent could reduce the number
    of people uninsured in the longer term, and most of the coverage gains
    would occur among adults with moderate incomes (Banthin et al. 2021).

        Policymakers can further reduce uninsurance by addressing the high
    uninsurance rates among adults with low incomes, particularly in the
    remaining Medicaid nonexpansion States, where more than one-third of
    adults with incomes at or below 138 percent of FPL are uninsured. The
    American Rescue Plan Act provides these States with new incentives to
    expand Medicaid by increasing the federal matching rate for regular
    (i.e., nonexpansion) Medicaid populations for 2 years (Musumeci 2021).
    If the nonexpansion States had adopted Medicaid expansion in 2020, 4.4
    million fewer people would have been uninsured that year (Buettgens
    2021). Federal policymakers are also considering approaches for closing
    the Medicaid coverage gap in States that have not expanded eligibility
    under the ACA.\19\
    ---------------------------------------------------------------------------
        \19\ Rachel Roubein and Alice Miranda Ollstein, ``Plugging
    Obamacare's Biggest Hole Poses Dilemma for Democrats,'' Politico, July
    10, 2021, https://www.politico.com/news/2021/07/10/obamacare-medicaid-
    coverage-gap-democrats-499013.

        Additional health-care reforms, ranging from incremental
    improvements to the ACA to more comprehensive approaches, can advance
    the U.S. toward universal coverage, though they have different trade-
    offs in costs, provider payment rates, and disruptions to the existing
    health-care system (Blumberg et al. 2019).

    Data and Methods

    This brief draws on data from the Urban Institute's Health Reform
    Monitoring Survey, a nationally representative, Internet-based survey
    of adults ages 18 to 64. Launched in 2013, the HRMS provides timely
    information on health insurance coverage, health-care access and
    affordability, and other health topics before federal survey data
    become available. For each round of the HRMS, we draw a stratified,
    random sample of nonelderly adults from Ipsos's KnowledgePanel, the
    nation's largest probability-based online panel. Members of the panel
    are recruited from an address-based sampling frame covering
    approximately 97 percent of U.S. households, including those without
    Internet access. If needed, panel members are given Internet access and
    web-enabled devices to facilitate their participation.

        For this analysis, we used data from the March 2019, March/April
    2020, and April 2021 rounds of the HRMS. The 2019 round was fielded
    March 4 through 14; it had a sample size of 9,596 adults, and 91
    percent completed the survey in the first week of fielding. The 2020
    round was fielded March 25 through April 10; it had a sample size of
    9,032 adults, and 75 percent completed the survey in the first week.
    And the 2021 round was fielded April 2 through 20; it had a sample size
    of 9,067 adults, and 82 percent completed the survey in the first week.

        The 2019 round of the HRMS included an oversample of adults with
    incomes below 138 percent of FPL. In 2020, we changed the survey's
    design to include larger oversamples of adults in low- and moderate-
    income households, nonwhite and
    Hispanic/Latinx adults, and young adults. Survey weights adjust for
    unequal selection probabilities and are poststratified to the
    characteristics of the national nonelderly adult population, based on
    benchmarks from the Current Population Survey and the American
    Community Survey. Participants can take the survey in English or
    Spanish, and the survey takes a median of 15 minutes to complete. The
    margin of sampling error, including the design effect, for the full
    sample of adults in the 2021 survey round is plus or minus 1.2
    percentage points for a 50 percent statistic at the 95 percent
    confidence level.
    Health Insurance Coverage Measures
    In all rounds of the HRMS, respondents received a question, adapted
    from the American Community Survey, about their current health
    insurance coverage. Respondents could report more than one type of
    coverage, and those who did not report any coverage were asked to
    verify if they have health insurance. We used additional follow-up
    questions to determine whether respondents enrolled in their health
    plan through the Marketplace, whether they enrolled in a private plan
    through the Marketplace, whether they are covered under certain state
    programs, and the name of the health plan for their main source of
    coverage.

        Because respondents could report more than one coverage type, we
    established a hierarchy of responses to assign coverage types so that
    coverage estimates sum to 100 percent: ESI/military coverage; public
    coverage, including Medicare, Medicaid, and CHIP; private nongroup
    coverage purchased through or outside the Marketplaces; and other
    unspecified coverage. To address the challenges associated with
    identifying health insurance coverage type in surveys (Call et al.
    2013; Klerman et al. 2009; Pascale 2008; Pascale, Fertig, and Call
    2019), we used a logical editing process to identify the most likely
    type of health insurance coverage held by respondents, based on the
    information they provided in the survey (Blavin, Karpman, and Zuckerman
    2016). However, measurement error still occurs in survey estimates of
    coverage type, particularly in reports of private nongroup coverage
    (which can be purchased through government-run Marketplaces with public
    subsidies) and Medicaid coverage (which is often provided through
    private Medicaid managed-care plans).

        Estimates from this brief are not directly comparable with
    estimates from HRMS analyses from before 2020 because of a change in
    the coverage editing process for respondents who reported having
    insurance but did not report a specific coverage type and who did not
    enroll in a health plan through the Marketplace. Under the previous
    approach, these respondents were identified as insured with an
    unspecified coverage type if they reported having a deductible. The
    updated approach only assigns unspecified coverage to these respondents
    if they report the name of a health plan that provides a valid form of
    comprehensive health insurance coverage. Based on this update,
    respondents reporting plans that do not offer comprehensive health
    insurance (e.g., health care sharing ministries) are considered
    uninsured, yielding slightly higher estimates of uninsurance in this
    brief than in previous analyses of the HRMS. Under this updated
    coverage editing approach, estimates of the share of uninsured
    nonelderly adults in previous rounds of the HRMS would be 1 to 2
    percentage points higher than under the previous approach. We applied
    the updated coverage editing process consistently for all years of data
    in this brief.
    Analysis
    Estimated changes in coverage are regression adjusted to control for
    any changes in the demographic and socioeconomic characteristics of
    respondents in each survey round not fully captured in the survey
    weights. This allows us to remove variation in coverage caused by
    changes in the observable characteristics of people responding to the
    survey over time. We control for measures used in poststratification of
    both the KnowledgePanel and the HRMS, including gender, age, race and
    ethnicity, primary language, educational attainment, marital status,
    presence of children in the household, household income, family income,
    homeownership status, Internet access, urban/rural residence, and
    region. We also control for citizenship status and participation in the
    previous round of the survey. In presenting the regression-adjusted
    estimates, we use the predicted rate of each coverage measure in each
    year for the same nationally representative population. For this
    analysis, we base the nationally representative sample on respondents
    for the 2020 and 2021 rounds of the survey. We emphasize changes in
    coverage that are statistically different from 0 at the 5 percent level
    or lower and provide a 95 percent confidence interval for key estimates
    of changes in the number of adults with selected coverage types.

    Limitations

    This analysis has several limitations. First, studies have found
    significant measurement error in reported health insurance coverage
    type across surveys (Call et al. 2013; Klerman et al. 2009; Pascale
    2008; Pascale, Fertig, and Call 2019). We attempt to mitigate this
    error using a logical editing process for coverage type that relies on
    multiple data elements (Blavin, Karpman, and Zuckerman 2016). Second,
    the probability-based internet panel underlying the HRMS does not cover
    some adult populations, including those who are homeless, are
    institutionalized, or do not speak English or Spanish. Third, the HRMS
    has a low cumulative response rate, and nonresponse bias is likely only
    partially mitigated by the survey weights. However, previous studies
    assessing recruitment for the panel from which HRMS samples are drawn
    have found little evidence of nonresponse bias for core demographic and
    socioeconomic measures (Garrett, Dennis, and DiSogra 2010; Heeren et
    al. 2008). Further, HRMS estimates of changes in coverage have been
    consistent with estimates from federal surveys with larger samples
    sizes, higher response rates, and stronger designs (Karpman and Long
    2015). Finally, though nonresponse in federal surveys increased
    significantly during the pandemic (Dahlhamer et al. 2021; Rothbaum and
    Bee 2021), we find little change in nonresponse in the HRMS.
    Probability-based internet panels could potentially have more stable
    response patterns because panel members have previously agreed to
    participate in surveys. However, the impact of the pandemic on these
    types of surveys is not yet fully understood.

    References

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        Assistant Secretary for Planning and Evaluation). 2021. Health
        Coverage under the Affordable Care Act: Enrollment Trends and State
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    Au-Yeung, Caroline, and Robert Hest. 2019. ``Comparing Federal
        Government Surveys That Count the Uninsured: 2019.'' Minneapolis:
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    Banthin, Jessica, Matthew Buettgens, Michael Simpson, and Robin Wang.
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        Subsidies Were Made Permanent? Estimates for 2022.'' Washington,
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    Banthin, Jessica, Michael Simpson, Matthew Buettgens, Robin Wang, and
        Linda J. Blumberg. 2020. ``Changes in Health Insurance Coverage Due
        to the COVID-19 Recession: Preliminary Estimates Using
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    Blavin, Fredric, Michael Karpman, and Stephen Zuckerman. 2016.
        ``Understanding Characteristics of Likely Marketplace Enrollees and
        How They Choose Plans.'' Health Affairs 35 (3): 535-39. https://
        doi.org/10.1377/hlthaff.2015.0867.

    Blumberg, Linda J., John Holahan, Matthew Buettgens, Anuj
        Gangopadhyaya, Bowen Garrett, Adele Shartzer, Michael Simpson,
        Robin Wang, Melissa Favreault, and Diane Arnos. 2019. From
        Incremental to Comprehensive Health Reform: How Various Reform
        Options Compare on Coverage and Costs. Washington, DC: Urban
        Institute.

    Brooks, Tricia, and Andy Schneider. 2020. ``The Families First
        Coronavirus Response Act: Medicaid and CHIP Provisions Explained.''
        Washington, DC: Georgetown University Health Policy Institute,
        Center for Children and Families.

    Buettgens, Matthew. 2021. ``Medicaid Expansion Would Have a Larger
        Impact Than Ever during the COVID-19 Pandemic.'' Washington, DC:
        Urban Institute.

    Call, Kathleen T., Michael E. Davern, Jacob A. Klerman, and Victoria
        Lynch. 2013. ``Comparing Errors in Medicaid Reporting across
        Surveys: Evidence to Date.'' Health Services Research 48 (2 pt. 1):
        652-64. https://dx.doi.org/10.1111%2Fj.1475-6773.2012.01446.x.

    Corallo, Bradley, and Robin Rudowitz. 2021. ``Analysis of Recent
        National Trends in Medicaid and CHIP Enrollment.'' San Francisco:
        Kaiser Family Foundation.

    Dahlhamer, James M., Matthew D. Bramlett, Aaron Maitland, and Stephen
        J. Blumberg. 2021. ``Preliminary Evaluation of Nonresponse Bias Due
        to the COVID-19 Pandemic on National Health Interview Survey
        Estimates, April-June 2020.'' Hyattsville, MD: Centers for Disease
        Control and Prevention, National Center for Health Statistics.

    Garfield, Rachel, Gary Claxton, Anthony Damico, and Larry Levitt. 2020.
        ``Eligibility for ACA Health Coverage Following Job Loss.'' San
        Francisco: Kaiser Family Foundation.

    Garrett, Bowen, and Anuj Gangopadhyaya. 2020. ``How the COVID-19
        Recession Could Affect Health Insurance Coverage.'' Washington, DC:
        Urban Institute.

    Garrett, Joe, J. Michael Dennis, and Charles A. DiSogra. 2010. ``Non-
        response Bias: Recent Findings from Address-Based Panel
        Recruitment.'' Presented at the Annual Conference of the American
        Association for Public Opinion Research, Chicago, May 13-16.

    Haley, Jennifer M., and Erik Wengle. 2021. ``Many Uninsured Adults Have
        Not Tried to Enroll in Medicaid or Marketplace Coverage.''
        Washington, DC: Urban Institute.

    Heeren, Timothy, Erika M. Edwards, J. Michael Dennis, Sergei Rodkin,
        Ralph W. Hingson, and David L. Rosenbloom. 2008. ``A Comparison of
        Results from an Alcohol Survey of a Prerecruited Internet Panel and
        the National Epidemiologic Survey on Alcohol and Related
        Conditions.'' Alcoholism: Clinical and Experimental Research 32
        (2): 222-29. https://doi.org/10.1111/j.1530-0277.2007.00571.x.

    Holahan, John, and Vicki Chen. 2011. ``Changes in Health Insurance
        Coverage in the Great Recession.'' Washington, DC: Kaiser
        Commission on Medicaid and the Uninsured.

    Karpman, Michael, and Sharon K. Long. 2015. ``QuickTake: HRMS
        Benchmarks Well Against Gallup-Healthways and NHIS on Changes in
        Health Insurance Coverage between 2013 and 2015.'' Washington, DC:
        Urban Institute.

    Karpman, Michael, and Stephen Zuckerman. 2020. ``ACA Offers Protection
        as the COVID-19 Pandemic Erodes Employer Health Insurance
        Coverage.'' Washington, DC: Urban Institute.

    Karpman, Michael, Stephen Zuckerman, and Genevieve M. Kenney. 2020.
        ``Uneven Recovery Leaves Many Hispanic, Black, and Low-Income
        Adults Struggling.'' Washington, DC: Urban Institute.

    Khorrami, Peggah, and Benjamin D. Sommers. 2021. ``Changes in U.S.
        Medicaid Enrollment during the COVID-19 Pandemic.'' JAMA Network
        Open 4 (5): e219463. https://doi.org/10.1001/
        jamanetworkopen.2021.9463.

    Klerman, Jacob A., Michael Davern, Kathleen T. Call, Victoria Lynch,
        and Jeanne D. Ringel. 2009. ``Understanding the Current Population
        Survey's Insurance Estimates and the Medicaid `Undercount.' ''
        Health Affairs 28 (6): w991-w1001. https://doi.org/10.1377/
        hlthaff.28.6.w991.

    Long, Sharon K., Genevieve M. Kenney, Stephen Zuckerman, Dana E. Goin,
        Douglas Wissoker, Fredric Blavin, Linda J. Blumberg, Lisa Clemans-
        Cope, John Holahan, and Katherine Hempstead. 2014. ``The Health
        Reform Monitoring Survey: Addressing Data Gaps to Provide Timely
        Insights into the Affordable Care Act.'' Health Affairs 33 (1):
        161-67. https://doi.org/10.1377/hlthaff.2013.0934.

    Musumeci, MaryBeth. 2021. ``Medicaid Provisions in the American Rescue
        Plan Act.'' San Francisco: Kaiser Family Foundation.

    Musumeci, MaryBeth, and Rachel Dolan. 2021. ``Key Issues for State
        Medicaid Programs When the COVID-19 Public Health Emergency Ends.''
        San Francisco: Kaiser Family Foundation.

    Obama, Barack. 2016. ``United States Health Reform: Progress and Next
        Steps.'' JAMA 316 (5): 525-32. https://doi.org/10.1001/
        jama.2016.9797.

    Pascale, Joanne. 2008. ``Measurement Error in Health Insurance
        Reporting.'' Inquiry 45 (4): 422-37. https://doi.org/
        10.5034%2Finquiryjrnl_45.04.422.

    Pascale, Joanne, Angela R. Fertig, and Kathleen T. Call. 2019.
        ``Assessing the Accuracy of Survey Reports of Health Insurance
        Coverage Using Enrollment Data.'' Health Services Research 54 (5):
        1099-109. https://doi.org/10.1111/1475-6773.13191.

    Rosenbaum, Sara, Morgan Handley, and Rebecca Morris. 2021. ``Winding
        Down Continuous Enrollment for Medicaid Beneficiaries When the
        Public Health Emergency Ends.'' New York: Commonwealth Fund.

    Rothbaum, Jonathan, and Adam Bee. 2021. ``Coronavirus Infects Surveys,
        Too: Survey Nonresponse Bias and the Coronavirus Pandemic.''
        Washington, DC: U.S. Census Bureau.

    Wagner, Jennifer. 2020. ``States Can Act Now to Keep Medicaid Enrollees
        Covered When the Public Health Emergency Ends.'' Washington, DC:
        Center on Budget and Policy Priorities.

    Acknowledgments

    This brief was funded by the Robert Wood Johnson Foundation. The views
    expressed here do not necessarily reflect the views of the Foundation.

        The views expressed are those of the authors and should not be
    attributed to the Urban Institute, its trustees, or its funders.
    Funders do not determine research findings or the insights and
    recommendations of Urban experts. Further information on the Urban
    Institute's funding principles is available at urban.org/
    fundingprinciples.

        The authors gratefully acknowledge Linda J. Blumberg, Matthew
    Buettgens, and Jennifer M. Haley for helpful feedback and Rachel Kenney
    for her careful editing.

                                     ______

                                Urban Institute

         Extending the American Rescue Plan Act's Enhanced Marketplace
                 Affordability Provisions Could Benefit Nearly
                    1 Million Uninsured Children and Parents

     Stacey McMorrow, Jessica Banthin, Matthew Buettgens, Michael Simpson,
            Genevieve M. Kenney, and Clare Wang Pan
    October 2021
    Signed into law in March 2021, the American Rescue Plan Act (ARPA)
    contained numerous provisions aimed at supporting recovery from the
    COVID-19 pandemic and associated recession.\1\ Among these provisions
    are changes to the subsidy schedule governing access to financial
    assistance to purchase health insurance coverage in the Affordable Care
    Act (ACA) Marketplaces. These changes give Americans access to greater
    financial assistance purchasing coverage through 2022 and have the
    potential to reduce uninsurance and make coverage more affordable for
    those already purchasing nongroup coverage. Making these provisions
    permanent is a topline priority in Senate Democrats' fiscal year 2022
    budget resolution.\2\
    ---------------------------------------------------------------------------
        \1\ American Rescue Plan Act, Pub. L. No. 117-2 (2021).
        \2\ ``FY2022 Budget Resolution Toplines,'' U.S. Senate Democratic
    Leadership, August 9, 2021, https://www.democrats.senate.gov/imo/media/
    doc/Topline%20Summary%20of%20FY2022
    %20Budget%20Resolution.pdf.

        Though children were not the primary target of the ACA coverage
    expansions or subsequent efforts to strengthen the ACA, recent
    increases in children's uninsurance rates and the critical need to
    address unmet health needs and catch up on forgone care during the
    pandemic suggest that removing barriers to health care for children
    could be particularly important in the coming years (Alker and Corcoran
    2020; McMorrow et al. 2020; Gonzalez, Karpman, and Haley 2021). These
    risks for children are also exacerbated by parents' rising uninsurance
    rates and pandemic-related unmet health needs (Gonzalez et al. 2020;
    ---------------------------------------------------------------------------
    Haley, Kenney, Wang Pan, et al. 2021).

        Children may benefit from extending the ARPA's enhanced subsidies
    if they gain coverage or their parents gain coverage or experience
    premium or OOP cost savings (Wright Burak 2019). In this brief, we
    consider the impacts of extending the enhanced subsidies on all
    children and their parents and children under age 6 and their parents.
    Using the Urban Institute's Health Insurance Policy Simulation Model
    (HIPSM), we find the following:

            Nearly 1 million uninsured children and parents, including
    approximately 300,000 uninsured children, would gain insurance coverage
    if ARPA subsidy enhancements were made permanent.

            About 67,000 uninsured children who would gain coverage
    through these provisions would be under age 6, and approximately
    267,000 uninsured parents who would gain coverage would have a child
    under age 6. This suggests even more young children could benefit when
    their parents gain coverage.

            Nearly two-thirds of the coverage gains for families would be
    concentrated among children and parents with incomes between 200 and
    400 percent of the federal poverty level (FPL).

            If ARPA subsidy enhancements were made permanent, we project
    that about 3.3 million children and 6.3 million parents would remain
    uninsured in 2022, unless additional policy changes are introduced.
    Most remaining uninsured children would be eligible for Medicaid or the
    Children's Health Insurance Program, or CHIP (57.2 percent), or tax
    credits (13.6 percent). But about 41.2 percent of parents would be
    ineligible for subsidized coverage because of their immigration status
    or residence in a state that has not expanded Medicaid under the ACA;
    this represents approximately 2.6 million parents, including 636,000
    uninsured parents who would become eligible for Medicaid if their state
    were to expand Medicaid under the ACA.

            Approximately 4.5 million children and parents who had
    nongroup coverage before the ARPA would experience household premium
    reductions of 28 percent per person, on average; those with incomes
    below 200 percent of FPL would save even more, 41 percent per person.
    Total household spending on premiums and OOP costs would fall by
    averages of 18 percent per person overall and 25 percent per person in
    families with income below 200 percent of FPL.

    Background

    The ACA expanded coverage options for millions of Americans, and though
    such options focused largely on childless adults, children's and
    parents' uninsurance also declined (Karpman et al. 2016). From 2013 to
    2016, uninsurance fell from 7.0 to 4.3 percent among children and from
    17.6 to 11.0 percent among parents (Haley, Kenney, Wang Pan, et al.
    2021). In recent years, however, declines in children's and parents'
    uninsurance have stalled (Haley et al. 2019, 2020), and uninsurance
    increased for both groups in 2019 (Haley, Kenney, Wang Pan, et al.
    2021). From 2018 to 2019, uninsurance increased from 4.8 to 5.2 percent
    among children and from 11.2 to 11.7 percent among parents.

        Thus, many families with children faced precarious health-care
    access and affordability as the COVID-19 pandemic and resulting
    recession took hold in 2020, and numerous families experienced
    additional economic and health challenges in the ensuing months. Many
    families with children lost jobs and incomes during the recession, but
    parents who kept working through the pandemic also faced challenges
    related to child care safety and availability (Karpman, Gonzalez, and
    Kenney 2020). Both children and parents have reportedly faced
    significant mental health challenges during the pandemic (Hamel et al.
    2020; Panchal et al. 2021), as well as forgone and delayed care
    (Gonzalez et al. 2020, 2021). As of now, no definitive estimates of the
    number of children and parents who lost health insurance coverage
    during the pandemic exist,\3\ but several protections have likely
    prevented catastrophic coverage losses. Under the Families First
    Coronavirus Response Act, for example, States became eligible for an
    increase in federal Medicaid funding throughout the public health
    emergency, so long as they maintain eligibility for those enrolled on
    or after March 18, 2020. As the recovery continues and some of these
    protections expire, it will be critical for families to be able to
    access affordable coverage and care, especially given the urgent need
    for children and parents to catch up on care they missed during the
    pandemic. Moreover, both physical and mental health-care needs for
    children and families may have increased because of the pandemic and
    the associated stressors of remote learning and social isolation.
    ---------------------------------------------------------------------------
        \3\ Joan Alker, ``Q: How Many Children Were Uninsured in 2020?''
    Say Ahhh! (blog), Georgetown University Health Policy Institute, Center
    for Children and Families, August 10, 2021, https://ccf.georgetown.edu/
    2021/08/10/how-many-children-were-uninsured-in-2020/.

        The ARPA included numerous provisions with the potential to benefit
    families and children, including a child tax credit and efforts to make
    insurance coverage more widely available and affordable (Acs and Werner
    2021; Wheaton, Giannarelli, and Dehry 2021). The changes to the
    Marketplace subsidy schedule were particularly important for children
    and parents, especially those whose families may have lost jobs and
    access to employer-sponsored insurance during the pandemic.
    Specifically, premium contributions for those with incomes below 150
    percent of FPL were reduced to zero; required premium contributions
    were significantly reduced for those with incomes between 150 and 400
    percent of FPL; and premium contributions were capped at 8.5 percent of
    income for people with incomes above 400 percent of FPL, who were
    previously ineligible for any subsidies (table 1). As under current
    law, people not meeting immigration requirements and those with access
    to an employer-sponsored plan deemed affordable under the ACA (i.e.,
    with employee premiums at or below 9.8 percent of household income)
    ---------------------------------------------------------------------------
    would remain ineligible for subsidies under extended ARPA subsidies.

      TABLE 1. Subsidy Schedules under Current Law and the  American Rescue
                                 Plan Act, 2022
     Premium contribution percentage-of-income limits for benchmark coverage
    ------------------------------------------------------------------------
    Income (% of
        FPL)               Before ARPA                   Under ARPA
    ------------------------------------------------------------------------
    < 138                                2.07                       0.0-0.0
    138-150                         3.10-4.14                       0.0-0.0
    150-200                         4.14-6.52                       0.0-2.0
    200-250                         6.52-8.33                       2.0-4.0
    250-300                         8.33-9.83                       4.0-6.0
    300-400                              9.83                       6.0-8.5
    400-500                               n/a                       8.5-8.5
    500-600                               n/a                       8.5-8.5
    600+                                  n/a                       8.5-8.5
    ------------------------------------------------------------------------
    Sources: Internal Revenue Service, Health and Human Services Department,
      and American Rescue Plan Act of 2021, Pub. L. No. 117-2.
    Notes: FPL is federal poverty level. ARPA is American Rescue Plan Act. n/
      a is not applicable; people with incomes above 400 percent of FPL are
      ineligible for subsidies under current law. Percentage-of-income caps
      applied in 2022; current-law caps are for 2021 and indexed each year.
      Annual adjustments to caps have been modest and are not made until
      close to the end-of-year open enrollment period.

        Children and their parents may benefit from these enhanced
    affordability provisions in at least three ways. First, uninsured
    children may gain coverage if subsidy enhancements allow families to
    newly purchase coverage for children. Second, uninsured parents may
    gain coverage with newly affordable options, and their already insured
    children may benefit from the associated health and financial
    improvements for their family (Wright Burak 2017). Finally, household
    spending on premiums would decline for families who already had
    nongroup coverage before the subsidy enhancements, which frees up
    resources for other needs. Understanding these effects will provide
    policymakers with insights for strengthening the health and financial
    well-being of children and families and identify remaining gaps in
    coverage affordability and accessibility.

    Methods

    We used the Urban Institute's Health Insurance Policy Simulation Model
    to produce the estimates in this brief. HIPSM is a detailed
    microsimulation model of the health-care system designed to estimate
    the cost and coverage effects of proposed health care policy options.
    The model simulates household and employer decisions and models the way
    changes in one insurance market interact with changes in other markets.
    Results from HIPSM simulations have been shown to be consistent with
    actual policy outcomes and other respected microsimulation models
    (Glied, Arora, and Solis-Roman 2015).

        An earlier report modeled the effects of the ARPA's enhanced
    subsidies on coverage for the entire nonelderly population in 2022
    (Banthin et al. 2021). That simulation assumed the ARPA's changes to
    the subsidy schedule were permanent and the changes were fully phased
    in by 2022. In other words, consumers, employers, and insurers in the
    model had fully adapted their decision making to the new schedule.
    Additional details on the 2022 HIPSM baseline estimates, including
    assumptions about the pandemic's economic effects, can be found in the
    earlier report.

        In this brief, we present estimates from the same simulation for
    children and parents overall and young children and their parents. We
    describe changes in the coverage distribution for children and parents
    under the enhanced subsidy schedule, and we consider changes in
    premiums and OOP spending for families who had nongroup coverage before
    the ARPA. Children are those ages 18 and younger and parents are
    nonelderly adults (ages 19 to 64) with a child in their tax unit. We
    produce estimates for young children ages 5 and younger and their
    parents because of the importance of early childhood to future health
    and well-being.

        This analysis has some limitations. First, assumptions about
    population, income, and health cost growth are always somewhat
    uncertain, but the additional uncertainty associated with the current
    economic recovery and frequently changing
    pandemic-related policies exacerbate the issue. For example, the
    current projections assume the Medicaid maintenance-of-effort
    provisions will expire in early 2022, and States have up to 12 months
    to complete the redetermination process.\4\ It is impossible to predict
    how quickly individual States will work through verifications,
    redeterminations, and renewals, however, so Medicaid enrollment may be
    higher in 2022 than these estimates indicate. In addition, our
    definition of parents excludes noncustodial parents and some unmarried
    parents living together with their children but assigned to different
    tax units.
    ---------------------------------------------------------------------------
        \4\ Daniel Tsai (Deputy Administrator and Director, Center for
    Medicaid and CHIP Services, Centers for Medicare and Medicaid
    Services), letter to state health officials, regarding ``Updated
    Guidance Related to Planning for the Resumption of Normal State
    Medicaid, Children's Health Insurance Program (CHIP), and Basic Health
    Program (BHP) Operations upon Conclusion of the COVID-19 Public Health
    Emergency,'' August 13, 2021, https://www.medicaid.gov/federal-policy-
    guidance/downloads/sho-21-002.pdf.
    ---------------------------------------------------------------------------

    Results

    If the ARPA's enhanced subsidies were made permanent, we find that the
    number of uninsured children would fall by approximately 303,000, and
    the number of uninsured parents would fall by about 686,000 (figure 1).
    The number of uninsured young children would fall by about 67,000, and
    about 267,000 parents of young children would gain coverage.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Uninsurance rates would drop from 4.6 to 4.2 percent for
    children and from 10.8 to 9.8 percent for parents (table 2). The
    increases in private nongroup coverage, of 0.5 and 1.2 percentage
    points for children and parents, are the key drivers of the projected
    decline in uninsurance. Young children have somewhat lower uninsurance
    rates than children overall, whereas their parents have somewhat higher
    uninsurance rates than parents overall both before and under the
    permanent ARPA subsidy schedule. But, the projected effects of the
    subsidies on young children and their parents are similar to those for
    parents and children overall; for both groups, reductions in
    uninsurance under the ARPA would be largely offset by gains in private
    nongroup coverage.

      TABLE 2. Coverage Distribution of Children and Parents before and under a Permanent ARPA Marketplace Premium
                                                 Subsidy Schedule, 2022
    ----------------------------------------------------------------------------------------------------------------
                                                Children ages 18 and younger       Parents of children ages 18  and
                                           -------------------------------------               younger
                                                                                ------------------------------------
                                             Before     Under     Percentage-     Before     Under     Percentage-
                                            ARPA (%)  ARPA (%)    point change   ARPA (%)  ARPA (%)    point change
    ----------------------------------------------------------------------------------------------------------------
    Employer                                   46.0      45.9             -0.1      60.2      60.0             -0.2
    Private nongroup                            1.7       2.2              0.5       4.8       6.0              1.2
    Medicaid/CHIP                              45.1      45.1              0.1      21.4      21.5              0.1
    Other public                                1.8       1.8              0.0       2.2       2.2              0.0
    Noncompliant nongroup                       0.8       0.7             -0.1       0.6       0.5             -0.1
    Uninsured                                   4.6       4.2             -0.4      10.8       9.8             -1.1
    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------
                                                Children ages 5 and younger        Parents of children ages 5  and
                                           -------------------------------------               younger
                                                                                ------------------------------------
                                             Before     Under     Percentage-     Before     Under     Percentage-
                                            ARPA (%)  ARPA (%)    point change   ARPA (%)  ARPA (%)    point change
    ----------------------------------------------------------------------------------------------------------------
    Employer                                   42.1      42.1              0.0      55.9      55.7             -0.2
    Private nongroup                            1.3       1.7              0.4       4.1       5.2              1.1
    Medicaid/CHIP                              50.3      50.3              0.0      25.3      25.4              0.1
    Other public                                2.1       2.1              0.0       2.1       2.1              0.0
    Noncompliant nongroup                       0.7       0.7             -0.1       0.6       0.5             -0.1
    Uninsured                                   3.4       3.1             -0.3      12.0      11.0             -0.9
    ----------------------------------------------------------------------------------------------------------------
    Source: Urban Institute Health Insurance Policy Simulation Model, 2021.
    Notes: ARPA is American Rescue Plan Act. CHIP is Children's Health Insurance Program. Estimates may not add to
      100 percent because of rounding.

        If the ARPA subsidies were made permanent, the declines in
    uninsurance would be concentrated among children and families with
    incomes between 200 and 400 percent of FPL (figure 2). Of the
    approximately 303,000 children who would gain coverage, about 198,000
    would live in families with moderate incomes. About 443,000 of the
    686,000 parents expected to gain coverage would have incomes in this
    range. An additional 75,000 children and 139,000 parents expected to
    gain coverage would have incomes above 400 percent of FPL. These
    patterns are similar for young children and their parents. However,
    compared with all parents, a slightly larger share of parents of young
    children gaining coverage would have incomes between 138 and 200
    percent of FPL.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        If the ARPA subsidy schedule were made permanent and no other
    coverage changes were enacted, we project 3.3 million children and 6.3
    million parents would remain uninsured in 2022 (figure 3). Among the
    remaining uninsured children, we estimate about 57.2 percent would be
    eligible for Medicaid or CHIP coverage and another 13.6 percent would
    be eligible for Marketplace subsidies. About 29.2 percent of uninsured
    children would be ineligible for publicly subsidized coverage,
    including 15.2 percent ineligible because of their immigration status
    and 14.0 percent ineligible because they have access to an affordable
    employer offer of coverage.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        This distribution differs markedly for uninsured parents.
    Compared with more than 70 percent of uninsured children, only 38.5
    percent of uninsured parents would be eligible for Medicaid/CHIP (21.8
    percent) or Marketplace subsidies (16.7 percent). Nearly one-third of
    uninsured parents would be ineligible for publicly subsidized coverage
    because of their immigration status, and another 10.1 percent (or about
    636,000 parents) would be ineligible for having income below the FPL in
    a state that did not expand Medicaid under the ACA. Finally, 20.2
    percent of uninsured parents would be ineligible because they have
    access to an affordable employer offer. These patterns are quite
    similar to those for young children and their parents, except young
    children are far less likely to be ineligible because of their
    immigration status (data not shown).

        Approximately 4.5 million children and parents who had nongroup
    coverage before the ARPA could also benefit from the enhanced subsidies
    through reductions in household premiums and OOP spending. Across all
    income groups, these families would experience an average reduction in
    premium spending of about 28 percent per person and an average
    reduction in OOP spending of 4 percent per person; the overall
    reduction in household spending would be 18 percent per person (figure
    4). These cost savings would be larger for families with incomes below
    400 percent of FPL. On average, families with incomes below 200 percent
    of FPL would experience a 41 percent reduction in premiums per person
    and a 7 percent reduction in OOP spending per person. Those with
    incomes between 200 and 400 percent of FPL would experience an average
    premium reduction of about 34 percent per person and an average OOP
    spending reduction of about 11 percent per person. Total household
    spending on premiums and OOP costs would decline by an average of 25
    percent per person for those with incomes below 200 percent of FPL and
    by 23 percent per person for those with incomes between 200 and 400
    percent of FPL.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Discussion

    This analysis finds that almost 1 million children and parents could
    gain coverage under extension of the ARPA Marketplace subsidy
    enhancements. These coverage gains would be concentrated among families
    with incomes between 200 and 400 percent of FPL and would likely
    improve access to needed care for children and parents in lower- and
    moderate-income families. In addition to those directly gaining
    coverage through the enhanced subsidies, many already insured children
    will likely benefit if their uninsured parents gain coverage. Evidence
    strongly suggests that parents having health insurance coverage has
    both health and economic benefits for children and families (Wright
    Burak 2017). Further, more than 4 million children and parents who had
    nongroup coverage before the ARPA could experience significant
    household premium and OOP cost savings, especially those with incomes
    below 400 percent of FPL.

        Both children's and parents' uninsurance rates were increasing
    leading up to the pandemic (Haley, Kenney, Wang Pan, et al. 2021), and
    many families with children were struggling to meet health care and
    other basic needs (Karpman et al. 2018; Karpman, Kenney, and Gonzalez
    2018). Since early 2020, pandemic-related job losses, fears of
    coronavirus exposure, and associated concerns have contributed to
    continued problems accessing needed health care and affording food,
    housing, and other basic needs (Gonzalez et al. 2020, 2021; Gonzalez,
    Karpman, and Haley 2021; Karpman et al. 2020; Karpman, Gonzalez, and
    Kenney 2020). Though some of these concerns may ease as the pandemic
    recedes and the economy recovers, new complications will likely arise
    as pandemic protections run out and prepandemic inequities remain
    unchanged. Thus, making the enhanced ARPA subsidies permanent will
    provide much needed relief for many families struggling to afford
    health insurance and health care, and the additional cost savings may
    free up resources for other family needs.

        Still, we project that more than 3 million children and 6 million
    parents would remain uninsured in 2022 even if the ARPA subsides were
    made permanent. Congress and the Biden administration are tackling
    several of the remaining barriers to coverage identified in this
    analysis. First, a federal program targeting people in the Medicaid
    coverage gap has been identified as a priority in Senate Democrats'
    fiscal year 2022 budget resolution.\5\ Urban Institute estimates
    indicate that in combination with the extension of the ARPA subsidies,
    filling the Medicaid coverage gap would reduce the number of nonelderly
    uninsured people by 7.0 million, or about 2.8 million more than
    extending the ARPA subsidies alone (Banthin, Simpson, and Green 2021).
    Our analysis suggests an estimated 636,000 uninsured parents with
    incomes below the FPL in the 12 States that have not yet expanded
    Medicaid under the ACA would become eligible for subsidized coverage
    under the Democrats' proposed reforms.
    ---------------------------------------------------------------------------
        \5\ ``FY2022 Budget Resolution Toplines,'' Senate Democratic
    Leadership.

        Second, the Biden administration is committed to improving outreach
    and enrollment efforts to ensure people are aware of their eligibility
    for assistance and have the support needed to enroll.\6\ In addition to
    the 2021 COVID-19 special enrollment period, which has resulted in at
    least 2.5 million new Marketplace enrollees,\7\ the administration
    intends to expand the 2022 open enrollment period by 30 days and to
    invest $80 million in the navigator program. The latter will provide
    outreach and enrollment assistance targeted to people of color; rural
    communities; immigrant communities; people facing language,
    transportation, or internet access barriers; and other underserved
    populations. The administration has also proposed creating a special
    enrollment period for certain consumers with low incomes who may be
    eligible for the most generous Marketplace subsidies.\8\ Taken
    together, these outreach and enrollment efforts could have meaningful
    impacts for the 70 percent of uninsured children and nearly 40 percent
    of uninsured parents who are already eligible for Medicaid or
    Marketplace tax credits.
    ---------------------------------------------------------------------------
        \6\ Katie Keith, ``ACA Round-Up: Navigator Grantees, GAO
    Investigation, Contraceptive Mandate, and More,'' Health Affairs Blog,
    September 1, 2021, https://www.healthaffairs.org/do/10.1377/
    hblog20210901.961047/full.
        \7\ Katie Keith, ``Marketplace Special Enrollment Reaches 2.5
    Million; Administration Announces Health Care Reconciliation
    Priorities,'' Health Affairs Blog, August 10, 2021, https://
    www.healthaffairs.org/do/10.1377/hblog20210810.821428/full.
        \8\ Centers for Medicare and Medicaid Services, ``CMS Proposed Rule
    to Increase Americans' Access to Health Coverage for 2022,'' news
    release, June 28, 2021, https://www.cms.gov/newsroom/press-releases/
    cms-proposed-rule-increase-americans-access-health-coverage-2022.

        Changing the employer affordability provision, which restricts
    otherwise eligible people from accessing Marketplace subsidies if they
    have access to an employer plan that costs the employee less than 9.8
    percent of their household income, could affect about 20 percent of
    uninsured parents. One modest policy change would be eliminating the
    ``family glitch,'' which restricts eligibility for subsidized coverage
    for the whole family even when the only affordable employer offer is
    for a single employee plan. Analyses of such a proposal have not found
    large effects on uninsurance, but they have found potential for
    household cost savings (Buettgens and Banthin 2021). To further reduce
    uninsurance for people affected by the employer affordability
    provision, however, lowering or eliminating the affordability threshold
    ---------------------------------------------------------------------------
    may be necessary.

        Addressing immigration restrictions on receiving Medicaid and
    Marketplace subsidies will also be critical to closing coverage gaps,
    because almost one-third of uninsured parents are ineligible for
    publicly subsidized coverage because of their immigration status.
    Though the Biden administration reversed the Trump administration's
    changes to the public charge rule that made many immigrant families
    afraid to use public benefits for which they were eligible (Haley,
    Kenney, Bernstein, et al. 2021), further efforts to expand eligibility
    for affordable coverage to undocumented or otherwise ineligible
    immigrants will be needed to achieve universal coverage. Finally,
    children and families need far more than health insurance to thrive, so
    ongoing attention to paid leave, child care, and educational and income
    supports will also be critical to ensure all children and their
    families have the opportunity for healthy, stable futures.

    References

    Acs, Gregory, and Kevin Werner. 2021. ``How a Permanent Expansion of
        the Child Tax Credit Could Affect Poverty.'' Washington, DC: Urban
        Institute.

    Alker, Joan, and Alexandra Corcoran. 2020. Children's Uninsured Rate
        Rises by Largest Annual Jump in More Than a Decade. Washington, DC:
        Georgetown University Health Policy Institute, Center for Children
        and Families.

    Banthin, Jessica, Matthew Buettgens, Michael Simpson, and Robin Wang.
        2021. ``What If the American Rescue Plan's Enhanced Marketplace
        Subsidies Were Made Permanent? Estimates for 2022.'' Washington,
        DC: Urban Institute.

    Banthin, Jessica, Michael Simpson, and Andrew Green. 2021. ``The
        Coverage and Cost Effects of Key Health Insurance Reforms Being
        Considered by Congress.'' Washington, DC: Urban Institute.

    Buettgens, Matthew, and Jessica Banthin. 2021. ``Changing the `Family
        Glitch' Would Make Health Coverage More Affordable for Many
        Families.'' Washington, DC: Urban Institute.

    Glied, Sherry A., Anupama Arora, and Claudia Solis-Roman. 2015. ``How
        Well Did the CBO Forecast the Effects of the ACA?'' New York:
        Commonwealth Fund.

    Gonzalez, Dulce, Michael Karpman, and Jennifer M. Haley. 2021.
        ``Worries about the Coronavirus Caused Nearly 1 in 10 Parents to
        Delay or Forgo Needed Health Care for Their Children in Spring
        2021.'' Washington, DC: Urban Institute.

    Gonzalez, Dulce, Michael Karpman, Genevieve M. Kenney, and Stephen
        Zuckerman. 2021. ``Delayed and Forgone Health Care for Children
        during the COVID-19 Pandemic.'' Washington, DC: Urban Institute.

    Gonzalez, Dulce, Stephen Zuckerman, Genevieve M. Kenney, and Michael
        Karpman. 2020. ``Almost Half of Adults in Families Losing Work
        during the Pandemic Avoided Health Care Because of Costs or COVID-
        19 Concerns.'' Washington, DC: Urban Institute.

    Haley, Jennifer M., Genevieve M. Kenney, Hamutal Bernstein, and Dulce
        Gonzalez. 2021. ``Many Immigrant Families with Children Continued
        to Avoid Public Benefits in 2020, Despite Facing Hardships.''
        Washington, DC: Urban Institute.

    Haley, Jennifer M., Genevieve M. Kenney, Robin Wang, Clare Wang Pan,
        Victoria Lynch, and Matthew Buettgens. 2019. Improvements in
        Uninsurance and
        Medicaid/CHIP Participation among Children and Parents Stalled in
        2017. Washington, DC: Urban Institute.

    Haley, Jennifer M., Genevieve M. Kenney, Clare Wang Pan, Robin Wang,
        Victoria Lynch, and Matthew Buettgens. 2019. ``Progress in
        Children's Coverage Continued to Stall Out in 2018.'' Washington,
        DC: Urban Institute.

    ---. 2021. ``Uninsurance Rose among Children and Parents in 2019:
        National and State Patterns.'' Washington, DC: Urban Institute.

    Hamel, Liz, Audrey Kearney, Ashley Kirzinger, Lunna Lopes, Calley
        Munana, and Mollyann Brodie. 2020. KFF Health Tracking Poll--July
        2020. San Francisco: Kaiser Family Foundation.

    Karpman, Michael, Jason A. Gates, Genevieve M. Kenney, and Stacey
        McMorrow. 2016. ``Uninsurance among Parents, 1997-2014: Long-Term
        Trends and Recent Patterns.'' Washington, DC: Urban Institute.

    Karpman, Michael, Dulce Gonzalez, and Genevieve M. Kenney. 2020.
        ``Parents Are Struggling to Provide for Their Families during the
        Pandemic: Material Hardships Greatest among Low-Income, Black, and
        Hispanic Parents.'' Washington, DC: Urban Institute.

    Karpman, Michael, Dulce Gonzalez, Stephen Zuckerman, and Gina Adams.
        2018. ``What Explains the Widespread Material Hardship among Low-
        Income Families with Children?'' Washington, DC: Urban Institute.

    Karpman, Michael, Genevieve M. Kenney, and Dulce Gonzalez. 2018.
        ``Health Care Coverage, Access, and Affordability for Children and
        Parents: New Findings from March 2018.'' Washington, DC: Urban
        Institute.

    Karpman, Michael, Stephen Zuckerman, Dulce Gonzalez, and Genevieve M.
        Kenney. 2020. ``The COVID-19 Pandemic Is Straining Families'
        Abilities to Afford Basic Needs: Low-Income and Hispanic Families
        the Hardest Hit.'' Washington, DC: Urban Institute.

    McMorrow, Stacey, Dulce Gonzalez, Clara Alvarez Caraveo, and Genevieve
        M, Kenney. 2020. ``Urgent Action Needed to Address Children's Unmet
        Health Care Needs during the Pandemic.'' Washington, DC: Urban
        Institute.

    Panchal, Nirmita, Rabah Kamal, Cynthia Cox, and Rachel Garfield. 2021.
        ``The Implications of COVID-19 for Mental Health and Substance
        Use.'' San Francisco: Kaiser Family Foundation.

    Wheaton, Laura, Linda Giannarelli, and Ilham Dehry. 2021. 2021 Poverty
        Projections: Assessing the Impact of Benefits and Stimulus
        Measures. Washington, DC: Urban Institute.

    Wright Burak, Elizabeth. 2017. Health Coverage for Parents and
        Caregivers Helps Children. Washington, DC: Georgetown University
        Health Policy Institute, Center for Children and Families.

    ---. 2019. Parents' and Caregivers' Health Insurance Supports
        Children's Healthy Development. Ann Arbor, MI: Society for Research
        in Child Development.

    Acknowledgments

    This brief was funded by the David and Lucile Packard foundation. We
    are grateful to them and to all our funders, who make it possible for
    Urban to advance its mission.

        The views expressed are those of the authors and should not be
    attributed to the Urban Institute, its trustees, or its funders.
    Funders do not determine research findings or the insights and
    recommendations of Urban experts. Further information on the Urban
    Institute's funding principles is available at urban.org/
    fundingprinciples.

        The authors are grateful to Julia Long for research assistance and
    to Rachel Kenney for editorial assistance.

                                     ______

         Questions Submitted for the Record to Linda J. Blumberg, Ph.D.
                     Questions Submitted by Hon. Ron Wyden
        Question. The enhanced premium tax credits (PTCs) from the American
    Rescue Plan (ARP) are already providing vital assistance to American
    families to help them afford health insurance coverage on the
    Affordable Care Act's (ACA's) Health Insurance Marketplaces. During the
    Special Enrollment period for marketplace coverage this year, 2.8
    million new customers signed up for coverage. The Centers for Medicare
    and Medicaid Services (CMS) estimates that consumers who returned to
    the marketplace to update their coverage during the Special Enrollment
    Period saw a 40-percent reduction in net monthly premiums on average,
    after accounting for the ARP's enhanced PTCs. The Congressional Budget
    Office (CBO) estimates that if the enhanced PTCs were made permanent
    and Congress closed the coverage gap in States that have not expanded
    Medicaid, 3.9 million fewer people would be uninsured over the next
    decade, compared to current law. This includes 1.4 million people
    obtaining marketplace coverage who would otherwise be uninsured.

        CBO also estimates that 1.6 million people with employer-based
    coverage would move to marketplace coverage. One of the reasons for
    that shift is that the Build Back Better legislation as marked up by
    the House would allow for people to qualify for PTCs if their employee
    share of job-based health insurance premiums exceeds 8.5 percent of
    their income. Under current law, individuals who have offers of job-
    based coverage are only eligible for PTCs if their employee share of
    the job-based health insurance premium exceeds 9.83 percent of their
    income.

        Can you discuss the positive impact of allowing premium tax credit
    eligibility for workers who bear very high cost burdens in employer-
    sponsored coverage?

        Answer. One remaining inequity in the current health insurance
    system is that low-income workers with offers of health insurance
    coverage through an employer or through the employer of a family member
    may be prohibited from accessing subsidized marketplace nongroup health
    insurance that may be of lower cost and higher actuarial value than the
    employer-based insurance offered to them. A low-income worker with the
    same income but who is not offered employer-based insurance may have
    access to marketplace coverage at a household paid premium that
    represents a substantially smaller share of their family income, and
    they may well qualify for out-of-pocket subsidies that lower their
    deductibles and co-payments/co-insurance to levels below typical
    employer-based plans, depending upon their income. In addition, the
    current ``firewall'' threshold of 9.83 percent of income (mentioned in
    the question above) is even higher than the maximum percent of income
    premium contribution of 8.5 percent included in the ARP and BBB
    legislation; the 9.83 percent is consistent with the pre-ARP
    marketplace subsidy schedule, which was less generous.

        Consequently, lowering the employer-based insurance premium
    ``firewall'' percent of income threshold would make it consistent with
    the new, more generous marketplace premium tax credit schedule, and
    would allow more modest income workers and their family members the
    choice to enroll in subsidized marketplace coverage that could lower
    their insurance premiums and out-of-pocket costs. The value of this
    change would accrue to lower-income working families, since these are
    the people for whom employer-sponsored insurance premium contributions
    are most likely to exceed 8.5 percent of family income.

        For example, a family of four with income of 150 percent of the
    Federal poverty level ($39,750) enrolling in subsidized marketplace
    insurance coverage would pay 4.14 percent of their income or $1,646
    ($137 per month) for benchmark (second lowest premium) silver coverage
    in 2022 under the ARP premium tax credit schedule and the schedule
    provided under the reconciliation proposal. In addition, due to that
    family's low income, by enrolling in silver level marketplace coverage,
    they would receive a plan with an actuarial value of 94 percent (i.e.,
    on average, 94 percent of covered medical costs would be reimbursed by
    the insurer, 6 percent by the enrollee), significantly lowering the
    out-of-pocket costs they would face when using medical care. In
    contrast, the average full premium for employer-based family coverage
    was $20,758 in 2020 (according to the Medical Expenditure Panel
    Survey), and employer-based coverage generally has an actuarial value
    in the neighborhood of 80 percent. Thus, a family at this income being
    asked to contribute $3,890 ($324 per month, under 20 percent of the
    total premium) for an employer-based family insurance policy is, under
    current law, prohibited from obtaining subsidized marketplace coverage.
    However, that family would have to pay 2.3 times as much (an additional
    $2,244 per year) in order to enroll in the employer plan compared to a
    subsidized marketplace plan if they were not barred by the 9.83 percent
    of income ``firewall.'' In addition, without the marketplace's cost-
    sharing reduction available to low-income families, an employer plan
    would, in almost all circumstances, require the family to pay higher
    deductibles, co-payments, and co-insurance when using medical care.

        In sum, lowering the Affordable Care Act's employer-based insurance
    ``firewall'' to 8.5 percent would significantly lower both premium
    contributions and out-of-pocket cost requirements for low-income
    working families currently faced with very high financial burdens in
    order to enroll in employer-based health insurance coverage. The lower
    the percent of income threshold for the firewall is set, the larger the
    number of families who could be provided a more affordable choice than
    their employer may offer.

        Question. The committee is examining approaches to help eliminate
    barriers that health insurance companies have put in place that can
    make it more difficult for people to obtain mental and behavioral
    health services. As we consider our options, we also want to assess the
    impact that short-term, limited-duration insurance plans have on access
    to mental and behavioral health care. These plans are not required to
    cover essential health benefits, including mental health services. One
    analysis of short-term, limited duration insurance plans found that
    only 57 percent of these plans covered mental health services and only
    38 percent covered substance use disorder services. CBO estimates that
    1.5 million Americans are enrolled in these plans.

        Can you comment on the current scope of short-term, limited-
    duration insurance plans in the market today and the risk they pose to
    people who need coverage for mental health?

        Answer. My Urban Institute colleagues estimate that 2.3 million
    people below the age of 65 will be enrolled in short-term limited
    duration (STLD) plans in 2022, absent additional policy changes.\1\
    These plans are not subject to the requirements placed on nongroup
    insurance plans qualified under the Affordable Care Act and sold
    through the marketplaces and directly by many insurers. The STLD plans
    pose considerable risks for all people who have, have had, or may have
    health conditions in the future, and those with mental health needs are
    no exception.
    ---------------------------------------------------------------------------
        \1\ Jessica Banthin, Matthew Buettgens, Michael Simpson, Robin
    Wang. ``What if the American Rescue Plan's Enhanced Marketplace
    Subsidies were Made Permanent?'' The Urban Institute, April 2021,
    https://www.urban.org/sites/default/files/publication/104072/what-if-
    the-american-rescue-plans-enhanced-marketplace-subsidies-were-made-
    permanent-estimates-for-2022_0_0.
    pdf.

        Outside of the 5 States that prohibit underwritten STLD plans,
    these policies can deny coverage outright to applicants based on their
    current, past, or expected health status. This means that people who
    have experienced a mental health issue are unlikely to be able to
    obtain coverage of any kind through one of these plans, and for those
    who are offered coverage, the issuer is permitted to charge them very
    high premiums compared to others without such conditions. Given the
    enormous increase in people reporting depression and/or anxiety
    disorders during the course of the COVID-19 pandemic, mental health
    issues may be on course to be the most prevalent pre-existing condition
    in the country. According to the National Health Interview Survey,
    between 2019 and 2020, the share of adults reporting one of these
    mental health conditions increased from 11 percent to 40 percent.\2\
    This means that a substantially larger population could be excluded
    from purchasing STLDs entirely or being ``up charged'' in order to
    obtain it.
    ---------------------------------------------------------------------------
        \2\ Cynthia Cox. ``Mental Illnesses May Soon be the Most Common
    Pre-Existing Conditions.'' Kaiser Family Foundation, October 2020,
    https://www.kff.org/policy-watch/mental-illness-may-soon-be-most-
    common-pre-existing-conditions/.

        Senator Wyden cited work by the Kaiser Family Foundation that found
    that large percentages of STLD plans do not provide any coverage for
    mental health care, given that these policies are not subject to
    essential health benefit requirements under the ACA. In addition, we
    know that large shares of the remainder that do provide some mental
    health-care coverage place substantial limits on the number of visits,
    prescriptions, or other types of mental health care that enrollees can
    receive. Some offer no prescription drug coverage at all, for example.
    In addition, most STLDs have annual and/or lifetime benefit limits,
    furthering capping enrollees' benefits, regardless of the type of care
    required. Thus, enrollees who have preexisting mental health needs or
    develop them once enrolled are very unlikely to have coverage that
    ---------------------------------------------------------------------------
    meets their needs, thus limiting their access to necessary care.

        Further, because STLDs are not subject to the ACA's requirements to
    provide clear standardized summaries of what is and is not covered and
    any benefit limits imposed, many people buy STLDs without understanding
    just how limited the covered benefits are. Consequently, consumers may
    well miss a chance to enroll in comprehensive coverage during the
    annual open enrollment period only to find out that they have no or
    very limited coverage for their needs once they try to obtain
    reimbursement under their STLD plan. As a result, a nonwealthy person
    experiencing a mental health crisis while enrolled in one of these
    plans may well be unable to obtain the treatment they need, leading to
    unnecessarily bad outcomes.

        Yet STLDs can have harmful implications even for people not
    enrolled in them. Since STLD issuers can screen out people with
    significant health needs while simultaneously limiting the claims paid
    out on behalf of those they do enroll, they can generally be offered to
    very healthy people at premiums below the unsubsidized premiums offered
    in the ACA compliant nongroup markets. To the extent that more very
    healthy people opt for STLDs instead of the comprehensive, higher value
    compliant plans, the average health-care costs associated with the
    enrollees in compliant plans will be higher than they otherwise would
    be. Higher average health-care needs among ACA compliant plan enrollees
    lead to higher premiums, pre-subsidy. This potential adverse selection
    into ACA compliant coverage can make comprehensive insurance more
    expensive for families, particularly those ineligible for financial
    assistance (premium tax credits). The greater the enrollment in STLDs,
    the greater the potential adverse effect on the comprehensive insurance
    pools, and the greater the financial burden on those wanting and
    needing that high value coverage.

                                     ______

                   Questions Submitted by Hon. Maria Cantwell
        Question. The pandemic has brought about more advancement in
    telemedicine in a couple short years than we have seen in decades. It
    has been shown to work well for both patients and providers. UW
    Medicine, in my home State of Washington, demonstrated that
    telemedicine has provided a reliable modality for care for patients
    without increasing overall health-care costs or utilization, as some
    have feared.

        Over the past 5 years, the number of people seeking telehealth
    services at University of Washington Medicine has steadily grown to
    around 21,000 per year in 2019. After the pandemic started, that number
    ballooned to over 20,000 per month, accounting for approximately 20
    percent of all ambulatory visits. I've also heard from many
    constituents that they wish for expanded telehealth services to
    continue even after the end of the public health emergency.

        That being said, there are several issues that need to be addressed
    first before we can provide quality telemedicine services to those who
    are most in need.

        Access to telehealth requires that patients have a reliable
    broadband connection and access to monitoring equipment or devices.
    However, many people in underserved communities do not have access to
    either, making it difficult, if not impossible, for them to utilize
    telehealth services. What specific steps can the Federal government
    take to ensure equitable access to telehealth services?

        As telehealth services become more popular across the country, more
    and more providers are offering them to their patients. However, there
    are population groups such as seniors that are sometimes not aware that
    they have access to these services, or do no possess the technical
    literacy to get the most out of telemedicine. How do we ensure that our
    current telehealth infrastructure supports people who may require
    additional assistance in accessing telehealth services? How can we
    support our health-care providers to help them promote telehealth
    literacy for their patients?

        One persistent challenge with telemedicine, even with the
    flexibilities afforded by the public health emergency, is the ability
    for physicians to see patients across State lines. This can be
    challenging when large metropolitan areas straddle State lines, such as
    the city of Vancouver, Washington that borders Oregon. In these
    instances, State licensing laws are acting as a barrier for patients to
    seek telemedicine services with providers that they know and trust. Is
    there anything Congress can do to help ensure broader coverage for
    patients in these situations?

        Answer. Unfortunately, the telemedicine topics in these questions
    are outside my area of expertise; consequently, I do not feel
    comfortable responding to them.

                                     ______

                      Question Submitted by Hon. Tim Scott
        Question. We are seeing tremendous progress with therapeutic and
    technological innovations that could soon cure diseases such as Sickle
    Cell Disease.

        As the science outpaces policy, how can reimbursement arrangements
    and public programs evolve to ensure immediate patient access for one-
    time curative treatments?

        Answer. The technology for treatment of Sickle Cell Disease (SCD)
    has clearly been advancing quickly in recent years. Yet, given the long
    history of inadequate access to appropriate care for SCD patients,
    improving quality and access to care for those afflicted with SCD will
    require both changes to the way care is delivered to this population
    and ensuring access to new treatments through insurance programs.

        There is considerable evidence that large percentages of health-
    care providers do not feel comfortable with their understanding of how
    to treat patients with SCD. Given the complex nature of the condition
    and the fact that most providers have little or no experience treating
    the disease, it is inappropriate to expect primary care physicians to
    be the central coordinator of care for these patients. Still, the
    variety of physicians treating SCD include hematologists, oncologists,
    pediatricians, and family medicine providers. Even among hematologists,
    however, many see few SCD patients, and lack of background and
    experience often leads to under prescribing of hydroxyurea. There is a
    clear need for broader training of physicians of all disciplines in
    cultural competency and acute and chronic pain management related to
    SCD, as well as emerging treatments.

        The development of a larger number of comprehensive sickle cell
    centers, including those with a focus on adults, not just children, is
    cited by many experts as an important next step in improving care for
    patients with SCD. Development of these types of delivery systems can
    be encouraged through payment incentives provided by Medicaid and
    Medicare, the insurance systems covering the largest number of SCD
    patients; it is estimated that Medicaid covers about 50 percent of the
    SCD population and Medicare covers another 15 percent. These
    comprehensive centers can be reimbursed not only for providing direct
    patient care, but also for providing tele-mentoring to physicians
    treating SCD patients in geographic areas beyond the centers' reach.

        Incentivizing hospital emergency rooms to have a dedicated system
    for people with SCD could also significantly improve care. Opioids are
    known by specialists in the condition to be the best treatment for
    acute SCD crises; however, many emergency department physicians are not
    aware of this, leading to poor treatment and unnecessary patient
    suffering.

        In addition, the CMS Center for Consumer Information and Insurance
    Oversight, the agency that oversees implementation of the Affordable
    Care Act, could consider requiring that SCD therapies shown to be
    effective be included in any Qualified Health Plan prescription drug
    formulary. Doing so would ensure that enrollees with SCD in marketplace
    plans would have insurance coverage for needed treatments. Since the
    number of enrollees with SCD in any particular marketplace plan can be
    expected to be small, the additional costs of such a requirement could
    be spread broadly across all enrollees, likely adding a small amount to
    the pre-subsidy premium. In addition, the risk adjustment system in the
    ACA compliant nongroup insurance markets leads to sharing of the
    treatment costs for high need patients across all plans offering
    coverage in those markets, regardless of how many of those patients are
    enrolled in a particular plan. Note, however, that such an approach
    would mean SCD treatments were covered more broadly than is the case
    for treatments for other serious conditions.

                                     ______

                   Question Submitted by Hon. James Lankford
        Question. The Affordable Care Act allows taxpayer funding for
    abortion on demand, but at the very least it acknowledged the right of
    States to prohibit abortion coverage on the exchanges and that abortion
    could not be required as an essential health benefit. Eleven of the 12
    States that have chosen not expand Medicaid have also chosen to
    prohibit abortion coverage on the exchanges. As written, the Democrats'
    reconciliation proposal would override these State laws and mandate
    coverage of, and funding for, abortions on demand, and transportation
    services to acquire them, for those under 138 percent of poverty and
    without cost sharing in 2024. However, the bill refers to abortions in
    an underhanded way.

        Do you agree that abortion coverage is mandated and funded by the
    proposed reconciliation bill's reference to family planning services
    ``which are not otherwise provided under such plan as part of the
    essential health benefits package'' (subsection (c) of section 137505)?

        Answer. No, I do not agree. Based upon the most recent language I
    can identify, the reconciliation proposal States: ``services described
    in subsection (a)(4)(C) of section 1905 of the such Act for which
    Federal payments would have been so available: which are not otherwise
    provided under such plan a part of the essential health benefits
    package as described in section 1302(a).''

        Section (a)(4)(C) of section 1905 states--(C) family planning
    services and supplies furnished (directly or under arrangements with
    others) to individuals of child-
    bearing age (including minors who can be considered to be sexually
    active) who are eligible under the State plan and who desire such
    services and supplies;

        Given that only services where ``Federal payments would have been
    so available'' (in Medicaid)--abortion (outside of Hyde circumstances)
    is not one of the services included.
        Prepared Statement of Sara R. Collins, Ph.D.,* Vice President,
             Health Care Coverage and Access, The Commonwealth Fund
    ---------------------------------------------------------------------------
        * The views presented here are those of the author and not
    necessarily those of The Commonwealth Fund or its directors, officers,
    or staff. To learn more about new publications when they become
    available, visit the Fund's website and register to receive email
    alerts.
    ---------------------------------------------------------------------------
           the current status of employer health insurance coverage
                              in the united states
        Thank you, Mr. Chairman, members of the committee, for this
    invitation to testify today on the current status of employer health
    insurance coverage in the United States. My comments will focus on
    trends in enrollment, the share of employers offering health insurance
    to workers, the costs of insurance and health care for people who are
    enrolled in the plans, and policy options to improve workers' coverage.
               employer health insurance is the backbone of the
                          u.s. health insurance system
        Employer health insurance continues to be the primary source of
    insurance coverage for the majority of the U.S. population. More than
    half the population under age 65--about 163 million people--get their
    health insurance through an employer, either their own or a family
    member's (Exhibit 1).\1\
    ---------------------------------------------------------------------------
        \1\ Analysis of the 2021 Current Population Survey by Sherry Glied
    and Mikaela Springsteen of New York University for the Commonwealth
    Fund.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Enrollment in employer health plans has changed little over the
    last decade even as the Federal Government expanded coverage options
    through the Affordable Care Act (ACA). Nearly all companies with 200 or
    more workers offer insurance to their employees (Exhibit 2).\2\ Small
    firms, however, are less likely to offer coverage and there has been
    some decline in the share that offers over the last decade. Employers
    in some sectors of the economy, including food services and retail. are
    far less likely to offer coverage than some others, such as
    manufacturing, finance, and insurance (Exhibit 3).\3\
    ---------------------------------------------------------------------------
        \2\ Kaiser Family Foundation, Employer Health Benefits, 2020 Annual
    Survey.
        \3\ Paul Fronstin and Stephen A. Woodbury, How Many Americans Have
    Lost Jobs with Employer Health Coverage During the Pandemic?
    (Commonwealth Fund, October 2020), https://doi.org/10.26099/q9p1-tz63.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Employer coverage proved to be resilient during the pandemic.
    Despite the deepest recession since the 2008 economic downturn, a
    recent Commonwealth Fund survey found that only 6 percent of working-
    age adults reported they lost employer coverage during the pandemic
    (Exhibit 4).\4\ Other research estimates about 3 million to 7 million
    people lost employer coverage.\5\ This loss is limited compared to the
    large number of jobs lost in 2020 partly because industries hit hardest
    with
    pandemic-related job losses, such as hotel, food service, and retail,
    had among the lowest employer coverage rates before the pandemic. Other
    laid-off workers were more fortunate: about 42 percent of companies
    that dismissed workers during the pandemic continued to pay at least
    part of their insurance premiums.\6\
    ---------------------------------------------------------------------------
        \4\ Sara R. Collins, Gabriella N. Aboulafia, and Munira Z. Gunja,
    As the Pandemic Eases, What Is the State of Health Care Coverage and
    Affordability in the U.S.? Findings from the Commonwealth Fund Health
    Care Coverage and COVID-19 Survey, March-June 2021 (Commonwealth Fund,
    July 2021), https://doi.org/10.26099/6w2d-7161.
        \5\ Paul Fronstin and Stephen A. Woodbury, ``Update: How Many
    Americans Have Lost Jobs with Employer Health Coverage During the
    Pandemic?'' To the Point (blog), Commonwealth Fund, January 11, 2021,
    https://doi.org/10.26099/pg4k-k397.
        \6\ Paul Fronstin and Stephen A. Woodbury, ``Update: How Many
    Americans Have Lost Jobs with Employer Health Coverage During the
    Pandemic?'' To the Point (blog), Commonwealth Fund, January 11, 2021,
    https://doi.org/10.26099/pg4k-k397.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Unlike during prior recessions, the ACA's coverage expansions
    provided a safety-net for people who lost employer coverage. This
    safety-net was enhanced by Federal relief efforts to help people
    maintain their Medicaid coverage, a substantial increase in marketplace
    premium subsidies under the American Rescue Plan Act (ARPA), and
    extended special-enrollment periods in State-run marketplaces in 2020
    and in the Federal marketplaces in 2021. Among workers who did lose
    employer coverage, 20 percent gained insurance through another
    employer, 20 percent elected COBRA, 16 percent gained coverage through
    Medicaid and 9 percent got covered through the marketplaces or
    individual market. Nearly 3 in 10--29 percent--became uninsured,
    reflecting ongoing holes in our coverage system and lack of awareness
    of options. But the availability of affordable coverage options kept
    gaps in coverage relatively short for a majority of people who lost
    ---------------------------------------------------------------------------
    employer coverage (Exhibit 5).

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    the u.s. has a health care spending problem in commercial insurance
                     plans; consumers are paying the price
        The ACA's coverage expansions, market rules against underwriting,
    and mandates for employers to offer coverage have enabled millions of
    previously people to get covered with comprehensive affordable
    coverage.\7\ Research has shown that these provisions have led to an
    overall downward trend in out-of-pocket costs across the U.S.
    population.\8\
    ---------------------------------------------------------------------------
        \7\ Sherry A. Glied, Sara R. Collins, and Saunders Lin, ``Did the
    Affordable Care Act Lower Americans' Financial Barriers to Health
    Care?'', Health Affairs 39, no. 3 (March 2020): 379-86, https://
    doi.org/10.26099/79hw-ax66.
        \8\ Sherry A. Glied and Benjamin Zhu, Catastrophic Out-of-Pocket
    Health Care Costs: A Problem Mainly for Middle-Income Americans with
    Employer Coverage (Commonwealth Fund, April 2020), https://doi.org/
    10.26099/x0cx-cp48.

        But the United States has a health-care spending problem in
    commercial insurance. This is demonstrated by the amount that the 180
    million people with employer and individual market plans pay for their
    insurance and health care. New research from the Health Care Cost
    Institute show that among people with employer insurance, spending per
    person grew by 21.8 percent between 2015 and 2019, outpacing both
    inflation and GDP growth (Exhibit 6).\9\ The data also show that
    average prices paid for health-care services and prescription drugs
    were the primary drivers, accounting for nearly two-thirds of overall
    growth.
    ---------------------------------------------------------------------------
        \9\ Health Care Cost Institute, 2019 Health Care Cost and
    Utilization Report, October 2021.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        These high prices are associated with higher employer premiums
    (Exhibit 7).\10\ Because employers share these costs with their workers
    in the form of premium contributions and deductibles, workers' costs
    are also rising. In most States, they are rising faster than median
    income.
    ---------------------------------------------------------------------------
        \10\ David C. Radley, Sara R. Collins, Jesse C. Baumgartner, 2020
    Scorecard on State Health System Performance, September 11, 2020,
    https://www.commonwealthfund.org/publications/scorecard/2020/sep/2020-
    scorecard-state-health-system-performance.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        New data on employer plans released by the Federal Government
    this fall and analyzed by the Commonwealth Fund, show that worker
    premium contributions and deductibles in employer plans have taken up a
    growing share of worker's incomes over the past decade. These costs
    accounted for 11.6 percent of median household income in 2020, up from
    9.1 percent a decade earlier (Exhibit 8).\11\
    ---------------------------------------------------------------------------
        \11\ Sara R. Collins, David C. Radley, and Jesse C. Baumgartner,
    State Trends in Employer Premiums and Deductibles, 2010-2020
    (Forthcoming Commonwealth Fund, December. 2021).

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        There is wide variation in what workers pay for employer
    coverage relative to their incomes across the country. Premium
    contributions and deductibles were 10 percent or more of median income
    in 37 States in 2020, up from 10 States in 2010 (Exhibit 9). In nine
    States (Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico,
    Oklahoma, South Carolina, and Texas) the average combined costs of
    premium contributions and deductibles amounted to 14 percent or more of
    median income in 2020. Middle-income workers in Mississippi and New
    Mexico faced the highest potential costs relative to income (19.0
    ---------------------------------------------------------------------------
    percent and 18.1 percent, respectively).

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        These costs add to already considerable burdens for families.
    For example, housing and food consumed 34 percent of average family
    income in 2020.\12\ Among families with children under age 5 who pay
    for child care, average spending on child care took up 13 percent of
    family income in 2017.\13\
    ---------------------------------------------------------------------------
        \12\ Bureau of Labor Statistics, ``Consumer Expenditures--2020,''
    news release, September 9, 2021, https://www.bls.gov/news.release/pdf/
    cesan.pdf.
        \13\ U.S. Department of the Treasury, The Economics of Child Care
    Supply in the United States, September 2021, https://home.treasury.gov/
    system/files/136/The-Economics-of-Childcare-Supply-09-14-final.pdf.

        Workers across the income spectrum have experienced steady growth
    in their insurance costs. But people living in States with lower median
    incomes are doubly burdened. On average, workers in States with median
    incomes lower than the national median face higher absolute costs
    ---------------------------------------------------------------------------
    compared to people in States with higher median incomes (Exhibit 10).

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        The Kaiser Family Foundation's annual survey of employer
    benefits finds that in lower wage firms, insured workers contribute a
    larger share of the premium for family plans than those in higher wage
    firms (Exhibit 11).\14\ Non-unionized workforces contribute a larger
    share of the premium than do unionized workforces.
    ---------------------------------------------------------------------------
        \14\ Kaiser Family Foundation, Employer Health Benefits, 2020
    Annual Survey.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Workers with the largest premium contributions relative to
    median income were concentrated in southern States. In Alabama,
    Arkansas, Delaware, Florida, Georgia, Louisiana, Mississippi, Nevada,
    New Mexico, Oklahoma, North Carolina, South Carolina, and Texas,
    premium contributions were 8 percent or more of median income, with a
    ---------------------------------------------------------------------------
    high of 12.7 percent in Mississippi (Exhibit 12).

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

             deductible growth is leaving millions underinsured
        The Commonwealth Fund has found that insured people who have high
    out-of-pocket costs and deductibles relative to their income are more
    likely to face problems accessing care and paying medical bills than
    those who do not. We have defined someone who has been continuously
    insured over the last year as ``underinsured'' if their plan's
    deductible equals 5 percent or more of income or if their out-of-pocket
    costs over the past year are equal to 10 percent or more of income (5
    percent or more if low income).\15\
    ---------------------------------------------------------------------------
        \15\ Sara R. Collins, Munira Z. Gunja, and Gabriella N. Aboulafia,
    U.S. Health Insurance Coverage in 2020: A Looming Crisis in
    Affordability--Findings from the Commonwealth Fund Biennial Health
    Insurance Survey, 2020 (Commonwealth Fund, August 2020), https://www.
    commonwealthfund.org/publications/issue-briefs/2020/aug/looming-crisis-
    health-coverage-2020-biennial.

        In 2020, about one-quarter of people in employer plans were
    underinsured by this measure (Exhibit 13). While rates were higher in
    the individual market, the largest growth has occurred in employer
    plans. This growth has been driven by growth in the size of deductibles
    ---------------------------------------------------------------------------
    relative to family income (Exhibit 14).

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Across the country, average deductibles in employer plans
    relative to median income were 5 percent or more in 22 States (Arizona,
    Arkansas, Florida, Georgia, Indiana, Iowa, Kentucky, Louisiana,
    Mississippi, Missouri, Montana, New Mexico, Nevada, North Carolina,
    Oklahoma, South Carolina, South Dakota, Tennessee, Texas, West
    Virginia, Wisconsin, Wyoming) and ranged as high as 7.4 percent in New
    Mexico (Exhibit 15).

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        One reason for the growth in average deductibles is more
    workers are enrolled in high-deductible plans with savings accounts
    either health reimbursement arrangements (HRAs) or health savings
    accounts (HSAs). About three of 10 workers are enrolled in such plans
    (Exhibit 16).\16\ About half of workers with HRAs and a quarter of
    those with HSAs receive employer contributions that reduce their
    deductibles to between zero and $1,000. Still, accounting for these
    contributions only reduces the share of workers across all single-
    coverage plans with deductibles of $1,000 or more from 57 percent to 47
    percent (Exhibit 17).
    ---------------------------------------------------------------------------
        \16\ Kaiser Family Foundation, Employer Health Benefits, 2020
    Annual Survey.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     high cost exposure in commercial plans distorts consumers' health
                 care decisions and leads to financial problems
        Research indicates that people who face high deductibles often
    avoid getting needed health care. A 2020 Commonwealth Fund survey found
    that among people in commercial plans, more than one-third of those
    with a deductible of $1,000 or more said they had not gotten needed
    health care due to cost, including not filling a prescription, not
    going to the doctor when sick, not getting a follow up test or
    treatment recommended by a doctor, or not seeing a specialist (Exhibit
    18).\17\
    ---------------------------------------------------------------------------
        \17\ Sara R. Collins, Munira Z. Gunja, and Gabriella N. Aboulafia,
    U.S. Health Insurance Coverage in 2020: A Looming Crisis in
    Affordability--Findings from the Commonwealth Fund Biennial Health
    Insurance Survey, 2020 (Commonwealth Fund, August 2020), https://www.
    commonwealthfund.org/publications/issue-briefs/2020/aug/looming-crisis-
    health-coverage-2020-biennial.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        When people in high-deductible plans do get care, they are
    susceptible to racking up medical debt. Forty-one percent of adults
    with a deductible of $1,000 or more reported they had experienced
    problems paying medical bills, including not being able to pay a bill,
    being contacted by a collection agency about an unpaid bill, having to
    change their way of life to pay their bills, or paying off debt over
    time. Among those who were paying off medical debt, 63 percent said
    ---------------------------------------------------------------------------
    they were paying off bills worth $2,000 or more.

        Medical bill problems and debt have become endemic in our health
    system. The media is awash in stories of patients receiving outlandish,
    uncovered bills.\18\ A recent JAMA article found that 17.8 percent of
    people in the U.S. had medical debt in collections, with the highest
    shares in the South and in predominantly poor zip codes.\19\ Between
    2009 and 2020, the amount of medical debt in collections overtook that
    of nonmedical debt.
    ---------------------------------------------------------------------------
        \18\ See for example Kaiser Health News and National Public Radio's
    ongoing ``Bill of the Month'' series, https://khn.org/news/tag/bill-of-
    the-month/.
        \19\ Raymond Kluender, et al., ``Medical Debt in the US, 2009-
    2020,'' JAMA. 2021;326(3):250-256. doi:10.1001/jama.2021.8694.

        Medical debt has spillover financial implications. In a 2021
    Commonwealth Fund survey, one-third of adults in employer-based plans
    reported problems paying their bills or that they were paying off debt
    over time (Exhibit 19).\20\ Of those who reported these difficulties,
    40 percent said that they had received a lower credit score because of
    their medical bills; 40 percent had taken on credit card debt to pay
    their bills; 35 percent had used up most or all their savings to pay
    their bills; 23 percent had been unable to pay for basic life
    necessities like food, heat, or rent; and 21 percent had delayed
    education or career plans (Exhibit 20).
    ---------------------------------------------------------------------------
        \20\ Sara R. Collins, Gabriella N. Aboulafia, and Munira Z. Gunja,
    As the Pandemic Eases, What Is the State of Health Care Coverage and
    Affordability in the U.S.? Findings from the Commonwealth Fund Health
    Care Coverage and COVID-19 Survey, March-June 2021 (Commonwealth Fund,
    July 2021), https://doi.org/10.26099/6w2d-7161.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               policy options
        The ACA's subsidized marketplaces and Medicaid expansion have
    provided a safety net for people in unaffordable or skimpy employer
    health plans. Improving the affordability and cost protection of
    marketplace plans and expanding Medicaid in all States, increasing
    awareness of these coverage options among workers, and making it easier
    for eligible workers to enroll in them will relieve some of the
    problems highlighted in this testimony. Specific improvements include:

            Make the temporary ARPA marketplace subsidies permanent.
            Provide a zero-premium, zero-cost sharing insurance option for
    Medicaid-
    eligible adults in the coverage gap in the 12 States that have not yet
    expanded their programs.
            Inform workers with employer coverage of their options to
    enroll in subsidized marketplace plans and Medicaid and, if they lose
    employer coverage, that they are eligible for a marketplace special-
    enrollment period.
            Fix the ``family coverage glitch.'' Under the ACA, families
    are ineligible for marketplace premiums if a family member has an offer
    of single-employer coverage that is affordable, (i.e., premiums less
    than 9.83 percent of family income).\21\ About 5 million people are
    caught in this glitch: they are in family plans with premium
    contributions that exceed that threshold, but are ineligible for
    marketplace subsidies.\22\ The Biden administration could fix this
    administratively, saving families that switched to marketplace plans an
    average of $400 person; families with incomes under 200 percent of the
    Federal poverty level could save $580 per person.
    ---------------------------------------------------------------------------
        \21\ Timothy S. Jost, ``Eliminating the Family Glitch,'' To the
    Point (blog), Commonwealth Fund, May 18, 2021, https://doi.org/
    10.26099/gh5r-vm20.
        \22\ Matthew Buettgens and Jessica Banthin, Changing the ``Family
    Glitch'' Would Make Health Coverage More Affordable for Many Families
    (Urban Institute, May 2021), https://www.
    urban.org/sites/default/files/publication/104223/changing-the-family-
    glitch-would-make-health-coverage-more-affordable-for-many-
    families_1.pdf.
    ---------------------------------------------------------------------------
            Lower the ``employer firewall'' threshold from 9.83 to 8.5
    percent of income (i.e., the ARPA premium contribution cap). When
    combined with the fix to the family coverage glitch, this change would
    mean that no one would have to spend more than 8.5 percent of income
    for their health insurance. Commonwealth Fund analyses indicate one-
    quarter of people with low incomes in employer plans who are not
    eligible for Medicaid in their States spend more than 8.5 percent of
    their household income on premiums (Exhibit 21).
            Rein in deductibles and out-of-pocket costs in marketplace
    plans. One proposal could eliminate deductibles for some people and
    reduce it for others by as much as $1,650.\23\
    ---------------------------------------------------------------------------
        \23\ Improving Health Insurance Affordability Act of 2021, S. 499,
    https://www.congress.gov/117/bills/s499/BILLS-117s499is.pdf; Linda J.
    Blumberg, et al., From Incremental to Comprehensive Health Insurance
    Reform: How Various Reform Options Compare on Coverage and Costs (Urban
    Institute, October 2019), https://www.urban.org/sites/default/files/
    2019/10/15/from_incremental_to_comprehensive_health_insurance_reform-
    how_various_reform_options_
    compare_on_coverage_and_costs.pdf.
    ---------------------------------------------------------------------------
            The historic No Surprises Act passed by Congress in 2020 and
    set to go into effect in January 2022 will protect most consumers from
    surprise medical bills from out-of-network providers and some emergency
    transportation providers.\24\ Other measures to protect consumers from
    the devastating consequences of medical debt include expanding the
    reach of the ACA's financial assistance policies for nonprofit
    hospitals to cover all hospitals and a broader range of providers,
    imposing stronger consumer protection rules for medical debt collection
    such as grace periods following illness or during appeals processes,
    and placing bans or limits on medical debt interest rates.\25\
    ---------------------------------------------------------------------------
        \24\ Jack Hoadley and Kevin Lucia, ``Putting Surprise Billing
    Protections into Practice: Biden Administration Releases First Set of
    Regulations,'' https://www.commonwealthfund.org/blog/2021/putting-
    surprise-billing-protections-practice-biden-administration-releases-
    first-set, To the Point (blog), Commonwealth Fund, July 14, 2021.
        \25\ National Consumer Law Center, Model Medical Debt Protection
    Act, September 2019, https://www.nclc.org/images/pdf/medical-debt/
    model-medical-debt-protection-act-082017.pdf.
    ---------------------------------------------------------------------------
            Address the high commercial provider prices that are the
    primary driver of employer premiums and deductibles. This could be
    pursued by adding a public plan option to the marketplaces, among other
    approaches.\26\
    ---------------------------------------------------------------------------
        \26\ Linda J. Blumberg et al., Comparing Health Insurance Reform
    Options; John Holahan, Michael Simpson, and Linda J. Blumberg, What Are
    the Effects of Alternative Public Option Proposals (Urban Institute,
    March 2021), https://www.urban.org/research/publication/what-are-
    effects-alternative-public-option-proposals; Robert A. Berenson, et
    al., Addressing Health Care Market Consolidation and High Prices, The
    Urban Institute, January 2020, https://www.urban.org/sites/default/
    files/publication/101508/addressing_health_care_market_
    consolidation_and_high_prices_1.pdf; Sherry A. Glied and Jeanne M.
    Lambrew, How Democratic Candidates for the Presidency in 2020 Could
    Choose Among Public Health Insurance Plans (Health Affairs, November
    2018).
    ---------------------------------------------------------------------------
            Develop an auto-enrollment mechanism to help people enroll and
    stay enrolled in comprehensive coverage. Creating a public plan as a
    default option would be essential to a national auto-enrollment
    program.\27\
    ---------------------------------------------------------------------------
        \27\ Linda J. Blumberg, John Holahan, and Jason Levitis, How Auto-
    Enrollment Can Achieve Near-Universal Coverage: Policy and
    Implementation Issues (Commonwealth Fund, June 2021), https://
    www.commonwealthfund.org/publications/issue-briefs/2021/jun/how-auto-
    enrollment-can-achieve-near-universal-coverage.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        The cost burden in commercial insurance is an enduring problem
    in U.S. health care that is undermining America's overall economic
    well-being. This year's U.S. Supreme Court decision reaffirming the
    constitutionality of the ACA paves the way for Congress to use the
    tools provided by the law to cover the remaining uninsured and make
    health care affordable to people covered by both public and commercial
    insurance. Doing so will help facilitate the country's postpandemic
    ---------------------------------------------------------------------------
    recovery and its future prosperity.

        Thank you.

                                     ______

          Questions Submitted for the Record to Sara R. Collins, Ph.D.
                     Questions Submitted by Hon. Ron Wyden
        Question. The enhanced premium tax credits (PTCs) from the American
    Rescue Plan (ARP) are already providing vital assistance to American
    families to help them afford health insurance coverage on the
    Affordable Care Act's (ACA's) Health Insurance Marketplaces. During the
    Special Enrollment period for Marketplace coverage this year, 2.8
    million new customers signed up for coverage. The Centers for Medicare
    and Medicaid Services (CMS) estimates that consumers who returned to
    the marketplace to update their coverage during the Special Enrollment
    Period saw a 40-percent reduction in net monthly premiums on average,
    after accounting for the ARP's enhanced PTCs. The Congressional Budget
    Office (CBO) estimates that if the enhanced PTCs were made permanent
    and Congress closed the coverage gap in States that have not expanded
    Medicaid, 3.9 million fewer people would be uninsured over the next
    decade, compared to current law. This includes 1.4 million people
    obtaining marketplace coverage who would otherwise be uninsured.

        CBO also estimates that 1.6 million people with employer-based
    coverage would move to marketplace coverage. One of the reasons for
    that shift is that the Build Back Better legislation as marked up by
    the House would allow for people to qualify for PTCs if their employee
    share of job-based health insurance premiums exceeds 8.5 percent of
    their income. Under current law, individuals who have offers of job-
    based coverage are only eligible for PTCs if their employee share of
    the job-based health insurance premium exceeds 9.83 percent of their
    income.

        Can you discuss the positive impact of allowing premium tax credit
    eligibility for workers who bear very high cost burdens in employer-
    sponsored coverage?

        Answer. The employer affordability threshold has always been an
    important part of the ACA for middle- and lower-income workers, and
    lowering the threshold to 8.5 percent of income will mean that in
    theory no one in the U.S. will have to contribute more than 8.5 percent
    of their income towards premiums. A new analysis from the Commonwealth
    Fund of the Medical Expenditure Panel Survey shows that over the past
    decade, worker premium contributions and deductibles for employer plans
    have consumed a growing share of workers's incomes. In 2020, average
    employee premium contributions alone comprised more than 8.5 percent of
    median income in 8 States (Mississippi, New Mexico, Florida, Louisiana,
    Nevada, South Carolina, Oklahoma, Texas); a decade earlier in 2010, in
    only one State, Mississippi, were middle-class people spending that
    much of their income on employer premiums.\1\
    ---------------------------------------------------------------------------
        \1\ Sara R. Collins, David C. Radley, and Jesse C. Baumgartner,
    State Trends in Employer Premiums and Deductibles, 2010-2020
    (Forthcoming Commonwealth Fund, December. 2021).

        As noted in my testimony, Commonwealth Fund research has shown that
    one-quarter of people with incomes between 0-199 percent of poverty who
    are in employer plans and not eligible for Medicaid spend more than 8.5
    percent of their household income on after-tax premiums.\2\
    ---------------------------------------------------------------------------
        \2\ Jesse C. Baumgartner, Sara R. Collins, and David C. Radley,
    Removing the Firewall Between Employer Insurance and the ACA
    Marketplaces: Who Could Benefit? (Commonwealth Fund, December 2020),
    https://doi.org/10.26099/hg7v-dy10.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Question. Improving access to behavioral health services is a
    longstanding issue that has become even more important during the
    COVID-19 pandemic. The pandemic has highlighted and worsened the
    weaknesses and gaps in the country's mental health-care system, as the
    committee heard at our hearing on this topic in the summer. This is a
    bipartisan issue, as Ranking Member Crapo and I are working together to
    develop legislation to address the mental and behavioral health needs
    of Americans across the country. Among other policies, we are
    interested in policies that will ensure that health insurance companies
    are not erecting unnecessary barriers to mental and behavioral health
    ---------------------------------------------------------------------------
    care.

        What do you think are the top two policies that this committee
    should consider to address mental health parity and reduce insurance
    barriers to mental health care?

        Answer. The Affordable Care Act made historic strides in addressing
    the mental health and behavioral health needs of Americans through
    expanded eligibility for Medicaid, individual and small group market
    reforms that ban pre-existing condition exclusions and require coverage
    of mental health and substance abuse services as essential health
    benefits, and marketplace premium and cost- sharing subsidies. The law
    also applied previously passed mental health parity requirements to
    these plans. The literature shows that these expansions and reforms
    increased coverage among people with mental health needs and improved
    access to mental health services and reduced unmet need.\3\ One study
    \4\ found that living in a Medicaid expansion State was associated with
    a greater decline in cost-related access problems for low-income adults
    with depression. Multiple studies found \5\ that living in a Medicaid
    expansion State was associated with relative reductions in poor mental
    health days for low-income adults.
    ---------------------------------------------------------------------------
        \3\ Jesse C. Baumgartner, Gabriella N. Aboulafia, and Audrey
    McIntosh, ``The ACA at 10: How Has It Impacted Mental Health Care?'',
    To the Point (blog), Commonwealth Fund, April 3, 2020, https://doi.org/
    10.26099/2ajx-qg59.
        \4\ https://ps.psychiatryonline.org/doi/full/10.1176/
    appi.ps.201800181?url_ver=Z39.88-2003&r
    fr_id=ori:rid:crossref.org&rfr_dat=cr_pub%3dpubmed.
        \5\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6109019/.

        For employer plans, the Mental Health Parity Act of 1996 and the
    Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) \6\
    required all large-group employer insurance plans to cover mental
    health services at the same level as medical and surgical services, if
    they offered them. This is known as ``parity,'' and means that there
    cannot be greater cost-sharing or other limitations for mental health
    services. But they are not required to offer mental health benefits,
    though most do.
    ---------------------------------------------------------------------------
        \6\ https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-
    Insurance-Protections/mhpaea_factsheet.

        Top policy options to improve coverage and access for people with
    mental health needs include: filling the Medicaid coverage gap in the
    remaining 12 non expansion States with zero premium and zero cost-
    sharing health coverage; extending mandatory essential health benefits
    to the large-group employer market; eliminating non-ACA-compliant plans
    that tend not to cover mental health benefits; and reining in
    deductibles and cost-sharing that leave millions of people in
    commercial health insurance plans underinsured.\7\
    ---------------------------------------------------------------------------
        \7\ Sara R. Collins, Munira Z. Gunja, and Gabriella N. Aboulafia,
    U.S. Health Insurance Coverage in 2020: A Looming Crisis in
    Affordability--Findings from the Commonwealth Fund Biennial Health
    Insurance Survey, 2020 (Commonwealth Fund, August 2020).

        Question. Efforts to expand health insurance coverage to those who
    are uninsured is of paramount importance, but the committee must also
    focus on ensuring that the coverage that people do have does not expose
    them to sky-high out-of-pocket costs. To address growing deductibles
    and health insurance premiums faced by consumers in employer-based
    coverage and Marketplace coverage, we need to examine the underlying
    causes, including in particular the high prices that we pay for health-
    ---------------------------------------------------------------------------
    care services and medications.

        What factors are most responsible for rising premiums and
    deductibles in job-based coverage? And what can we do to address them?

        Answer. The United States has a health-care spending problem in the
    commercial insurance markets. This is demonstrated by the amount that
    the 180 million people with employer and individual market plans pay
    for their insurance and health care. New research from the Health Care
    Cost Institute show that among people with employer insurance, spending
    per person grew by 21.8 percent between 2015 and 2019, outpacing both
    inflation and GDP growth.\8\ The data also show that average prices
    paid for health-care services and prescription drugs were the primary
    drivers, accounting for nearly two-thirds of overall growth. This is
    true across all service types--inpatient, outpatient, physician, and
    prescription drugs. We know this because commercial utilization across
    services has largely been flat or minimal (with inpatient visits
    decreasing) and prices increasing quite significantly year over year.
    ---------------------------------------------------------------------------
        \8\ Health Care Cost Institute, 2019 Health Care Cost and
    Utilization Report, October 2021.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        In surveys of employers, the two top drivers of spending \9\
    reported are (1) hospital spending and (2) drug spending. Hospitals
    make up the largest portion of spending so they are a particular
    concern. Drugs represent a smaller but growing portion of spending and
    their growth rate is a concern given the pipeline of products and their
    expected costs.
    ---------------------------------------------------------------------------
        \9\ https://sehpcostcontainment.chir.georgetown.edu/documents/SEHP-
    report-final.pdf.

        These prices are driving premiums in employer plans higher,
    employers share those costs with employees in the form of higher
    premium contributions, deductibles, and through wage concessions. This
    means that when people in these plans do need care they either avoid it
    or incur bills they cannot pay, ending up being pursued by hospitals
    who charged the high prices in the first place. These prices also
    increase the premium costs of marketplace coverage and thus federally
    ---------------------------------------------------------------------------
    financed subsidies.

        To address this problem, policies at the Federal level include:

            Adding a public plan option to the marketplaces or otherwise
    capping provider prices paid by health plans.\10\
    ---------------------------------------------------------------------------
        \10\ Linda J. Blumberg et al., Comparing Health Insurance Reform
    Options; John Holahan, Michael Simpson, and Linda J. Blumberg, What Are
    the Effects of Alternative Public Option Proposals (Urban Institute,
    March 2021), https://www.urban.org/research/publication/what-are-
    effects-alternative-public-option-proposals; Sherry A. Glied and Jeanne
    M. Lambrew, ``How Democratic Candidates for the Presidency in 2020
    Could Choose Among Public Health Insurance Plans'' (Health Affairs,
    November 2018).
    ---------------------------------------------------------------------------
            Policies aimed at reducing drug prices.\11\
    ---------------------------------------------------------------------------
        \11\ David Blumenthal, Mark E. Miller, and Lovisa Gustafsson, ``The
    U.S. Can Lower Drug Prices Without Sacrificing Innovation,'' Harvard
    Business Review, October 1, 2021.

        There is also considerable activity in States that can inform
    Federal policy:\12\
    ---------------------------------------------------------------------------
        \12\ Robert A. Berenson, et al., Addressing Health Care Market
    Consolidation and High Prices, The Urban Institute, January 2020,
    https://www.urban.org/sites/default/files/publication/101508/
    addressing_health_care_market_consolidation_and_high_prices_1.pdf.

            Price transparency. Many States have now created all payer
    claims databases that can inform policy makers of the drivers of
    health-care spending.
            Increasing competition in consolidated markets. Many States
    are taking steps to increase competition in hospital markets such as
    experimenting with public plan options to enhance competition in
    consolidated markets (Washington and Colorado), challenging
    anticompetitive behaviors, and identifying vertical and cross market
    mergers.
            States are using existing regulatory structures to limit
    provider prices.
                Montana and Oregon implemented price ceilings
    on hospital payment rates within their State employee health benefit
    plans. Such ceilings could be models for State price ceilings on
    provider payments in the commercial market.
                Certificate of need laws.
                Rhode Island empowers its insurance
    commissioner to review proposed premium rates, and review and approve
    hospital payment rate increases included in insurance contracts.
                Maryland modified its rate-setting approach
    used to control hospital spending to setting all payer hospital
    budgets.

                                     ______

                     Questions Submitted by Hon. Tim Scott
        Question. We heard a great deal of testimony about our health-care
    system in general, the need to improve patient outcomes, access to care
    in certain communities and how to better address health equity. Last
    month, the Centers for Disease Control and Prevention (CDC) released
    State-by-State obesity rates. Specifically, the CDC called for ``action
    at the policy and systems level to ensure that obesity prevention and
    management starts early, and that everyone has access to good
    nutrition, safe places to be physically active, and quality obesity
    clinical care.''

        Given the correlation between family income and physical activity,
    has the Commonwealth Fund examined the issue of wellness access?

        For example, there is growing concern around a lack of physical
    activity in certain communities which are often attributed to unsafe
    streets, limited access to playgrounds and pay-to-play policies inside
    and outside school. Has the Commonwealth Fund studied these factors and
    their impact on underlying issues contributing to obesity,
    cardiovascular and behavioral health disorders?

        Could modernizing the tax code to ensure physical fitness is
    treated as a form of preventative health care be helpful in this
    pursuit?

        Answer. The Commonwealth Fund's Scorecard on State Health System
    Performance ranks State health system performance on the basis of 49
    different health indicators.\13\ Adult and childhood obesity are
    included in our ``Healthy Lives'' performance dimension. South Carolina
    has one of the highest childhood obesity rates (38 percent) in the
    country ranking it at 48th in performance on this measure. A similar
    share of adults are obese (35 percent), ranking the State at 34th in
    performance. This contributes to South Carolina's overall low health
    system performance ranking--37th in our 2020 Scorecard.
    ---------------------------------------------------------------------------
        \13\ David C. Radley, Sara R. Collins, Jesse C. Baumgartner, 2020
    Scorecard on State Health System Performance, Commonwealth Fund,
    September 2020, https://www.commonwealth
    fund.org/publications/scorecard/2020/sep/2020-scorecard-state-health-
    system-performance.

        We have not investigated the drivers of obesity that you highlight
    in our work, all of which are certainly contributing factors. But at a
    minimum, having good health insurance, in particular, ACA compliant
    coverage, will enable people access to free preventive care and regular
    interaction with the health system that is a first step towards
    ---------------------------------------------------------------------------
    reducing obesity and its associated health problems.

        Under the ACA, free preventive health services include obesity
    related care including obesity screening and counseling and diet
    counseling, in addition to screening for associated health problems
    (e.g., cholesterol and blood pressure screening). Guidelines and
    counseling for physical activity could be made more explicit, per your
    recommendation.

        The ACA also created new incentives and builds on existing wellness
    program policies to promote employer wellness programs and encourage
    opportunities to support healthier workplaces. These include programs
    that reimburse for the cost of a fitness center membership and those
    that have health incentives included, with guidelines to prevent
    discrimination by health status. While these programs are very popular,
    with an estimated 63 million people in employer health plans that offer
    them in 2020, the evidence that they promote health is mixed.\14\
    Healthier and wealthier employees have been found to be more likely to
    participate than those in poorer health and less income.
    ---------------------------------------------------------------------------
        \14\ Katie Keith, ``EEOC Will Advance New Wellness Regulations,''
    Health Affairs Blog, June 17, 2020.DOI: 10.1377/hblog20200617.824130.

        Expanding Medicaid coverage in all States and getting people
    covered in the insurance they are eligible for is a necessary first
    step in addressing rising obesity, but clearly more work is needed to
    ---------------------------------------------------------------------------
    address the underlying drivers that you highlight.

        Question. With the ongoing opioid epidemic, are overdose reversal
    drugs being required to be co-prescribed to Federal beneficiaries for
    all Federal health-care programs, and is naloxone covered as a
    formulary?

        If a Federal beneficiary wants to use the State standing order,
    will the Federal health-care plan pay as an in plan drug not an out-of-
    pocket expense?

        Answer. Medicaid coverage, and in particular, its coverage of
    naloxone, has been a critical part of the Nation's fight to control the
    opioid epidemic.\15\ States that have expanded Medicaid eligibility
    under the ACA have had an advantage over those States that have not
    expanded their programs.\16\ But some States have more restrictive
    access to prescription drugs in their Medicaid programs including more
    restrictive fill limits, that reduce access to naloxone.\17\ Exempting
    naloxone from such fill limits would further aid States' ability to
    prevent opioid overdose mortality. Medicaid and Medicare beneficiaries
    can also face out-of-pocket costs for naloxone prescriptions, which
    States and the Federal Government could address.\18\
    ---------------------------------------------------------------------------
        \15\ Jesse C. Baumgartner and David C. Radley, ``The Drug Overdose
    Mortality Toll in 2020 and Near-Term Actions for Addressing It,'' To
    the Point (blog), July 15, 2021, updated August 16, 2021, https://
    doi.org/10.26099/gb4y-r129.
        \16\ Richard G. Frank and Carrie E. Fry, ``The Impact of Expanded
    Medicaid Eligibility on Access to Naloxone,'' Addiction, published
    online April 14, 2019, https://doi.org/10.26099/by07-xs93.
        \17\ A.R. Roberts, et al., Medicaid prescription limits and their
    implications for naloxone accessibility, Drug and Alcohol Dependence,
    Vol. 218, January 2021, https://www.sciencedirect.com/science/article/
    pii/S0376871620305202?via%3Dihub.
        \18\ Gery P. Guy Jr. et al., ``Vital Signs: Pharmacy-Based Naloxone
    Dispensing--United States, 2012-2018,'' CDC MMWR Vital Signs 68, no. 31
    (August 2019): 679-86, https://www.cdc.gov/mmwr/volumes/68/wr/
    mm6831e1.htm?s_cid=mm6831e1_w%22.

        State laws mandating coprescription of naloxone have been
    associated with increased naloxone provision, but significant variation
    among States remains and analysis of Medicare data has shown low rates
    of coprescribing.\19\
    ---------------------------------------------------------------------------
        \19\ Traci C. Green et al., ``Laws Mandating Coprescription of
    Naloxone and Their Impact on Naloxone Prescription in Five U.S. States,
    2014-2018,'' American Journal of Public Health, 110, no. 6 (June 2020):
    881-887, https://pubmed.ncbi.nlm.nih.gov/32298179/; Christopher M.
    Jones et al., ``Naloxone Co-prescribing to Patients Receiving
    Prescription Opioids in the Medicare Part D Program, United States,
    2016-2017,'' JAMA, 322, no. 5 (August 2019): 1-3, https://
    jamanetwork.com/journals/jama/fullarticle/2740706.

        Question. We are seeing tremendous progress with therapeutic and
    technological innovations that could soon cure diseases such as Sickle
    ---------------------------------------------------------------------------
    Cell Disease.

        As the science outpaces policy, how can reimbursement arrangements
    and public programs evolve to ensure immediate patient access for one-
    time curative treatments?

        Answer. This is a complicated question that first requires common
    definition of the terms ``one-time curative'' and ``immediate.''
    Congress could ask the National Academy of Medicine (NAM) to convene a
    consensus study to identify key parameters to help define these terms.
    Further, an expert body such as the NAM could offer recommendations for
    what conditions warrant government regulation or legislation in this
    critical area and what remedies may be appropriate.

        Equity considerations are paramount in this discussion, which your
    example of Sickle Cell Disease, underscores. This is a condition that
    disproportionately impacts people of color and in which historically,
    treatments options have been limited. As potential ``curative''
    treatments are developed and brought to market, it will be important to
    ensure that those that need the treatments are able to access and
    afford the treatment. Care must be taken to ensure that policies around
    access and reimbursement do not disproportionately disadvantage
    communities of color.

        This is especially important as Medicaid programs weigh the patient
    needs and the costs of such treatments given their beneficiary mix.
    Uncertainty around pricing of high cost, potentially ``curative''
    treatments presents a particularly difficult forecasting and budget
    challenge for Medicaid programs and State policymakers given the
    requirement to balance their budgets each year.

                                     ______

                   Question Submitted by Hon. James Lankford
        Question. The Affordable Care Act allows taxpayer funding for
    abortion on demand, but at the very least it acknowledged the right of
    States to prohibit abortion coverage on the exchanges and that abortion
    could not be required as an essential health benefit. Eleven of the 12
    States that have chosen not expand Medicaid have also chosen to
    prohibit abortion coverage on the exchanges. As written, the Democrats'
    reconciliation proposal would override these State laws and mandate
    coverage of, and funding for, abortions on demand, and transportation
    services to acquire them, for those under 138 percent of poverty and
    without cost sharing in 2024. However, the bill refers to abortions in
    an underhanded way.

        Do you agree that abortion coverage is mandated and funded by the
    proposed reconciliation bill's reference to family planning services
    ``which are not otherwise provided under such plan as part of the
    essential health benefits package'' (subsection (c) of section 137505)?

        Answer. The ACA and Executive Order 13535 \20\ clarify that Federal
    funding (including premium subsidies and cost-sharing subsidies) cannot
    be used to pay for abortion services, unless to save the life of the
    mother or in the case of rape or incest. The ACA also cannot require
    health plans to provide abortion coverage. Many plans do offer abortion
    services, but coverage of those services cannot be financed with
    Federal dollars, unless to save the life of the mother or in the case
    of rape or incest. Several States do not allow health plans to cover
    abortion services at all.
    ---------------------------------------------------------------------------
        \20\ https://www.healthinsurance.org/faqs/do-health-insurance-
    plans-in-acas-exchanges-cover-abortion/.

        The reconciliation bill would not change these facts for people who
    ---------------------------------------------------------------------------
    will become newly eligible for marketplace coverage.

                                     ______

        Prepared Statement of Hon. Mike Crapo, a U.S. Senator From Idaho
        Thank you, Mr. Chairman, and welcome to our witnesses. I would
    especially like to thank Senator Scott for coming today and for
    highlighting the critical role States play in our health-care system,
    as well as how we can work to address affordability issues for all
    Americans.

        As we look toward the future of our health-care system, we have a
    responsibility to enhance care quality, to increase affordability, and
    to improve access to lifesaving services and treatment options, from
    diagnostics to cutting-edge therapies. Any reforms we adopt moving
    forward should build on what works within our current system, in
    addition to addressing hurdles to high-quality, low-cost care.

        We should look to the unprecedented success of Medicare Part D and
    Medicare Advantage, which empower consumers to choose what works best
    for them. In contrast with top-down, bureaucratic health-care models,
    these programs leverage choice and competition to expand coverage while
    lowering costs and enhancing care quality.

        Outside of Medicare, these same core principles have driven a wide
    range of promising reforms. Employers, who provide coverage to roughly
    half of the population, have adopted diverse tools and models to
    incentivize workers to seek out lower-cost, higher-quality care
    options. States have adopted waivers and flexibilities to tailor their
    Medicaid programs to best meet their needs and strategic goals. Our
    health-care system has substantial room for improvement, but these
    creative and market-based models provide a compelling blueprint for
    bipartisan reform.

        We have seen strong bipartisan backing for proposals to expedite
    Medicare coverage for cutting-edge devices, to avoid a telehealth
    access cliff for seniors, and to cap out-of-pocket spending under Part
    D. I have also worked with multiple members of this committee on both
    sides of the aisle to ensure Medicare beneficiary access to tests that
    detect dozens of cancers at an early stage, reducing mortality and
    allowing for proactive care. These types of policies have the potential
    to lower consumer costs while improving health-care outcomes.
    Unfortunately, some of the proposals currently under consideration risk
    moving in the opposite direction, with potentially dire unintended
    consequences for Americans. In addition to exacerbating inflation and
    weakening our economic recovery, the trillions of dollars in taxing and
    spending proposed by House Democrats would advance a range of policies
    that could hinder health-care outcomes and drive up costs, with
    taxpayers bearing the burden.

        The proposed drug price controls, imposed under the guise of
    negotiation, pose a threat to our global leadership in biomedical
    innovation. A recent University of Chicago study found that the price-
    fixing policies included in the bill would slash research and
    development funding by up to 60 percent, reduce the number of new drugs
    approved in the next 20 years by as many as 342, and trigger a loss of
    life as much as twenty times what the COVID-19 pandemic has inflicted
    on our Nation.

        House Democrats have also proposed making their poorly targeted
    Obamacare premium subsidy hike permanent. This proposal does nothing to
    improve Obamacare plans or to address underlying health-care costs. The
    administration has also taken a series of steps that risk constraining
    consumer choices, delaying or weakening coverage and undermining
    innovation.

        A number of States that had devoted months, if not years, to
    crafting comprehensive improvements to their Medicaid programs saw
    their hard work thrown away overnight as the administration rescinded
    their waivers, seemingly for political reasons. This approach
    undermines the State-Federal partnership at Medicaid's core and creates
    tremendous uncertainty, in addition to eliminating opportunities for
    innovation.

        The administration also announced plans to roll back a popular rule
    aimed at expediting access to lifesaving medical devices for seniors.
    This regulation would be a game-changer for patients suffering from
    cancer, diabetes, and a broad range of other conditions.
    Disappointingly, it may never go into effect.

        I stand ready and eager to work with the administration and members
    of both parties to pursue policies that improve health-care outcomes,
    expand access to life-saving drugs and devices, and drive down costs
    for both the consumer and the taxpayer. From telehealth expansion to
    outcomes-based payment arrangements, there are endless opportunities
    for us to come together on common ground and meet the needs of the
    American people. We should set aside needless tax hikes and wasteful
    spending and instead take advantage of these opportunities.

        I again thank the witnesses for their time. We look forward to
    hearing from you all.

                                     ______

              Prepared Statement of Douglas Holtz-Eakin, Ph.D.,*
                        President, American Action Forum
    ---------------------------------------------------------------------------
        * The views expressed here are my own and not those of the American
    Action Forum. I thank Margaret Barnhorst and Jackson Hammond for their
    assistance.
    ---------------------------------------------------------------------------
                                  introduction
        Chairman Wyden, Ranking Member Crapo, and members of the committee,
    thank you for the opportunity to discuss health insurance coverage in
    America and the role of Federal programs. In this testimony, I hope to
    make three main points:

            The vast majority of Americans are covered by health
    insurance, with private insurance provided by employers being the
    leading source of coverage.
            During 2020, the onset of the pandemic slightly reduced
    private insurance, but public safety net programs offset the loss and
    left the fraction of Americans uninsured roughly unchanged.
            Despite this success, key public programs--Medicare and
    Medicaid--can benefit from reforms that raise the value of the care
    provided to their beneficiaries.

        Let me discuss each of these in greater detail.
                        sources of health-care coverage
    Pre-COVID-19 Coverage
        Released last month, the Census Bureau's report, ``Health Insurance
    Coverage in the United States: 2020,'' describes the state of health
    insurance coverage from 2020, based on data collected in the Current
    Population Survey Annual Social and Economic Supplement (CPS ASEC). The
    survey was conducted from February to April 2021 and asked participants
    about health insurance held at any time throughout 2020. Given the
    wording of the question, people are considered uninsured in 2020 only
    if they had no coverage at any time during the year, and they are
    instead counted in the coverage group for insurance they held at the
    beginning of the year, and potentially in more than one group if they
    transitioned. Ultimately, those who lost coverage in 2020 due to the
    COVID-19 pandemic are not included in the uninsured rate for 2020.
    Therefore, the 2020 report provides the most recent look at health
    insurance coverage in the United States just prior to the effects of
    the pandemic.\1\
    ---------------------------------------------------------------------------
        \1\ https://www.census.gov/content/dam/Census/library/publications/
    2021/demo/p60-274.pdf.

        According to the report, 66.5 percent of people in the United
    States had private coverage in 2020, 34.8 percent had public coverage,
    and 8.6 percent of people in the United States, or 28.0 million, did
    not have health insurance at any point during the year. Employer-
    sponsored insurance (ESI) remained the most common sub-type of health
    insurance, with 54.4 percent of the population covered for some or all
    of the calendar year, followed by Medicare (18.4 percent), Medicaid
    (17.8 percent), direct-purchase coverage (10.5 percent), TRICARE (2.8
    percent), and coverage through Veterans Affairs (VA) or Civilian Health
    and Medical Program of the Department of Veterans Affairs (0.9
    ---------------------------------------------------------------------------
    percent).

    The report also details health insurance coverage across various
    demographic groups, displaying disparities in coverage that existed
    prior to the pandemic. In 2020, Hispanics, inclusive of all races, had
    the highest uninsured rate (18.3 percent), followed by Blacks (10.4
    percent), Asians (5.9 percent), and non-Hispanic Whites (5.4 percent).
    Blacks had the highest rate of public coverage at 41.4 percent, while
    non-Hispanic Whites had the highest rate of private coverage (73.9
    percent).

        Adults aged 65 and older and children under age 19 were more likely
    to have coverage than those aged 19 to 64, given their age-eligible
    status for Federal programs. Only 1.0 percent of those aged 65 or older
    and 5.6 percent of those under age 19 were uninsured for all of 2020,
    compared to 11.9 percent of those aged 19 to 64.

        Poverty and employment also contributed to disparities in health-
    care coverage in 2020. Those living in poverty, with an income below
    100 percent of the Federal Poverty Level (FPL), were most likely to be
    uninsured for the entire calendar year at 17.2 percent, while those
    with incomes above 400 percent of the FPL were the least likely to be
    uninsured (3.4 percent). Additionally, among adults aged 19 to 64
    years, 12.9 percent of those who did not work at least one week in the
    year were uninsured for the entire calendar year, compared to 8.4
    percent of full-time, year-round workers. Many adults receive health
    insurance through their employer, and in 2020, 87 percent of full-time,
    year-round workers were covered by private insurance.
    COVID-19 Impacts on Coverage
        Since the second quarter of 2020, the COVID-19 pandemic has
    affected the United States economy and the health insurance market.
    Over half of the United States population received health insurance
    through their employer prior to the pandemic, leaving room for
    significant impacts on health coverage following the loss of 22.2
    million jobs between March and April 2020. Last year, several studies
    attempted to predict pandemic-related losses in coverage, estimating
    between 3.5 to 5.7 million would become uninsured due to loss of
    ESI.\2\, \3\ Given the ongoing nature of the pandemic and
    the lack of significant real-time data, there is still no finite gauge
    on the effects of the pandemic on insurance coverage, yet more recent
    preliminary estimates suggest that the effects have not been nearly as
    detrimental as initially feared.
    ---------------------------------------------------------------------------
        \2\ https://www.urban.org/research/publication/changes-health-
    insurance-coverage-due-covid-19-recession.
        \3\ https://www.kff.org/coronavirus-COVID-19/issue-brief/
    eligibility-for-aca-health-coverage-following-job-loss/.

        Last month, researchers at Duke University and Indiana University-
    Purdue University Indianapolis released a report that found nearly 2.7
    million people in the United States lost their health insurance in the
    spring and summer months (April 23-July 21, 2020), based on data from
    the Census Bureau's 2020 Household Pulse Survey.\4\ This change
    represented a decline of 1.36 percentage points over the 12-week
    period. By the fall and winter months (August 19-December 21, 2020),
    they found enrollment in other coverage types rose enough to offset the
    loss in ESI, resulting in an insignificant change in the uninsured rate
    in the fall and winter months of 2020.
    ---------------------------------------------------------------------------
        \4\ https://jamanetwork.com/journals/jama-health-forum/fullarticle/
    2783874.

        Based on the same data from the 2020 Household Pulse Survey, the
    Urban Institute estimated that 3.3 million adults lost ESI and 1.9
    million became uninsured from April 23-July 21, 2020. In their
    estimates, the overall uninsured rate increased by 1 percentage point
    in this time period but increased 3.8 percentage points among Hispanic
    adults and increased 1.6 percentage points among adults with a high
    school degree or less. Additionally, public coverage rose by 1.1
    percentage points during this 3-month period.\5\
    ---------------------------------------------------------------------------
        \5\ https://www.urban.org/sites/default/files/publication/102852/
    as-the-covid-19-recession-extended-into-the-summer-of-2020-more-than-3-
    million-adults-lost-employer-sponsored-health-insurance-coverage-and-2-
    million-became-uninsured.pdf.

        A December 2020 report from the Kaiser Family Foundation (KFF)
    reached similar numbers using employment rates and enrollment in the
    fully insured group market to extrapolate a rough estimate for the
    entire ESI market, concluding that approximately 2 to 3 million people
    lost ESI between March and September 2020.\6\ They also note, however,
    that losses in ESI were largely offset by gains in Medicaid and
    marketplace enrollment.
    ---------------------------------------------------------------------------
        \6\ https://www.kff.org/policy-watch/how-has-the-pandemic-affected-
    health-coverage-in-the-u-s/.

        A study from the Heritage Foundation, based on data from the
    National Association of Insurance Commissioners, found a 7 percent
    increase in Medicaid and Children's Health Insurance Program (CHIP)
    enrollment in the first three quarters of 2020, reflective of
    government measures to address pandemic-related loss of coverage, such
    as the temporary increase in Federal funding for State Medicaid
    programs and the maintenance of eligibility provisions in the Families
    First Coronavirus Response Act.\7\ More recently, in June 2021, CMS
    championed record increases in Medicaid and CHIP enrollment, citing a
    13.9 percent increase between February 2020 and January 2021.\8\ It
    appears that countercyclical social safety net programs are meeting
    demand without expansion or increased Federal funding, though they
    should not become a primary source of health coverage for Americans.
    ---------------------------------------------------------------------------
        \7\ https://www.heritage.org/public-health/report/covid-19-effects-
    the-response-health-insurance-coverage-and-claims.
        \8\ https://www.medicaid.gov/medicaid/national-medicaid-chip-
    program-information/downloads/april-2021-medicaid-chip-enrollment-
    trend-snapshot.pdf.

        While the pandemic may have led to a shift in the distribution of
    coverage across subtypes, overall coverage rates remained steady for
    several reasons. Those that lost employment were likely never enrolled
    in ESI; lower-wage workers are less likely to be covered by an employer
    plan, and pandemic-related job losses were most pronounced in
    industries with lower coverage rates.\9\ People who did lose ESI as a
    result of job loss qualified for a special enrollment period for
    marketplace coverage, and low-income individuals or families may have
    become eligible for Medicaid or CHIP. Additionally, many employers
    continued to temporarily offer ESI or premium support to furloughed or
    laid-off employees, which further mitigated the pandemic's effects on
    overall coverage.\10\
    ---------------------------------------------------------------------------
        \9\ https://www.kff.org/policy-watch/how-has-the-pandemic-affected-
    health-coverage-in-the-u-s/.
        \10\ https://www.bls.gov/brs/2020-results.htm.

        If preliminary estimates are true and the uninsured rate has indeed
    remained steady, there are still around 28 million people without
    health insurance. Yet according to KFF, 57 percent of the typical non-
    elderly uninsured population are eligible for, but do not enroll in,
    free or subsidized coverage. Based on 2019 data, around 40 percent of
    the typical non-elderly, uninsured population are eligible for free
    insurance through either Medicaid (24 percent) or a marketplace bronze
    plan with a $0 premium (16 percent). In addition, 17 percent are likely
    eligible for subsidized coverage through marketplaces.\11\ Using 2017
    data, KFF estimated in another study that roughly 15 percent of the
    typical non-elderly uninsured population is ineligible for subsidies
    due to undocumented immigrant status, 14 percent declined an offer of
    ESI, and 7 percent had incomes above 400 percent of the FPL, making
    them ineligible for subsidies.\12\ Ultimately, it is not clear that
    expanding Federal programs would necessarily cover these populations.
    In January 2021, 2.2 million individuals fell in the coverage gap as a
    result of States electing not to expand their Medicaid programs under
    the Affordable Care Act.\13\
    ---------------------------------------------------------------------------
        \11\ https://www.kff.org/policy-watch/millions-of-uninsured-
    americans-are-eligible-for-free-aca-health-insurance/.
        \12\ https://files.kff.org/attachment/The-Uninsured-and-the-ACA-A-
    Primer-Key-Facts-about-Health-Insurance-and-the-Uninsured-amidst-
    Changes-to-the-Affordable-Care-Act.
        \13\ https://www.kff.org/uninsured/issue-brief/the-coverage-gap-
    uninsured-poor-adults-in-states-that-do-not-expand-medicaid/.

        Much is still unknown about the future of COVID-19 and its
    lingering effects on health coverage. Looking ahead, policymakers
    should explore why people forgo viable coverage options, identify those
    that are truly without coverage options, and focus on the subset of
    individuals living in non-expansion States.
                          drivers of health-care costs
        According to the 2019 National Health Expenditure Account from the
    Centers for Medicare and Medicaid Services (CMS), individuals, health
    insurers, and Federal and State governments spent a combined $3.8
    trillion on health expenditures in 2019, accounting for 17.7 percent of
    the national gross domestic product (GDP).\14\ From 2010-2018, national
    health expenditures have grown an average of 4.5 percent each year
    compared to the previous year, but spending remained around 17 percent
    of national GDP.\15\
    ---------------------------------------------------------------------------
        \14\ https://www.cms.gov/files/document/highlights.pdf.
        \15\ https://www.cdc.gov/nchs/data/hus/2019/044-508.pdf.

        In 2019, roughly 73 percent of total health expenditures, or
    approximately $2.77 trillion, was spent on health insurance: private
    health insurance spending accounted for 31 percent of total health
    expenditures, Medicare accounted for 21 percent, Medicaid accounted for
    16 percent, and other health-care services (including VA, Department of
    Defense, and CHIP) made up 4 percent.\16\ Based on this data, spending
    per beneficiary in 2019 was highest for Medicare ($13,276), followed by
    Medicaid ($8,485) and private health insurance ($5,927). The remaining
    27 percent of total health expenditures was split between out-of-pocket
    (OOP) costs (11 percent), other third-party payers and programs (9
    percent), investments (5 percent) and government public health
    activities (3 percent).\17\
    ---------------------------------------------------------------------------
        \16\ National Health Expenditures 2019 Highlights (cms.gov).
        \17\ The Nation's Health Dollar ($3.8 Trillion), Calendar Year
    2019: Where It Came From (cms.gov).

        A number of factors can drive health-care costs--including, but not
    limited to provider consolidation, rising prices of health services, a
    growing, aging, or sicker population--yet pouring more money into the
    issue will not necessarily improve coverage, especially in the case of
    Medicare. According to the Medicare trustees report released on August
    31st of this year, the Medicare trust fund, which covers hospital
    services through Medicare Part A, will be depleted in 2026. In 2020,
    Medicare spending resulted in a $495.5 billion deficit, which accounted
    for 16 percent of the Federal debt. Despite the fact that it would
    require a nearly 33 percent increase in Medicare payroll taxes to cover
    the Part A cash shortfalls in 2020, progressives continue to push
    ---------------------------------------------------------------------------
    costly agendas to expand the program.

        At the start of the pandemic in spring 2020, social distancing
    measures and attempts to mitigate the spread of the virus led to
    cancellations of elective procedures and outpatient appointments.
    Despite subsequent increases in health spending as demand grew for
    laboratory services and hospitals resumed procedures at the end of the
    year, overall health spending fell slightly in 2020, according to
    analysis from the Peterson-KFF Health System Tracker.\18\ Total health
    spending in December 2020 was 1.5 percentage points lower than total
    health spending from December 2019. Yet GDP fell by 3.5 percent in
    2020, meaning that total health spending likely represented a greater
    share of overall national spending for the year. The sustained decrease
    in the utilization of preventative services and chronic disease
    screenings may have long-term impacts on health outcomes and health
    costs.\19\
    ---------------------------------------------------------------------------
        \18\ https://www.healthsystemtracker.org/chart-collection/how-have-
    healthcare-utilization-and-spending-changed-so-far-during-the-
    coronavirus-pandemic/#item-start.
        \19\ https://www.healthsystemtracker.org/chart-collection/how-have-
    healthcare-utilization-and-spending-changed-so-far-during-the-
    coronavirus-pandemic/#item-covidcostsuse_marchupdate--2.
    ---------------------------------------------------------------------------
                              room for improvement
        While over half of the United States population receives health
    insurance through their employer, a significant portion of the
    population relies--for better or worse--on Federal and State programs
    for health-care coverage. For these individuals, the future of health-
    care coverage should focus on enhancing existing Federal programs to
    balance costs and provide high value care.
    Medicare Advantage
        Medicare Advantage (MA) allows beneficiaries to enroll in plans
    managed by private insurers, as opposed to partaking in the traditional
    fee-for-service (FFS) Medicare program. MA's popularity continues to
    grow, because it provides beneficiaries with expanded choices of plans
    and coverage options at affordable prices.\20\ In fact, MA has
    leveraged the power of competition to control costs. Average premiums
    for MA plans have continuously decreased since 2015, with average
    premiums at $21 a month this year.\21\ Additionally, MA beneficiaries
    spend 40 percent less on OOP costs than FFS beneficiaries and nearly
    two-thirds of MA seniors are in $0 premium plans.\22\ These savings are
    significant, especially when considering that more than half of all MA
    enrollees live on an annual income of less than $24,500.\23\
    ---------------------------------------------------------------------------
        \20\ https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-
    medicare-advantage-in-20
    19/.
        \21\ https://www.kff.org/medicare/issue-brief/medicare-advantage-
    in-2021-premiums-cost-sharing-out-of-pocket-limits-and-supplemental-
    benefits/.
        \22\ Average annual beneficiary health-care costs for various
    Medicare coverage options (milliman.com).
        \23\ BMA-Data-Brief-March-2021-FIN.pdf
    (bettermedicarealliance.org).

        The average MA enrollee chooses from 33 plans offered by 8
    different issuers in their geographic area,\24\ and there is even some
    evidence that MA enrollment leads to better health outcomes: MA
    enrollees have 33 percent fewer emergency department visits and 23
    percent fewer hospital visits than those in FFS Medicare.\25\ MA
    beneficiaries also experienced lower COVID-19 hospitalization and
    mortality rates than FFS beneficiaries, perhaps in part due to
    coordinated care services for seniors that included vaccination
    support, meal delivery, and at-home testing.\26\
    ---------------------------------------------------------------------------
        \24\ https://www.kff.org/medicare/issue-brief/medicare-advantage-
    2021-spotlight-first-look/.
        \25\ https://avalere.com/press-releases/medicare-advantage-
    achieves-better-health-outcomes-and-lower-utilization-of-high-cost-
    services-compared-to-fee-for-service-medicare.
        \26\ BMA-Q3-Data-Brief-FIN-1.pdf (bettermedicarealliance.org).

        Enrollment in MA continues to grow, with 42 percent of current
    Medicare beneficiaries enrolled in MA as of March of this year and 51
    percent of Medicare beneficiaries expected to be enrolled in MA by
    2030.\27\ MA beneficiaries are proportionally more diverse, lower
    income, and more complex than those in FFS: racial minorities make up a
    larger share of the MA population (33 percent) than they do of the FFS
    population (16 percent).\28\ MA costs $7 billion more a year than
    traditional Medicare, largely because of the supplemental benefits MA
    plans offer, such as dental, hearing, and vision.\29\ Yet, in the grand
    scheme of a $776-billion entitlement program, $7 billion amounts to
    less than 1 percent of total spending.\30\
    ---------------------------------------------------------------------------
        \27\ https://www.kff.org/medicare/issue-brief/medicare-advantage-
    in-2021-enrollment-update-and-key-trends/.
        \28\ BMA-State-of-MA-Report-2021.pdf (bettermedicarealliance.org).
        \29\ https://www.kff.org/medicare/press-release/payments-to-
    medicare-advantage-plans-boosted-medicare-spending-by-7-billion-in-
    2019/.
        \30\ https://www.pgpf.org/budget-basics/
    medicare#::text=Medicare%20accounts%20for%20a%
    20significant,of%20total%20federal%20government%20spending.

        Rather than pursuing costly agendas to expand supplemental benefits
    or lower the Medicare eligibility age, advocates for enhancing health-
    care coverage for the elderly should focus on bolstering MA.
    Medicare Part D Reform
        Medicare Part D provides Medicare beneficiaries with access to
    subsidized prescription drug coverage, and in 2021, 48 million seniors,
    or 77 percent of all Medicare beneficiaries, enrolled in Part D
    benefits.\31\ While the program has been largely successful, it
    represents approximately a third of all drug spending in the United
    States, and its current structure, along with pricing incentives in the
    broader pharmaceutical market, creates perverse incentives for insurers
    and drug manufacturers to benefit from high-cost drugs.
    ---------------------------------------------------------------------------
        \31\ https://www.kff.org/medicare/issue-brief/key-facts-about-
    medicare-part-d-enrollment-premiums-and-cost-sharing-in-2021/.

        Growing pharmaceutical expenditures in the past several years,
    driven by a significant increase in both the number of beneficiaries
    reaching catastrophic coverage and the costs that each of them incur,
    have led to a resounding push to reform Part D to realign incentives.
    Spreading the risk for high-cost beneficiaries to insurers and drug
    manufacturers, while capping the liability of beneficiaries, could
    ---------------------------------------------------------------------------
    induce behavioral changes that lead to lower costs for all parties.

        Reforms should include placing a true cap on beneficiary OOP
    expenditures, eliminating the coverage gap phase entirely and instead
    requiring drug manufacturers to pay rebates during the catastrophic
    phase, reducing the Federal Government's reinsurance rate, and
    increasing plans' liability in the catastrophic phase. Under a Part D
    redesign such as the one proposed by the American Action Forum in 2018,
    assuming a maximum OOP (MOOP) cap of $2,500, would collectively save
    beneficiaries $7.4 billion over 10 years (from 2020-2029). Each
    beneficiary would see an increase in their premiums of only $61 over
    the entire 10-year window, or an average monthly increase of $0.51.
    Across all beneficiaries, the reduced cost-sharing expenses would more
    than offset the increase in premiums paid.

        In this same proposal, the Federal Government would be expected to
    save $23.4 billion over 10 years if a $2,500 MOOP were implemented in
    2020 and a 5-percent reduction in brand drug spending occurred. While
    total premium subsidies would increase $637.4 billion, reinsurance
    expenditures would decline by $473.2 billion, and low-income subsidy
    cost-sharing subsidies would decline by $187.6 billion.

        If the maximum OOP cap is increased, however, expected overall
    beneficiary savings would decrease while Federal Government savings
    would increase. With a $4,000 maximum OOP cap, the Federal Government
    would save $31 billion over the 10-year period, and beneficiaries would
    save $400 million over 10 years. In this scenario, premium increases
    would offset nearly all of the expected reductions in cost sharing.

        Insurers will want to find ways to counter beneficiaries' loss of
    incentive to use lower-cost alternatives; such tools already at plans'
    disposal include requiring pre-authorization or step therapy for
    coverage of higher-cost drugs. Beneficiaries may resist if the tools
    impose too much of a barrier to accessing their preferred drug. If
    policymakers take seriously the effort to reduce expenditures and use
    of low-value health-care products, however, they will have to make
    tradeoffs. Alternatively, current rules could be loosened to provide
    plans more options to control costs in ways that are less punitive or
    burdensome to beneficiaries. This approach could include greater
    formulary flexibility such as loosening the protected classes
    requirements and allowing more narrow coverage options in certain
    therapeutic classes, as recommended by MedPAC.\32\
    ---------------------------------------------------------------------------
        \32\ http://www.medpac.gov/docs/default-source/reports/
    mar18_medpac_ch14_sec.pdf.

        That being said, restructuring the benefit design of Medicare Part
    D in a way that realigns incentives away from high-cost, high-rebate
    drugs may be the best option to reduce overall program costs as well as
    drug prices in other parts of the market.
    Managed Medicaid
        Medicaid managed care programs can assist States in reducing
    Medicaid costs and better utilizing health services to improve outcomes
    for Medicaid beneficiaries. While traditional FFS Medicaid encourages
    greater use of services and use of more expensive services as it
    reimburses providers for each service performed without any quality
    controls or value assessments of services, Managed Care Organizations
    (MCOs) are required to meet certain quality standards as part of their
    contract with the State and are paid a fixed amount for each enrollee,
    thus eliminating the incentive to provide unnecessary services. As of
    this year, 40 States and the District of Columbia use MCOs.

        MCOs establish a network of providers and connect patients with a
    primary care provider, disincentivize overutilization of services or
    use of high cost services, and incentivize and encourage wellness and
    preventive services. These and other cost management strategies to
    discourage resource use, limit subspecialists and/or require approvals
    for referrals work very well for generally healthy populations with
    preventive and episodic health needs. Chronic complex populations,
    particularly children, have many specialized needs that must be closely
    integrated and delivered in a coordinated fashion, often on a daily
    basis, to be effective.

        While all individuals can benefit from managed care programs,
    individuals with above-average health-care needs will benefit the most
    from the stricter regulations regarding quality of care and beneficiary
    protections. Future efforts to improve MCOs should focus on enrolling
    higher-cost populations. The aged and disabled are the costliest
    Medicaid beneficiaries, therefore their lack of enrollment in managed
    care programs (and thus their continued enrollment in FFS Medicaid) has
    resulted in much of the potential benefit offered by such programs to
    go unrealized. Aged and disabled beneficiaries account for 60 percent
    of all Medicaid expenditures despite being only a quarter of the
    Medicaid population.\33\ As such, despite 69 percent of Medicaid
    beneficiaries being enrolled in MCOs in 2018, only 46.2 percent of
    total Medicaid spending was spent on MCOs in 2019.\34\
    ---------------------------------------------------------------------------
        \33\ http://kff.org/other/state-indicator/total-medicaid-mco-
    spending/?currentTimeframe=0&
    sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
        \34\ https://www.kff.org/other/state-indicator/total-medicaid-mco-
    enrollment/?currentTime
    frame=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.

        Adults and children with chronic or complex medical conditions have
    expenditures far above the average for those without such conditions,
    yet many of these individuals with complex needs are not receiving the
    most appropriate or beneficial care, and they--and the Medicaid
    budget--are worse off because of it. A more integrated and coordinated
    approach through managed Medicaid would expand coverage for the most
    vulnerable populations while controlling costs and improving outcomes
    for all.
                                   conclusion
        Collectively, Americans are getting older, living longer, and
    becoming increasingly burdened with chronic diseases.\35\ Looking to
    the future, the Federal Government should focus on maximizing spending
    power and improving the value of existing programs to ensure
    sustainable and high-quality health care.
    ---------------------------------------------------------------------------
        \35\ https://www.cdc.gov/chronicdisease/resources/infographic/
    chronic-diseases.htm.

    ---------------------------------------------------------------------------
        Thank you. I look forward to answering your questions.

                                     ______

        Questions Submitted for the Record to Douglas Holtz-Eakin, Ph.D.
                     Questions Submitted by Hon. Mike Crapo
        Question. Included in this reckless tax and spending spree is a
    proposal to create a new Federal health benefit for individuals in
    States that chose not to adopt the optional Medicaid expansion. The
    legislative language, however, is incredibly broad.

        Is it your understanding that this proposal, as drafted, would
    allow wide latitude to the Secretary of HHS to develop a program that
    would be akin to a public option?

        Answer. As originally drafted, this proposal could have eventually
    become something akin to a public option if the program were later
    expanded.

        Question. Furthermore, would it be in the Secretary's best interest
    to stand up a Nationwide program utilizing as few managed care plans as
    possible, similar to the operations of TRICARE?

        Answer. Using fewer managed care programs would go against the
    grain of what States Nationwide have done. In Medicaid programs in 40
    States and DC, officials have chosen to contract with managed care
    plans to provide lower costs and better-utilized services to Medicaid
    beneficiaries. Not using managed care programs could result in higher
    costs for the same or worse quality Nationwide.

        Question. For the vast majority of people who purchase coverage on
    the Obamacare exchanges, the U.S. Treasury pays most of their premiums
    via direct payments to health insurers.

        For 2021 and 2022, the American Rescue Plan Act (ARPA) increased
    the amount of those subsidies and lifted the cap on subsidy eligibility
    (which was at 400 percent of the Federal poverty line), sending Federal
    subsidies to people earning more than $100,000 and up to $500,000. The
    House Democrats' proposal seeks to permanently adopt these subsidy
    expansions.

        CBO suggests that this subsidy expansion provides much greater
    support for upper-income households than for lower-income households.
    Do you agree with those findings?

        Answer. Yes.

        Question. If so, can you walk us through why that is the case?

        Answer. It is true, practically by definition. Removing the cap on
    eligibility for subsidies benefits only higher-income individuals,
    while expanding the generosity helps all income levels somewhat. The
    net impact is largely a benefit to the more affluent.

        Question. The House Democrats' drug pricing proposal frames its
    price controls as negotiation, but the process it creates looks more
    like bureaucratic price-fixing. Their legislation would force life
    sciences manufacturers, roughly two-thirds of which are start-ups, to
    the table under the threat of an excise tax of up to 95 percent,
    raising grave constitutional questions.

        The proposal would then cap prices based on an international
    benchmark, essentially importing top-down, one-size-fits-all programs
    from abroad, including many that rely on quality-adjusted life years,
    or QALYs. These metrics face strong resistance from advocates for aging
    Americans, as well as those with disabilities, since QALYs tend to
    treat their lives as less valuable. This system, in short, is a far cry
    from the market-based negotiations that currently occur in the Medicare
    Part D program.

        Do you believe that the price-setting framework included in Speaker
    Pelosi's drug pricing bill would facilitate meaningful negotiation?

        Answer. No. At a very basic level, the government would ultimately
    set the parameters for the negotiation. The government would determine
    whether a manufacturer had complied with those parameters. And the
    government would level substantial penalties on manufacturers who do
    not comply with its price concession demands. The more one drills down,
    the clearer it becomes that the process envisioned cannot be reasonably
    called a negotiation.

        Question. The nonpartisan Congressional Budget Office relied on
    QALYs to model how the bill's price controls would work in practice,
    and many of the foreign price controls imported by the proposal are at
    least partially QALY-based.

        What do you see as some of the potential drawbacks or tradeoffs
    from the use of QALYs in the context of drug pricing and health care
    more broadly?

        Answer. QALYs assign an arbitrary dollar value to a year of one's
    life and the QALY methodology for drug pricing, especially to assess
    the value of rare disease drugs and new therapies, is also arbitrary
    and fails to account for societal or non-health benefits that result
    from improved health. These valuations necessarily require judgments
    about the value of a year of life--or fraction thereof--or the quality
    of that year. Decisions about value that have traditionally been made
    by patients and their doctors would be turned over to bureaucrats and
    academics. This type of evaluation system is typical of many countries
    with lower drug prices, where politicians have been willing to forego
    access to innovative treatments for their populations in order to limit
    health-care costs. Given the aforementioned limitations of QALY
    measurements for the elderly, disabled, and terminally or chronically
    ill, the Affordable Care Act banned their use in Medicare formularies.
    QALYs attempt to standardize measurements across diverse conditions and
    consider the value individuals place on their health care, but the
    health-care system is complex and difficult to replicate in a single
    model. Ultimately, QALYs make arbitrary assessments of the value of
    life and have the potential to limit access to new life-saving
    medicines and therapies.

        Question. In 2003, Congress enacted bipartisan legislation that
    created Medicare Part D and modernized Medicare Advantage, or MA, as a
    market-based alternative to fee-for-service coverage for seniors. Both
    programs have achieved incredible success, with high satisfaction
    rates, dynamic enrollment growth, and a range of diverse choices for
    seniors.

        What lessons can we take from Part D and MA as we look to enhance
    coverage, quality and access across other Federal programs and health-
    care markets?

        Answer. Medicare Advantage (MA) has leveraged the power of
    competition to control costs and provide beneficiaries with expanded
    choices of plans and coverage options. The average MA enrollee chooses
    from 33 plans offered by 8 issuers in their geographic area, and there
    is evidence that MA enrollment leads to better health outcomes: MA
    enrollees have 33 percent fewer emergency department visits and 23
    percent fewer hospital visits than those in fee-for-service (FFS)
    Medicare. Additionally, MA beneficiaries have experienced lower COVID-
    19 hospitalization and mortality rates compared to those in FFS
    Medicare, due in part to the comprehensive and coordinated care
    options. MA's popularity continues to grow as it provides beneficiaries
    with affordable prices. Average premiums for MA plans have continuously
    decreased since 2015, with average premiums at $21 per month in 2021.
    MA beneficiaries spend 40 percent less on out-of-pocket costs compared
    to FFS beneficiaries and many MA enrollees have access to $0 premiums:
    In 2020, roughly 60 percent of MA enrollees paid no premium.

        In Part D, direct negotiation by the Secretary of Health and Human
    Services has been expressly forbidden, yet the program nevertheless
    sees aggressive negotiation over the prices of medications between Part
    D plan sponsors and drug manufacturers. This competitive process is the
    key factor in the program's success to date. Today, Part D
    beneficiaries have access to 27 different plans, on average, enabling
    individuals to choose a plan that is tailored to their needs. Because
    there are a number of plan options for beneficiaries, individual plans
    have the ability to use preferential tiering strategies to negotiate
    discounts for specific drugs. If a beneficiary requires or desires a
    specific medication that is not on the preferred formulary (or covered
    at all) for one plan, they can choose to sign up for a different plan
    that provides the medication at a more desirable price. Total program
    expenditures for Part D came in far lower than initial CBO projections
    by about 48 percent. All that being said, however, Medicare Part D is
    still in need of reform to realign incentives by placing greater
    financial risk on insurers and drug manufacturers and protecting
    beneficiaries from catastrophic financial risk.

        Question. What effects, from your perspective, would the House
    Democrats' drug price control proposals have on Part D moving forward?

        Answer. The specific price control mechanisms, such as inflation
    penalties and the maximum price ceiling for Medicare negotiations, that
    have been misleadingly called ``price negotiation'' limit how much
    Medicare will pay for certain drugs. This could result in Part D plans
    losing access to some prescription drugs that do not make the
    formulary. Additionally, the very high levels of liability ascribed to
    manufacturers will reduce profits and therefor likely reduce research
    and development initiatives for new medicines--which will hurt all
    Americans, including Part D beneficiaries, but especially those with
    rare or complex conditions.

        Question. Medicare's telehealth coverage and payment policies have
    drawn criticism from across the political spectrum, and for good
    reason. Prior to the COVID-19 pandemic, outdated statutory and
    regulatory requirements have made it nearly impossible for most seniors
    to access telehealth services in a meaningful way, exacerbating access
    gaps, particularly for rural and underserved communities.

        Fortunately, last year, Congress acted to establish emergency
    flexibilities and ensure widespread telehealth availability for
    Medicare beneficiaries. This temporary relief, however, will expire at
    the end of the ongoing public health emergency, resulting in a coverage
    cliff for tens of millions of older Americans.

        I am confident that we can develop long-term, responsible and
    bipartisan solutions to modernize Medicare's telehealth policies. That
    said, I was disappointed to see that the House Democrats' taxing and
    spending proposals would do nothing to address the impending access
    cliff. Seniors, health-care providers and innovators deserve certainty
    and stability on this front, and we should set aside partisan processes
    to tackle urgent issues like this one instead.

        If Congress turns to telehealth in the coming months, what
    considerations should we bear in mind as we work to craft fiscally
    responsible policies that meaningfully expand access?

        Answer. Equitable payments between telehealth and in-person visits
    are a potential concern. While telehealth visits may be appropriate and
    effective for certain behavioral health treatments like talk therapy,
    they are inherently less effective for other conditions, especially
    physical ailments. Additionally, the infrastructure necessary for
    telehealth, including broadband Internet, is lacking in rural areas and
    expensive to set up, so steps should be taken to ensure that telephones
    and cell phones are able to be used where broadband access is
    impractical.

        Question. In an attempt to curb or reverse price increases, Speaker
    Pelosi's drug pricing bill would impose steep penalties for
    prescription drug price growth that exceeds general inflation.

        How do you anticipate policies along these lines might impact the
    launch prices for new products coming to market, and what do you see as
    some of the tradeoffs that this approach might necessitate?

        Answer. The primary flaw in efforts to restrict price increases to
    no more than the rate of inflation is that they do not work in the long
    run. Instead, policies that limit the ability of a company to increase
    prices over time simply result in increases in the initial list price
    of medications when they first come to market. Such anti-market
    policies are punitive in nature, aimed more at punishing pharmaceutical
    companies for high prices than at meaningfully addressing health-care
    costs. The problem with seeking to punish drug companies for high
    prices is that in most cases the effects of these policies will simply
    lead to higher launch prices Nationwide and ultimately negatively
    impact American patients most of all.

        Question. Historically, what types of unintended consequences have
    resulted from government-imposed price controls?

        Answer. Historically, price increases have been largely correlated
    with the imposition or expansion of mandatory rebates and taxes. Drug
    manufacturers who have their drug covered by Medicaid are required by
    law to offer Medicaid the ``best price'' available to any other payer
    or provide a fixed rebate and the ACA extended this requirement in
    expansion States and to Medicaid managed care organizations, thus drug
    manufacturers became obligated to provide their drugs for roughly
    three-quarters of the price to nearly a quarter of the U.S. population.
    The result was predictable: a sharp increase in the value of
    manufacturers' rebates. In FY 2010, Medicaid drug rebates equaled 42
    percent of gross Medicaid drug costs. Following the ACA's changes,
    rebates grew each year as a percentage of expenditures, and by FY 2013,
    Medicaid rebates equaled nearly 63 percent of the program's gross drug
    costs. Ultimately, these costs get passed to consumers in the form of
    higher list prices.

        Question. On August 31, 2021--following a 5-month delay relative to
    the statutory reporting deadline of April 1st--the Medicare trustees
    issued their annual report on the financial status of the program. The
    trustees warn that the Medicare hospital insurance, or HI trust fund,
    will be bankrupt in 2026, at which time the program will no longer be
    able to pay full benefits for seniors and the disabled.

        While the trustees predict that the HI trust fund will be depleted
    in 2026, there is substantial uncertainty behind their forecast.
    Current projections, for example, show a year-end HI surplus for the
    year 2025 that is only $27.4 billion. Given historic annual Medicare
    spending, that is an exceptionally low reserve amount.

        It is, therefore, unclear whether the Medicare HI trust fund could
    remain solvent through the entirety of 2025.

        Given these dire fiscal warnings, do you believe that Congress
    should be focused on preserving and protecting the Medicare program's
    long-term solvency if we want to keep the promises that we have made
    both to current beneficiaries and to Americans who are near retirement
    age?

        Answer. Yes. Medicare is quickly running out of money to cover
    program costs and continuing with the Medicare status quo is
    unacceptable. Medicare's annual cash shortfall in 2020 represented
    almost 16 percent of the Federal deficit that year. Since 1965,
    Medicare's cumulative cash shortfall amounts to $5.95 trillion, and
    year-over-year Medicare shortfalls are now responsible for nearly one-
    third of national debt. Balancing Medicare's annual cash shortfalls
    under the existing system would prove devastating to seniors and
    require significant increases in annual Medicare payroll taxes and
    Medicare Parts B and D premiums. More specifically, to balance the 2020
    Medicare Part A cash deficit, Medicare payroll taxes would need to
    increase 32.6 percent, from 1.45 percent to 1.9 percent. To balance the
    $307 billion deficit for Medicare Part B in 2020, seniors' premiums for
    physicians would need to increase by 276 percent, raising the average
    annual premium from $1,782 to $6531. To balance the Part D cash deficit
    of $89.2 billion in 2020, seniors' premiums for prescription drugs
    would need to increase by 565 percent, bringing the average annual drug
    premium from $392 to $2,610. With such unprecedented levels of cash
    shortfalls continuing through the budget horizon, maintaining the
    status quo ensures that Medicare will soon not exist for today's
    seniors, let alone future generations of Americans. These rising costs
    and the measures necessary to cover them will increasingly harm seniors
    if Medicare reform is not undertaken.

        Question. Congress has historically looked to reform and adjust
    Medicare payments to providers in order to extend the life of the HI
    trust fund. However, the last time Congress enacted significant
    Medicare savings, the money was used to finance spending on Obamacare.

        I remember when Obamacare was pushed through Congress without a
    single Republican vote. That law raided over $700 billion from a
    financially strapped Medicare program and spent it. Those savings are
    no longer available to help us preserve and protect the Medicare
    program.

        Now here we are, more than a decade later, in a very similar
    situation.

        If current proposals are enacted, hundreds of billions in Medicare
    savings will be spent at a time when the HI trust fund is projected to
    be insolvent in approximately 4 short years.

        In your opinion, should Congress instead be focused on making sure
    that current Medicare benefits remain available and accessible to
    beneficiaries?

        Answer. The 2021 trustees report provides a sense of what the
    future may look like should Medicare continue to remain unchanged.
    Sooner or later Medicare reform is inevitable, but progressive efforts
    to lower the Medicare eligibility age and add coverage for vision,
    hearing, and dental would only accelerate the program's collapse. The
    Obama administration oversaw a $2.4-trillion cash shortfall over 8
    years (2009-2016), while the Trump administration oversaw its own $1.6-
    trillion Medicare cash shortfall during the past presidential term. The
    trustees project that by the end of 2021 the Biden administration will
    have overseen a $446-billion cash shortfall in its first year in
    office. The fiscal reality is that continuing the previous two
    administrations' Medicare policies and leaving Medicare unchanged all
    but guarantees bankruptcy. In 2026, the HI fund will only cover about
    91 percent of its bills, and that gap will only grow larger in the
    years that follow as the population ages.

                                     ______

                    Questions Submitted by Hon. John Cornyn
            price controls, biopharmaceutical leadership, and china
        Question. For over a decade, the Chinese Government has targeted
    biopharmaceuticals as a key industry for development. The State Council
    has called on all levels of government to support expansions in
    research, development, and manufacturing capacity.

        At the same time, Democrats are pushing for draconian price
    controls that threatened to slash U.S. biopharmaceutical research and
    development by as much as 60 percent and cut new drug approvals over
    the next 2 decades by as many as 342.\1\
    ---------------------------------------------------------------------------
        \1\ https://cpb-us-w2.wpmucdn.com/voices.uchicago.edu/dist/d/3128/
    files/2021/08/Issue-Brief-Price-Controls-and-Drug-Innovation-Sep-
    23.pdf.

        Could you elaborate on the impact these price control proposals
    would have on the United States' leadership in the discovery,
    ---------------------------------------------------------------------------
    development, and delivery of new biopharmaceutical products?

        Answer. The competitive, market-based approach to pharmaceuticals
    in the United States has allowed access to new and innovative therapies
    and medicines that have been unavailable in other developed countries
    as politicians abroad have been willing to forego access to innovative
    treatments in order to limit health-care costs. For example, the 14
    reference countries included in the Trump administration's
    International Price Index proposal have significantly restricted access
    to treatments and reduced pharmaceutical innovation, compared to the
    United States. When adjusting for population, the 14 countries had
    access to only 51.5 percent of the 290 new drugs developed in the past
    8 years and it took an average of 16 months after their initial global
    launch for the drugs to become available. In contrast, the United
    States gained access to 89 percent of the 290 new medicines within
    three months. Looking at cancer drugs specifically, 59.7 percent of the
    82 new cancer drugs between 2017 and 2017 were available within 17.4
    months in the 14 reference countries, compared to 96 percent of new
    cancer medicines available within three months in the United States.
                                  drug pricing
        Question. The Democrats' drug pricing plan establishes an excise
    tax of up to 95 percent of the gross sales of a drug if the
    manufacturer does not negotiate or fails to reach an agreement on
    price. It seems to me this is more of a price control than since it is
    such a punitive measure.

        Are you aware of a 95-percent excise tax anywhere else in U.S. law?

        Answer. No, I am not.

        Question. How might a policy like this impact the biopharmaceutical
    development?

        Would you expect it to have any impact on the industry's ability to
    respond to the next world pandemic?

        Answer. The United States has persisted as a global leader in
    biotech and biopharmaceutical development for years thanks to market-
    based functions of research and development, yet such a policy would
    effectively allow the government to dictate the price that a company
    may charge for a drug and immediately halt funding of drug discovery
    and development. Manufacturers depend on investment capital, and
    Federal policies that dramatically curtail return on investment will
    have a detrimental effect on manufacturer's ability to attract the
    capital necessary to continue bringing new treatments to market.
    Investors and venture capital firms will stop investing in new
    therapies and will give up on medicines that have not yet been
    invented.

        The market-based system in the United States allowed flexibility to
    respond to emerging threats of the COVID-19 pandemic in real-time.
    Without public-private partnerships and substantial amounts of funding
    invested in the biopharmaceutical industry in the early stages of the
    COVID-19 pandemic, it would have been far more challenging, if not
    impossible, to achieve the rapid and remarkable success we have seen
    for the development of innovative vaccines and treatments. Policies in
    the Build Back Better proposal claim to limit drug spending through
    restrictive government price controls, ultimately deciding that lower
    spending is more important than access to the range of innovative new
    drugs. Letting the government decide that Americans should not have
    access to new, innovative treatments in a timely manner because the
    value of those treatments is not worth the cost to taxpayers or private
    payers, would surely inhibit the country's ability to respond to the
    next pandemic.
                                  biosimilars
        Question. Biosimilars represent an opportunity to save billions of
    dollars in the cost of prescription drugs. Despite this great
    potential, the market is still lacking.

        What policies do you think may be necessary to ensure a more robust
    biosimilars market?

        Answer. History has proven the best way to reduce the price of a
    good for which there is growing demand is to increase its supply
    through competition. For drug pricing, that means bringing generics and
    biosimilars to market to compete with brand-name drugs. There are
    ongoing measures within the FDA that promote the approval and market
    entry of lower-cost drug options, including the Biosimilars Action Plan
    from 2018 for biosimilars and the Drug Competition Action Plan for
    generic drugs. The FDA is updating previous guidelines on the use of
    biosimilars to account for modernized technologies and is exploring the
    use of labeling carve-outs and provisions in the CREATES Act to
    increase supply of biosimilars and generics in the drug market and
    increase access to product samples.

        Question. One idea to help unlock the potential savings of
    biosimilars is implementing a shared savings program where Medicare
    savings associated with prescribing a biosimilar would be shared with
    providers and ultimately lowering Medicare costs, and more importantly
    patients through reduced co-pays. Senator Bennet and I have introduced
    a bill that would create a shared savings program.

        What do you think of this approach?

        Answer. It looks promising.

        Question. Many times you have argued that one of the best ways to
    bring down drug prices is to interject competition through generic
    drugs and biosimilars.

        What should Congress be doing to bolster a biosimilars market where
    we are seeing lots of biosimilars approved, but uptake is lagging
    behind?

        Answer. Instead of setting price controls that will stifle
    pharmaceutical innovation and further limit the creation of
    biosimilars, Congress should seek to reduce drug costs by increasing
    the utilization of biosimilars over higher-cost alternatives, by
    increasing patient and provider awareness of biosimilars and their
    associated benefits, as well as incentivizing providers to prescribe
    biosimilars through temporary reimbursement increases, both of which
    have historically garnered bipartisan support.

        Question. Are there market forces making it difficult for
    biosimilars to achieve market share?

        Answer. Biologics and biosimilars often treat rare diseases and are
    some of the most expensive drugs due to high development costs and a
    limited pool of potential users. Market share is further hindered by
    the complex approval process, which sometimes takes as long as 10
    years, and difficulty in proving a biosimilar drug's similarity to the
    reference biologic. Several additional factors that have slowed market
    growth of biosimilars include regulatory uncertainties, low demand from
    physicians and payers, and extensive patent litigation.

                                     ______

                     Questions Submitted by Hon. Tim Scott
        Question. Last week, the Bureau of Labor and Statistics released
    their Job Openings and Labor Turnover Summary indicating that Americans
    are quitting their jobs in record numbers. Additionally, the Bureau's
    September jobs report revealed weak employment numbers and slowing job
    growth. With higher-income individuals now eligible to receive ACA
    government subsidies due to the pandemic and proposals to make this
    permanent, I am concerned that this could lure individuals away from
    employer-based coverage, driving up employee premiums and undermining
    group coverage--especially if those drawn away are younger, healthier
    employees.

        Given the concerning economic indicators we have seen, could the
    devaluing of employer-sponsored health care be another barrier for job
    creators, especially small businesses, to attract and retain talent?

        Answer. More people leaving employer-based coverage may lead to
    higher premiums, but this heavily depends on the type of people
    leaving. Higher income levels of eligibility may be more likely to
    remove health insurance as a variable all together when an individual
    looks for work, rather than actively disadvantage job creators.
    Employer-sponsored health insurance is a financial burden on companies.
    Given a choice, employers might prefer to re-invest the money formerly
    spent on employees who left the company insurance into other benefits,
    such as higher salaries, bonuses, or retirement benefits in order to
    retain talent. As such, it may be a wash for companies when it comes to
    available resources to attract talent.

        Question. According to a recent Kaiser Family Foundation report,
    out-of-pocket costs for Medicare enrollees ``can run into the hundreds
    and even thousands of dollars for expensive dental treatment, hearing
    aids, or corrective eyewear'' harming their retirement security.
    Private Medicare Advantage plans today offer hearing, dental, and
    vision services at little or no additional cost to enrollees and
    without putting the American taxpayer on the hook for these additional
    services.

        How is that? Is the key here mandated benefits or flexibility and
    competition--in other words, one-size-fits-all versus the free-market?

        Could we not just build on these high-performing, lower-cost
    private Medicare Advantage plans instead of cutting them to fund an
    expensive one-size-fits-all government expansion which would negatively
    impact nearly a third of Medicare patients in South Carolina during a
    pandemic?

        Answer. Medicare Advantage (MA) offers beneficiaries plans managed
    by private insurers, as opposed to the traditional, one-size-fits-all
    Medicare fee-for-service (FFS) plans administered by the Federal
    Government. MA uses the power of competition to control costs and
    provide beneficiaries with expanded choices of plans and comprehensive
    coverage options. The average MA enrollee chooses from 33 plans offered
    by 8 issuers in their geographic area, and average premiums for MA
    plans have continuously decreased since 2015, with average premiums at
    $21 per month in 2021. MA beneficiaries spend 40 percent less on out-
    of-pocket costs compared to FFS beneficiaries, and many MA enrollees
    have access to $0 premiums. In 2020, roughly 60 percent of MA enrollees
    paid no premium.

        The flexibility of the private market allows MA plans to offer more
    comprehensive benefits than FFS Medicare. Starting in 2017, MA plans
    began offering primarily health-related benefits, such as vision,
    dental, and hearing benefits, and in 2020, plans were allowed to offer
    non-primarily health-related benefits to those with chronic conditions.
    As of this month, 90 percent of MA enrollees are covered by a MA plan
    with Part D coverage (MA-PD plan), and as of this year, 98 percent of
    MA-PD plans covered vision care, 93 percent covered hearing benefits,
    and 87 percent covered dental services. MA plans currently cover 42
    percent of the Medicare population, and that number is projected to
    increase to 51 percent by the end of the decade. As MA's popularity
    continues to grow, advocates for enhanced Medicare coverage should
    focus on bolstering MA, which already provides a range of tailored
    benefits to the Medicare population.

        Question. As ranking member of the Special Committee on Aging, I
    recently released a report titled ``Putting Patients First: Innovative
    Solutions for Prescription Drugs and Older Americans'' examining how
    government-mandated drug prices would stifle medical innovation, erode
    consumer choice, and restrict access to lifesaving drugs for many
    patients.

        What does the proposal to use government price-setting based on the
    VA mean for patient care decisions in Medicare (whether based on a
    domestic price or international reference price)?

        Answer. It means Medicare beneficiaries will have less access to
    medications that will be excluded from the formulary and will either
    have to use less-optimal treatments or go without.

        Question. The latest Medicare trustees report projects that the
    hospital trust fund will run dry in 2026. Additionally, I am
    increasingly hearing from worried Medicare providers regarding the
    financial uncertainty currently facing the Medicare physician payment
    system. As Medicare Open Enrollment began this week, I believe we ought
    to be focused on strengthening this vital program for current and
    future enrollees instead of exacerbating its challenges by hastily
    expanding it.

        What is the cost to the American taxpayer of lowering Medicare's
    eligibility age to 60?

        Answer. Modeling from AAF's Center for Health and Economy shows
    that if Medicare eligibility were extended to those age 60-64, an
    additional 3.9 million Americans would be insured at a cost to the
    Federal taxpayer between $379.6 billion and $1.8 trillion over 10
    years, depending on employer behavior in response to the change.\2\
    ---------------------------------------------------------------------------
        \2\ https://www.americanactionforum.org/research/lowering-the-
    medicare-age-to-60-cost-and-coverage-outcomes/.

        Question. We are seeing tremendous progress with therapeutic and
    technological innovations that could soon cure diseases such as Sickle
    ---------------------------------------------------------------------------
    Cell Disease.

        As the science outpaces policy, how can reimbursement arrangements
    and public programs evolve to ensure immediate patient access for one-
    time curative treatments?

        Answer. Programs need to be given the adequate regulatory
    flexibility to quickly adapt to and provide access to new technologies.
    This includes reducing red tape, as well as ensuring stakeholders have
    direct lines of communication to the agencies that oversee these
    programs.

                                     ______

                   Questions Submitted by Hon. James Lankford
        Question. The Affordable Care Act allows taxpayer funding for
    abortion on demand, but at the very least it acknowledged the right of
    States to prohibit abortion coverage on the exchanges and that abortion
    could not be required as an essential health benefit. Eleven of the 12
    States that have chosen not expand Medicaid have also chosen to
    prohibit abortion coverage on the exchanges. As written, the Democrats'
    reconciliation proposal would override these State laws and mandate
    coverage of, and funding for, abortions on demand, and transportation
    services to acquire them, for those under 138 percent of poverty and
    without cost sharing in 2024. However, the bill refers to abortions in
    an underhanded way.

        Do you agree that abortion coverage is mandated and funded by the
    proposed reconciliation bill's reference to family planning services
    ``which are not otherwise provided under such plan as part of the
    essential health benefits package'' (subsection (c) of section 137505)?

        Answer. Yes.

        Question. As you know, one of the successes in Medicare Part D over
    the years has been the ability for plans to drive generic utilization,
    which provides savings for beneficiaries and the health system and
    taxpayer. However, the current structure of Part D has shifted to
    incentivize plans to favor rebates over lower-priced generic and
    biosimilar alternatives. As a result, we have seen the number of
    generics placed on the lowest-cost sharing tier drop dramatically in
    recent years. I'm concerned about this trend and working on legislation
    that would address this problem.

        Can you provide more details on the importance of generic/
    biosimilar access in Part D and how this can meaningfully lower out-of-
    pocket costs for seniors?

        Answer. Generics and biosimilars benefit patients and the health-
    care system by introducing competition for high-priced drugs. In 2018,
    generic drugs accounted for 22 percent of all drug spending despite the
    fact that 90 percent of dispensed prescriptions were generic drugs.
    Additionally, the average co-pay of a generic prescription ($5.63) is
    nearly one-seventh that of a brand-name prescription ($40.65), offering
    significant savings potential for patients.\3\ Markets for generic
    drugs are competitive and generic entry inherently increases the number
    of competitors in the market, which drives significant price reductions
    for brand name drugs compared to the original price prior to generic
    entry. However, given the competing financial incentives for insurers
    and manufacturers to cover biosimilar drugs under the current structure
    of Part D, future reforms should seek to ensure biosimilars are less
    costly for all involved stakeholders to encourage competition and
    utilization in the long run.
    ---------------------------------------------------------------------------
        \3\ https://accessiblemeds.org/sites/default/files/2019-09/AAM-
    2019-Generic-Biosimilars-Access-and-Savings-US-Report-WEB.pdf.

        Question. While every member of Congress argues for increased
    access to quality health care, the Biden administration's new mandates
    that ban providers from participating in both Medicare and Medicaid
    unless their staff is fully vaccinated, will decrease the number of
    available Medicare and Medicaid providers. While we are still waiting
    to see the interim final rule from CMS on this requirement, many
    ---------------------------------------------------------------------------
    providers in my State have severe concerns.

        Have you seen preliminary estimates on how many providers will lose
    their provider numbers or, on the contrary, how many trained
    professional care givers will be forced out of the market because of
    this mandate?

        Answer. The Biden administration estimates the vaccine mandate will
    ``cover approximately 17 million health-care workers across 76,000
    health-care facilities.''\4\ A preliminary study from the COVID States
    Project (a joint research project of Northeastern University, Harvard
    University, Rutgers University, and Northwestern University) estimated
    that in July 2021, 73 percent of health-care workers were vaccinated,
    27 percent were unvaccinated, and 15 percent of were vaccine resistant,
    based on a response that they ``would not get the COVID vaccine if/when
    it is available to them.\5\ Based on more recent estimates, it appears
    that health systems across the country are losing anywhere from 0.5
    percent to 10 percent of their health-care workers due to COVID-19
    vaccine mandates.\6\
    ---------------------------------------------------------------------------
        \4\ https://www.whitehouse.gov/briefing-room/press-briefings/2021/
    11/04/background-press-call-on-osha-and-cms-rules-for-vaccination-in-
    the-workplace/.
        \5\ http://news.northeastern.edu/uploads/
    COVID19%20CONSORTIUM%20REPORT%2062%20
    HCW%20August%202021.pdf.
        \6\ https://www.fiercehealthcare.com/hospitals/how-many-employees-
    have-hospitals-lost-to-vaccine-mandates-numbers-so-far.

                                     ______

                     Questions Submitted by Hon. Todd Young
        Question. Over half of American workers are saving for retirement
    via a workplace retirement plan,\7\ and the vast majority of those
    savers earn less than 400,000 dollars per year.\8\
    ---------------------------------------------------------------------------
        \7\ http://www.pensionrights.org/publications/statistic/how-many-
    american-workers-participate-workplace-retirement-plans.
        \8\ https://www.bls.gov/ncs/ebs/benefits/2018/ownership/civilian/
    table02a.htm.

        Can you please explain how increasing corporate tax rates,
    resulting in reduced corporate profits and returns, can negatively
    ---------------------------------------------------------------------------
    impact Americans' retirement savings?

        Answer. There are two main channels for negative impacts. First,
    the proposed corporate changes will reduce the future labor earnings of
    workers by reducing productivity growth, reducing real wage growth, and
    driving corporations overseas. Thus, workers will have fewer resource
    out of which to save for retirement. Second, higher corporate taxes
    will reduce the return to pension funds and the retirement earnings of
    individuals. This lowers the accumulated funds available to fund
    retirement needs.

        Question. In your view, will increasing the corporate tax
    negatively impact American workers?

        Answer. Yes.

        Question. Professor Larry Summers, the former U.S. Secretary of the
    Treasury under President Clinton, the former Director of the National
    Economic Council under President Obama, and the Charles W. Eliot
    University Professor at Harvard, issued the following series of tweets
    on October 25, 2021:

            Yesterday on @CNN w @jaketapper, @SecYellen said I was wrong
            about my assertion we are more at risks of losing control of
            inflation than at any time in my career. She expressed
            confidence that inflation is decelerating and will be back to
            target levels by the end of next year. I hope she is right but
            I think it's much less than a 50/50 chance. When the
            administration formulated its budget in February, it expected 2
            percent inflation in 2021, I was warning about inflation. Their
            forecast is no longer operative. In May and June, @SecYellen
            expressed confidence that inflation would be back to the 2
            percent range by late 2021 or early 2022. Now this forecast is
            no longer operative. In @CNN interview, @SecYellen asserts
            twice that inflation has decelerated. This is a bit misleading
            as the 3 month and 12 month CPI inflation rates are both around
            5 percent on an annual basis. And the trimmed mean and median
            inflation rates that exclude aberrant sectors (which used to be
            a stable of administration's rhetoric) are now accelerating.
            The TIPS market is suggesting inflation in 3 percent range over
            5 years and more next year. Breakeven inflation over 5 years is
            up 40 bps in the last month. Expectations data are even more
            disturbing. This is part of why my alarm is increasing and
            Treasury should be as well. Given lags in indices, housing
            inflation is almost certain to soar in coming months. With
            super tight labor markets, rising strike activity and real
            wages having declined, increases in wage inflation are likely
            as well. I actually believe the gap between Treasury and Fed
            statements and the everyday experience of business and
            consumers in terms of inflation has widened in recent months.
            Until the Fed and Treasury fully recognize the inflation
            reality, they are unlikely to deal with it successfully.\9\
    ---------------------------------------------------------------------------
        \9\ https://twitter.com/LHSummers/status/1452698999656534018.

        Question. Do you agree with Professor Summers' analysis and
    ---------------------------------------------------------------------------
    conclusions as set forth above?

        Answer. I believe he has been unusually prescient in his concerns
    over inflation stemming from the American Rescue Plan and continued
    quantitative easing by the Federal Reserve. I share his concerns.

        Question. How does the Democrats' proposed $3.5-trillion spending
    plan ensure that this rapid inflation will only continue?

        Answer. The $1.9-trillion American Rescue Plan was passed at a time
    when the economy was growing at a 6.0 to 6.5 percent annual rate--poor
    timing--was far larger than the roughly $500-billion output gap--
    inappropriately large--and had all sorts of unrelated measures--
    bailouts of the multiemployer pension system are evidence of a poor
    design. The current reconciliation bill is heavily front-loaded in its
    spending and back-loaded in its pay-fors. It promises a repeat of the
    ARP policy error in the near-term and a dramatic rise in fiscal
    imbalances in the long term.

        Question. What can Congress do (or refrain from doing) to prevent
    Professor Summers' forecast regarding the future inflation rate?

        Answer. First, do no harm. Do not repeat the policy error and let
    the Fed get inflation under control.

        Question. On October 16, 2021, when asked by CNN's Jake Tapper
    whether it sounded tone deaf to suggest that rising prices and empty
    grocery store shelves are ``high-class problems,'' White House Press
    Secretary Jen Psaki responded, ``A year ago, people were in their
    homes, 10 percent of people were unemployed, gas prices were low
    because nobody was driving, people weren't buying goods because they
    didn't have jobs. Now more people have jobs, more people are buying
    goods, that's increasing the demand. That's a good thing. At the same
    time, we also know that the supply is low because we're coming out of
    the pandemic. And because a bunch of manufacturing sectors across the
    world have shut down because ports haven't been functioning as they
    should be. These are all things we're working through. What people
    should know is that inflation will come down next year. Economists have
    said that. They're all projecting that.''\10\
    ---------------------------------------------------------------------------
        \10\ https://www.cnn.com/videos/politics/2021/10/15/jen-psaki-ron-
    klain-inflation-retweet-tapper-lead-vpx.cnn.

        Do you agree with the White House's explanation for the
    ---------------------------------------------------------------------------
    inflationary environment America is currently facing? Why or why not?

        Answer. I do not. The aspects of the recovery that she emphasizes
    were accomplished by bipartisan legislation in March and December 2020,
    as well as successful deployment of the vaccines. The legislation
    passed in 2021--the ARP--has done more harm than good by fueling
    inflation. It is true that there are supply-chain constraints, but
    supply is only meaningfully measured relative to demand, and the ARP
    excessively stimulated demand.

                                     ______

                   Questions Submitted by Hon. John Barrasso
        Question. Before coming to the Senate, I practiced medicine in
    Casper, WY for over 2 decades. At the medical practice where I worked,
    we cared for any patient that came through the door. It made no
    difference if the patient had private insurance, Medicare, Medicaid, or
    no coverage. We cared for everyone.

        Medicare is a vitally important program for seniors in Wyoming and
    across the country. We must ensure Medicare can continue to meet the
    health-care needs of our Nation's seniors.

        Right now, Democrats are proposing to add dental, vision, and
    hearing benefits to traditional Medicare.

        Can you discuss how seniors can currently receive these benefits?
    In particular, can you focus on their access through Medicare
    Advantage?

        Answer. Medicare Advantage (MA) allows beneficiaries to enroll in
    plans managed by private insurers, and 89 percent of MA plans also
    include Part D coverage (MA-PD plans). Starting in 2017, MA plans began
    offering ``primarily health-related'' benefits, including vision,
    dental, and hearing. In 2019, plans were allowed to expand those
    supplemental benefits to cover things such as transportation, meal
    service, and adult day care, as well as disease-tailored benefits to
    enrollees with specific medical conditions. Beginning in 2020, plans
    started offering ``non-primarily health-related'' benefits--for
    example, pest control services and air purifiers--for enrollees with
    chronic diseases. In 2020, 98 percent of MA-PD plans covered vision
    care, 93 percent provided hearing benefits, and 87 percent covered
    dental services. Additionally, 95 percent of MA-PD plans offered
    fitness benefits such as gym memberships, and 68 percent offered
    coverage for over-the-counter items such as sunscreen and first aid
    supplies.

        Question. Can you discuss ways Congress could improve Medicare
    Advantage so more seniors could gain access to these plans?

        Answer. Virtually all Medicare beneficiaries (99.7 percent) will
    have access to at least one MA plan in 2022, varying between 99.9
    percent of beneficiaries in metropolitan areas and 98.4 percent of
    beneficiaries in non-metropolitan areas.\11\ MA offers a consumer-
    driven and value-based model that encourages competition between plans
    and leads to expanded supplemental benefits and improved quality
    measures, and currently, 94 percent of seniors in MA plans are
    satisfied with the quality of care received.\12\ Enrollment in MA is
    projected to reach 29.5 million people in 2022, up from 26.9 million in
    2021, and average monthly premiums are predicted to decrease to $19 per
    month in 2022, down from $21 in 2021.\13\ As the size of the MA market
    continues to grow, MA enrollment is likely to surpass FFS enrollment
    and has the potential to become the leading source of coverage for
    seniors.
    ---------------------------------------------------------------------------
        \11\ https://www.kff.org/medicare/issue-brief/medicare-advantage-
    2022-spotlight-first-look/.
        \12\ https://bettermedicarealliance.org/publication/future-of-
    medicare-factsheet/.
        \13\ https://www.cms.gov/newsroom/press-releases/cms-releases-2022-
    premiums-and-cost-sharing-information-medicare-advantage-and-
    prescription-drug.

        Question. According to the Congressional Budget Office (CBO),
    making the increased premium tax credits permanent would cost $259
    billion over 10 years. CBO estimates that over half (65 percent) of
    those benefiting from the provision have incomes above 400 percent of
    the Federal poverty level (FPL). CBO goes on to say that 20 percent
    will have incomes above 600 percent percent of FPL and 10 percent will
    ---------------------------------------------------------------------------
    be over 700 percent.

        Do you think these subsidies are properly designed to lower health-
    care costs and help the neediest families?

        Answer. No. Removing the cap on eligibility for subsidies benefits
    only higher-
    income individuals, while expanding the generosity helps all income
    levels somewhat. The net impact is largely a benefit to the more
    affluent.

        Question. As a doctor, I have seen firsthand the dramatic
    improvements in medical care over the last 30 years. Thanks to American
    innovation, patients are living longer and healthier lives.

        Making sure seniors can continue to access cutting edge therapies
    should be the focus of prescription drug reforms. I am concerned
    current policies within Medicare Part D do not allow patients to
    receive the full benefit of the discounts that are already negotiated
    under Part D.

        Can you please discuss policies you believe would lower the cost of
    prescription drugs at the pharmacy counter?

        In particular, can you focus on policies that would allow seniors
    to more directly benefit from the discounts already negotiated under
    Part D?

        Answer. The current structure of Medicare Part D's benefit design,
    along with pricing incentives in the broader pharmaceutical market,
    create perverse incentives for insurers and drug manufacturers to
    benefit from high-cost drugs, which have resulted in a rapid increase
    in spending in the catastrophic phase of the Part D program over the
    past decade, exposing taxpayers and high-cost beneficiaries to ever-
    increasing costs. Under current law, the mandatory discount decreases
    (as a proportion of the drug's price) as the price increases. To
    counter this undesirable effect, policies should instead require
    manufacturer rebates in the catastrophic phase, ensuring the mandatory
    discount increases along with a drug's price, and increase insurer
    liability in the catastrophic phase to put downward pressure on drug
    prices. Reforms should also establish an out-of-pocket (OOP) maximum
    for beneficiaries and reduce the government's open-ended insurance
    liability, providing greater protection to beneficiaries and taxpayers.
    Several bills introduced in Congress as well as a proposal introduced
    by AAF \14\ have included these four necessary components--requiring
    manufacturer liability to increase along with a drug's price,
    decreasing the government's reinsurance liability, increasing insurer
    liability, and capping beneficiary OOP spending--to reform the Medicare
    Part D benefit structure, but slight differences in details lead to
    significant variations in their impact.\15\
    ---------------------------------------------------------------------------
        \14\ https://www.americanactionforum.org/research/redesigning-
    medicare-part-d-realign-incentives-1/.
        \15\ https://www.americanactionforum.org/insight/analysis-of-the-
    competing-proposals-to-reform-medicare-part-d/.

        Question. On October 19th, the Congressional Budget Office was able
    to provide preliminary cost information regarding the reconciliation
    bill. Since this legislation is still being drafted, there remain many
    ---------------------------------------------------------------------------
    unanswered questions.

        Importantly, CBO was able to provide information regarding the cost
    and number of individuals who might gain health insurance under the
    reconciliation legislation.

        According to CBO, the Democrats are spending over $550 billion
    dollars over 10 years on provisions meant to lower the number of
    uninsured individuals.

        The result? According to CBO, 85 percent of the people uninsured
    now will remain uninsured under the Democratic proposal. Specifically,
    in 2031, over 20 million Americans will remain uninsured under this
    Democratic proposal.

        Do you believe spending over $550 billion dollars to cover about 4
    million people over 10 years is a good use of taxpayer money?

        Answer. To provide some context, that is roughly $13,750 a year.
    The average cost for a family of four over a year is roughly $13,824 a
    year. For an individual, the average cost is over $5,500. This
    legislation is certainly not the most efficient way to spend taxpayer
    money to provide health coverage.

        Question. Do you think there are better ways to spend $500 billion
    to lower the cost of health care?

        Answer. We could get rid of the taxes on all of the various inputs
    for health care so that the underlying cost is reduced.

        Question. President Biden has claimed the cost of his multi-
    trillion-dollar reconciliation bill is actually zero dollars.

        Folks in Wyoming have a hard time understanding how legislation
    that was reported to cost upwards of $3.5 trillion one day can
    magically cost zero the next.

        As the former director of the non-partisan Congressional Budget
    Office (CBO), can you please explain how President Biden could make
    sure a claim?

        Answer. I cannot. The Senate should ask the White House to explain
    the claim.

        Question. Do you believe such a claim is accurate?

        Answer. Absolutely not. Most estimates put the price tag at $5.5 to
    $6 trillion if all the spending programs are made permanent, and the
    revenue raised at $2 trillion. There are no zero-dollar outcomes here.

                                     ______

               Prepared Statement of Frederick Isasi, J.D., MPH,
                        Executive Director, Families USA
                                  introduction
        Chairman Wyden, Ranking Member Crapo, members of the committee,
    thank you for the opportunity to testify today. My name is Frederick
    Isasi, and I am the executive director of Families USA, a leading
    national, non-partisan voice for health-care consumers. For more than
    40 years, Families USA has been dedicated to achieving high-quality,
    affordable health care and improved health for all.

        It is an honor to be with you this morning. Thanks to extraordinary
    leadership by members of this committee, as well as your colleagues
    elsewhere in government, American families have experienced major gains
    in health coverage during the past decade. But as we all know, our work
    is not yet done. On behalf of Families USA, I urge you to seize every
    opportunity to legislate and continue our work to finally make sure
    that everyone in America can get the affordable health care they need
    to thrive.
                 recent history of health insurance in america
        As the 21st century dawned, the state of American health insurance
    was increasingly grim, with the number of people who had no health
    coverage steadily rising, year after year.\1\ America's leaders finally
    turned the tide in 2010 by passing the Affordable Care Act. From 2010
    through 2016, 20 million people gained health insurance,\2\ many for
    the first time in their lives.
    ---------------------------------------------------------------------------
        \1\ U.S. Census Bureau, Current Population Survey, Annual Social
    and Economic Supplements. ``Table HIB-1. Health Insurance Coverage
    Status and Type of Coverage by Sex, Race and Hispanic Origin: 1999 to
    2012,'' https://www2.census.gov/programs-surveys/demo/tables/health-
    insurance/time-series/hib/hihistt1b.xls.
        \2\ U.S. Census Bureau, 2008 to 2019 American Community Surveys
    (ACS). ``Table HIC-9_ACS. Population Without Health Insurance Coverage
    by Race and Hispanic Origin: 2008 to 2019,'' https://www2.census.gov/
    programs-surveys/demo/tables/health-insurance/time-series/acs/hic
    09_acs.xlsx.

        To be sure, the individual market still had problems after passage
    of the ACA, with too many people charged premiums and deductibles they
    couldn't afford. But the ACA took a terrible individual market and made
    it much, much better. For example, national surveys taken both before
    and after the law took full effect showed that people buying their own
    insurance experienced dramatic overall improvements:\3\
    ---------------------------------------------------------------------------
        \3\ Sara R. Collins, Munira Z. Gunja, Michelle M. Doty, and Sophie
    Beutel. ``How the Affordable Care Act Has Improved Americans' Ability
    to Buy Health Insurance on Their Own'' (New York, NY; The Commonwealth
    Fund, February 1, 2017), https://www.commonwealthfund.org/publications/
    issue-briefs/2017/feb/how-affordable-care-act-has-improved-americans-
    ability-buy.

            Before the ACA, 60 percent of consumers trying to buy
    insurance in the individual market reported that it was ``very
    difficult or impossible to find affordable insurance.'' The ACA cut
    ---------------------------------------------------------------------------
    that proportion to 34 percent.

            More than two out of five (43 percent) consumers trying to buy
    individual insurance before the ACA said that it was ``very difficult
    or impossible to find the coverage they needed.'' After the ACA, just
    one in four (25 percent) experienced this problem.

            Altogether, just 46 percent of those who tried to buy
    individual coverage before the ACA wound up actually purchasing
    insurance. By contrast, two-thirds (66 percent) of people exploring the
    ACA's individual market bought coverage.

        The ACA also prohibited insurance companies from discriminating
    against people with preexisting conditions; guaranteed essential
    preventive care, free from copayments and deductibles, to hundreds of
    millions of Americans who get health care on the job; and slashed
    prescription drug costs for millions of senior citizens as the infamous
    Medicare ``prescription drug donut hole'' shrank, then closed. Put
    simply, the Affordable Care Act provided the greatest advance in
    American health coverage since President Johnson signed Medicare and
    Medicaid into law in July 1965.

        Starting in 2017, however, health coverage in America changed
    course. Trump administration policies led to reduced enrollment in
    Medicaid and marketplace coverage as Federal officials decimated
    funding for outreach and enrollment assistance and promoted the sale of
    so-called ``junk'' insurance plans that let insurance companies
    discriminate against people with preexisting conditions. The number of
    people without health insurance once again began rising, growing from
    27 million in 2016 to nearly 30 million in 2019.\4\ In a particularly
    shocking development, the number of children without any health
    insurance whatsoever rose for the first time since Congress, on a
    bipartisan basis, passed the Children's Health Insurance Program in
    1997, 2 decades earlier.\5\
    ---------------------------------------------------------------------------
        \4\ U.S. Census Bureau, 2008 to 2019 ACS, Table HIC-9_ACS.
        \5\ For estimates from 1997 through 2015, see Brian W. Ward, Tainya
    C. Clarke, Colleen N. Nugent, and Jeannine S. Schiller. ``Early Release
    of Selected Estimates Based on Data from the 2015 National Health
    Interview Survey.'' National Health Interview Survey Early Release
    Program. National Center for Health Statistics. May 2016, https://
    www.cdc.gov/nchs/data/nhis/earlyrelease/earlyrelease201605.pdf. For
    estimates from 2008 to 2019, see U.S. Census Bureau, 2008 to 2019
    American Community Survey (ACS), ``Table HIC-5_ACS. Health Insurance
    Coverage Status and Type of Coverage by State--Children Under 19: 2008
    to 2019,'' https://www2.census.gov/programs-surveys/demo/tables/health-
    insurance/time-series/acs/hic05_acs.
    xlsx.

        These insurance losses proved still more tragic in 2020, when the
    worst pandemic of deadly disease in more than a century and the
    steepest economic drop since the 1929 stock market crash devastated our
    country. As millions of workers lost their jobs, the number of people
    receiving health coverage from their employers fell by nearly 6
    million--one of the largest losses in history.\6\ The fallout would
    have been far worse, but thanks to Medicaid and health insurance
    marketplaces, 70 percent of people who lost employer-sponsored
    insurance were able to obtain other forms of coverage.\7\ All told, the
    number of uninsured still rose by 1.8 million people in 2020. Notably,
    the only statistically significant increases in the number of uninsured
    people reported by the Census Bureau took place in States that had not
    extended Medicaid coverage as Congress authorized in 2010 \8\--a
    problem Congress can and should fix, as I'll explain in a few moments.
    ---------------------------------------------------------------------------
        \6\ From 2019 to 2020, the number of people with employer-sponsored
    insurance fell by 5.8 million, according to Census Bureau estimates
    based on the Current Population Survey (CPS). Katherine Keisler-Starkey
    and Lisa N. Bunch. ``Health Insurance Coverage in the United States:
    2020.'' Current Population Reports, P60-274. U.S. Census Bureau,
    September 2021, https://www.census.gov/library/publications/2021/demo/
    p60-274.html.
        \7\ The Census Bureau's CPS estimates also showed that the number
    of uninsured increased by 1.8 million from 2019 to 2020, even as
    employer-based insurance covered nearly 6 million fewer people.
    Keisler-Starkey and Bunch. Health Insurance Coverage in the United
    States: 2020.
        \8\ Keisler-Starkey and Bunch. Health Insurance Coverage in the
    United States: 2020, Table A-1.

        Many of us weathered the storm, but many did not; this signals that
    our work to secure affordable and equitable health care is far from
    complete. Earlier this year, the members of this committee and other
    national leaders once again stepped forward to protect the American
    people. By passing the American Rescue Plan, you made health care
    substantially more affordable for people who buy their own insurance.
    You guaranteed that, through the end of 2022, no one in America will be
    forced to pay more than 8.5 percent of their income for benchmark
    private insurance.\9\ At the same time, you dramatically lowered
    premiums charged to millions of hardworking families who buy their own
    insurance, unable to get health care on the job.
    ---------------------------------------------------------------------------
        \9\ American Rescue Plan Act of 2021, Pub. L. 117-2, March 11,
    2021, section 9661, https://www.congress.gov/117/plaws/publ2/PLAW-
    117publ2.pdf.

        Almost before the ink was dry from President Biden's signature on
    the American Rescue Plan, families all across this Nation saw their
    health-care costs dramatically fall and their health security
    strengthen. During just the 6 months from February 15 to August 15,
    2021, nearly 3 million people signed up for coverage through health
    insurance marketplaces--and no wonder!\10\ Average premium costs
    dropped by 50 percent, as nearly half of families coming to the Federal
    marketplace were charged $10 or less in monthly premiums for health
    coverage.\11\ The median deductible for families new to the Federal
    marketplace fell by 90 percent, from $750 to $50.\12\
    ---------------------------------------------------------------------------
        \10\ Centers for Medicare and Medicaid Services (CMS). 2021 Final
    Marketplace Special Enrollment Period Report. September 15, 2021,
    https://www.hhs.gov/sites/default/files/2021-sep-final-enrollment-
    report.pdf.
        \11\ CMS. 2021 Final Marketplace Special Enrollment Period Report.
        \12\ CMS. 2021 Final Marketplace Special Enrollment Period Report.

        Think about the impact on a family of four making $3,800 a month
    who, in the past, could afford nothing better than a plan with a $7,000
    deductible for each insured family member. Today, by spending $38 on
    monthly premiums, that same family can buy insurance with a deductible
    of $800 instead of $7,000.\13\ That's enormous progress.
    ---------------------------------------------------------------------------
        \13\ Before the ARP, a family of four at 175 percent of the Federal
    poverty level (FPL) purchasing coverage with premiums at national
    average levels would have had to pay $12 for bronze coverage and $204
    for silver coverage. After the ARP, the cost of silver has declined to
    $38. Kaiser Family Foundation. Health Insurance Marketplace Calculator
    (undated), https://www.kff.org/interactive/subsidy-calculator/. In
    healthcare.gov, the average combined deductible for a single individual
    is $6,921 for a bronze plan and $800 for an 87 percent-actuarial value
    silver plan, which would be available to a family with income at 175
    percent of FPL. Kaiser Family Foundation. Cost-Sharing for Plans
    Offered in Federal Marketplace for 2021. January 14, 2021, https://
    files.kff.org/attachment/Cost-Sharing-for-Marketplace-for-2021.pptx.

    ---------------------------------------------------------------------------
        And behind every one of these numbers is a real person's story:

            Kristen Black from Lufkin, TX lost her employer-sponsored
    health insurance in 2019 when she had to switch from working full time
    to part time because of a chronic health condition. Kristen worked with
    a local insurance navigator and found a gold plan that allowed her to
    access the doctors and medication she needs to manage her chronic
    condition. Two years later with the new American Rescue Plan subsidies,
    Kristen's plan went from costing her $333.10 per month to $177.10 per
    month. Saving over $150 every month is a huge help to Kristen. She is
    finally getting the care she needs at a price she can afford.

            Sheryl Hagen from Missouri couldn't afford the $300 premium
    her employer charged for health insurance, so she went without. Earlier
    this year, Sheryl had a health scare that led to a $1,300 bill, so she
    decided to sign up for insurance. She found a marketplace plan that
    cost her $73 a month. After President Biden signed the American Rescue
    Plan into law, Sheryl reapplied, and her monthly premium was cut to $0.

            April Henry, an Oregon-based writer who formerly worked in the
    health-care industry, and her husband began saving $700 a month on
    premiums after they went back to the marketplace following enactment of
    the American Rescue Plan. The two of them can now save more for
    retirement and help their 25-year-old daughter with upcoming dental
    surgery.

        Your hard work earlier this year has already paid off for Kristen
    and Sheryl and April and millions of other struggling families. In
    2010, Congress passed legislation that sought to guarantee all families
    affordable access to quality health care and protection from costs that
    deplete the family budget. That promise is closer to fruition than ever
    before. But all of the extra help hard-working families receive from
    the American Rescue Plan will come to an end in less than 14 months,
    unless you once again lead the way on American health care through
    Build Back Better legislation.
                              building back better
        Build Back Better legislation gives America's leaders an
    opportunity to finish the job we started in 2010, to finally make sure
    that everyone in this country is guaranteed access to affordable, high-
    quality health care. If you act boldly and decisively in the coming
    weeks, you can provide real relief to so many people in America who are
    currently forced to choose between feeding their family and filling
    their prescription.

        Families USA supports a network of tightly linked proposals to
    strengthen American health care. Employer-sponsored insurance, the
    health insurance marketplace, and public programs like Medicare,
    Medicaid, and the Children's Health Insurance Program work together to
    provide a spectrum of coverage for people across the lifespan. We urge
    you to lower prescription drug costs for people in Medicare and the
    commercial market, improve coverage for children and postpartum women,
    help families provide long-term care at home or in the community for
    seniors and family members with disabilities, enroll the eligible
    uninsured into coverage, and finally make sure that Medicare
    beneficiaries who worked hard all their lives receive essential
    coverage for dental, vision, and hearing care.

        But the focus of today's hearing is Medicaid and marketplace
    coverage. I'm therefore going to center my remaining remarks on two
    proposals: guaranteeing essential health care to low-income adults who
    are uninsured because of their States' stubborn refusal to provide
    Medicaid to their poorest residents; and ensuring that the American
    Rescue Plan's dramatic improvements to the affordability of private
    insurance won't be taken away from the millions of families who now
    rely on them.
                       closing the medicaid coverage gap
        The Medicaid program is a cornerstone of American health care. It
    covers nearly half of all births and, together with the Children's
    Health Insurance Program, half of all children under age 6.\14\ It is
    the country's largest source of funding for substance use treatment and
    prevention, covering almost 40 percent of adults suffering from opioid
    use disorders.\15\ Medicaid is America's leading source of coverage for
    long-term services and supports, serving six out of every ten nursing
    home residents.\16\ And after controlling for socioeconomic factors,
    low-income families often have better access to care and more financial
    protection in Medicaid than in private coverage, at a cost that is 10
    percent lower for children and 25 percent lower for adults.\17\
    ---------------------------------------------------------------------------
        \14\ Manatt, Phelps and Phillips, LLP. Medicaid's Role in
    Children's Health. Robert Wood Johnson Foundation, February 1, 2019,
    https://www.rwjf.org/en/library/research/2019/02/medicaid-s-role-in-
    children-s-health.html. From July 2019 to April 2021, the number of
    children covered through Medicaid and CHIP rose from 35.2 million to
    38.9 million. Center for Medicaid and CHIP Services (CMCS), Medicaid
    and CHIP Enrollment Trends Snapshot through June 2020 (undated),
    https://www.medicaid.gov/medicaid/national-medicaid-chip-program-
    information/downloads/june-medicaid-chip-enrollment-trend-snapshot.pdf;
    CMCS, Medicaid and CHIP Enrollment Trends Snapshot through April 2021
    (undated), https://www.medicaid.gov/medicaid/national-medicaid-chip-
    program-information/downloads/april-2021-medicaid-chip-enrollment-
    trend-snapshot.pdf.
        \15\ Manatt, Phelps and Phillips, LLP. Medicaid's Role in Fighting
    the Opioid Epidemic. Robert Wood Johnson Foundation, February 1, 2019,
    https://www.manatt.com/Manatt/media/Media/Images/White%20Papers/Issue-
    6-Medicaid-s-Role-in-Fighting-the-Opioid-Epidemic.pdf.
        \16\ Kaiser Family Foundation. Medicaid's Role in Nursing Home
    Care. June 2017, https://www.kff.org/infographic/medicaids-role-in-
    nursing-home-care/.
        \17\ Julia Paradise and Rachel Garfield. What is Medicaid's Impact
    on Access to Care, Health Outcomes, and Quality of Care? Kaiser Family
    Foundation, August 2, 2013, https://www.kff.org/report-section/what-is-
    medicaids-impact-on-access-to-care-health-outcomes-and-quality-of-care-
    setting-the-record-straight-on-the-evidence-issue-brief/; John Holahan
    and Sharon K. Long. Costs, Access, and Utilization under Medicaid: A
    Review of the Evidence. Urban Institute, June 30, 2006, https://
    www.urban.org/sites/default/files/publication/50326/1001002-Costs-
    Access-and-Utilization-Under-Medicaid-A-Review-of-the-Evidence.PDF;
    Teresa A. Coughlin, Sharon K. Long, Lisa Clemans-Cope and Dean Resnick.
    What Difference Does Medicaid Make? Assessing Cost Effectiveness,
    Access, and Financial Protection under Medicaid for Low-Income Adults.
    Urban Institute, May 2013, https://www.kff.org/wp-content/uploads/2013/
    05/8440-what-difference-does-medicaid-make2.pdf.

        The Affordable Care Act built on that record of accomplishment,
    extending Medicaid coverage to adults with incomes up to 138 percent of
    the Federal poverty level, with very generous Federal financial
    support. In more than three out of every four American States,
    governors and State legislators from both parties have gratefully taken
    advantage of Federal financial incentives to implement this extension--
    and for good reason. An impressive research base now confirms that
    Medicaid expansion saves lives, protects people from cancer and other
    serious diseases, helps combat the scourge of addiction, prevents
    bankruptcy, saves money for State budgets, boosts employment, and keeps
    the doors open in rural hospitals.\18\ And there is no clearer example
    of the whole community's need for health coverage than the COVID-19
    pandemic: newly infected people without insurance delay seeking care
    because of cost, which lets the virus spread, undetected and untreated.
    Based on peer-reviewed literature, insurance gaps in Texas, Florida,
    Oklahoma, Georgia, and Mississippi were linked to more than 40 percent
    of those coverage-gap States' COVID-19 deaths.\19\ Truly, in places
    where many of us are uninsured, all of us are at risk.
    ---------------------------------------------------------------------------
        \18\ Madeline Guth and Meghana Ammula. Building on the Evidence
    Base: Studies on the Effects of Medicaid Expansion, February 2020 to
    March 2021. Kaiser Family Foundation, May 6, 2021, https://www.kff.org/
    medicaid/report/building-on-the-evidence-base-studies-on-the-effects-
    of-medicaid-expansion-february-2020-to-march-2021/; Madeline Guth,
    Rachel Garfield, and Robin Rudowitz. The Effects of Medicaid Expansion
    under the ACA: Studies from January 2014 to January 2020. Kaiser Family
    Foundation, March 17, 2020, https://www.kff.org/medicaid/report/the-
    effects-of-medicaid-expansion-under-the-aca-updated-findings-from-a-
    literature-review/.
        \19\ Stan Dorn. The Catastrophic Cost of Uninsurance: COVID-19
    Cases and Deaths Closely Tied to America's Health Coverage Gaps.
    Families USA, March 2021, https://familiesusa.org/wp-content/uploads/
    2021/03/COV-2021-64_Loss-of-Lives-Report_Report_v2_4-20-21.pdf.

        More than 2 million adults in this country are currently uninsured
    because they have the misfortune of being poor while living in one of
    the dozen States that stubbornly refuse to extend Medicaid coverage to
    their lowest-income residents. In these States, parents cannot get
    Medicaid unless they have extremely low incomes. In Mississippi, for
    example, a working mom with two children can't get Medicaid unless she
    earns $115 a month or less.\20\ And adults who are neither pregnant nor
    caring for dependent children are flatly ineligible for health care, no
    matter how low their income and how severe their need. This cruel
    exclusion denies health care to desperately poor people who are
    homeless, who have been diagnosed with a life-threatening illness, or
    are struggling with severe and untreated mental health or substance use
    disorders. It makes no sense to say that those who need help the most
    receive the least, but that is exactly what happens in coverage-gap
    States.
    ---------------------------------------------------------------------------
        \20\ Kaiser Family Foundation. ``Medicaid Income Eligibility Limits
    for Adults as a Percent of the Federal Poverty, as of January 1,
    2021.'' State Health Facts, https://www.kff.org/health-reform/state-
    indicator/medicaid-income-eligibility-limits-for-adults-as-a-percent-
    of-the-federal-poverty-level/
    ?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:
    %22asc%22%7D; Office of the Assistant Secretary for Planning and
    Evaluation, U.S. Department of Health and Human Services. HHS Poverty
    Guidelines for 2021, https://aspe.hhs.gov/topics/poverty-economic-
    mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-
    register-references/2021-poverty-guidelines.

        Many of us believe that public benefits should support rather than
    undermine work. But if that Mississippi mother sees her pay rise from
    $115 to $120 a week, she loses her health care. Closing the coverage
    gap is needed so struggling families can climb the economic ladder
    without losing their health insurance. If they earn more, they may need
    to pay more for health care, but never again will moms and dads be
    penalized with the loss of health insurance if they try to make a
    ---------------------------------------------------------------------------
    better life for their children.

        This is not a hypothetical concern. Consider the stories of Della
    and Wendy.

        Wendy is a restaurant manager from Metairie, LA. Like 70 percent of
    all Louisiana businesses that employ fewer than 50 people,\21\ her
    restaurant doesn't provide health insurance. She applied for Medicaid
    before 2016 and was turned down. She worked so many hours that she made
    just a little too much money to qualify. When Louisiana became the
    first State in the Deep South to extend Medicaid to all low-wage
    workers, Wendy was one of more than 600,000 Louisianans who gained
    access to health-care coverage.\22\
    ---------------------------------------------------------------------------
        \21\ Agency for Healthcare Research and Quality, Center for
    Financing, Access and Cost Trends. ``Table II.A.2 Percent of private-
    sector establishments that offer health insurance by firm size and
    State: United States, 2020.'' 2020 Medical Expenditure Panel Survey-
    Insurance Component, https://meps.ahrq.gov/data_stats/summ_tables/insr/
    state/series_2/2020/tiia2.htm.
        \22\ Office of the Governor of Louisiana. Governor Edwards
    Celebrates the 5-year Anniversary of Medicaid Expansion That Continues
    to Save Lives, Jobs, Rural Hospitals and Reduce the Number of Uninsured
    Louisianans. July 1, 2021, https://gov.louisiana.gov/index.cfm/
    newsroom/detail/3253.

        That let her go to the doctor, who diagnosed Wendy as having a
    thyroid condition. The doctor quickly prescribed medication to keep it
    managed. As a result, she's healthier, feeling better, and losing
    weight. There is no telling how her health would have degenerated
    without Medicaid--quality coverage which she never believed was
    ---------------------------------------------------------------------------
    possible for her.

        Just 500 miles away from Wendy, Della is a kidney transplant
    recipient living in Henry County, GA.

        Georgia is one of the 12 States that stubbornly refuse to provide
    all their low-income residents with health care. As a result, Della
    earns $100 too much to qualify for Medicaid. Without this coverage, she
    couldn't afford to take daily immunosuppressant medication. As a
    result, her new kidney failed. She is now forced to undergo expensive
    and exhausting dialysis treatments, which limit her ability to work and
    are sending her deeper and deeper into medical debt.

        In America, your health and financial self-sufficiency should not
    vary by zip code. Both Della and Wendy should be able to find the
    quality, affordable coverage they need to remain healthy and thrive,
    but Della is still stuck in the Medicaid coverage gap.

        And make no mistake: people of every race and ethnicity have their
    lives and economic security endangered by their States' refusal to
    offer them Medicaid. But families of color are in particular danger.
    Compared to white adults in non-expansion States, Black adults are 46
    percent more likely and Latinos more than twice as likely to lack
    insurance because they fall into the coverage gap.\23\ Put simply,
    anyone who believes in health equity must also be committed to closing
    the Medicaid coverage gap.
    ---------------------------------------------------------------------------
        \23\ Analysis of Figure 3, results for adults ages 19-64, in
    Samantha Artiga, Latoya Hill, Kendal Orgera, and Anthony Damico. Health
    Coverage by Race and Ethnicity, 2010-2019. Kaiser Family Foundation,
    July 16, 2021, https://www.kff.org/racial-equity-and-health-policy/
    issue-brief/health-coverage-by-race-and-ethnicity/.
    ---------------------------------------------------------------------------
      making health care affordable for people who buy their own insurance
        The American Rescue Plan fixed one of the biggest remaining holes
    in America's health insurance system: unaffordable costs that prevent
    people from buying insurance when they don't get health benefits on the
    job. Before that plan took effect, almost 75 percent of uninsured
    families said they lacked health care because they could not afford
    insurance.\24\
    ---------------------------------------------------------------------------
        \24\ The second most common reason given in response to the survey,
    ineligibility for coverage, was cited by only 25 percent of uninsured
    families. Survey respondents could give more than one explanation for
    lacking insurance. Jennifer Tolbert, Kendal Orgera, and Anthony Damico.
    Key Facts about the Uninsured Population. Kaiser Family Foundation,
    November 6, 2020, https://www.kff.org/uninsured/issue-brief/key-facts-
    about-the-uninsured-population/.

        As I noted earlier, the American Rescue Plan cut families' average
    premium costs by 50 percent in the health insurance marketplace and
    lowered median deductibles by 90 percent.\25\ The American people
    showed how much this improved their ability to afford health care for
    their families: During the COVID-19 special enrollment period that
    ended on August 15, the number of people insured through health
    insurance marketplaces shot upward by nearly 3 million, or 35 percent,
    in just 6 short months.\26\
    ---------------------------------------------------------------------------
        \25\ CMS. 2021 Final Marketplace Special Enrollment Period Report.
        \26\ By the end of the Special Enrollment period, 8.0 million
    people previously receiving marketplace coverage were joined by an
    additional 2.8 million new members, representing a 35-percent increase.
    CMS. 2021 Final Marketplace Special Enrollment Period Report.

        People of all races and ethnicities need affordable health care,
    but working-class people in communities of color have a particularly
    large stake in making sure that American Rescue Plan's affordability
    assistance remains in place. Based on the most recent available Census
    Bureau data, Black and Latino adults are 50 percent more likely than
    White adults to qualify for financial help buying marketplace coverage
    and thus to benefit from the American Rescue Plan.\27\
    ---------------------------------------------------------------------------
        \27\ In 2019, the most recent year for which data are available,
    among citizens and lawfully present immigrants age 19-64, 10.0 percent
    of whites qualified for premium tax credits, including both those who
    enrolled in individual-market coverage and those who were uninsured
    despite qualifying for assistance. Among adults of color, 14.5 percent
    were eligible for premium tax credits and either uninsured or enrolled
    in individual-market plans, including 16.4 percent of Indigenous
    adults, 15.4 percent of African-American adults, 15.2 percent of Latino
    adults, and 11.4 percent of Asian-American/Pacific-Islander adults.
    Unpublished analysis of 2019 ACS data by the National Center for
    Coverage Innovation at Families USA, accessed through IPUMS USA,
    University of Minnesota, www.ipums.org.

        By keeping affordability assistance in 2023 and beyond, you will be
    doing more than helping millions of families obtain affordable health
    care, vital though that goal is. You will also give peace of mind to
    nearly 170 million people who get health coverage on the job.\28\ In
    America, if you lose your job, your family can lose its health
    insurance. By making it truly affordable for people to buy their own
    insurance, Build Back Better legislation can guarantee that a pink slip
    will no longer take away health insurance. As a result, parents will no
    longer spend sleepless nights worrying that, if they lose their job,
    they might not be able to take their sick child to the doctor, or may
    be forced to choose between paying the utility bills and paying for
    Dad's blood-pressure medicine that he needs to prevent another heart
    attack.
    ---------------------------------------------------------------------------
        \28\ Kaiser Family Foundation. ``Health Insurance Coverage of the
    Total Population (CPS): 2020.'' State Health Facts, https://
    www.kff.org/other/state-indicator/health-insurance-coverage-of-the-
    total-population-cps/
    ?dataView=1¤tTimeframe=0&sortModel=%7B%22colId%22:%
    22Location%22,%22sort%22:%22asc%22%7D.

        American entrepreneurship will also receive a much-needed boost.
    Instead of forcing people to stay in dead-end jobs just to keep their
    insurance, people can finally start that business they've always
    dreamed of, knowing that, if they go out on their own, they are
    guaranteed the ability to buy affordable health care. From 1978 through
    2010, new business formation in America plummeted, falling from more
    than 15 percent of all companies to just 9 percent.\29\ Since 2010 that
    number has stabilized, but now it's time to reverse the trend and
    galvanize the creation of new American businesses. One crucial step
    towards that end is making the American Rescue Plan's affordability
    improvements permanent. That will help people start their own companies
    by guaranteeing that, after they go out on their own, entrepreneurs
    will still able to get affordable health insurance for themselves and
    their families.
    ---------------------------------------------------------------------------
        \29\ U.S. Census Bureau, Business Dynamics Statistics, ``Rate of
    establishments born during the last 12 months,'' Business Dynamics
    Statistics: Establishment Age: 1978-2019, downloaded on October 10,
    2021, from https://data.census.gov/cedsci/table?q=BDSTIMESERIES.BDSEAGE
    &tid=BDSTIMESERIES.BDSEAGE&hidePreview=true.
    ---------------------------------------------------------------------------
                           now is the time for action
        We face tremendous challenges as a country, but we also have an
    extraordinary chance to learn from the mistakes of the past and make an
    historic investment in our collective health and economic recovery.
    Improving access to affordable health care for every family in America
    is a cornerstone of that opportunity, and I urge every single member of
    this committee, and all of your colleagues in Congress, to put the
    needs of America's families first by immediately passing a bold and
    comprehensive Build Back Better Act.

                                     ______

        Questions Submitted for the Record to Frederick Isasi, J.D., MPH
                     Questions Submitted by Hon. Ron Wyden
        Question. When we assess ways to expand health insurance coverage
    and improve affordability for families, it is critical to remember the
    important role that States can play as innovators. That is why we
    established the State waiver process under section 1332 of the ACA.
    This process provides important flexibilities for States to improve
    coverage and affordability, while maintaining crucial guard rails.
    These guard rails ensure that the coverage provided is as comprehensive
    as it would be under the ACA, is as affordable as coverage would be
    under the ACA, covers as many people as would be covered under the ACA,
    and does not increase the Federal deficit.\1\ States have used these
    so-called ``1332 waivers'' to stand up reinsurance programs that have
    helped reduce premiums on the Marketplaces. States are also using the
    waivers to pursue new approaches to lowering costs, including public
    option approaches.
    ---------------------------------------------------------------------------
        \1\ Patient Protection and Affordable Care Act Sec. 1332 (Pub. L.
    111-148, as amended by Pub. L. 111-152).

        Can you discuss how States have used section 1332 waivers to offer
    ---------------------------------------------------------------------------
    affordable health-care choices for families?

        Answer. State waivers are essential tools to enable States to
    innovate to meet the needs of their residents who don't have adequate
    access to affordable care options. Most States (15 out of the 16 with
    Federal approval) have used 1332 waivers to fund reinsurance, which
    stabilized insurance markets and lowered premiums for those who buy
    insurance without help from premium tax credits.\2\ Recently, States
    like Nevada, Colorado, and Washington are using such waivers to jump
    start price competition by introducing new, lower-cost plans, including
    publicly administered coverage, as an option for consumers.
    ---------------------------------------------------------------------------
        \2\ J. Pitsor, S. Scotti, ``State Roles Using 1332 Health
    Waivers,'' National Conference of State Legislatures, July 2021,
    https://www.ncsl.org/research/health/state-roles-using-1332-health-
    waivers.aspx, (accessed 11/09/21).

        Question. What can Congress do to allow more States to leverage
    1332 waivers to expand affordable coverage in their States, while still
    ---------------------------------------------------------------------------
    meeting the critical guardrails that section 1332 requires?

        Answer. Congress could do more to make these waivers effective. In
    particular, America faces a huge enrollment gap. Many would be
    surprised to know that two-thirds of uninsured people qualify for
    Medicaid, CHIP, or premium tax credits but are not enrolled, and
    roughly half of them are eligible for zero-premium coverage.\3\ People
    of color are particularly likely to fall into this enrollment gap.\4\
    The deficit neutrality guard rail in the 1332 statute has been
    interpreted to bar Federal funding for State policies that increase
    enrollment of uninsured people who qualify for premium tax credits
    (PTCs). If a waiver would improve participation rates among PTC-
    eligible consumers, the State would need to pay the full resulting
    increased costs. As a practical matter, this means that States cannot
    go forward with such innovation. A technical change to the statutory
    language in section 1332 would let States experiment with innovative
    methods for enrolling the eligible uninsured, putting 1332 waivers on
    the same footing as Medicaid 1115 waivers and SNAP waivers, which keep
    Federal funding in place when States increase enrollment of eligible
    people.
    ---------------------------------------------------------------------------
        \3\ Matthew Rae, Cynthia Cox, Gary Claxton, Daniel McDermott, and
    Anthony Damico, How the American Rescue Plan Act Affects Subsidies for
    Marketplace Shoppers and People Who Are Uninsured. Kaiser Family
    Foundation, March 25, 2021, https://www.kff.org/health-reform/issue-
    brief/how-the-american-rescue-plan-act-affects-subsidies-for-
    marketplace-shoppers-and-people-who-are-uninsured/ (accessed 11/11/21).
        \4\ S. Artiga, L. Hill, K. Orgera, Health Coverage by Race and
    Ethnicity 2010-2019, Kaiser Family Foundation, July 2021, https://
    www.kff.org/racial-equity-and-health-policy/issue-brief/health-
    coverage-by-race-and-ethnicity/ (accessed 11/09/21).

                                     ______

                 Questions Submitted by Hon. Sheldon Whitehouse
        Question. Please elaborate on your oral testimony that self-
    employed and small business owners cannot currently access high-quality
    affordable health insurance and would benefit from the availability of
    a public option.

        How can Congress design a public option to meet the challenges that
    prevent these populations from accessing health insurance on the
    exchanges?

        Answer. For many years, small business employers have lagged behind
    larger firms in providing their employees with health coverage. All
    companies struggle with high and rising health-care prices, but small
    employers have less leverage to obtain coverage on favorable terms.
    Comparing companies with 100 or more employees to those with fewer than
    50, people at small firms were roughly half as likely to be covered by
    employer-based insurance in 2020 (27.8 percent versus 57.0 percent).\5\
    For individuals who do receive an offer of coverage through their
    employer, premiums are higher than those of their colleagues at larger
    businesses ($7,045 and $7,197 for companies with fewer than 50 and
    those with 100 or more workers, respectively), and deductibles were
    more than 30 percent higher at smaller firms ($2,376 versus $1,814).\6\
    ---------------------------------------------------------------------------
        \5\ G. Edward Miller and Patricia Keenan. Trends in Health
    Insurance at Private Employers, 2008-2020. Agency for Healthcare
    Research and Quality, July 2020, https://www.
    meps.ahrq.gov/data--files/publications/st536/stat536.pdf (accessed 11/
    11/21).
        \6\ Miller and Keenan. Trends in Health Insurance at Private
    Employers, 2008-2020.

        Between 2014, when the Affordable Care Act's (ACA) main coverage
    provisions took effect, and 2019, previous losses in small-employer
    coverage came to a halt.\7\ But more progress is possible. In
    particular, Congress could allow employers to purchase coverage offered
    on the exchange, including public-option coverage. Massachusetts has
    used this approach, combining the State's individual and small-group
    market and letting small firms buy relatively inexpensive coverage. In
    that case, the public program involved selective contracting with plans
    to serve low- and
    moderate-income people on the exchange, generally relying on managed
    care organizations that began by serving Medicaid beneficiaries.
    Alternative approaches could involve publicly administered provider
    pricing, with requirements for providers to participate in public-
    option networks or be excluded from other State-managed coverage
    systems, including Medicaid and public employee insurance. The key
    would be using public purchasing to leverage lower premiums while
    assuring robust provider participation, then making these lower-
    premium, publicly managed plans available in the small-group market.
    ---------------------------------------------------------------------------
        \7\ Miller and Keenan. Trends in Health Insurance at Private
    Employers, 2008-2020. In 2020, the number of workers receiving
    employer-sponsored insurance fell at firms of all sizes, due to the
    COVID-19 economic crash.

        Question. How will a public option offered on the individual
    exchange benefit not only those who enroll in the public option plan,
    but also those who purchase private insurance coverage from the
    ---------------------------------------------------------------------------
    exchange?

        Answer. A public option offered on the exchange would give its
    private health insurance competitors new incentives to negotiate better
    health-care prices and thereby lower premiums and other costs. As
    prices decrease in both the public option and private coverage, health-
    care costs would fall for consumers throughout the market.

        To achieve this goal, it is essential to establish strong
    guardrails that prevent the public option from eroding advance premium
    tax credits (APTCs), which are based on the second-lowest cost silver
    plan. Last year, health researchers at the RAND Corporation, working in
    collaboration with Families USA and two leading actuarial firms,
    estimated the impact of offering a public option in health insurance
    marketplaces, with and without APTC guard rails.\8\ They found that,
    with measures that prevented the public option from directly eroding
    APTC values, consumers at all income levels would experience
    significant health-care cost reductions due to the public option. By
    contrast, without such guardrails, only higher-income consumers
    ineligible for APTCs would benefit, and many lower-income consumers
    would experience cost increases due to erosion in the purchasing power
    provided by APTCs.
    ---------------------------------------------------------------------------
        \8\ S. Dorn, ``Public Options and Other Policies to Lower Health
    Insurance Premiums Need Guardrails to Protect Low- and Moderate-Income
    Consumers,'' Families USA, June 2020, https://familiesusa.org/
    resources/public-options-and-other-policies-to-lower-health-insurance-
    premiums-need-guardrails-to-protect-low-and-moderate-income-consumers/
    (accessed 11/09/21).

        Families USA strongly supports Federal policy that would add a
    public option to health insurance exchanges. In addition to APTC
    guardrails, the policy should have strong incentives for providers to
    serve beneficiaries of a public option, thereby meeting provider
    network standards and making the public option a viable choice for
    consumers. It also will be essential for a public option to provide
    real financial security for consumers and access to care by covering
    comprehensive benefits, including but not limited to services
    classified as essential health benefits under the ACA. Full parity of
    coverage between mental and physical health care is likewise
    ---------------------------------------------------------------------------
    fundamental, as are limits on consumer premium and out-of-pocket costs.

                                     ______

                      Question Submitted by Hon. Tim Scott
        Question. We are seeing tremendous progress with therapeutic and
    technological innovations that could soon cure diseases such as Sickle
    Cell Disease.

        As the science outpaces policy, how can reimbursement arrangements
    and public programs evolve to ensure immediate patient access for one-
    time curative treatments?

        Answer. There is no simple answer to this question. Fundamentally,
    our Nation should ensure fairness in access to lifesaving treatments--
    no one's health should depend on their wealth. Yet, as it stands,
    almost one in three people can't fill prescriptions because of cost.\9\
    Congress must allow the government to be a better steward of the
    dollars being spent on all pharmaceuticals, to ensure resources are
    available to invest in high-value treatments, even when expensive. To
    that end, Congress must empower the government to negotiate for fair
    drug prices, either at launch of the drug or as prices go up (e.g.,
    annually). Politically there is tremendous support for this idea from
    the public, with nearly nine in 10 people (88 percent) in favor of
    allowing the Federal Government to negotiate for lower prices,
    including more than three-fourths (77 percent) of Republicans, nine in
    10 independents (89 percent) and 96 percent of Democrats.\10\
    ---------------------------------------------------------------------------
        \9\ Fishman, Eliot. ``Too Many People Are Skipping or Changing
    Medications Because They Are Too Expensive.'' Families USA, June 14,
    2021, https://familiesusa.org/resources/too-many-people-are-skipping-
    or-changingmedications-because-they-are-too-expensive/.
        \10\ Kirzinger, Ashley, Audrey Kearney, Mellisha Stokes, and
    Mollyann Brodie. ``KFF Health Tracking Poll--May 2021: Prescription
    Drug Prices Top Public's Health Care Priorities.'' KFF, June 3, 2021,
    https://www.kff.org/health-costs/poll-finding/kff-health-tracking-poll-
    may-2021/.

        In addition, policymakers should look to the Medicaid program.
    Medicaid provides health coverage for millions of Americans, including
    many with complex health needs. Prescription drug coverage is a key
    component of Medicaid for many beneficiaries, and Federal law requires
    manufacturers who want their drugs covered under the program to rebate
    a portion of drug payments to the government, referred to as the
    Medicaid Drug Rebate Program. It also includes an inflationary
    component that requires additional rebates when average manufacturer
    prices for a drug increase faster than inflation. Because of this,
    Medicaid covers almost all FDA-approved drugs produced by those
    manufacturers with an open formulary--meaning patients have access to
    ---------------------------------------------------------------------------
    novel, lifesaving medicines.

                                     ______

                   Question Submitted by Hon. James Lankford
        Question. The Affordable Care Act allows taxpayer funding for
    abortion on demand, but at the very least it acknowledged the right of
    States to prohibit abortion coverage on the exchanges and that abortion
    could not be required as an essential health benefit. Eleven of the 12
    States that have chosen not expand Medicaid have also chosen to
    prohibit abortion coverage on the exchanges. As written, the Democrats'
    reconciliation proposal would override these State laws and mandate
    coverage of, and funding for, abortions on demand, and transportation
    services to acquire them, for those under 138 percent of poverty and
    without cost sharing in 2024. However, the bill refers to abortions in
    an underhanded way.

        Do you agree that abortion coverage is mandated and funded by the
    proposed reconciliation bill's reference to family planning services
    ``which are not otherwise provided under such plan as part of the
    essential health benefits package'' (subsection (c) of section 137505)?

        Answer. I believe that access to a free and safe abortion is an
    essential component of women's health care, and that women should be
    trusted to make their own health-care decisions. It is critical that we
    repeal the Hyde Amendment and ensure coverage for the full spectrum of
    reproductive health care under Medicaid and marketplace plans. That
    said, the reconciliation text does not mandate or fund abortion
    coverage beyond the Hyde Amendment's limited scope of permitted
    services.

                                     ______

        Submitted by Hon. Tim Scott, a U.S. Senator From South Carolina

                              United States Senate

                              washington, dc 20510

                                October 15, 2021

    The Honorable Chiquita Brooks-LaSure
    Administrator
    Centers for Medicare and Medicaid Services
    7500 Security Boulevard
    Baltimore, MD 21244

    Dear Administrator Brooks-LaSure:

    We write to express our support for the Medicare Advantage (MA) program
    and our commitment to work with the Centers for Medicare and Medicaid
    Services (CMS) to ensure the program continues to provide high-quality,
    affordable care to over 26 million seniors and enrollees with
    disabilities who qualify for Special Needs Plans.\1\
    ---------------------------------------------------------------------------
        \1\ https://www.cms.gov/Research-Statistics-Data-and-Systems/
    Statistics-Trends-and-Reports/MCRAdvPartDEnrolData.

    Medicare beneficiaries, including many in rural communities, have
    access to more MA coverage options nationwide today than at any time
    during the last decade.\2\ MA's consistently high rates of beneficiary
    satisfaction and its growing enrollment are a demonstration of its
    value. Today, MA provides coverage to approximately 42 percent of all
    Medicare beneficiaries across the country, with enrollment in over half
    of the U.S. States meeting or exceeding this national average.
    ---------------------------------------------------------------------------
        \2\ https://connect.kff.org/medicare-advantage-enrollment-has-more-
    than-doubled-over-the-past-decade-see-the-latest-data-and-trends.

    Payment stability is critical to protecting and strengthening this
    popular choice for seniors, particularly since these seniors have paid
    into the Medicare program and expect to continue to receive the
    excellent, reasonably priced care offered by MA. As Congress and the
    Administration work together to find opportunities to promote better
    access to care and reduce costs, ensuring that MA's care delivery model
    remains strong and stable should remain a priority. The MA program is
    essential to fulfilling the CMS's commitment to improving and
    delivering high-quality, accessible, affordable, and equitable care
    ---------------------------------------------------------------------------
    choices to Medicare beneficiaries.

    MA delivers first-rate coverage to an increasingly diverse population.
    According to a recent analysis, growth in MA enrollment from 2009 to
    2018 was greatest among Black and Latino Americans, as well as,
    individuals dually eligible for Medicare and Medicaid. The latter group
    currently accounts for 31 percent of MA beneficiaries from a racial or
    ethnic minority, compared with 21 percent of racial or ethnic minority
    beneficiaries enrolled in Medicare Fee-for-Service (FFS).\3\ Diversity
    in enrollment is partly growing in response to the comprehensive
    benefits MA offers to its beneficiaries, including an expansion of zero
    premium plans, the addition of supplemental benefits aimed at
    addressing social determinants of health, and the establishment of
    Special Needs Plans. The increasing participation in MA of Black,
    Latino, and dual-eligible individuals underscores the critical
    importance of continuing to support coverage options that address the
    unique needs of a diverse beneficiary population and further improve
    health equity.\4\
    ---------------------------------------------------------------------------
        \3\ David J. Meyers, Vincent Mor, Momotazur Rahman, and Amal N.
    Trivedi. Growth in Medicare Advantage Greatest Among Black and Hispanic
    Enrollees. Health Affairs, 40, no. 6 (2021): 945-950.
        \4\ David J. Meyers, Vincent Mor, Momotazur Rahman, and Amal N.
    Trivedi. Growth in Medicare Advantage Greatest Among Black and Hispanic
    Enrollees. Health Affairs, 40, no. 6 (2021): 945-950.

    The comprehensive and innovative MA clinical care model promotes
    primary care and is providing seniors with value-based care that can be
    of a higher quality than Medicare FFS, resulting in improved health
    outcomes and cost savings. MA offers financial protections from high
    out-of-pocket costs not available in Medicare FFS, which is an
    important benefit for the more than half of MA beneficiaries that have
    low fixed incomes of less than $30,000 annually.\5\ The MA model
    prioritizes care coordination, early diagnosis, and treatment of
    chronic conditions, and is strengthened by MA's ability to offer
    benefits aimed at addressing social determinants of health including
    vision, dental, hearing, telehealth services, transportation, meal
    services and delivery, in-home support services, and other wellness
    benefits.
    ---------------------------------------------------------------------------
        \5\ https://www.ahip.org/wp-content/uploads/
    MA_Demographics_Report_2019.pdf.

    During the ongoing COVID-19 pandemic, MA is protecting and supporting
    seniors and individuals with disabilities by providing more care in the
    home through meal delivery, providing personal protective equipment,
    multifaceted beneficiary engagement, vaccine education, and delivery
    services to underserved communities. MA plans are also supporting
    ---------------------------------------------------------------------------
    beneficiaries by utilizing telehealth visits.

    To ensure this continuum of care, we stand ready to protect MA from
    payments cuts, which could lead to higher costs and premiums, reduce
    vital benefits, and undermine advances made to improve health outcomes
    and health equity for MA enrollees.

    We look forward to partnering with you to fulfill CMS's commitment to
    improving health-care access, quality, and affordability, and to
    advancing health equity. We are committed to building on the progress
    already made by protecting proven health-care coverage options like MA
    for the program's more than 26 million beneficiaries--including the
    millions of seniors we represent in our States.

    Sincerely,

    Kyrsten Sinema                      Tim Scott
    U.S. Senator                        U.S. Senator

    Gary C. Peters                      Shelly Moore Capito
    U.S. Senator                        U.S. Senator

    Jon Tester                          Todd Young
    U.S. Senator                        U.S. Senator

    Jacky Rosen                         Marco Rubio
    U.S. Senator                        U.S. Senator

    Joe Manchin III                     Deb Fischer
    U.S. Senator                        U.S. Senator

    Jeanne Shaheen                      Mark Kelly
    U.S. Senator                        U.S. Senator

    Angus S. King, Jr.
    U.S. Senator

                                     ______

               Putting Patients First: Innovative Solutions for
                     Prescription Drugs and Older Americans

    U.S. Senate
    Special Committee on Aging
    Senator Tim Scott (R-SC)
    Ranking Member
                                                         SEPTEMBER 2021

    EXECUTIVE SUMMARY

    ``God uses a lot of different things to get you where you need to be,''
    said James Deer, a lawn care businessman from Ulmer, SC, who, at the
    age of 59, faced a rare bone marrow cancer diagnosis.\1\ As he quickly
    discovered, treatments are scarce. Now 62, Mr. Deer is doing better
    after participating in a trial to treat his cancer with medication
    called AG-120. It produced a complete response.
    ---------------------------------------------------------------------------
        \1\ Birch, J. (2021, July 8). Clinical trial gives cancer patients
    new hope. MUSC. Retrieved July 29, 2021, from https://
    hollingscancercenter.musc.edu/news/archive/2021/07/08/musc-hollings-
    clinical-trial-gives-cancer-patients-new-hope.

    For Mr. Deer and countless others, particularly older Americans, access
    to treatments and the innovation that drives them makes all the
    difference, often, between life and death. Today's biomedical
    innovations bring about modern miracles that have extended lifespans by
    millions of years over the last 4 decades, which is cause for
    celebration, particularly for the United States Senate Special
    Committee on Aging.\2\ These advances ought to inspire wonder,
    appreciation, relief, and hope. They also deserve policymakers'
    support.
    ---------------------------------------------------------------------------
        \2\ Kurczy, S. (2019, February 12). Calculating the Benefits of
    Drugs. Ideas and Insights, https://www8.gsb.columbia.edu/articles/
    ideas-work/calculating-benefits-drugs.

    As part of their $3.5-trillion tax and spending plan, the Biden
    administration and Congressional Democrats are including H.R. 3, the
    Elijah E. Cummings Lower Drug Costs Now Act. This proposal reflects the
    very best of intentions--a commitment to care for each other, to
    support the most vulnerable, to better the lives of the suffering and
    the forgotten--by helping patients afford lifesaving medicine. The
    problem is that the Democrats' plan endeavors to remedy the current
    situation through price controls. In other words, Democrats propose the
    Federal Government should be in charge of deciding the price of
    treatments, instead of a competitive free marketplace sustained by
    ---------------------------------------------------------------------------
    companies driving innovation.

    This report serves to inform policymaking debate by exploring the
    consequences of H.R. 3 and price controls, which include long-term drug
    shortages (an almost 50-percent decline in access to medicines);\3\
    shattered innovation (a 50- to 90-percent decline in new medicines);\4\
    and bankrupt businesses (an economic loss in the trillions of
    dollars).\5\ Further, this report outlines policy options that will
    lower drug prices and expand access to treatment by way of four key
    mechanisms:
    ---------------------------------------------------------------------------
        \3\ PhRMA. Analysis of IQVIA Analytics Link and U.S. Food and Drug
    Administration (FDA), European Medicines Agency (EMA), Japan
    Pharmaceuticals and Medical Devices Agency (PMDA), Australia
    Therapeutic Goods Administration (TGA) and Health Canada data. April
    2021.
        \4\ Vital Transformation. International Reference Pricing Under
    H.R. 3 Would Devastate the Emerging Biotechnology Sector, Leading to 56
    Fewer New Medicines Coming to Market Over 10 Years.
        \5\ Tabarrok, A. (2011). Launching The Innovation Renaissance: A
    New Path to Bring Smart Ideas to Market Fast (TED Books Book 8). TED
    Books.

    1. Allowing seniors to have lower out-of-pocket costs for Medicare
    ---------------------------------------------------------------------------
    drugs;

    2. Expanding choices for older Americans through Medicare Part D;

    3. Supporting fair insulin prices in Medicare; and,

    4. Increasing individualized care like value-based arrangements.

    These policies will help older Americans find affordable treatments
    that meet their needs while maintaining the market dynamism that makes
    new medicine available in the first place. For Mr. Deer and those like
    him, innovation is hope.

    INTRODUCTION

    Research shows that since 1982, new drugs provided an extra 150 million
    years of life--and that the United States led the way with 719 new
    drugs.\6\ This is nothing short of miraculous. For seniors, and for all
    Americans, it is impossible to put a price on living longer and living
    better. Sadly, that is exactly what H.R. 3 would do, to tragic effect.
    ---------------------------------------------------------------------------
        \6\ Cowen, T. (2019, April 23). Frank Lichtenberg and the cost of
    saving lives through pharmaceuticals. Retrieved July 29, 2021, from
    https://marginalrevolution.com/marginalrevolution/2019/04/-frank-
    lichtenberg-and-the-cost-of-saving-lives-through-pharmaceuticals.html.

    Consider James Deer of South Carolina, whose life has been improved by
    innovative cancer medicine: gains from cancer treatments make up 73
    percent of the advances in surviving over the past 3 decades, and 1.3
    million people have survived cancer since 2000 because of new
    drugs.\7\, \8\ The first section of this report explains how
    H.R. 3 would place decades of medical advances at risk; the second
    section posits how Congress can affordably preserve and advance our
    nation's tremendous rhythm of developing breakthrough, lifesaving
    medical achievements.
    ---------------------------------------------------------------------------
        \7\ Seabury, S.A., Goldman, D.P., Gupta, C.N., et al. (2016).
    Quantifying Gains in the War on Cancer Due to Improved Treatment and
    Earlier Detection. Forum Health Econ Policy, 19(1), 141-156. doi:
    10.1515/fhep-2015-0028.
        \8\ MacEwan, J.P., Dennen, S., Kee, R., Ali, F., Shafrin, J., and
    Batt, K. (2020). Changes in mortality associated with cancer drug
    approvals in the United States from 2000 to 2016. J Med Econ, 23(12):
    1558-1569. doi: 10.1080/13696998.2020.1834403.
    ---------------------------------------------------------------------------
    H.R. 3, Pricing Out Innovation
    By institutionalizing Democrats' driving mechanism for lowering drug
    costs--Federal regulation of drug price caps--H.R. 3 is a compassionate
    idea that would lead to a disastrous outcome. Sadly, this proposal is a
    core component of their $3.5-
    trillion tax and spending plan to remake the economy. Here is how it
    would work: the Federal Government would tell manufacturers how much
    they can charge for medicine. The price could not exceed 1.2 times the
    average price in the United Kingdom, Canada, France, Germany,
    Australia, and Japan. Price controls would also be enforced.
    Enforcing Price Controls
    The Federal Government would set prices below this limit for some
    number of drugs in a given year. Manufacturers would pay a tax--as high
    as 95 percent--if they did not comply. If the federal government
    decided that manufacturers had asked for too high a price for a
    treatment in the past, they would be forced to pay even more. The six
    countries on which the plan bases its regulations and taxes strictly
    control drug prices to lower them. The hope is that the same would
    happen in the U.S. Historically, there is good reason to believe this
    hope is misplaced.
    The Problem With Price Controls
    Patients and families need lower prices and more options. Controls
    produce the opposite effect. Price controls limit consumer choice by
    forcing industry to cut investment in critical business aspects such as
    research and development, innovation compliance costs, and ultimately
    manufacturing and production. This has happened repeatedly throughout
    history. When the U.S. put price controls on oil and gas in the 1970s,
    production fell, and working people spent hours (and their paychecks)
    in long lines waiting to fill their tanks.\9\ The controls failed to
    lower prices, but prices did fall when President Reagan repealed the
    regulations. For economists, this is common sense.
    ---------------------------------------------------------------------------
        \9\ Rafuse, J. (2018, August 24). History 101: Price controls don't
    work, chicagotribune.com. https://www.chicagotribune.com/news/ct-xpm-
    2007-06-07-0706061080-story.html.
    ---------------------------------------------------------------------------
    Lessons Learned: Good Intentions, Bad Policy
    Today, economists consider the United States' experiment with price
    controls on gas a canonical example of well-intentioned but
    counterproductive regulation.\10\ In extreme cases, like Venezuela or
    the Soviet Union, price controls can ruin the economy.\11\ While H.R. 3
    alone is not an extreme case, it is a step in the wrong direction that
    could lead to extreme and harmful effects for seniors in need.
    Policymakers should remember history's lessons--price controls limit
    the availability of goods and services, and would restrict access to
    prescription drugs.
    ---------------------------------------------------------------------------
        \10\ Sumner, S. (2021, June 23). Temporary insanity (learning from
    mistakes). Econlib, https://www.econlib.org/temporary-insanity-
    learning-from-mistakes/.
        \11\ The Economist. (2021, February 11). Cuba and Venezuela open
    up, hesitantly, to the market, https://www.economist.com/the-americas/
    2021/02/11/cuba-and-venezuela-open-up-hesitantly-to-the-market.
    ---------------------------------------------------------------------------
    The Same Shortage Story for Prescription Drugs
    In 21 countries using price controls, according to one review, access
    to treatments is limited.\12\ Cancer drugs are limited in Canada.\13\
    Cardiology drugs are denied to patients in France, and multiple
    sclerosis treatments to patients in the United Kingdom.\14\ In
    Australia, patients are left with outdated drugs.\15\ Over 400 new
    medicines were available to almost 90 percent of Americans in the last
    decade, compared to only 52 percent of the H.R. 3 countries.\16\ U.S.
    patients have access to 95 percent or more medicines for rare diseases,
    cancer, vision, mental illness, HIV, Parkinson's, epilepsy, cystic
    fibrosis, and multiple sclerosis. Patients in the H.R. 3 countries can
    access 70 percent or less of these medicines.\17\ These shortages point
    to significant declines in future innovation.
    ---------------------------------------------------------------------------
        \12\ Kanavos, P., Fontrier, A.M., Gill, J., and Efthymiadou, O.
    (2019). Does external reference pricing deliver what it promises?
    Evidence on its impact at national level. The European Journal of
    Health Economics, 21(1), 129-151, https://doi.org/10.1007/s10198-019-
    01116-4.
        \13\ Ghoussoub, M. (2018, January 20). A tale of 2 friends with
    breast cancer; 1 has coverage for costly drug, the other forced to pay.
    Canadian Broadcasting Corporation, https://www.
    cbc.ca/news/canada/british-colum-bia/a-tale-of-2-friends-with-breast-
    cancer-1-has-coverage-for-costly-drug-the-other-forced-to-pay-
    1.4495123.
        \14\ Matthews-King, A. (2018, September 10). NHS will not fund MS
    drug which can delay need for wheelchair by up to 7 years. The
    Independent, https://www.independent.co.uk/news/health
    /multiple-sclerosis-ms-wheelchair-progressive-nhs-drug-symptoms-nice-
    ocrelizumab-a8528071.
    html.
        \15\ Layt, S. (2019, July 2). Patients take outdated drugs because
    of PBS restrictions: UQ doctor. The Sydney Morning Herald, https://
    www.smh.com.au/national/queensland/patients-take-outdated-drugs-
    because-of-pbs-restrictions-uq-doctor-20190702-p523gt.html.
        \16\ PhRMA. Analysis of IQVIA Analytics Link and U.S. Food and Drug
    Administration (FDA), European Medicines Agency (EMA), Japan
    Pharmaceuticals and Medical Devices Agency (PMDA), Australia
    Therapeutic Goods Administration (TGA) and Health Canada data. April
    2021.
        \17\ PhRMA. (2021). Analysis of IQVIA Analytics Link and U.S. Food
    and Drug Administration (FDA), European Medicines Agency (EMA), Japan
    Pharmaceuticals and Medical Devices Agency (PMDA), Australia
    Therapeutic Goods Administration (TGA) and Health Canada data.
    ---------------------------------------------------------------------------

     SHORTING THE FUTURE: INNOVATION, MEDICINE, AND THE INVISIBLE PATIENT

    In public policy, the future lives affected by medicine innovation
    should not be invisible.\18\ Hundreds of thousands more may have died
    during the pandemic without the innovation of American vaccines.
    Dorothy Nielsen, 88, from Mt. Pleasant, SC writes, ``[t]he
    biopharmaceutical industry has really done amazing work creating not
    just one, but multiple vaccines. The research and development these
    amazing scientists have created should make all of us proud.''\19\ She
    adds, ``[i]t is important that these companies continue to strive for
    innovation on other diseases that will remain once COVID-19 has been
    tamed.'' The Congressional Budget Office (CBO) says that H.R. 3 would
    prevent a substantial amount of new drugs from coming to market.\20\
    Price controls could cost businesses almost $2 trillion, a death
    sentence--unless they severely slash investment in new treatments.\21\
    As a result, consumers would lose access to more medications than the
    CBO predicts.\22\ Lost access would have dire consequences for seniors.
    ---------------------------------------------------------------------------
        \18\ Tabarrok, A. (2021, January 29). The Invisible Graveyard Is
    Invisible No More. Retrieved July 29, 2021, from https://
    marginalrevolution.com/marginalrevolution/2021/01/the-invisible-
    graveyard-is-invisible-no-more.html.
        \19\ Nielsen, D.R. (2021, March 9). Letter to the Editor:
    Scientists have done a remarkable job. Retrieved July 29, 2021, from
    https://www.postandcourier.com/moultrie-news/opinion/letter-to-the-
    editor-scientists-have-done-a-remarkable-job/article_4f85035c-7c3f-
    11eb-87fc-1f160dc37643.
    html.
        \20\ Congressional Budget Office. H.R. 3, Elijah E. Cummings Lower
    Drug Costs Now Act. (2019, December 10). Congressional Budget Office,
    https://www.cbo.gov/publication/55936.
        \21\ Stengel, K., Cole, M., and Brantley, K. (2021, July 6). Impact
    of H.R.3 as Passed by the House on Federal Spending and Drug
    Manufacturer Revenues. Avalere Health, https://avalere.com/insights/
    impact-of-h-r-3-scenarios-on-federal-spending-and-drug-manufacturer-
    revenues.
        \22\ Axelsen, K., and Jayasuriya, R. (2021). Government
    Scorekeepers Likely Underestimate the Impact of Lower Drug Costs Now
    Act (H.R. 3) on Investment in Innovative Medicines: Brief. Charles
    River Associates.
    ---------------------------------------------------------------------------
    The Tragedy of Lost Innovation
    Price controls led to 25-percent fewer new drugs, and 2 years of lost
    life expectancy, according to one study.\23\ New drugs also reduce
    disability by up to 30 percent, according to another.\24\ Research
    discovered that in 30 countries, drug innovation made up three-fourths
    of a 1.74-year increase in life expectancy.\25\ For older Americans in
    particular, these are not dry academic numbers on a spreadsheet; they
    are marked improvements in the quality of daily life. Innovative drug
    breakthroughs represent precious time on our livelihood and mortality
    clocks, the sacrifice of which would be an immeasurable tragedy.
    ---------------------------------------------------------------------------
        \23\ Moreno, G., van Eijndhoven, E., Benner, J., and Sullivan, J.
    (2017). The Long-Term Impact of Price Controls in Medicare Part D.
    Forum for Health Economics and Policy, 20(2), https://doi.org/10.1515/
    fhep-2016-0011.
        \24\ Lichtenberg, F.R. (2019). The impact of access to prescription
    drugs on disability in eleven European countries. Disability and Health
    Journal, 12(3), 375-386, https://doi.org/10.1016/j.dhjo.2019.01.003.
        \25\ Lichtenberg, F. (2012). Pharmaceutical Innovation and
    Longevity Growth in 30 Developing and High-income Countries, 2000-2009.
    National Bureau of Economic Research. Published, https://doi.org/
    10.3386/w18235.
    ---------------------------------------------------------------------------
    Pricing Economic Growth Out of the Market
    Research suggests that if cancer mortality fell by 10 percent,
    Americans would gain $5 trillion--and maybe more if new drugs drove the
    decline.\26\ Yet H.R. 3 would curtail that innovation, forfeiting
    trillions. It would hurt small businesses that make new medicines the
    most. The investments on which they rely would dry up as regulations
    reduced their income by almost 60 percent.\27\ Price controls would
    eliminate 4 percent of pharmaceutical jobs.\28\ On top of overall
    economic decline, new drugs from small businesses would fall by 90
    percent, which means 16 fewer medications for ovarian cancer, prostate
    cancer, leukemia, and breast cancer; 10 fewer for hypertension,
    pulmonary fibrosis, and brain cancer; and two fewer for diabetes and
    COPD.\29\ On the ground, the magnitude of this impact becomes even
    clearer.
    ---------------------------------------------------------------------------
        \26\ Tabarrok, A. (2011). Launching The Innovation Renaissance: A
    New Path to Bring Smart Ideas to Market Fast (TED Books Book 8). TED
    Books.
        \27\ Vital Transformation. International Reference Pricing Under
    H.R. 3 Would Devastate the Emerging Biotechnology Sector, Leading to 56
    Fewer New Medicines Coming to Market Over 10 Years.
        \28\ Moreno, G., van Eijndhoven, E., Benner, J., and Sullivan, J.
    (2017). The Long-Term Impact of Price Controls in Medicare Part D.
    Forum for Health Economics and Policy, 20(2), https://doi.org/10.1515/
    fhep-2016-0011.
        \29\ Vital Transformation. International Reference Pricing Under
    H.R. 3 Would Devastate the Emerging Biotechnology Sector, Leading to 56
    Fewer New Medicines Coming to Market Over 10 Years.
    ---------------------------------------------------------------------------
    H.R. 3 on the Ground: South Carolina
    The biopharmaceutical sector contributes almost $7 billion to South
    Carolina's economy every year, and nearly 25,000 jobs.\30\ The state
    has 28 cutting-edge plants involved in creating new medicines.\31\ H.R.
    3 would put them in jeopardy. It would do the same to over 18,000 South
    Carolinians who participated in clinical trials in 2017, and to the
    $290 million in yearly tax revenue generated by industry.\32\ For South
    Carolina seniors, price controls would even impact retirement--three-
    quarters of company shares are held by mutual funds, endowments, and
    pension funds. Policymakers should also keep in mind that the lives of
    everyday Americans are the driving concern behind these figures.
    ---------------------------------------------------------------------------
        \30\ TEConomy Partners. (2019). The Economic Impact of the
    Biopharmaceutical Industry: U.S. and State Estimates.
        \31\ NDP Analytics. (2021). Analysis of the US FDA's Drug
    Establishments Current Registration Sit.
        \32\ TEConomy Partners. (2019). The Economic Impact of the
    Biopharmaceutical Industry: U.S. and State Estimates.
    ---------------------------------------------------------------------------
    A Name Behind the Numbers
    William Donevant, 71, of Georgetown, SC said, ``[w]e haven't gone
    fishing in a while.''\33\ Three years into retirement, he was diagnosed
    with a rare cancer. As is too often the situation, his case was hard to
    treat. He is in remission thanks to CAR-T-cell therapy, which changes
    genetics in the immune system. He now finds happiness in resuming his
    life, and in time spent with his granddaughter. ``Without chemotherapy,
    it will set me free.''
    ---------------------------------------------------------------------------
        \33\ Birch, J. (2021, June 18). Cancer patients get second chance
    at life, thanks to new CAR-T-cell therapy. Retrieved July 29, 2021,
    from https://hollingscancercenter.musc.edu/news/archive/2021/06/18/
    cancer-patients-get-second-chance-at-life-thanks-to-new-car-t-cell-
    therapy.

    Policy should not curb the innovation that gets Mr. Donevant his life
    ---------------------------------------------------------------------------
    back. It should help him resume activities he loves, like fishing.

    Fortunately, there are common-sense, achievable paths forward.

    POLICY SOLUTIONS

    Americans are blessed with the best medicine in the world. What older
    Americans need and deserve is more of it, at lower prices and a quicker
    pace. Instead of pursuing a rigid pricing dictate, Congress and the
    Administration should adopt practical, achievable strategies for
    promoting innovation and lower consumer costs, including:

          An out-of-pocket cap for Part D;
          Allowing plan sponsors to offer more plan options;
          Codifying the insulin demonstration program to lower insulin
    prices introduced under President Trump's Administration; and
          Modernizing value-based arrangements.
    Medicare Part D: The Value of Choice
    Created in 2006, Medicare Part D provides seniors access to private,
    stand-alone prescription drug plans or Medicare Advantage prescription
    drug plans that cover a wide range of medication. Part D is a
    bipartisan success story, keeping costs low by empowering patients
    through choice and a market-oriented structure, not heavy-handed
    bureaucracy. In fact, research finds that Part D's market mechanisms
    are responsible for its low costs.\34\ This is exactly the kind of
    initiative to which policymakers should look when considering the
    affordability of medicines for older Americans. Some practical steps to
    modernize Part D would lead to significant gains for patients.
    ---------------------------------------------------------------------------
        \34\ Decarolis, F., Polyakova, M., and Ryan, S. P. (2020). Subsidy
    Design in Privately Provided Social Insurance: Lessons from Medicare
    Part D. Journal of Political Economy, 128(5), 1712-1752, https://
    doi.org/10.1086/705550.
    ---------------------------------------------------------------------------
    Out-of-Pocket Cap for Part D
    Part D beneficiaries pay a monthly premium, an annual deductible, and
    copayments or coinsurance. Their relative share of overall costs is
    low. The lack of an annual cap on out-of-pocket spending, however, can
    expose them to dramatic costs, according to a new analysis. In 2019,
    nearly 1.5 million beneficiaries paid above the catastrophic threshold.
    Over 3.6 million older Americans faced that hardship in the last
    decade.\35\ For seniors, the majority of whom live on fixed incomes,
    establishing a reasonable, annual cap on out-of-pocket costs would help
    better support their finances and deliver more peace of mind. Enhancing
    seniors' access to Part D plans would similarly contribute to lower
    overall costs.
    ---------------------------------------------------------------------------
        \35\ Millions of Medicare Part D Enrollees Have Had Out-of-Pocket
    Drug Costs High Enough to Exceed the Catastrophic Threshold Over Time.
    (2021, July 23). KFF, https://www.kff.org/medicare/press-release/
    millions-of-medicare-part-d-enrollees-have-had-out-of-pocket-drug-
    costs-high-enough-to-exceed-the-catastrophic-threshold-over-time/.
    ---------------------------------------------------------------------------
    Increase Plan Choice for Part D Beneficiaries
    Part D works best for seniors because of time-tested principles like
    choice, flexibility, and a fair role for the market. Unfortunately,
    Obamacare shrunk the number of available Part D plans offered, thereby
    curtailing choice by limiting older Americans to only one basic plan
    benefit and two enhanced plans per service area. Because of this
    arbitrary cap, seniors now lack access to innovative, flexible plans.
    Repealing this intrusive regulation would give them more options--plans
    that best fit their needs, not the interests of distant bureaucrats,
    improving access to medicines. Supporting patients' unique health needs
    was also the inspiration for President Trump's cost-cutting insulin
    initiative.
     Codify the Trump Administration Insulin Demonstration Program
    As seniors throughout the country know all too well, diabetes is
    becoming an increasingly pressing health challenge. It is affecting
    more Americans in recent years. In 2018, 34 million adults (13 percent)
    had diabetes--including 27 percent of those aged 65 years and
    older.\36\ This impacts costs for many vulnerable seniors. A recent
    study found that Part D beneficiaries' spending on insulin products
    quadrupled between 2007 and 2017, rising from $236 million to $934
    million. While coverage of insulin products varies across Part D plans,
    the problem is generally in the coverage gap, which has a coinsurance
    rate of 25 percent. This coverage gap pushes out-of-pocket costs for
    older Americans as high as $100 per insulin prescription.\37\
    ---------------------------------------------------------------------------
        \36\ Centers for Disease Control and Prevention. National Diabetes
    Statistics Report 2020: Estimates of Diabetes and Its Burden in the
    United States, https://www.cdc.gov/diabetes/pdfs/data/statistics/
    national-diabetes-statistics-report.pdf#page=4.
        \37\ Cubanski, J., Neuman, T., True, S., and Damico, A. (2020, June
    22). Insulin Costs and Coverage in Medicare Part D. KFF, https://
    www.kff.org/medicare/issue-brief/insulin-costs-and-coverage-in-
    medicare-part-d/.

    Responding to this price spike, President Trump created a voluntary
    Part D benefit allowing seniors to access insulin for $35 or less a
    month.\38\ Absent this flexibility, they would have to pay much more.
    According to the Kaiser Family Foundation, President Trump's program
    cut older Americans' insulin costs by almost 30 percent.\39\ This is a
    remarkable gain for seniors' mental, physical, and financial well-
    being, and policymakers should make it permanent to address their
    health needs in a flexible manner. They should also endorse broader
    measures to expand flexibility in Medicare, such as value-based
    arrangements (VBAs).
    ---------------------------------------------------------------------------
        \38\ Max Richtman. (2020, June 8). Trump's $35 Insulin Plan: A
    Nickel Solution to a Billion-Dollar Problem. Morning Consult, https://
    morningconsult.com/opinions/trumps-35-insulin-plan-a-nickel-solution-
    to-a-billion-dollar-problem/.
        \39\ Cubanski, J., Neuman, T., True, S., and Damico, A. (2020, June
    22). Insulin Costs and Coverage in Medicare Part D. KFF, https://
    www.kff.org/medicare/issue-brief/insulin-costs-and-coverage-in-
    medicare-part-d/.
    ---------------------------------------------------------------------------
    Modernize Value-Based Arrangements
    Traditionally Medicare pays ``fee-for-service.'' It reimburses for each
    item or service provided. By incentivizing hospitals, physicians, and
    other providers to focus on service quantity over quality, the fee-for-
    service model better serves limited health-care access than it does
    older Americans. VBAs help address this problem.

    VBAs reward providers who focus on quality over quantity. They
    prioritize individual care and patient outcomes. They also reduce costs
    for taxpayers, no longer on the hook for perverse incentives. By
    expanding and modernizing the number of Medicare VBAs, policymakers can
    help ensure that seniors are receiving the very best care, at
    affordable cost, tailored to their needs.
    Reform for the future
    ``I do hope that when the pandemic is over,'' economist Alex Tabarrok,
    a George Mason University health expert, said, ``we don't forget that
    for patients with life-threatening diseases, it's always been an
    emergency.''\40\
    ---------------------------------------------------------------------------
        \40\ Tabarrok, A. (2021b, July 30). Welcome to the Club. Retrieved
    August 2, 2021, from https://marginalrevolution.com/marginalrevolution/
    2021/07/welcome-to-the-club.html.

    Mr. Tabarrok echoes South Carolina's Dorothy Nielsen in this sentiment,
    which is worth emphasizing: the Food and Drug Administration's (FDA)
    imposition of overbearing standards interferes with access to vastly
    more treatments than COVID vaccines. Innovation saves lives, now and in
    ---------------------------------------------------------------------------
    the future.

    Streamlining the FDA's review process, boosting patient voice in its
    decisions, and allowing innovative trial designs will encourage the
    growth of lifesaving treatments. It is imperative for Congress and the
    administration to constantly search for effective measures that achieve
    this kind of regulatory fairness and flexibility--one of the best
    possible ways to put patients first.

    CONCLUSION

    For James Deer, Dorothy Nielsen, and William Donevant, and for so many
    older Americans across the country, metrics indicating a higher quality
    of life or better life expectancy are not just statistics. They
    represent the most valuable resource we have: time--more time to share
    with a grandchild, laugh with a spouse, or just go fishing.

    Putting patients first by expanding access to quality treatments is and
    should be an urgent goal for policymakers. Sharing the medical
    innovation miracle's bounty is a moral priority. There are strategies
    and paths available to achieve this goal--to help seniors and all
    Americans live well, and with dignity--that avoid the pricing pitfalls
    of H.R. 3. Quality, affordable treatments can be available for patients
    without sharp shortages, diminished innovation, and economic losses.
    Policy today can and should effectively support patients, taxpayers,
    and the competitive marketplace that has extended and improved so many
    lives in the United States. Let us work to diligently legislate
    precious time back to ourselves and our loved ones for the chance to
    enjoy more tomorrows together.

                                     ______

         Submitted by Hon. John Thune, a U.S. Senator From South Dakota

    CONGRESSIONAL BUDGET OFFICE
    U.S. Congress
    Washington, DC 20515
                                            Phillip L. Swagel, Director

                                October 19, 2021

    Honorable Jason Smith
    Ranking Member
    Committee on the Budget
    U.S. House of Representatives
    Washington, DC 20515

    Re: Provisions in Reconciliation Legislation That Would Affect Health
            Insurance Coverage of People Under Age 65

    Dear Congressman:

    This letter responds to your request for information about the
    Congressional Budget Office's cost estimates for specified health-care
    provisions contained in the reconciliation legislation being considered
    by the House of Representatives. The relevant sections would extend
    eligibility for and increase the amount of premium tax credits and
    cost-sharing reductions available for health insurance through the
    marketplaces established under the Affordable Care Act (ACA). They also
    would establish a federal Medicaid program for States that have not
    expanded Medicaid under the ACA.

    The reconciliation process stems from S. Con. Res. 14, the Concurrent
    Resolution on the Budget for Fiscal Year 2022, which instructed 13
    committees to recommend legislative changes that would affect deficits
    over the 2022-2031 period.\1\ As part of that process, the House
    Committee on Ways and Means and the House Committee on Energy and
    Commerce approved legislation on September 15, 2021. On September 27,
    2021, the House Committee on the Budget combined the recommendations of
    the committees and reported H.R. 5376, a bill to provide for
    reconciliation pursuant to title II of S. Con. Res. 14.
    ---------------------------------------------------------------------------
        \1\ Section 2002 of S. Con. Res. 14 instructed 12 committees in the
    House of Representatives to recommend legislation that would increase
    the deficit by up to $1.975 trillion and instructed the Committee on
    Ways and Means to recommend legislation that would decrease the deficit
    by at least $1 billion. For more information, see Megan S. Lynch, S.
    Con. Res. 14: The Budget Resolution for FY 2022, Report R46893, version
    2 (Congressional Research Service, September 1, 2021), https://
    go.usa.gov/xMF57.

    CBO has not yet completed a cost estimate of H.R. 5376 as a whole. This
    letter provides estimates for the provisions in that bill for which you
    have requested additional information.

     Estimated Federal Costs and Changes in Health Insurance Coverage

    You asked how the reconciliation legislation would affect health
    insurance coverage for people under age 65. CBO and the staff of the
    Joint Committee on Taxation (JCT) have analyzed the following
    provisions:

          Section 137501--Improve Affordability and Reduce Premium Costs
    of Health Insurance for Consumers;

          Sections 137504, 137505, and 30701: provisions affecting
    coverage for people with low income, particularly those whose income is
    below 138 percent of the federal poverty level (FPL)--Temporary
    Expansion of Health Insurance Premium Tax Credits for Certain Low-
    Income Populations, Ensuring Affordability of Coverage for Certain Low-
    Income Populations, and Closing the Medicaid Coverage Gap;

          Section 137507--Special Rule for Individuals Receiving
    Unemployment Compensation; and

          Section 137502--Modification of Employer-Sponsored Coverage
    Affordability Test in Health Insurance Premium Tax Credit.

    CBO and JCT estimate that enacting those provisions would increase
    deficits by $553.2 billion over the 2022-2031 period (see Table 1).
    Estimates for all provisions account for interactions with section
    137501.

    Over the 2022-2031 period, CBO and JCT estimate, enacting the
    provisions discussed here would result in a net decline of about 3.9
    million people without health insurance. The components of that change
    (which do not sum to the total because of rounding) would be as
    follows:

          4.0 million increase in Medicaid enrollment;
          3.6 million increase in subsidized nongroup enrollment;
          1.0 million decrease in unsubsidized nongroup enrollment; and
          2.8 million decrease in enrollment in employment-based coverage.

    CBO and JCT estimate that under the legislation, in 2031, 23.6 million
    people under the age of 65 would be uninsured--a reduction from the
    current-law total of 27.7 million people.

    CBO and JCT classified people who do not have health insurance into
    mutually exclusive groups on the basis of the most heavily subsidized
    option available to them.

    Of those who would be uninsured under the bill's provisions, CBO and
    JCT estimate, 24 percent would be eligible for Medicaid or the
    Children's Health Insurance Program (CHIP), 18 percent would be
    eligible for a premium tax credit with a dollar value greater than zero
    through the marketplaces, 30 percent would have access to employment-
    based coverage, and the remaining 28 percent would be ineligible for
    subsidized coverage.

    Background

    Since the ACA was enacted, 38 States and the District of Columbia have
    expanded Medicaid eligibility to all adults under the age of 65 whose
    income is up to 138 percent of the FPL. People generally are not
    eligible for subsidies through the health insurance marketplaces under
    current law if their income is below 100 percent of the FPL ($12,880
    for a single person or $26,500 for a family of four in 2021).

    Under current law, people with a modified adjusted gross income between
    100 percent and 400 percent of the FPL who are lawfully present in the
    United States are eligible for premium tax credits if they are not
    eligible for public coverage (through Medicaid or CHIP, for example)
    and if they do not have an affordable offer of
    employment-based coverage. For 2021 and 2022, however, the American
    Rescue Plan Act of 2021--enacted in March 2021--expanded eligibility
    for the tax credits to include people whose income is above 400 percent
    of the FPL.

    Under current law, people can use those credits to lower their monthly
    out-of-pocket costs for premiums. The amount is calculated as the
    difference between the benchmark premium for health insurance (that is,
    the premium for the second lowest cost silver plan available in the
    region) and a specified maximum contribution, expressed as a percentage
    of income.

    For most people, a silver plan pays about 70 percent of the total cost
    of covered benefits. (That ``actuarial value'' of the plan would
    require enrollees to pay out-of-pocket costs of about 30 percent, on
    average). Cost-sharing reductions (CSRs) effectively increase the
    actuarial value of silver plans for people whose income is between 100
    and 250 percent of the FPL, as follows:

          Between 100 percent and 150 percent of the FPL, the actuarial
    value increases to 94 percent;

          Between 150 percent and 200 percent of the FPL, the actuarial
    value increases to 87 percent; and

          Between 200 percent and 250 percent of the FPL, the actuarial
    value increases to 73 percent.

    Because there is no appropriation under current law to pay for CSRs,
    most insurers use ``silver loading''--they charge higher premiums for
    silver plans offered through the marketplaces.

    Basis of Estimate

    The provisions considered in this estimate would cause a net increase
    in the deficit, as follows:

          $209.5 billion under section 137501, Improve Affordability and
    Reduce Premium Costs of Health Insurance for Consumers;

          $323.1 billion under sections 137504, 137505, and 30701, which
    concern coverage for people with low income;

          $10.6 billion under section 137507, Special Rule for Individuals
    Receiving Unemployment Compensation; and

          $10.8 billion under section 137502, Modification of Employer-
    Sponsored Coverage Affordability Test in Health Insurance Premium Tax
    Credit.

    Improve Affordability and Reduce Premium Costs of Health Insurance for
    Consumers. Section 137501 would extend the enhanced premium tax credits
    provided by the American Rescue Plan Act. For 2023 and beyond, the
    legislation would increase subsidies for people whose income is below
    400 percent of the FPL and extend eligibility to people whose income is
    above that level (see Table 2).

    CBO and JCT estimate that section 137501 would increase Federal
    deficits by $209.5 billion over the 2022-2031 period as the result of
    increased direct spending of $119.7 billion and revenue reductions of
    $89.8 billion. Those net effects primarily reflect a $259.0 billion
    increase in premium tax credits for health insurance obtained through
    the marketplaces partially offset by higher revenues. Those revenues
    would increase because taxable wages would increase as employment-based
    coverage declines. CBO and JCT estimate that about 10 percent of the
    estimated increase in premium tax credits would stem from the
    enrollment of people whose income is above 700 percent of the FPL.

    CBO and JCT expect that section 137501 would have a twofold effect on
    health insurance coverage obtained through the marketplaces. First,
    most enrollees who have subsidies under current law would be eligible
    for enhanced subsidies that would lower their out-of-pocket costs for
    premiums. Second, subsidies would be extended to include some people
    who will lose eligibility after 2022 under current law. CBO and JCT
    anticipate that, in addition to reducing current enrollees' out-of-
    pocket premium costs, the enhanced subsidies would attract more
    enrollees to the marketplaces. CBO and JCT estimate that those
    additional enrollees would account for $167.2 billion of the increase
    in premium tax credits and that current-law enrollees would account for
    the remaining $91.8 billion.

    CBO and JCT estimate that enacting section 137501 would increase the
    number of people who have coverage through the marketplaces by 3.4
    million, on average, over the 2022-2031 period. The agencies also
    estimate that the income of 65 percent of those who would not have
    enrolled without that provision would be above 400 percent of the FPL.
    For people whose income is more than 600 percent and 700 percent of the
    FPL, those estimates are 20 percent and 10 percent, respectively.

    The estimated increase in marketplace enrollment consists of 1.4
    million fewer uninsured people, 600,000 fewer people with nongroup
    coverage purchased outside of the marketplaces, and 1.6 million fewer
    people with employment-based coverage. The estimated reduction in
    employment-based coverage is primarily driven by a reduction in offers
    as a response to the increased subsidies for coverage through the
    marketplaces. CBO and JCT estimate that 200,000 people would enroll in
    coverage through Medicaid and CHIP as a result of that reduction in
    offers of employment-based coverage.

    Provisions Affecting Coverage for People With Low Income. Beginning in
    2022, the bill would extend subsidized coverage to people whose income
    is below 100 percent of the FPL who otherwise meet eligibility
    requirements.

    For each year from 2022 to 2024, sections 137504 and 137505 would:

          Expand access to subsidized coverage through the marketplaces by
    extending eligibility for premium tax credits and CSRs to people whose
    income is below 100 percent of the FPL;

          Expand eligibility for premium tax credits and CSRs to people
    whose income is below 138 percent of the FPL who have access to an
    offer of employment-based coverage that is considered affordable under
    the ACA;

          Modify the subsidy recapture and tax-filing requirements for
    people whose income is below 138 percent of the FPL; and

          Appropriate funds for outreach and education.

    For 2023 and 2024, section 137505 also would increase CSRs for eligible
    enrollees whose income is below 138 percent of the FPL from the
    current-law actuarial value of 94 percent to 99 percent. Because
    funding for CSRs has not been appropriated under current law, most
    insurers use silver loading to cover those costs. Under section 137505,
    the Federal Government would directly reimburse insurers for a portion
    of the cost of CSRs for eligible people whose income was below 138
    percent of the FPL in 2023 and 2024. CBO and JCT expect that most
    insurers would continue to use silver loading to finance the remaining
    costs.

    For 2024 only, section 137505 would provide marketplace enrollees whose
    income was under 138 percent of the FPL with additional benefits, such
    as subsidies for transportation to medical appointments, that currently
    are covered by State Medicaid programs but not required for marketplace
    plans.

    Starting in 2025, section 30701 would establish a federal Medicaid
    program to provide coverage to adults whose income is up to 138 percent
    of the FPL and who reside in a State that has not expanded its program.
    The Secretary of the Department of Health and Human Services would be
    required to administer the program through third-party entities and
    under contracts with Medicaid managed care organizations. The Federal
    program would be required to provide health-care services and enrollee
    protections that are consistent with the services and protections
    provided to adults residing in States with programs as expanded under
    the ACA.

    In addition, the section would require States to maintain their
    Medicaid expansions or pay the Federal Government an amount
    approximately equal to the expenditures associated with maintaining
    expansions. That requirement would apply to States that had expanded
    their Medicaid programs as of January 1, 2022, but subsequently
    terminate those expansions. CBO expects that such a requirement would
    cause most States to maintain their expansion programs rather than have
    the new Federal program cover their adult residents. As a result, CBO
    estimates that over the 2025-2031 period, States that continued their
    expansion programs would spend $86.6 billion to operate those programs;
    States that terminated their expansion programs would pay the Federal
    Government $3.6 billion.

    After accounting for the effects of section 137501, CBO and JCT
    estimate that enacting sections 137504, 137505, and 30701 would
    increase Federal deficits by $323.1 billion over the 2022-2031 period:
    An increase in direct spending of $335.6 billion would be partially
    offset by an increase in revenues of $12.5 billion. Those effects
    reflect a $390.0 billion net increase in Medicaid outlays and $27.2
    billion in administrative costs, partially offset by a $75.6 million
    net decrease in subsidies for health insurance obtained through the
    marketplaces along with other smaller effects.

    CBO and JCT estimate that enacting sections 137504, 137505, and 30701
    would increase the number of adults who enroll in Medicaid, on average,
    by 3.8 million annually over the 2022-2031 period. That increase would
    result, on average, in 2.3 million fewer uninsured people per year,
    700,000 fewer people with nongroup coverage, and 900,000 fewer people
    with employment-based coverage. The estimated effect on the number of
    people with employment-based coverage is primarily driven by fewer
    people taking up an offer of health insurance coverage.

    CBO and JCT estimate that over the 2022-2024 period, during which
    eligibility for marketplace subsidies would be extended to people whose
    income was below 100 percent of the FPL, enrollment in nongroup
    coverage would increase by 2.3 million people annually, on average. The
    estimated increase consists of 1.7 million fewer uninsured people,
    300,000 fewer people with employment-based coverage, and 200,000 fewer
    people enrolled in Medicaid.

    After establishment of the Federal Medicaid program, Medicaid
    enrollment would increase by 5.6 million, on average over the 2025-2031
    period, CBO and JCT estimate. That projected increase consists of an
    estimated 6.4 million people enrolling in the Federal Medicaid program
    established by section 30701, partially offset by a decrease of 800,000
    people enrolled in State-expanded Medicaid programs. The estimated
    reduction is associated with CBO's expectation that States that would
    have expanded after 2021 (according to the agency's baseline
    projections) would not do so and that few States that already have
    expanded would terminate their expansions once the Federal program was
    implemented. CBO and JCT expect that people in those States would
    instead enroll in the Federal Medicaid program. According to CBO and
    JCT's estimates, the net increase in Medicaid enrollment would result
    in 2.5 million fewer people being uninsured, 1.9 million fewer people
    having nongroup coverage, and 1.1 million fewer people with employment-
    based coverage.

    Special Rule for Individuals Receiving Unemployment Compensation. Under
    current law, eligible people may receive a premium tax credit for
    health insurance through the marketplaces that equals the difference
    between the benchmark premium and a maximum contribution specified as a
    percentage of household income. (CBO and JCT estimated the effects of
    section 137507 relative to section 137501; for the maximum income
    contribution percentages for 2031 under section 137501, see Table 2 at
    the end of this estimate.)

    Section 137507 would increase the amount of the premium tax credit for
    people who receive unemployment benefits for any length of time in a
    year between 2022 and 2025. Under that provision, people whose
    household income was above 100 percent of the FPL after excluding
    unemployment benefits, and who are otherwise eligible for premium tax
    credits, would receive the same credit available to them if their
    income was 150 percent of the FPL in the year they receive unemployment
    benefits.

    After accounting for the effects of section 137501, CBO and JCT
    estimate that section 137507 would increase Federal deficits by $10.6
    billion over the 2022-2031 period as a result of an increase in outlays
    of $4.9 billion and a decrease in revenues of $5.7 billion. Those
    effects would stem primarily from the increase in premium tax credits
    for health insurance obtained through the marketplaces.

    CBO and JCT estimate that 2.0 million people receiving unemployment
    compensation would be eligible for enhanced premium tax credits under
    section 137507 if they meet other eligibility requirements. The
    agencies estimate that, on average in each year from 2022 to 2025,
    roughly 500,000 people who already would be expected to enroll in
    marketplace coverage under section 137501 would receive an increased
    subsidy under section 137507. CBO and JCT estimate that, on average,
    about 500,000 people would newly enroll and receive a premium tax
    credit if section 137507 was enacted. The agencies estimate that most
    of those people would have otherwise been uninsured.

    Modification of Employer-Sponsored Coverage Affordability Test. Section
    137502 would modify the criteria used to determine an affordable offer
    of employer-sponsored health insurance for purposes of premium tax
    credit eligibility. Under current law, unaffordable offers are those
    that require employees to contribute more than 9.5 percent of their
    income (indexed annually for inflation) for self-only coverage. Section
    137502 would modify that affordability threshold from an indexed 9.5
    percent to a nonindexed 8.5 percent of income. If an employee's
    contribution exceeded 8.5 percent of household income, they and their
    dependents would be able to purchase subsidized coverage through the
    marketplaces.

    After accounting for the effects of section 137501, CBO and JCT
    estimate that enacting section 137502 would increase Federal deficits
    by $10.8 billion over the 2022-2031 period as a result of an increase
    in outlays of $12.1 billion and an increase in revenues of $1.2
    billion. Those effects would stem primarily from an increase in premium
    tax credits for health insurance obtained through the marketplaces,
    partially offset by higher revenues stemming from higher taxable wages
    that would result from a reduction in employment-based coverage.

    CBO and JCT estimate that, on average over the 2022-2031 period,
    300,000 more people would enroll in nongroup coverage under the
    section. That increase consists of estimated reductions of fewer than
    100,000 people without insurance and fewer than 300,000 people with
    employment-based coverage. The estimate of the reduction in employment-
    based coverage is driven primarily by the expectation that fewer people
    would take up an employment-based offer. Those choosing to take up
    nongroup coverage instead would do so because the premium tax credits
    for plans available through the marketplaces would make those plans
    less expensive than employment-based plans.

    I hope this information is useful to you.

                Sincerely,

                Phillip L. Swagel
                Director

    cc: Honorable John Yarmouth
        Chairman
        Committee on the Budget

    Identical letters sent to the Honorable Kevin Brady, Ranking Member,
    Committee on Ways and Means; the Honorable Cathy McMorris Rodgers,
    Ranking Member, Committee on Energy and Commerce; and the Honorable
    Virginia Foxx, Ranking Member, Committee on Education and Labor.

      Table 1. Estimated Budgetary Effects of Provisions in Reconciliation Legislation That Would Affect Health Insurance Coverage for People Under Age 65
                                                               By Fiscal Year, Millions of Dollars
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                           2022       2023       2024       2025       2026       2027       2028       2029       2030       2031    2022-2026   2022-2031
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Increases or Decreases (-) in Direct Spending

    Sec. 137501--Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers
        Budget              1,463     19,949     12,519     11,521     11,110     10,867     11,347     12,199     13,815     14,939     56,562      119,729
         Authority
        Estimated           1,463     19,949     12,519     11,521     11,110     10,867     11,347     12,199     13,815     14,939     56,562      119,729
         Outlays

    Sec. 137504, 137505, and 30701--Provisions Affecting Coverage for People With Low Income
        Budget              8,330     16,942     17,055     27,433     36,562     39,003     44,334     47,456     48,488     50,034    106,322      335,637
         Authority
        Estimated           8,330     16,942     17,055     27,433     36,562     39,003     44,334     47,456     48,488     50,034    106,322      335,637
         Outlays

    Sec. 137507--Special Rule for Individuals Receiving Unemployment Compensation
        Budget              1,309      1,821      1,419      1,139       -778          0          0          0          0          0      4,910        4,910
         Authority
        Estimated           1,309      1,821      1,419      1,139       -778          0          0          0          0          0      4,910        4,910
         Outlays

    Sec. 137502--Modification of Employer-Sponsored Coverage Affordability Test in Health Insurance Premium Tax Credit
        Budget                671      1,824      1,493      1,264        982      1,060        950      1,276        867      1,672      6,234       12,059
         Authority
        Estimated             671      1,824      1,493      1,264        982      1,060        950      1,276        867      1,672      6,234       12,059
         Outlays

    Interactionsa
        Budget               -131       -176        -95        -53         40          0          0          0          0          0       -415         -415
         Authority
        Estimated            -131       -176        -95        -53         40          0          0          0          0          0       -415         -415
         Outlays

    Total Changes in Direct Spending
        Budget             11,642     40,360     32,391     41,304     47,916     50,930     56,631     60,931     63,170     66,645    173,613      471,920
         Authority
        Estimated          11,642     40,360     32,391     41,304     47,916     50,930     56,631     60,931     63,170     66,645    173,613      471,920
         Outlays

                                                             Increases or Decreases (-) in Revenues

    Sec. 137501--Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers
        Total Revenues        499        197     -9,761     -9,518     -9,068    -10,529    -11,408    -12,367    -13,259    -14,592    -27,651      -89,806
            On-budget         332       -275    -10,640    -10,790    -10,464    -12,018    -12,991    -14,080    -15,101    -16,517    -31,837     -102,544
             Revenues
            Off-budget        167        472        879      1,272      1,396      1,489      1,583      1,713      1,842      1,925      4,186       12,738
             Revenues

    Sec. 137504, 137505, and 30701--Provisions Affecting Coverage for People With Low Income
        Total Revenues         53     -1,586     -3,560     -1,908      3,105      3,211      3,224      3,243      3,315      3,399     -3,896       12,496
            On-budget         -28     -1,819     -3,824     -2,753      2,037      2,143      2,152      2,160      2,211      2,277     -6,387        4,556
             Revenues
            Off-budget         81        233        264        845      1,068      1,068      1,072      1,083      1,104      1,122      2,491        7,940
             Revenues

    Sec. 137507--Special Rule for Individuals Receiving Unemployment Compensation
        Total Revenues         21       -916     -1,645     -1,566     -1,577          2          2          0          0          0     -5,683       -5,679
            On-budget          10       -944     -1,683     -1,615     -1,592          2          2          0          0          0     -5,824       -5,820
             Revenues
            Off-budget         11         28         38         49         15          0          0          0          0          0        141          141
             Revenues

    Sec. 137502--Modification of Employer-Sponsored Coverage Affordability Test in Health Insurance Premium Tax Credit
        Total Revenues        106        159       -170       -120         83        174        137        241        128        474         58        1,212
            On-budget          52        -71       -457       -390       -178        -80       -126        -56       -206         59     -1,044       -1,453
             Revenues
            Off-budget         54        230        287        270        261        254        263        297        334        415      1,102        2,665
             Revenues

    Interactions a
        Total Revenues         -4        119        152        103        103          0          0          0          0          0        473          473
            On-budget          -2        123        156        106        104          0          0          0          0          0        487          487
             Revenues
            Off-budget         -2         -4         -4         -3         -1          0          0          0          0          0        -14          -14
             Revenues

    Total Changes in          675     -2,027    -14,984    -13,009     -7,354     -7,142     -8,045     -8,883     -9,816    -10,719    -36,699      -81,304
     Revenues
            On-budget         364     -2,986    -16,448    -15,442    -10,093     -9,953    -10,963    -11,976    -13,096    -14,181    -44,605     -104,774
             Revenues
            Off-budget        311        959      1,464      2,433      2,739      2,811      2,918      3,093      3,280      3,462      7,906       23,470
             Revenues

                                                          Net Increases or Decreases (-) in the Deficit

    Sec. 137501--Improve Affordability and Reduce Premium Costs of Health Insurance for Consumers
        Effect on the         964     19,752     22,280     21,039     20,178     21,396     22,755     24,566     27,074     29,531     84,213      209,535
         Deficit
            On-budget       1,131     20,224     23,159     22,311     21,574     22,885     24,338     26,279     28,916     31,456     88,399      222,273
             Deficit
            Off-budget       -167       -472       -879     -1,272     -1,396     -1,489     -1,583     -1,713     -1,842     -1,925     -4,186      -12,738
             Deficit

    Sec. 137504, 137505, and 30701--Provisions Affecting Coverage for People With Low Income
        Effect on the       8,277     18,528     20,615     29,341     33,457     35,792     41,110     44,213     45,173     46,635    110,218      323,141
         Deficit
            On-budget       8,358     18,761     20,879     30,186     34,525     36,860     42,182     45,296     46,277     47,757    112,709      331,081
             Deficit
            Off-budget        -81       -233       -264       -845     -1,068     -1,068     -1,072     -1,083     -1,104     -1,122     -2,491       -7,940
             Deficit

    Sec. 137507--Special Rule for Individuals Receiving Unemployment Compensation
        Effect on the       1,288      2,737      3,064      2,705        799         -2         -2          0          0          0     10,593       10,589
         Deficit
            On-budget       1,299      2,765      3,102      2,754        814         -2         -2          0          0          0     10,734       10,730
             Deficit
            Off-budget        -11        -28        -38        -49        -15          0          0          0          0          0       -141         -141
             Deficit

    Sec. 137502--Modification of Employer-Sponsored Coverage Affordability Test in Health Insurance Premium Tax Credit
        Effect on the         565      1,665      1,663      1,384        899        886        813      1,035        739      1,198      6,176       10,847
         Deficit
            On-budget         619      1,895      1,950      1,654      1,160      1,140      1,076      1,332      1,073      1,613      7,278       13,512
             Deficit
            Off-budget        -54       -230       -287       -270       -261       -254       -263       -297       -334       -415     -1,102       -2,665
             Deficit

    Interactions a
        Effect on the        -127       -295       -247       -156        -63          0          0          0          0          0       -888         -888
         Deficit
            On-budget        -129       -299       -251       -159        -64          0          0          0          0          0       -902         -902
             Deficit
            Off-budget          2          4          4          3          1          0          0          0          0          0         14           14
             Deficit

    Total Effect on        10,967     42,387     47,375     54,313     55,270     58,072     64,676     69,814     72,986     77,364    210,312      553,224
     the Deficit
            On-budget      11,278     43,346     48,839     56,746     58,009     60,883     67,594     72,907     76,266     80,826    218,218      576,694
             Deficit
            Off-budget       -311       -959     -1,464     -2,433     -2,739     -2,811     -2,918     -3,093     -3,280     -3,462     -7,906      -23,470
             Deficit
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Data sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

    a Estimates for all provisions account for interactions with Section 137501; the estimated interaction effects between other provisions are shown in
      this line.

                 Table 2. Comparison of Maximum Household Contributions for Premium Tax Credits in 2031
    ----------------------------------------------------------------------------------------------------------------
                                                                        Percent of Income
      Percentage of Federal Poverty Limit  -------------------------------------------------------------------------
                                                     Under Current Lawa                  Under Section 137501
    ----------------------------------------------------------------------------------------------------------------
    100-133                                                                2.1                                    0
    133-150                                                         3.1 to 4.2                                    0
    150-200                                                         4.2 to 6.6                             0 to 2.0
    200-250                                                         6.6 to 8.5                           2.0 to 4.0
    250-300                                                        8.5 to 10.0                           4.0 to 6.0
    300-400                                                               10.0                           6.0 to 8.5
    400+                                                                  n.a.                                  8.5
    ----------------------------------------------------------------------------------------------------------------
    Data source: Congressional Budget Office.
    n.a. = not applicable.

    a Reflects CBO's current-law estimate of the maximum income contributions in 2031.

                     Prepared Statement of Hon. Ron Wyden,
                           a U.S. Senator From Oregon
        Senate Democrats are on the cusp of moving major legislation that
    will transform American health care, helping consumers get relief from
    getting clobbered at the pharmacy window, promoting innovations, and
    delivering quality, cost-effective home and community-based services to
    older people and people with disabilities. As we look to these exciting
    future developments, today the committee will examine the state of
    health-care coverage in America.

        Health care in America got far better the day that the Affordable
    Care Act eliminated the insane and insidious discrimination against
    those with preexisting health conditions. In one fell swoop, that
    change brought security to millions of people who otherwise worried
    that if they or a loved one had a condition like diabetes, there would
    be no quality, affordable coverage available to them. The Affordable
    Care Act significantly advanced the proposition that health care is a
    human right, but Americans who still lack insurance coverage cannot
    exercise that right fully.

        I'm thrilled that the committee is joined this morning by Senator
    Reverend Warnock, who has become the conscience of the Senate on this
    issue. He was a crusader for health care long before he was a member of
    the Senate. His home State of Georgia is one of a handful of States
    where Republican leaders have blocked the expansion of Medicaid.
    Instead of getting health coverage to many of the most vulnerable
    people in their States, they are clinging to a decade-old political
    grudge against the Affordable Care Act. It is a morally bankrupt
    choice.

        That's one aspect of the health coverage challenge the committee
    will discuss today. The committee will also talk about building on what
    worked in the response to COVID-19.

        Earlier this year, reversing course on a Trump administration
    policy that made it harder for people to get health care during a
    pandemic, President Biden announced a special enrollment period for
    health insurance so that people who'd lost their jobs could get
    covered. It was a lifeline for people who needed health-care security
    during the pandemic, and nearly 3 million people signed up for
    coverage. As part of the American Rescue Plan that passed in March,
    Democrats in Congress made signing up for insurance much more
    affordable by expanding the ACA's tax credits for health-care premiums.

        All in all, consumers who updated their health coverage during the
    special enrollment period are saving on their net monthly premiums by
    an average of 40 percent. Nearly two out of three consumers can get a
    plan with zero premium, after tax credits. Extending those
    improvements, in my view, is a no-brainer. It's a way to improve health
    coverage and put money back in Americans' pockets at the same time.

        In addition to expanding insurance coverage, today's hearing is
    also an opportunity to discuss how Medicare, while a lifeline for tens
    of millions, still has key gaps in what it covers. For example,
    Democrats are working on updating the Medicare guarantee to cover
    dental care, vision, and hearing for seniors. It's just unthinkable
    that there are seniors on Medicare, people who've worked hard for a
    lifetime and done everything right, who can't afford teeth cleaning,
    eyeglasses, or a hearing aid. Similarly, this committee is working on a
    plan to allow seniors and people with disabilities to get the care they
    need in the place where they're most comfortable, at home.

        Before I wrap up, I also want to briefly address some of the key
    facts that have been distorted in health-care debates. None of the
    plans I've talked about will reduce the solvency of Medicare's hospital
    insurance trust fund at all--not one bit. Those benefits will have
    different sources of funding. They will not be part of Medicare Part A,
    which is what the trust fund covers.

        History shows Republicans trot out this insolvency argument every
    time Democrats propose significant improvements to our Federal health-
    care programs--and it's never true. The Affordable Care Act extended
    the solvency of Medicare by 12 years, but Republican political
    campaigns falsely claimed it would do the opposite. They continued to
    make that claim even after it was fully, repeatedly debunked.

        Republican Senators' stated concern over Medicare didn't stop them
    from attempting to repeal the ACA, which would have devastated
    Medicare's finances had they succeeded. The Trump tax law even reduced
    payments into Medicare's trust fund.

        Shoring up the Medicare hospital insurance trust fund ought to be a
    bipartisan proposition in order to guarantee that seniors continue
    receiving the benefits they've earned. That would require Republicans
    to stop using solvency as a political weapon, creating yet another
    artificial, unnecessary crisis.

        The record shows that Democrats have worked again and again to
    improve Medicare's finances while upholding its promise of guaranteed
    benefits for seniors. In campaign ads and in the Congress, Republicans
    have done just the opposite.

        So there's a lot for us to discuss today. I'm expecting a lively
    hearing. Once again, I want to thank our friend Senator Reverend
    Warnock for being here along with all our witnesses. I'm looking
    forward to Q&A.

                                     ______

                                 Communications

                                  ----------

                            Americans for Prosperity
    Senator Wyden, Senator Crapo, and distinguished members of the
    Committee, thank you for giving Americans for Prosperity this
    opportunity to submit our views on how best to improve health care and
    coverage in the United States.

    AFP's Health Care Vision

    Americans for Prosperity is a national, grassroots activist
    organization whose thousands of members across the country work to
    empower every person to earn success, contribute to his or her
    community, and live a productive, meaningful life. Among many other
    projects, we work to create a health-care system that continuously
    delivers better care at lower cost through markets, not mandates. That
    means a system in which doctors, nurses, and hospitals are free to
    compete and offer the best health-care products and services at the
    best prices that meet the needs of their patients. We call this vision
    a ``personal option,'' and in this submission for the record, we would
    like to outline some of the principles and reforms we believe are
    essential to making it a reality.\1\
    ---------------------------------------------------------------------------
        \1\ https://americansforprosperity.org/personal-option/.
    ---------------------------------------------------------------------------

    The Status Quo

    When it comes to health-care reform, Americans have historically been
    cautious, preferring incremental over radical change. That is still
    true today. Our polling finds 75 percent of Americans are generally
    satisfied with their current health-care arrangements, and a similar
    percentage of Americans are not in the market for major changes or
    disruptions, preferring instead to fix what's broken in our system
    while preserving what works.\2\
    ---------------------------------------------------------------------------
        \2\ https://americansforprosperity.org/voters-want-more-choice-
    control-health-care-survey/.

    And what works? For one thing, the quality of care. The quality of
    American health care is generally very high. In many respects, it's the
    best in the world. Our cancer survival rates, for example, are good \3\
    and continuously getting better. We also tend to have shorter surgery
    wait-times.\4\
    ---------------------------------------------------------------------------
        \3\ https://www.healio.com/news/hematology-oncology/20180131/us-
    cancer-survival-rates-remain-among-highest-in-world.
        \4\ https://fee.org/articles/america-outperforms-canada-in-surgery-
    wait-times-and-its-not-even-close/.

    For another thing, access to basic coverage. Universal coverage has
    been effectively achieved in the United States. That's right. Some 98
    percent of Americans today are either covered by or eligible for some
    form of comprehensive, government-subsidized health insurance. While
    about 9 percent of Americans are officially uninsured, 7 percentage
    points of that group are eligible for public or private insurance but
    simply not enrolled. Just 2 percent of Americans are truly
    uninsured.\5\
    ---------------------------------------------------------------------------
        \5\ https://www.kff.org/uninsured/issue-brief/key-facts-about-the-
    uninsured-population/.

    And yet, for all its strengths and marvels, our system is not perfect.
    It is notoriously too costly and too complicated. It provides too
    ---------------------------------------------------------------------------
    little price transparency and too many negative surprises for patients.

    We believe these flaws arise because, in our country, patients are
    treated more like products than customers. Too many important decisions
    are made for patients instead of by them. We cater too much to
    insurance companies and government bureaucracies and not enough to the
    true end-users of care and the medical professionals they trust.

    Why do these problems exist? Because a number of well-meant but
    misguided government policies shift power and responsibility from
    patients to third parties, principally in the tax code, but also in the
    structure and incentives of various government programs. The remedy
    seems fairly obvious: reform these policies to shift power back to
    patients.

    By making health care more like other markets, where the end-user
    controls the dollars and the essential decisions, we can increase
    choice and competition, and thus the quality and the abundance of
    medical goods and services, and thus the health and happiness of
    patients and their families.

    To put it more succinctly, we must empower patients to act as
    customers, and remove the barriers standing between them and their
    doctors. This is the formula for success. This is how we fix what's
    broken and preserve what works.

    What do we Americans want from our health-care system? Based on our
    polling and conversations with voters, it's clear that we Americans
    want:

          Good insurance at an affordable price.
          Access to the latest life-saving drugs at a reasonable price.
          To see the doctor of our choice, conveniently and affordably.
          To know how much our care will cost, up front, before we pay for
    it.
          The choice to try experimental treatments.
          And strong government safety nets that protect the vulnerable.

     In a nutshell, we want a personal option. A personal option gives
    people the choice and control they want, with the quality they deserve,
    at prices they can afford, from the medical professionals they trust.

    Solution: A Personal Option

    So how do we get there? What reforms are needed?

    Help People, Not Insurance Companies

    Health care exists for patients. Government health insurance assistance
    should go directly to patients, rather than to insurance companies,
    similar to the way food stamps go directly to low-income families
    rather than to farmers or food producers. Congress should adopt more
    voucher-like approaches to existing health insurance subsidies,
    including Medicaid, Medicare, and the Affordable Care Act. It could,
    for example, start by adopting such an approach to fill in the so-
    called Medicaid coverage gap, the 2 million or so individuals who live
    in States that have not expanded Medicaid and who are not eligible for
    any form of government-subsidized health insurance. We could take some
    of the money we currently spend on Medicaid and deposit it directly
    into a tax-free Health Savings Account owned and controlled by the
    enrollee. Congress would require that this assistance be used to pay
    for health insurance premiums and legitimate out-of-pocket expenses,
    but would not otherwise dictate how the recipient uses the funds. This
    approach would be more compassionate than current, top-down subsidy
    structures because it would be more efficient and dignified for the
    recipient.

    Promote Price Transparency

    In every market, consumers get to see the price up front--except in
    health care. We would never tolerate this at the gas station or grocery
    store. Unable to shop for value, patients grope in the dark and get hit
    with excessive charges and pay for needless middlemen and waste. Health
    care costs will not come down until we can see real prices. But how to
    get there? Some people favor top-down government mandates, forcing
    hospitals, insurers, and drugmakers to publish their list prices and
    their privately negotiated rates. The Trump Administration tried to do
    so through aggressive regulatory actions. While we strongly support
    price transparency, we do not believe a mandatory approach will
    actually help consumers in the long run. The only sure path to price
    transparency is to empower consumers to make the important purchasing
    decisions. When consumers are spending their own money, they shop for
    value, and prices become transparent naturally--just as they do at the
    gas station and the grocery store. A good place to start is to expand
    and strengthen special accounts that patients can use to save and pay
    for health care, tax-free. Such accounts help level the tax code
    playing field, effectively giving consumers the same kind of generous
    tax break for health care and coverage purchases that currently only
    employers receive.

    Expand and Strengthen Tax-Free HSAs

    Tax-free Health Savings Accounts help 30 million American families pay
    their out-of-pocket medical expenses tax-free. Why not every family? An
    HSA is a tool that saves you anywhere between 10 to 40 percent off,
    each time you make a health-care purchase. And it gives you greater
    control of your medical decisions. Studies show HSAs help reduce
    health-care costs.\6\, \7\, \8\ Expanding this
    option is a prime way to put consumers in the driver's seat and bend
    the health-care cost curve downward. Unfortunately, today only about 10
    percent of Americans are able to have an HSA, because the law requires
    HSA owners to buy a narrowly defined, high-deductible health plan or
    HDHP. By removing this needless restriction, we can allow all Americans
    to save for health care, tax-free. It would also be desirable to
    significantly increase how much people can save in these accounts, as
    well as the array of items and coverage options they can buy with them,
    including, for example, direct primary care subscriptions and health
    insurance premiums. Examples of good bills that include these kinds of
    reforms include Senator Rubio's and Senator Tim Scott's Health Savings
    Act (S. 380, 2021), Senator Cruz's Personalized Care Act (S. 153,
    2021), and Senator Paul's Health Savings Accounts for All Act (S. 4367,
    2020).
    ---------------------------------------------------------------------------
        \6\ https://www.nber.org/papers/w21031.
        \7\ https://www.actuary.org/sites/default/files/pdf/health/
    cdhp_may09.pdf.
        \8\ file:///C:/Users/DClancy/OneDrive%20-%20Stand%20Together/
    dean%20files/policy/hc/hc%20-%20payment%20-%20decentralized%20-
    %20tax%20-%20hsa/hsa%20-%20studies%20etc/
    HSA%20effect%202019%20PA%20study.pdf.
    ---------------------------------------------------------------------------

    Strengthen Individual Coverage HRAs

    Current policy allows employers to set up, and employees to benefit
    from, special spending accounts known as individual coverage health
    reimbursement arrangements or ICHRAs. In addition to facilitating
    employees' out-of-pocket purchases using pre-tax dollars, these
    innovative accounts also enable employees to use tax-free money from
    their employer to buy health insurance that is personally owned and
    portable. This is a godsend, including for patients with costly pre-
    existing medical conditions. Thanks to ICHRAs, employees can now have
    the peace of mind that comes from knowing that they don't have to lose
    their health insurance coverage when they change jobs. Congress should
    reject efforts to eliminate or water down ICHRAs, and should facilitate
    educational efforts to increase employers' awareness and use of this
    exciting option.

    Reduce Mandates to Make Health Insurance Affordable

    Insurance today is often a poor value for money. Thanks to well-meant
    but misguided mandates, federal and state, premiums in recent years
    have doubled, deductibles have tripled, and access to doctors and
    hospitals has dramatically narrowed. Happily, with some sensible
    insurance reforms we can reverse these harmful trends and actually
    bring down premiums while preserving protections for people with pre-
    existing conditions. Specifically, Congress should repeal costly,
    frivolous benefit mandates and ease or eliminate age-based community-
    rating price controls, so that more young, healthy people sign up
    voluntarily.

    Reduce Hospital Market Consolidation

    Hospital services represent about 40 percent of all health expenditures
    in the United States. In recent years, hospital market consolidation
    has accelerated, reducing choice and quality, driving up prices, and
    tilting the playing field against physicians. Addressing and reversing
    this troubling trend requires legislative, judicial, and regulatory
    action, including modifications of antitrust laws, or at least
    modifications of their specific application. But there are other policy
    reforms that can help to reduce hospital market consolidation, and thus
    to improve the cost, quality, and abundance of hospital services.\9\
    Such reforms include the repeal of local certificate of need laws and
    reforms of Medicare to provide for site-neutral payments and an end to
    the moratorium on physician-owned hospitals. The latter two reforms are
    discussed more specifically, below.
    ---------------------------------------------------------------------------
        \9\ https://www.heritage.org/health-care-reform/report/how-
    congress-can-help-reverse-hospital-market-consolidation.
    ---------------------------------------------------------------------------

    Lift the Federal Moratorium on Physician-Owned Hospitals

    Section 6001 of the Affordable Care Act places an effective moratorium
    on participation in Medicare for new and expanded physician-owned
    hospitals (POH).\10\ This prohibition is unjustified and should be
    repealed. Studies show that it unduly and needlessly limits competition
    and increases costs. For example, a recent literature review finds,
    among other things, that orthopedic and cardiac ``focused factory''
    POHs offer consumers comparable or lower costs and higher quality care
    compared to other hospitals; patients with a wide range of serious
    conditions experience lower in-hospital and 30-day mortality rates in
    specialty POHs; patients with orthopedic conditions receive a greater
    number of conservative preoperative therapies prior to invasive
    procedures and experience shorter stays and lower risk-adjusted
    complication rates; general surgery POHs offer higher quality services
    compared to their competitors; and the cost and quality of general
    acute care POHs is not inferior to competitors.\11\
    ---------------------------------------------------------------------------
        \10\ https://www.healthaffairs.org/do/10.1377/hblog20210408.980640/
    full/.
        \11\ https://www.mercatus.org/publications/healthcare/cost-and-
    quality-care-physician-owned-hospitals-systematic-review.
    ---------------------------------------------------------------------------

    Move to Site-Neutral Payment in Medicare

    Medicare payment structures are built around the kind of facility in
    which care is delivered, rather than how efficiently and effectively it
    is delivered. Congress should move to site-neutrality, so that the
    Medicare payment for a medical service is the same whether it is
    delivered in a physician's office, a clinic, or a hospital setting. The
    Centers for Medicare and Medicaid Services issued a rule to accomplish
    site-neutrality on a limited basis.\12\ Congress should codify this
    site-neutrality policy and expand it to level the playing field among
    providers and remove the financial disabilities for medical
    professionals who would compete with hospital systems.
    ---------------------------------------------------------------------------
        \12\ https://www.govinfo.gov/content/pkg/FR-2019-11-12/pdf/2019-
    24138.pdf.
    ---------------------------------------------------------------------------

    Modernize Medicare

    Medicare is a popular but expensive and in critical ways outdated
    insurance product that fails to protect seniors from catastrophic costs
    and negatively distorts health-care markets. We can do better by
    America's elderly and disabled citizens. Reform need not be partisan or
    polarized. There are incremental reforms that modernize and strengthen
    Medicare to give seniors more freedom and better access to doctors and
    therapies at lower cost. Because the private, competitive Medicare
    Advantage option often offers superior service with extra benefits at
    no or low out-of-pocket cost, more than 43 percent of Medicare
    enrollees have voluntarily opted into it. To increase competition
    within Medicare, we believe all new Medicare enrollees should be auto-
    enrolled into an affordable Medicare Advantage plan in their area, with
    a right to opt into original, fee-for-service Medicare if they wish. To
    increase competition within the over-65 market more generally, we
    believe seniors should be allowed to choose private coverage in lieu of
    Medicare without penalty, with reasonable policies to govern how and
    when they can opt back in, if they wish. Senator Braun's Fair Care Act
    (S. 4796, 2020) includes a provision to do just that, as does Senator
    Cruz's Retirement Freedom Act (S. 275, H.R. 1166, 2021). We also
    endorse Representative Latta's Stop Penalizing Working Seniors Act
    (H.R. 5563, 2021), which enable seniors enrolled only in Medicare Part
    A to save for and pay out-of-pocket health-care costs, tax-free,
    through a personally owned and controlled Health Savings Account.

    Make Medicaid Reform a National Priority

    If there's something both sides of the aisle ought to be able to agree
    on, it's that we must eliminate waste in federal programs. Medicaid's
    improper payment rate has ballooned from 9 percent in 2018 to nearly 15
    percent in 2019 and all the way to 21 percent in 2020--possibly as high
    as 25 percent. Officially, Medicaid wastes on the order of $70 billion
    a year--enough to pay for health care for 12 million adults or 3.6
    million disabled Americans for an entire year.\13\ Unofficially, the
    program probably wastes in excess of $100 billion a year. About 80
    percent of these improper payments are due to payments to ineligible
    persons.\14\ Meanwhile, the quality of care delivered by Medicaid has
    long been known to be inferior. Clearly, this broken program cries out
    for reform. Medicaid was never meant to be a middle-class entitlement
    that displaces private insurance options and busts the federal budget.
    It was meant to be a safety net. Congress should reform it to keep it
    focused on those who truly need help paying for health care. Congress
    should also help the working poor by using some of the money we
    currently spend on Medicaid as direct deposits into tax-free HSAs for
    low-income families.
    ---------------------------------------------------------------------------
        \13\ https://thehill.com/blogs/congress-blog/healthcare/568825-
    medicaids-improper-payments-show-why-the-program-needs-reform.
        \14\ https://nypost.com/2020/11/28/medicaid-hemorrhaging-100b-on-
    americans-ineligible-for-the-program/.
    ---------------------------------------------------------------------------

    Unleash the Potential of Telehealth

    Telehealth technologies empower health professionals to remotely
    consult, diagnose, and treat patients without meeting in-person.
    Providers can safely and effectively deliver an array of health
    services through telehealth including primary care, mental health
    services, and emergency care. Patients can connect with health-care
    workers through a variety of telehealth technologies including video
    conference apps, remote monitoring devices, instant messages, and audio
    phone calls. The pandemic has dramatically revealed how telemedicine
    can reduce costs and infections and ensure that people, especially in
    underserved rural and urban communities, can access health care in a
    timely manner. Prior to the COVID-19 pandemic, only 134,000 Medicare
    enrollees received virtual care every week. After the pandemic
    emergency reforms took effect, the number of enrollees receiving
    telehealth increased to 10.1 million, roughly one-third of all fee-for-
    service Medicare enrollees. Overall, Medicare enrollees purchased eight
    percent fewer primary care services between January and June 2020.\15\
    From February to December 2020, the number of telehealth services
    delivered to privately insured patients increased over 1,500 percent.
    As a share of all health-care services, virtual care increased from one
    percent to 21 percent during this period. Expanding access to
    telehealth lowers health-care spending by providing patients a low-cost
    alternative to expensive in-person care. The popular telehealth
    platform Teladoc reports the average telehealth consultation costs just
    $40. By comparison, the typical cost of an in-person primary care visit
    is $160. Virtual care also reduces costs by helping patients avoid
    expensive hospitalizations. Ascension Health, America's 2nd largest
    hospital system, found 60 percent of its telehealth patients would have
    visited an urgent care clinic or emergency room if they did not offer
    virtual care. This decreased costly outpatient services by 33 percent
    for Ascension's patients.\16\ Unfortunately, these important reforms
    are limited to the COVID-19 public health emergency. As soon as state
    and federal officials declare the pandemic over, these harmful
    telehealth barriers will resume and patients will lose access to
    essential virtual care.
    ---------------------------------------------------------------------------
        \15\ http://www.medpac.gov/docs/default-source/reports/
    mar21_medpac_report_ch14_sec.pdf?s
    fvrsn=0.
        \16\ https://connectwithcare.org/wp-content/uploads/2020/08/
    Ascension-Telehealth-Data.pdf.

    1. Remove barriers on patient locations. Under changes implemented by
    the CARES Act, CMS authorized health-care providers to deliver care to
    patients located in any zip code and setting, including their home.\17\
    Prior to this reform, patients could only receive telehealth services
    from select health-care facilities in rural areas.
    ---------------------------------------------------------------------------
        \17\ https://www.cms.gov/newsroom/fact-sheets/medicare-
    telemedicine-health-care-provider-fact-sheet.

    2. Remove barriers on provider locations. Under the CARES Act, CMS
    announced that health-care practitioners can deliver telehealth from an
    expanded array of facilities, including Federally Qualified Health
    Centers, Rural Health Centers, and their own homes.\18\
    ---------------------------------------------------------------------------
        \18\ https://www.cms.gov/files/document/covid-rural-health-
    clinics.pdf.

    3. Expand the list of telehealth services. Starting March 1, 2020, CMS
    announced that health professionals can deliver approximately 240
    additional telehealth services to Medicare recipients, including mental
    health consultations, home health visits and emergency care.\19\
    ---------------------------------------------------------------------------
        \19\ https://www.cms.gov/Medicare/Medicare-general-information/
    telehealth/telehealth-codes.

    4. Expand the list of telehealth providers. Prior to COVID-19, federal
    law authorized only nine types of health-care providers to deliver
    telehealth services.\20\ Fortunately, the agency expanded the list of
    telehealth provider-types to include all practitioners who are
    currently authorized to deliver in-person care to Medicare recipients,
    including physical therapists, occupational therapists, and speech
    language pathologists.\21\
    ---------------------------------------------------------------------------
        \20\ https://www.law.cornell.edu/cfr/text/42/410.78.
        \21\ https://www.cms.gov/files/document/summary-covid-19-emergency-
    declaration-waivers.pdf.

    5. End technology restrictions on telehealth. Under the Cares Act, CMS
    authorized practitioners to deliver telehealth through audio-only phone
    calls.\22\ In addition, the Office for Civil Rights (OCR) issued
    guidance allowing health-care providers to deliver telehealth through
    any non-public facing telecommunication platform, including Zoom, Apple
    FaceTime, and Skype.\23\
    ---------------------------------------------------------------------------
        \22\ https://www.cms.gov/files/document/covid-19-emergency-
    declaration-waivers.pdf.
        \23\ https://www.hhs.gov/hipaa/for-professionals/special-topics/
    emergency-preparedness/notification-enforcement-discretion-telehealth/
    index.html.

    6. Allow telehealth across state lines. Prior to COVID-19, federal law
    prohibited health-care practitioners from delivering telehealth to
    patients across state lines.\24\ Fortunately, CMS issued a waiver
    allowing health-care providers to deliver telehealth in States that
    explicitly authorize out-of-state providers to provide virtual care
    without an additional license.\25\
    ---------------------------------------------------------------------------
        \24\ https://www.law.cornell.edu/cfr/text/42/410.78.
        \25\ https://www.cms.gov/files/document/summary-covid-19-emergency-
    declaration-waivers.pdf.

    7. Empower insurers to offer comprehensive telehealth coverage. Before
    COVID-19, federal law prohibited insurers from waiving deductibles for
    telehealth services for individuals with high-deductible health plans
    (HDHPs). Fortunately, the CARES Act allows insurers to offer telehealth
    services free of deductibles for individuals covered by these
    plans.\26\
    ---------------------------------------------------------------------------
        \26\ https://www.congress.gov/116/plaws/publ136/PLAW-
    116publ136.pdf.

    Examples of positive legislation in this area include Sen. Manchin's
    Protecting Rural Telehealth Access Act (S. 1988, 2021), Senator Tim
    Scott's Telehealth Modernization Act (S. 368, 2021), and Senator
    Schatz's CONNECT for Health Act of 2021 (S. 1512, 2021).

    Allow Association Health Plans

    Letting individuals and businesses band together to buy affordable
    coverage at group rates should be a no-brainer. Large businesses get
    such discounts, why not small businesses as well? Unfortunately, a
    federal court recently ruled that the U.S. Department of Labor does not
    have authority to clarify existing rules to permit AHPs federally.
    Therefore, congressional clarification is needed. Examples of good
    bills to do so include Senator Kennedy's Association Health Plans Act
    (S. 896, 2021) and Senator Paul's American Healthshare Plans Act (S.
    3610, 2020).

    Allow ``Truth in Medicine''

    The U.S. Food and Drug Administration imposes a speech restriction on
    drug manufacturers barring the sharing of scientific information with
    doctors about possible uses of drugs outside the current limits of the
    drugs' labeling--even when the information is truthful, non-misleading,
    and potentially life-saving. Congress should rescind this harmful gag
    rule.\27\
    ---------------------------------------------------------------------------
        \27\ https://goldwaterinstitute.org/free-speech-in-medicine/.
    ---------------------------------------------------------------------------

    Speed Up FDA Drug Approvals

    The pandemic and Operation Warp Speed have shown that a speedier FDA
    gets more life-saving drugs and medicines to people more quickly. It
    takes 10 to 15 years and $2.6 billion on average to bring a new drug to
    market.\28\ Some drugs are approved in the United States only many
    years after they were approved overseas. Patients suffer and die
    needlessly. We can reduce this needless suffering and expense without
    harming patients by requiring FDA to recognize drugs and devices that
    have been approved by advanced countries we trust. Senator Cruz's
    RESULTs Act (S. 154, 2021) would do just that. Another excellent
    proposal is Senator Braun's Promising Pathway Act (S. 1644, 2021).
    ---------------------------------------------------------------------------
        \28\ https://www.phrma.org/policy-issues/research-development.
    ---------------------------------------------------------------------------

    Improve Medicare Drug Coverage

    There is bipartisan support for helping Medicare enrollee's deal with
    prescription drug costs by capping their total Part D out-of-pocket
    cost exposure and eliminating the infamous ``donut hole'' coverage gap.
    AFP supports these sensible reforms to help make prescription drugs
    more affordable.

    Promote Generic Drug Competition

    Robust generic competition is critical to ensuring that costly
    medications and therapies become affordable, without harmful government
    price controls or infringing the just rights of inventors. It's time to
    end pay-for-delay schemes, patent evergreening, and abuse of FDA
    citizen petitions. Good places to start include Senator Crapo's Lower
    Costs More Cures Act (H.R. 19, 2021) \29\ and Senator Wyden's and
    Senator Grassley's Prescription Drug Price Reduction Act (S. 2543,
    2019, and S. 4199, 2020).\30\
    ---------------------------------------------------------------------------
        \29\ https://republicans-energycommerce.house.gov/wp-content/
    uploads/2021/04/HR-19-Section-by-Section.pdf.
        \30\ https://www.finance.senate.gov/imo/media/doc/
    PDPRA%20Committee%20Report%20092
    519%20FINAL.pdf.
    ---------------------------------------------------------------------------

    Legalize Drug Importation

    Another way to put downward pressure on pharmaceutical costs is to
    legalize drug importation from abroad. The current restrictions on such
    importation unduly limit Americans' choices. While the pharmaceutical
    industry objects that such a reform would merely ``import foreign price
    controls'' into our country, it would actually put pressure on those
    countries to relax their price controls, which would be good for
    everyone. Importation should be allowed for individuals and importers,
    and not just governments.
    False Solution: Price Controls
    America leads the world in access to breakthrough treatments, and
    Americans get the latest medicines before the rest of the world. That
    doesn't come cheap. This creates an unavoidable tradeoff between
    profitability and life-saving innovation. Allowing the government to
    set drug prices would only tilt that further away from innovation. In a
    December 2019 report, the White House Council of Economic Advisers
    estimated that H.R. 3 would reduce the pharmaceutical spending on
    research and development by $75 billion to $200 billion over the next
    decade. If price controls were to reduce R&D by $200 billion over the
    next 10 years, the CEA concluded, the industry will introduce as many
    as 100 fewer products over that period. Instead of 300 new drugs,
    Americans would see 200. According to the CEA, Americans would be less
    healthy and less economically productive. The $34.5 billion in annual
    savings that the federal government would realize from price controls
    would reduce annual economic output by $375 billion to $1 trillion,
    imposing a cost to society 10 to 30 times the federal savings.\31\
    Price controls have failed in other areas of the globe. In the European
    Union, price controls have led to drug shortages.\32\ Meanwhile, while
    Americans enjoy access to 89 percent of new drugs, Canadians only have
    access to about half, because its government deems most new drugs ``too
    expensive.'' Here's an example, In the United Kingdom, the National
    Institute for Health and Care Excellence or NICE has recommended that
    Tafamidis, an extremely costly drug (which in the U.S. costs about
    $250,000 a year, or $25,000 a year in out-of-pocket costs to a patient)
    not be covered at all: ``The cost-effectiveness estimates are higher
    than what NICE normally considers an acceptable use of NHS
    resources.''\33\ The Canadian Drug Expert Committee, which makes
    reimbursement recommendations that provincial health plans use to
    determine whether they will cover a drug, determined a price reduction
    of more than 92 percent would be required for Tafamidis to be
    considered ``cost-effective at a willingness-to-pay threshold of
    $50,000 per [quality-adjusted life-year].'' A quality-adjusted life-
    year, or QALY, is a bureaucratic way to quantify the value of a human
    life in monetary terms and attempts to answer the question, ``Is paying
    for this treatment a good use of taxpayer money?'' Implicitly, this
    question disfavors patients who are sick, elderly, or disabled. A
    pharmaceutical company facing the prospect of foreign QALY boards
    setting prices for new drugs to treat rare diseases--in this case a 90
    percent price cut or no coverage at all--is surely going to be loath to
    invest in future such efforts. Rather, it will prefer to tweak and
    repackage existing drugs that are already profitable. A Congressional
    Budget Office working paper finds that 60 fewer new cures would be
    approved if federal drug price controls like those proposed in the bill
    H.R. 3 were enacted.\34\ A more recent analysis by economist Tomas
    Philipson of the University of Chicago finds that such price controls
    would lead up to a 60 percent reduction in drug company research and
    development from 2021 to 2039, resulting in 167 to 342 fewer new FDA
    approvals.\35\ The upper end of that range (342 drugs) is more than
    half the total number of drugs approved by the FDA over the past 20
    years (644 drugs).
    ---------------------------------------------------------------------------
        \31\ https://republicans-energycommerce.house.gov/news/in-the-news/
    100-fewer-lifesaving-drugs/.
        \32\ https://www.politico.eu/article/europe-still-coming-up-short-
    on-drug-supplies/.
        \33\ https://www.nice.org.uk/guidance/ta696/documents/final-
    appraisal-determination-document.
        \34\ https://www.cbo.gov/system/files/2021-08/57010-New-Drug-
    Development.pdf.
        \35\ https://cpb-us-w2.wpmucdn.com/voices.uchicago.edu/dist/d/3128/
    files/2021/08/Issue-Brief-Price-Controls-and-Drug-Innovation-
    Philipson.pdf.
    ---------------------------------------------------------------------------

    Encourage Pro-Consumer State-Level Reforms

    Not all reforms can be achieved solely at the federal level. Some
    require action by the States. The following state-level reforms are
    included in this discussion, not only for completeness, but because, in
    many cases, Congress can help support the States.

    Liberate Direct Patient Care

    Direct patient care, also known as direct primary care, is a great new
    option that lets patients pay a flat fee for unlimited access to a
    primary care doctor and preventive services, with no insurance-company
    middle man. It's like a monthly Netflix subscription to your most
    trusted doctors. AFP supports legislation to legalize DPC at the state
    level, and encourages Congress to enact federal legislation to allow
    people to use their tax-free HSA and HRA funds to pay for DPC
    subscriptions out-of-pocket.

    Strengthen Access to Short Term Renewable Health Plans

    Short term renewable health insurance plans can be dramatically more
    affordable than traditional plans, up to 50 to 80 percent more
    affordable, because they are offer a streamlined, temporary option
    unburdened by excessive government mandates that drive up costs. While
    not a substitute for permanent coverage, these federally defined and
    state-regulated plans are an important option that everyone should have
    access to. About a dozen States have restricted them so severely, they
    are either unavailable or unaffordable. Five States have essentially
    outlawed them. Yet a recent study shows the only States where
    individual market premiums have increased since 2018 are the five that
    effectively prohibit these plans (California, Massachusetts, New
    Jersey, New York, and Rhode Island). Meanwhile, that States that allow
    short-term plans have lost fewer enrollees in the individual market,
    have had far more insurers offer coverage in the market, and have had
    larger premium reductions since 2018.\36\ Those hostile laws should be
    repealed, and we encourage States to conform their policies to current
    federal policy, which allows a plan duration of up to 12 months and
    renewable for a total of 36 months. Congress, meanwhile, should codify
    that existing policy while also allowing tax-free HSA and HRA funds to
    be used for short term plans.
    ---------------------------------------------------------------------------
        \36\ https://galen.org/2021/individual-health-insurance-markets-
    improving-in-states-that-fully-permit-short-term-plans-2/.
    ---------------------------------------------------------------------------

    Liberate Hospitals to Expand and Compete

    You shouldn't need a government permission slip or a political
    connection to provide a new medical service, purchase hospital
    equipment, or build a new facility. Local CON laws require government
    approval before private entities can do these things. Often, existing
    market participants have a veto over new entrants. Such protectionism
    harms patients and reduces the resilience we need to respond quickly to
    a crisis like COVID-19. A veritable mountain of studies and papers show
    that CON laws drive up costs and reduce quality, and that repealing
    them saves lives.\37\ While Congress wisely repealed the federal CON
    law back in the 1980s, and thus has no cause for federal legislation in
    this area, it can and should provide oversight on the issue, as well as
    moral support for state-level efforts to end this harmful
    protectionism.
    ---------------------------------------------------------------------------
        \37\ https://www.mercatus.org/publications/corporate-welfare/
    certificate-need-laws.
    ---------------------------------------------------------------------------

    Let Nurses Deliver the Care They're Trained For

    The nearly 80 million Americans who do not have sufficient access to a
    health-care provider would be served better if medical professionals
    like nurse practitioners were allowed to practice to the full extent of
    their education and training without having to pay a physician for the
    privilege. Senator Paul's Coronavirus Regulatory Repeal Act (S. 969,
    2021) would make this and similar pandemic reforms permanent, while
    giving Congress and federal regulators a chance to carefully review and
    block changes that would not be in patients' best interest.

    Let Doctors and Nurses Practice Across State Lines

    The pandemic showed the vital importance of allowing doctors and nurses
    to care for out-of-state patients, including via telehealth. State and
    federal policies that effectively limit health-care professionals to
    practicing within the borders of a single state reduce consumer choice,
    interstate competition, and the quality of care. States should amend
    their laws to automatically recognize out-of-state health professional
    licenses. And while federal programs including Medicare should respect
    state jurisdiction and policy choices, such programs should be reformed
    where possible to facilitate interstate care delivery. For example,
    Congress should make permanent Medicare policies adopted during the
    pandemic that allow state-licensed doctors and nurses to treat patients
    in and from other States.
    False Solution: Single-Payer
    Some people believe the only way to get affordable care is for the
    government to provide it, or what they call a ``public option'' or
    ``Medicare for All.'' But that approach has been tried many times, and
    the results are not encouraging. During the pandemic, we saw government
    failures that made it harder to get people the help they needed--things
    like providing testing kits that did not work, mask and ventilator
    shortages for frontline workers, and rigid state laws that kept
    hospitals from adding capacity and prevented doctors and nurses from
    going where they were needed. The bright spots of the pandemic--
    vaccines developed in record time, hospitals expanded overnight, nurses
    and doctors practicing across state lines, a telehealth revolution--
    came about because policymakers wisely removed unhelpful government
    barriers. Peoples in countries with a single-payer system typically
    experience shortages and bureaucratic rationing. Access to a waiting
    list is not access to care. In Canada, where private health insurance
    is effectively outlawed, health care is ``free,'' yet patients pay for
    it in other ways.\38\ For example, Canadians receive fewer cancer
    screenings than Americans do \39\ and have higher mortality rates for
    certain cancers.\40\ The median wait time in Canada for an MRI scan is
    more than two months--to be treated by a specialist, more than five
    months.\41\ And while Americans enjoy access to 89 percent of new
    drugs,\42\ Canadians have access to only 44 percent--Greeks and
    Spaniards, a mere 14 percent--because their governments deem most new
    drugs ``too expensive.''\43\ In these systems, people end up paying for
    their ``free'' care by being forced to endure needless suffering, lost
    income, and preventable death. Realistically, a national single-payer
    program like that proposed by Senator Sanders (``Medicare for All'')
    would mean significantly higher taxes for American families and
    significantly less access to needed therapies. In fact, the
    Congressional Budget Office estimates it would increase federal
    spending by more than $32 trillion over the first ten years.\44\ Unlike
    the false promise of ``Medicare for All,'' consumer-driven reforms like
    these would make health care in our state even better and more
    affordable for all.
    ---------------------------------------------------------------------------
        \38\ https://www.encounterbooks.com/features/sally-c-pipes-on-the-
    false-promise-of-single-payer-healthcare/.
        \39\ https://www.thecentersquare.com/opinion/op-ed-health-care-a-
    personal-option-vs-the-public-option/article_c11a65e6-0a4f-11eb-b268-
    5f4c8d38b20f.html.
        \40\ https://www.cdc.gov/cancer/dcpc/research/index.htm.
        \41\ https://www.fraserinstitute.org/studies/waiting-your-turn-
    wait-times-for-health-care-in-canada-2019.
        \42\ https://www.nationalreview.com/2020/08/canadian-single-payer-
    health-care-system-slow-inefficient/.
        \43\ https://galen.org/2019/examination-of-international-drug-
    pricing-policies-in-selected-countries-shows-prevalent-government-
    control-over-pricing-and-restrictions-on-access/.
        \44\ https://economics21.org/medicare-for-all-winners-and-losers.
    ---------------------------------------------------------------------------

    Conclusion

    Our system needs reforms. But overall it is a good system. Americans
    enjoy superior quality and access, and something like universal
    coverage, and most are satisfied with their current coverage and not
    looking for a radical overhaul. Instead of further expanding government
    health insurance programs, Congress should enact a personal option for
    health care that enables us to fix what's broken in our system while
    preserving what works. A personal option will give the American people
    the choice and control they want, with the quality they deserve, at
    prices they can afford, from the medical professionals they trust. We
    stand ready to help you achieve this exciting vision.

                                     ______

                            Center for Fiscal Equity

                            14448 Parkvale Road, #6

                           Rockville, Maryland 20853

                          fiscalequitycenter@yahoo.com

                        Statement of Michael G. Bindner

    Chairman Grassley and Ranking Member Wyden, thank you for the
    opportunity to submit our comments. With a new Administration in the
    White House, the context for reform has changed. Whether what the
    witnesses will tell you has changed will be determined at the hearing.
    I am quite sure that none will provide exactly the same options as
    below.

    What we all agree on is that the system is fragmented. Unless Congress
    abolishes the Veterans Health Administration (Tricare), the Federal
    Employees Health Benefit Plan and the Postal Service plan, it will stay
    that way. Even Medicare for All will not stand alone, given the
    political realities. Unless coverage is extended to undocumented
    workers, there will be leakages in the system. I will focus on future
    options and leave further description of the gory details to the
    invited witnesses.

    Adding coverage of undocumented workers fills the major gap in coverage
    which produces cost shifting. Higher co-pays under the Affordable Care
    Act Silver Plan also cause bills to be unpaid. Families who cannot
    afford higher options (largely because subsidies are inadequate) cannot
    afford medical bills at all. The ending of mandates widened the gaps in
    the system.

    State contributions to Medicaid, plus the supposed drain of pension
    costs for their employees, are a continuing source of concern.

    The former can be remedied by splitting Medicaid into two pots, one for
    the elderly and disabled and one for the unemployed and the working
    poor. The first pot can then be transferred to CMMS as Medicare Part E.
    As detailed in the first attachment, Medicare for All essentially turns
    all of Medicare into what is now Medicaid. Part E would be a good step
    in that direction.

    As an aside, the push to advance fund pension costs for State
    governments and USPS is not driven by necessity. It is driven by the
    financial sector's desire to sell retirement funds to employees, thus
    earning higher commissions than the current system. The fact that one
    part of the financial sector insists on full funding while another
    sells the likely result of this myth has given us the current
    retirement income crisis most people face.

    The majority of workers have incomes too low to save much, regardless
    of how easy (or automatic) enrollment is made. Until the minimum wage
    is increased, the refundable child tax credit is passed (and doubled
    again--and even again), there is no room for consideration of subsidies
    for increased saving.

    The second way to relieve state budgets can be accomplished in one of
    two ways. Option A is to enroll the unemployed and those in ESL,
    remedial and higher educational, rehabilitative and job programs into
    the health plan of the service provider and then raise the
    reimbursement amounts for any programs delivered through the private
    sector to include these costs. ESL training would be available
    regardless of immigration status.

    Option B is the Public Option rejected when the Affordable Care Act was
    debated. Those who opposed it left Congress anyway--which should be a
    lesson to ``moderate'' Senators. The President has proposed trying to
    pass it again. Along with Medicare Part E, this is the best option for
    now for an increased federal role.

    As described in the first attachment, for passage to occur we would
    have to give something to get something. In this case, higher broad
    based taxes and ending pre-existing condition reforms would be that
    price. Those who are denied coverage would be automatically enrolled in
    the Public Option, which would be more heavily subsidized than
    currently proposed. The Public Option would also include anyone left in
    Medicaid not transferred to Medicare Part E. Under this plan, all
    subsidies would be federal and would be much more generous.

    The desire for greater profit, which is inherent in our economic system
    (people get upset when I simply call it Capitalism), will lead
    employers and insurance companies alike to exclude an ever growing
    share of the workforce until the Public Option has become what is
    essentially Medicare for All.

    Pay it now, or pay it later. Either way, there will be a transition as
    the finances are worked out.

    This need not take long if health-care reform is combined with tax
    reform. Payroll tax funding is a non-starter. Transferring costs to
    higher income taxpayers ala the Affordable Care Act is not viable
    either. The combination of the two is essentially some form of value
    added tax.

    Our tax reform plan provides a menu of such taxes, including a straight
    up goods and services tax, an asset value-added tax (which is a
    transaction-based form of the ACA tax structure, dividend, interest and
    capital gains taxes) and a subtraction VAT. These are described more
    fully in the second attachment.

    The residual income surtax proposed would be dedicated to paying down
    the National Debt. This should be a major selling point for those who
    pay higher income taxes (but not high enough) and who also own the vast
    majority of the debt held in mutual funds and directly held bonds. The
    music must stop eventually, probably sooner than later. Starting now is
    best.

    A goods and services tax means everyone pays, including wealthier
    retirees attempting to dodge taxation through tax free savings
    accounts, life insurance policies--which can be borrowed from or used
    to transfer intergenerational wealth, trusts and, for those who are new
    to wealth, borrowing from their financial assets.

    A GST, or Invoice VAT, is broad based and border adjustable. It is good
    for workers and would be part of any comprehensive tax reform that
    includes taking most households--indeed, almost all households--off the
    income tax rolls.

    An asset VAT will raise money, but the pool of money raised will
    decrease given the proposed zero rating for ESOP sales, as well as the
    loss in trading volume such a tax would bring on. Higher income
    surtaxes would also decrease the money available for speculation by
    higher income receivers (I will not call them earners--their high
    compensation often results in cutting everyone else's pay).

    Subtraction VAT funding would be used to the extent that private
    insurance survives. As is currently the case, there would be a tax
    exclusion--or even a credit--for providing health insurance to
    employees. As described below, employee-owned firms could provide
    direct services rather than third party care. As this sector expands,
    the need for mandated insurance would simply end (as would outside
    financing for employee borrowing).

    The last option, although similar to the current funding system for
    ``first world'' employees, would also be the eventual long term
    solution to funding gaps.

    Thank you for the opportunity to address the committee. We are, of
    course, available for direct testimony or to answer questions by
    members and staff.

     Attachment One--Hearing on Pathways to Universal Health Coverage, June
                        12, 2019

    There are three methods to get to single-payer: a public option,
    Medicare for All and single-payer with an option for cooperative
    employers.

    The first to set up a public option and end protections for pre-
    existing conditions and mandates. The public option would then cover
    all families who are rejected for either pre-existing conditions or the
    inability to pay. In essence, this is an expansion of Medicaid to
    everyone with a pre-existing condition. As such, it would be funded
    through increased taxation, which will be addressed below. A variation
    is the expansion of the Uniformed Public Health Service to treat such
    individuals and their families.

    The public option is inherently unstable over the long term. The profit
    motive will ultimately make the exclusion pool grow until private
    insurance would no longer be justified, leading-again to Single Payer
    if the race to cut customers leads to no one left in private insurance
    who is actually sick. This eventually becomes Medicare for All, but
    with easier passage and sudden adoption as private health plans are
    either banned or become bankrupt. Single-payer would then be what
    occurs when

    The second option is Medicare for All, which I described in an
    attachment to June 18th and 19th's comments and previously in hearings
    held May 8, 2019 (Finance) and May 8, 2018 (Ways and Means). Medicare
    for All is essentially Medicaid for All without the smell of welfare
    and with providers reimbursed at Medicare levels, with the difference
    funded by tax revenue.

    Medicare for All is a really good slogan, at least to mobilize the
    base. One would think it would attract the support of even the Tea
    Partiers who held up signs saying, ``don't let the government touch my
    Medicare!'' Alas, it has not. This has been a conversation on the left
    and it has not gotten beyond shouting slogans either. We need to decide
    what we want and whether it really is Medicare for All. If we want to
    go to any doctor we wish, pay nothing and have no premiums, then that
    is not Medicare.

    There are essentially two Medicares, a high option and a low one. One
    option has Part A at no cost (funded by the Hospital Insurance Payroll
    Tax and part of Obamacare's high unearned income tax as well as the
    general fund), Medicare Part B, with a 20% copay and a $135 per month
    premium and Medicare Part D, which has both premiums and copays and is
    run through private providers. Parts A and B also are contracted out to
    insurance companies for case management. Much of this is now managed
    care, as is Medicare Advantage (Part C).

    Medicaid lingers in the background and the foreground. It covers the
    disabled in their first two years (and probably while they are seeking
    disability and unable to work). It covers non-workers and the working
    poor (who are too poor for Obamacare) and it covers seniors and the
    disabled who are confined to a long-term care facility and who have run
    out their assets. It also has the long-term portion which should be
    federalized, but for the poor, it takes the form of an HMO, but with no
    premiums and zero copays.

    Obamacare has premiums with income-based supports (one of those facts
    the Republicans hate) and copays. It may have a high option, like the
    Federal Employee Health Benefits Program (which also covers Congress)
    on which it is modeled, a standard option that puts you into an HMO.
    The HMO drug copays for Obamacare are higher than for Medicare Part C,
    but the office visit prices are exactly the same.

    What does it mean, then, to want Medicare for All? If it means we want
    everyone who can afford it to get Medicare Advantage Coverage, we
    already have that. It is Obamacare. The reality is that Senator Sanders
    wants to reduce Medicare copays and premiums to Medicaid levels and
    then slowly reduce eligibility levels until everyone is covered. Of
    course, this will still likely give us HMO coverage for everyone except
    the very rich, unless he adds a high-option PPO or reimbursable plan.

    Either Medicare for All or a real single payer would require a very
    large payroll tax (and would eliminate the HI tax) or an employer paid
    subtraction value-added tax (so it would not appear on receipts nor
    would it be zero rated at the border, since there would be no evading
    it), which we discuss below, because the Health Care Reform debate is
    ultimately a tax reform debate. Too much money is at stake for it to be
    otherwise, although we may do just as well to call Obamacare Medicare
    for All and leave it alone.

    The third option is an exclusion for employers, especially employee-
    owned and cooperative firms, who provide medical care directly to their
    employees without third party insurance, with the employer making HMO-
    like arrangements with local hospitals and medical practices for
    inpatient and specialist care.

    Employer-based taxes, such as a subtraction VAT or payroll tax, will
    provide an incentive to avoid these taxes by providing such care.
    Employers who fund catastrophic care or operate nursing care facilities
    would get an even higher benefit, with the proviso that any care so
    provided be superior to the care available through Medicaid or Medicare
    for All. Making employers responsible for most costs and for all cost
    savings allows them to use some market power to get lower rates.

    This proposal is probably the most promising way to arrest health-care
    costs from their current upward spiral--as employers who would be
    financially responsible for this care through taxes would have a real
    incentive to limit spending in a way that individual taxpayers simply
    do not have the means or incentive to exercise. The employee-ownership
    must ultimately expand to most of the economy as an alternative to
    capitalism, which is also unstable as income concentration becomes
    obvious to all.

    The key to any single-payer option is securing a funding stream. While
    payroll taxes are the standard suggestion, there are problems with
    progressivity if such taxes are capped and because profit remains
    untaxed, which requires the difference be subsidized through higher
    income taxes. For this reason, funding should come through some form of
    value-added tax. Our revised tax reform plan can be found in Attachment
    Two.

     Attachment Two--Tax Reform, Center for Fiscal Equity, March 5, 2021

    Individual payroll taxes. These are optional taxes for Old-Age and
    Survivors Insurance after age 60 for widows or 62 for retirees. We say
    optional because the collection of these taxes occurs if an income
    sensitive retirement income is deemed necessary for program acceptance.
    Higher incomes for most seniors would result if an employer
    contribution funded by the Subtraction VAT described below were
    credited on an equal dollar basis to all workers. If employee taxes are
    retained, the ceiling should be lowered to $85,000 to reduce benefits
    paid to wealthier individuals and a $16,000 floor should be established
    so that Earned Income Tax Credits are no longer needed. Subsidies for
    single workers should be abandoned in favor of radically higher minimum
    wages.

    Wage Surtaxes. Individual income taxes on salaries, which exclude
    business taxes, above an individual standard deduction of $85,000 per
    year, will range from 6.5% to 26%. This tax will fund net interest on
    the debt (which will no longer be rolled over into new borrowing),
    redemption of the Social Security Trust Fund, strategic, sea and non-
    continental U.S. military deployments, veterans' health benefits as the
    result of battlefield injuries, including mental health and addiction
    and eventual debt reduction. Transferring OASDI employer funding from
    existing payroll taxes would increase the rate but would allow it to
    decline over time. So would peace.

    Asset Value-Added Tax (A-VAT). A replacement for capital gains taxes,
    dividend taxes, and the estate tax. It will apply to asset sales,
    dividend distributions, exercised options, rental income, inherited and
    gifted assets and the profits from short sales. Tax payments for option
    exercises and inherited assets will be reset, with prior tax payments
    for that asset eliminated so that the seller gets no benefit from them.
    In this perspective, it is the owner's increase in value that is taxed.
    As with any sale of liquid or real assets, sales to a qualified broad-
    based Employee Stock Ownership Plan will be tax-free. These taxes will
    fund the same spending items as income or S-VAT surtaxes.

    This tax will end Tax Gap issues owed by high-income individuals. A 26%
    rate is between the GOP 24% rate (including ACA-SM and Pease surtaxes)
    and the Democratic 28% rate. It's time to quit playing football with
    tax rates to attract side bets. A single rate also stops gaming forms
    of ownership. Lower rates are not as regressive as they seem. Only the
    wealthy have capital gains in any significant amount. The de facto rate
    for everyone else is zero.

    Subtraction Value-Added Tax (S-VAT). These are employer paid Net
    Business Receipts Taxes. S-VAT is a vehicle for tax benefits, including

          Health insurance or direct care, including veterans' health care
    for non-
    battlefield injuries and long-term care.
          Employer-paid educational costs in lieu of taxes are provided as
    either
    employee-directed contributions to the public or private unionized
    school of their choice or direct tuition payments for employee children
    or for workers (including ESL and remedial skills). Wages will be paid
    to students to meet opportunity costs.
          Most importantly, a refundable child tax credit at median income
    levels (with inflation adjustments) distributed with pay.

    Subsistence-level benefits force the poor into servile labor. Wages and
    benefits must be high enough to provide justice and human dignity. This
    allows the ending of state administered subsidy programs and
    discourages abortions, and as such enactment must be scored as a must
    pass in voting rankings by pro-life organizations (and feminist
    organizations as well). To assure child subsidies are distributed, S-
    VAT will not be border adjustable.

    The S-VAT is also used for personal accounts in Social Security,
    provided that these accounts are insured through an insurance fund for
    all such accounts, that accounts go toward employee ownership rather
    than for a subsidy for the investment industry. Both employers and
    employees must consent to a shift to these accounts, which will occur
    if corporate democracy in existing ESOPs is given a thorough test. So
    far it has not. S-VAT funded retirement accounts will be equal-dollar
    credited for every worker. They also have the advantage of drawing on
    both payroll and profit, making it less regressive.

    A multi-tier S-VAT could replace income surtaxes in the same range.
    Some will use corporations to avoid these taxes, but that corporation
    would then pay all invoice and subtraction VAT payments (which would
    distribute tax benefits. Distributions from such corporations will be
    considered salary, not dividends.

    Invoice Value-Added Tax (I-VAT). Border adjustable taxes will appear on
    purchase invoices. The rate varies according to what is being financed.
    If Medicare for All does not contain offsets for employers who fund
    their own medical personnel or for personal retirement accounts, both
    of which would otherwise be funded by an S-VAT, then they would be
    funded by the I-VAT to take advantage of border adjustability. I-VAT
    also forces everyone, from the working poor to the beneficiaries of
    inherited wealth, to pay taxes and share in the cost of government.
    Enactment of both the A-VAT and I-VAT ends the need for capital gains
    and inheritance taxes (apart from any initial payout). This tax would
    take care of the low-income Tax Gap.

    I-VAT will fund domestic discretionary spending, equal dollar employer
    OASI contributions, and non-nuclear, non-deployed military spending,
    possibly on a regional basis. Regional I-VAT would both require a
    constitutional amendment to change the requirement that all excises be
    national and to discourage unnecessary spending, especially when
    allocated for electoral reasons rather than program needs. The latter
    could also be funded by the asset VAT (decreasing the rate by from
    19.5% to 13%).

    As part of enactment, gross wages will be reduced to take into account
    the shift to S-VAT and I-VAT, however net income will be increased by
    the same percentage as the I-VAT. Adoption of S-VAT and I-VAT will
    replace pass-through and proprietary business and corporate income
    taxes.

    Carbon Added Tax (CAT). A Carbon tax with receipt visibility, which
    allows comparison shopping based on carbon content, even if it means a
    more expensive item with lower carbon is purchased. C-VAT would also
    replace fuel taxes. It will fund transportation costs, including mass
    transit, and research into alternative fuels (including fusion). This
    tax would not be border adjustable unless it is in other nations,
    however in this case the imposition of this tax at the border will be
    noted, with the U.S. tax applied to the overseas base..

    Tax Reform Summary

    This plan can be summarized as a list of specific actions:

    1. Increase the standard deduction to workers making salaried income of
    $425,001 and over, shifting business filing to a separate tax on
    employers and eliminating all credits and deductions--starting at 6.5%,
    going up to 26%, in $85,000 brackets.

    2. Shift special rate taxes on capital income and gains from the income
    tax to an asset VAT. Expand the exclusion for sales to an ESOP to
    cooperatives and include sales of common and preferred stock. Mark
    option exercise and the first sale after inheritance, gift or donation
    to market.

    3. End personal filing for incomes under $425,000.

    4. Employers distribute the child tax credit with wages as an offset to
    their quarterly tax filing (ending annual filings).

    5. Employers collect and pay lower tier income taxes, starting at
    $85,000 at 6.5%, with an increase to 13% for all salary payments over
    $170,000 going up 6.5% for every $85,000 up to $340,000.

    6. Shift payment of HI, DI, SM (ACA) payroll taxes to consumers or
    employers, remove caps on employer payroll taxes and credit them to
    workers on an equal dollar basis.

    7. Employer paid taxes could as easily be called a subtraction VAT,
    abolishing corporate income taxes. These should not be zero rated at
    the border.

    8. Expand current state/federal intergovernmental subtraction VAT to a
    full GST with limited exclusions (food would be taxed) and add a
    federal portion, which would also be collected by the States. Make
    these taxes zero rated at the border. Rate should be 19.5% and replace
    employer OASI contributions. Credit workers on an equal dollar basis.

    9. Change employee OASI from 5% to 6.5% from $18,000 to $85,000 income.
    This change is necessitated by decreased gross pay.

    Video Link Statement to the committee sent separately: https://
    www.youtube.com/watch?v=IQmc0Mey9_Q.

                                     ______

                      Consumers for Affordable Health Care

                                 P.O. Box 2490

                               Augusta, ME 04338

                           Telephone: 1-800-965-7476

                              Fax: 1-888-214-5233

                      Website: https://www.mainecahc.org/

                      Email: consumerhealth@mainecahc.org

    October 19, 2021

    Senator Ron Wyden
    Chairman

    Senator Mike Crapo
    Ranking Member

    U.S. Senate
    Committee on Finance
    219 Dirksen Senate Office Building
    Washington, DC 20510-6200

    Dear Senator Wyden, Senator Crapo, and distinguished members of the
    Senate Committee on Finance,

    Consumers for Affordable Health Care (CAHC) is designated by Maine's
    Attorney General and the Bureau of Insurance as Maine's Health
    Insurance Consumer Assistance Program. We operate a statewide toll-free
    confidential HelpLine staffed by trained experts who provide assistance
    to Mainers in understanding their health coverage options and enrolling
    in and applying for private Marketplace and public health insurance
    coverage.

    Consumer Assistance Program staff provide training to and work closely
    with other organizations involved in getting the word out about
    coverage options, including Maine hospitals, community health centers,
    community action programs and social service organizations. We also
    work closely with organizations serving communities that experience
    racial and ethnic disparities in accessing the health coverage and care
    they need, including for example, Maine Access Immigrant Network,
    Wabanaki Public Health, and New Mainers Public Health Initiative. The
    outreach, education and enrollment work we are engaged in is, in part,
    where we often hear about Mainers who are benefiting from health
    coverage programs, in particular, the Affordable Care Act (ACA) and the
    increase in subsidies created by the American Rescue Plan Act (ARPA),
    as well as Medicaid expansion.

    As the committee and other congressional policymakers discuss the
    nation's budget reconciliation, we thought it would be helpful for you
    to hear about Mainers who are benefiting from the initiatives described
    above. People who have more affordable options because of the ACA and
    ARPA. Monthly premium rates have decreased for tens of thousands of
    Mainers and we have talked with many people over the past several
    months who have looked into and enrolled in Marketplace coverage as a
    result.\1\ Here are examples of Maine people who have found affordable
    plans and are now able to access the health care and prescription
    medicine they need:
    ---------------------------------------------------------------------------
        \1\ CMS, 2021 Final Marketplace Special Enrollment Period Report,
    https://www.hhs.gov/sites/default/files/2021-sep-final-enrollment-
    report.pdf.

          Pete R. who lives in Penobscot County. Pete has diabetes and is
    not offered coverage through his work at an auto repair shop. His gross
    income is about $31,000 annually. He was uninsured until recently when
    he learned about increased monthly subsidies and enrolled in an
    affordable Marketplace plan. He is now able to get the health care and
    ---------------------------------------------------------------------------
    medications he needs to treat his diabetes at a cost he can afford.

          Debra B. who lives Franklin County. Debra became uninsured when
    she lost her job after the explosion at the Jay Paper Mill in 2020. She
    could not afford her $350/month premium, but now, because of the ARPA
    increase in subsidies and the extended Marketplace open enrollment, she
    has coverage and is able to access the health care she needs until she
    can find another job with health insurance.

          Alfred H. is a lobsterman who lives in Washington County. He was
    uninsured until recently and sometimes skipped the treatment or
    medication he needs to manage his chronic conditions because of the
    cost. His wife has coverage through work, but her employer does not
    offer family coverage. Now that the American Rescue Plan Act increased
    monthly subsidies, Alfred has coverage he can afford and is able to
    better manage his diabetes and heart condition.

          Julie G. lives in western Cumberland County. She previously
    worked at a community health center, helping people enroll in
    Marketplace coverage, until she found she needed help herself after
    becoming disabled. Thanks to American Rescue Plan Act and the increase
    in subsidies, she and her husband can enroll in a plan they can afford.

          Mohamud H. lives in Cumberland County. He works every day to
    help address the needs of refugee and asylee new Mainers. Once a new
    Mainer himself, Mohamud now has affordable health coverage through the
    Marketplace. The coverage enables him to remain healthy as he works to
    ensure equal access to programs and services other New Mainers from
    Africa and the Middle East need as they live, raise families and work
    in Maine.

          Tom A. lives in Oxford County. Tom was laid off from his job at
    a small business due to COVID. He was receiving Unemployment Insurance
    when he signed up for a Marketplace plan this past March. After
    struggling to pay his monthly premium of over $318 a month, he was able
    to access the increased subsidies under ARPA to lower his premium down
    to $2.36/month.

          Maia S. lives in Kennebec County. Maia was on her mother's
    coverage until her mom changed jobs and was no longer offered family
    coverage. Maia was not offered coverage through her work as a mental
    health rehabilitation technician and is now enrolled in MaineCare
    (Medicaid in Maine), through expansion. The coverage is helping her
    access the mental health and other health care she needs as she attends
    classes at the University of Maine at Augusta.

    These are just a few of the people in Maine who are able to access the
    affordable comprehensive health coverage they need through the
    Marketplace and the Affordable Care Act's expanded Medicaid.

    If we have learned anything from the pandemic, it is how important it
    is for people to have access to affordable health coverage and care.
    The high cost of coverage undermines the ability to access health care
    and control the pandemic to the best possible extent.

    The ability of Mainers to purchase affordable coverage is also
    important to health-care providers in Maine, including our community
    health centers, mental health clinics and hospitals, especially in
    rural areas where health-care providers struggle to retain staff and
    keep their doors open.

    We urge you to support a budget reconciliation that extends and makes
    permanent health coverage affordability provisions that Mainers and
    other Americans are relying on and that will improve access to the
    health care and medicine they need.

    Sincerely,

    Ann L. Woloson
    Executive Director

    Cc: Senator Debbie Stabenow
        Senator Chuck Grassley
        Senator Maria Cantwell
        Senator John Cornyn
        Senator John Thune
        Senator Robert Menendez
        Senator Thomas R. Carper
        Senator Richard Burr
        Senator Patrick J. Toomey
        Senator Benjamin L. Cardin
        Senator Rob Portman
        Senator Sherrod Brown
        Senator Michael F. Bennet
        Senator Bob Casey
        Senator Tim Scott
        Senator Bill Cassidy
        Senator James Lankford
        Senator Steve Daines
        Senator Todd Young
        Senator Ben Sasse
        Senator John Barrasso
        Senator Mark R. Warner
        Senator Sheldon Whitehouse
        Senator Maggie Hassan
        Senator Catherine Cortez Masto
        Senator Elizabeth Warren
        Senator Angus King
        Senator Susan Collins

                                     ______

                       First Focus Campaign for Children

                         1400 Eye Street, NW, Suite 650

                              Washington, DC 20005

                                p: 202-657-0670

                                f: 202-657-0671

                        https://campaignforchildren.org/

    November 2, 2021

    Chairman Wyden, Ranking Member Crapo, and Members of the Senate
    Committee on Finance, thank you for the opportunity to submit this
    statement for the record.

    The First Focus Campaign for Children is a bipartisan children's
    advocacy organization dedicated to making children and families a
    priority in federal policy and budget decisions. Our organization is
    committed to ensuring that all our nation's children have equal
    opportunity to reach their full potential.

    The Status of Children's Health:

    The number of U.S. children without health insurance rose in 2020 for
    the fourth year in a row as the coronavirus pandemic tore through the
    country.

    Nearly 4.3 million children--or 5.6% of all U.S. children--did not have
    health insurance in 2020, according to new data from the U.S. Census
    Bureau, a 7% rise over 2019.\1\
    ---------------------------------------------------------------------------
        \1\ Katherine Keisler-Starkey and Lisa N. Bunch, U.S. Census Bureau
    Current Population Reports, P60-274, Health Insurance Coverage in the
    United States: 2020, U.S. Government Publishing Office, Washington, DC,
    September 2021.

    Children of color were hit hardest, the data suggests, with 9.5% of
    Hispanic children lacking health insurance. Black children lack health
    insurance at a rate of 6%, while less than 4% of white children and
    ---------------------------------------------------------------------------
    less than 3% of Asian children lack health insurance.

    Children in the South have the highest uninsurance rate, at 7.7%. The
    rate of children without insurance is more than twice as high in States
    that have not expanded Medicaid, at 8.5% of children.

    The numbers come as pediatric hospitalizations for COVID-19 surge. As
    of October 28th, over 6.3 million children have tested positive for
    COVID-19 since the onset of the pandemic, according to the American
    Academy of Pediatrics, with more than 100,000 cases added in the past
    week.\2\
    ---------------------------------------------------------------------------
        \2\ Children and COVID-19: State Data Report. American Academy of
    Pediatrics and the Children's Hospital Association, October 28, 2021,
    https://www.aap.org/en/pages/2019-novel-coronavirus-covid-19-
    infections/children-and-covid-19-state-level-data-report/.

    There are bills before Congress now that will improve the health and
    outcomes of children, some detailed below, and additional bills could
    be introduced to help create an equitable health system for children.

    Children's Health Insurance Program (CHIP) Permanency

    Enacting legislation to make the popular and successful Children's
    Health Insurance Program (CHIP) permanent ensures that the children and
    pregnant people who receive health insurance through CHIP will never
    again worry about their coverage expiring mid-year or mid-treatment. As
    you know, CHIP funding expired on September 30, 2017, and CHIP was not
    fully funded again until January 2018. For months States made
    contingency plans for CHIP's possible demise, advocates and lawmakers
    worked to extend funding, and families across the country received
    disenrollment notices as they faced an uncertain future about their
    children's health care. Never again should a family feel the fear and
    worry of whether their child will have health coverage. Enactment of
    legislation to make CHIP permanent would ensure that the health
    coverage of children is no longer subjected to arbitrary deadlines and
    funding cliffs that lead to chaos, distress, and anxiety for families
    across this country.

    For almost 25 years, CHIP has been an essential source of children's
    coverage, ensuring access to high-quality, affordable, pediatric-
    appropriate health care for children in working families whose parents
    earn too much to qualify for Medicaid but too little to purchase
    private health insurance on their own. CHIP has played a critical role
    in reducing the number of uninsured children by more than 68 percent,
    from an uninsurance rate of nearly 15 percent in 1997 to less than five
    percent in 2016, while improving health outcomes and access to care for
    children and pregnant women. CHIP, together with Medicaid, plays a
    particularly important role for children of color: in 2019 more than
    half of American Indian/Alaska Native, Black, multi-racial, and
    Hispanic children relied on Medicaid and CHIP as their source of health
    coverage. Since 2017, uninsurance rates for children have risen a full
    percentage point to 5.7 percent. Around 726,000 children lost coverage
    between 2016 and 2019--even before our country began facing a
    devastating pandemic that has left more than 28 million Americans
    infected with COVID-19, including more than six million children. As we
    work to reverse course and get all eligible children covered, making
    CHIP permanent is critical so families, medical providers, and
    governors can depend on it to always be there. By making CHIP
    permanent, the recurrent funding dilemma would be eliminated, allowing
    States to develop their programs in ways that best serve children and
    families. Finally, the public health emergency that has devastated our
    nation for nearly two years should make clear that comprehensive,
    affordable health coverage that is reliable is essential. Ensuring
    CHIP's future as the critical part of the health insurance system for
    children that it is must be a priority. To never again wonder about
    CHIP's future would allow lawmakers, federal and state health
    departments, advocates, pediatricians, and other providers to be
    entirely focused and attentive to the emergencies at hand--ending the
    COVID-19 pandemic, addressing our nation's shameful maternal and infant
    mortality crises, and eliminating health disparities and promoting
    health equity. Swift passage of legislation to make CHIP permanent will
    ensure that never again will we divert any attention away from
    improving child and maternal health outcomes to prepare for contingency
    planning for the possible temporary expiration or end of CHIP.

    Health Coverage for Children in Immigrant Families

    All children should have access to health care, regardless of their
    immigration status. The COVID-19 pandemic has made clear that we are
    all connected, that children have been impacted by the public health
    and economic crises, and that every child and family needs support to
    recover. Congress must eliminate structural barriers in our immigration
    system and other systems to protect all children's healthy development,
    including the five-year waiting period for those with legal permanent
    status to access certain federal programs and determinations of public
    charge for children.

    The Health Equity and Access under the Law for Immigrant Families Act
    of 2021 or the HEAL for Immigrant Families Act of 2021 (S. 1660) would
    help improve access to health care for children in immigrant families.
    Specifically, it would eliminate the requirement for a five-year
    waiting period for immigrants to enroll in Medicaid and CHIP, restore
    full-benefit enrollment in Medicaid and CHIP to all eligible, federally
    authorized immigrants by eliminating the outdated list of ``qualified''
    immigrants, and ensure that all individuals with federally authorized
    presence, including Deferred Action for Childhood Arrivals (DACA), are
    eligible for federally funded health-care programs. Additionally, the
    Lifting Immigrant Families through Benefits Access Restoration (BAR)
    Act of 2021 (H.R. 5227) would eliminate the five-year bar and other
    restrictions on immigrants' access to federal means-tested benefit
    programs--such as Medicaid, SNAP, Temporary Assistance for Needy
    Families (TANF), and Supplemental Security Income (SSI). These pieces
    of legislation should be passed and implemented to ensure equal access
    to health care.

     Pass 12-Month Continuous Eligibility for Children in Medicaid and CHIP

    Children in low-income families need to be continuously covered under
    Medicaid or CHIP for a full year. While families may experience some
    income fluctuation, their income does not change substantially or for
    the long-term. Keeping children covered leads to improved health status
    and well-being, promotes health equity, and alleviates the impact of
    seasonal work, overtime, and variable work hours on low income
    families. For States, continuous coverage for twelve months reduces
    administrative costs and labor while helping to promote more efficient
    health-care spending. When children with chronic conditions have
    consistent access to medications and their medical home, and when all
    children can access care when needed without interruptions, health-care
    costs go down.\3\
    ---------------------------------------------------------------------------
        \3\ Brooks, Tricia and Allexa Gardner, ``Continuous Coverage in
    Medicaid and CHIP,'' Georgetown University Health Policy Institute,
    Center for Children and Families, July 2021, https://
    ccf.georgetown.edu/wp-content/uploads/2021/07/Continuous-Coverage-
    Medicaid-CHIP-final.
    pdf.
    ---------------------------------------------------------------------------

    Continuous Eligibility from Birth to Age Six

    States should be allowed to cover children from birth to age six with
    continuous coverage on Medicaid or CHIP. As their brains grow and
    develop and before they are enrolled in regular, full-time school, we
    need to ensure continuous health coverage for all children. The
    American Academy of Pediatrics recommends babies get checkups at birth,
    three-to-five days after birth, and then at 1, 2, 4, 6, 9, 12, 15, 18
    and 24 months.\4\ Babies may receive referrals for additional
    assessment and treatment from specialists and other providers during or
    between any of these appointments. It is essential parents and medical
    providers know their child's primary care and any referrals are covered
    during this significant time in a child's development.
    ---------------------------------------------------------------------------
        \4\ ``Recommendations for Preventive Pediatric Health Care,''
    American Academy of Pediatrics, last updated February 2017, https://
    www.aap.org/en-us/documents/periodicity--schedule.pdf.

    A critical aspect of well-child exams during the first five years
    includes developmental, behavioral, and psychosocial screenings. If
    these screenings are missed or interrupted due to lack of coverage,
    that can delay needed assessments and necessary early interventions. If
    a child with a delay or suspected delay is not identified in an early
    well-child check-up they will have to wait until someone identifies
    this in school.\5\ If a child is not identified until school age, they
    could have significant delays and might have lost many opportunities
    for early interventions. This could cause undue harm and suffering to
    the child and family and increase costs later. Continuous coverage
    during the first 5 years of life would help ensure children see medical
    providers regularly and receive appropriate care and referrals on time.
    As Congress weighs the provision to require States to maintain coverage
    for children for twelve months at a time without churning on and off
    CHIP or Medicaid, we suggest a broader view of coverage for the
    youngest children with continuous coverage from birth to age 6.
    ---------------------------------------------------------------------------
        \5\ ``Developmental Monitoring and Screening,'' Centers for Disease
    Control and Prevention, last visited 23, February 2018, https://
    www.cdc.gov/ncbddd/childdevelopment/screening.html.
    ---------------------------------------------------------------------------

    12-Month Coverage for Postpartum Mothers

    More than 700 women die each year in this country due to pregnancy or
    delivery, a rate higher than nearly all other developed countries, and
    60% of these deaths are preventable.\6\ Our rates of maternal death are
    rising--the rate in 2019 was significantly higher than in
    2018.\7\, \8\ The United States has an infant mortality rate
    that ranks 33rd out of the 37 Organization for Economic Cooperation and
    Development member countries.\9\ And the statistics are significantly
    worse for Black women and infants compared to their white peers. In
    2019, the maternal mortality rate for Black women was 2.5 times higher
    than that of white women and 3.5 times higher than that of Hispanic
    women.\10\
    ---------------------------------------------------------------------------
        \6\ Building U.S. Capacity to Review and Prevent Maternal Deaths.
    (2018). Report from nine maternal mortality review committees.
    Available at: https://www.cdcfoundation.org/sites/default/files/files/
    ReportfromNineMMRCs.pdf.
        \7\ Centers for Disease Control and Prevention, Pregnancy-Related
    Deaths. Available at: https://www.cdc.gov/reproductivehealth/
    maternalinfanthealth/pregnancy-relatedmortality.htm.
        \8\ Hoyert DL. Maternal mortality rates in the United States, 2019.
    NCHS Health E-Stats. 2021. DOI: https://doi.org/10.15620/
    cdc:103855externalicon.
        \9\ United Health Foundation. (2020). America's Health Rankings,
    Annual Report, https://assets.americashealthrankings.org/app/uploads/
    annual20-rev-complete.pdf.
        \10\ Hoyert DL. Maternal mortality rates in the United States,
    2019. NCHS Health E-Stats. 2021. DOI: https://doi.org/10.15620/
    cdc:103855externalicon.

    Medicaid coverage is an important piece of reducing maternal mortality
    rates, and it varies greatly between States. Coverage is higher and
    uninsured rates are lower for pregnant and postpartum women in States
    that have expanded Medicaid coverage.\11\ Approximately half of all
    uninsured new mothers reported that losing Medicaid or other coverage
    after pregnancy was the reason they were uninsured.\12\ And the decline
    in infant mortality rates is 50% greater in Medicaid expansion States
    than in non-expansion States and includes a significant reduction in
    racial disparities.\13\ Numerous stakeholders have advocated for a 12-
    month expansion of postpartum Medicaid coverage in recent years, and
    COVID-19-related legislation passed in 2020 has begun to make progress
    toward that goal. The Families First Coronavirus Recovery Act included
    a requirement of continuous coverage for Medicaid enrollees through the
    end of the public health emergency, including for pregnant women. The
    American Rescue Plan included a time-limited, five-year state option
    for postpartum coverage of up to 12 months, well over the 60 days now
    required. And in the Centers for Medicare and Medicaid Services (CMS)
    has approved several state waiver requests to extend postpartum
    coverage to 12 months. We support efforts in Congress to make permanent
    the extension of Medicaid benefits to 12 months of postpartum care.
    ---------------------------------------------------------------------------
        \11\ Ranji, Usha, Ivette Gomez, and Alina Salganicoff, ``Expanding
    Postpartum Medicaid Coverage,'' KFF, March 9, 2021, https://
    www.kff.org/womens-health-policy/issue-brief/expanding-postpartum-
    medicaid-coverage/.
        \12\ Urban Institute. Uninsured New Mothers' Health and Health Care
    Challenges Highlight the Benefits of Increasing Postpartum Medicaid
    Coverage. May 28, 2020. Available at: https://www.urban.org/research/
    publication/uninsured-new-mothers-health-and-health-care-challenges
    highlight-benefits-increasing-postpartum-medicaid-coverage.
        \13\ Searing, Adam and Donna Cohen Ross, ``Medicaid Expansion Fills
    Gaps in Maternal Health Coverage Leading to Healthier Mothers and
    Babies,'' Georgetown University Center for Children and Families, May
    2019, https://ccf.georgetown.edu/wp-content/uploads/2019/05/Maternal-
    Health-3a.pdf.
    ---------------------------------------------------------------------------

    Improve ACA Affordability by Eliminating the ``Family Glitch''

    The ACA offers tax credits to make private, employer-sponsored health
    insurance more affordable for working families. The law bases
    eligibility determinations on a comparison of the cost of the insurance
    and the family's income. However, the Treasury Department's regulations
    implementing that provision of the ACA base that assessment on the cost
    of insuring the employee alone, instead of the cost of family coverage.
    While individual-only employer-sponsored health insurance premiums
    average around $7,470 a year, annual premiums for family coverage
    average $21,342--nearly triple.\14\
    ---------------------------------------------------------------------------
        \14\ ``2020 Employer Health Benefits Survey,'' Kaiser Family
    Foundation, October 8, 2020, https://www.kff.org/health-costs/report/
    2020-employer-health-benefits-survey/.

    Over 5 million people fall into the ACA family glitch, and the vast
    majority (4.4 million people or 85%) are currently enrolled through
    employer-sponsored health insurance.\15\ These families likely spend
    far more for health insurance coverage than individuals with similar
    incomes eligible for financial assistance on the ACA Marketplaces and
    could spend less on premiums if they could enroll in Marketplace plans
    and qualify for subsidies. One study estimated that those impacted by
    the family glitch are spending on average 15.8% of their incomes on
    employer-based coverage.\16\
    ---------------------------------------------------------------------------
        \15\ Cox, Cynthia, Krutika Amin, Gary Claxton, and Daniel
    McDermott, ``The ACA Family Glitch and Affordability of Employer
    Coverage,'' Kaiser Family Foundation, April 7, 2021, https://
    www.kff.org/health-reform/issue-brief/the-aca-family-glitch-and-
    affordability-of-employer-coverage/.
        \16\ Buettgens, Matthew, Lisa Dubay, and Genevieve M. Kenney.
    ``Marketplace subsidies: Changing the `Family Glitch' reduces family
    health spending but increases government costs.'' Health Affairs 35.7
    (2016): 1167-1175.

    If not clarified by the Administration or changed through legislation,
    this interpretation will continue to leave millions of children as well
    as their non-employee parents ineligible for tax credits or subsidized
    coverage in the ACA Marketplaces. Over half of those who fall in the
    ACA family glitch (about 2.8 million people) are children under the age
    of 18. These are children who do not qualify for the Children's Health
    Insurance Program (CHIP). About 500,00 people in the family glitch are
    ages 18-26. The ACA requires employers to offer coverage to dependents
    up to age 26, but that coverage does not need to meet affordability
    standards set elsewhere in the ACA.\17\
    ---------------------------------------------------------------------------
        \17\ Ibid, 15.
    ---------------------------------------------------------------------------

     Permit Families to Buy In to Coverage through Medicaid or the Federal
                        Employees Health Benefits Program (FEHBP)

    For families who are self-employed, work part-time, or work for small
    businesses that may not offer health benefits, these options offer the
    chance to provide their children with coverage that will meet their
    needs and be cost-effective. Allowing all families regardless of income
    and immigration status to buy into coverage through these programs will
    improve coverage and access to care for families who remain in the
    coverage gap.

    Conclusion

    More than ever before children across the country are waiting for
    Congress to do its part and secure their coverage and help improve
    their lives. There are bills before Congress now that will advance the
    health and development of children, and additional bills could be
    introduced. At the First Focus Campaign for Children, we stand ready to
    work together to get legislation passed to insure all children with the
    health coverage that will meet their needs to grow, develop, and
    thrive.

    Thank you for the consideration of our ideas. Please reach out to Bruce
    Lesley at Brucel@firstfocus.org.

    Sincerely,

    Bruce Lesley
    President

                                     ______

                         Healthcare Leadership Council

                         750 9th Street, NW, Suite #500

                             Washington, D.C. 20001

                                  202-452-8700

    October 20, 2021

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chairman                            Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    Washington, DC 20510                Washington, DC 20510

    Dear Chair Wyden and Ranking Member Crapo:

    On behalf of the Healthcare Leadership Council (HLC), we thank you for
    holding a hearing on, ``Health Insurance Coverage in America: Current
    and Future Role of Federal Programs.'' HLC appreciates the opportunity
    to share its thoughts with you on several healthcare coverage
    priorities.

    HLC is a coalition of chief executives from all disciplines within
    American healthcare. It is the exclusive forum for the nation's
    healthcare leaders to jointly develop policies, plans, and programs to
    achieve their vision of a 21st-century healthcare system that makes
    affordable high-quality care accessible to all Americans. Members of
    HLC--hospitals, academic health centers, health plans, pharmaceutical
    companies, medical device manufacturers, laboratories, biotech firms,
    health product distributors, post-acute care providers, home care
    providers, and information technology companies--advocate for measures
    to increase the quality and efficiency of healthcare through a patient-
    centered approach.

    Medicare Part D Drug Coverage

    Nearly nine of every 10 Medicare beneficiaries enrolled in Part D
    prescription drug plans say they are satisfied with their medication
    coverage with large majorities saying that their costs for both generic
    and name-brand drugs are affordable.\1\ In the current Medicare Part D
    program, beneficiaries are only responsible for 5 percent of drug costs
    above the catastrophic threshold. However, five percent of a $100,000
    drug is burdensome for seniors. Annual out-of-pocket expenses for these
    patients are significant. Beneficiary spending exceeds more than $3,000
    on average, and one in 10 beneficiaries spends at least $5,200 for out-
    of-pocket prescription drug costs. HLC supports an out-of-pocket cap
    that provides all seniors with certainty and financial relief. We
    believe that any changes to the Medicare Part D program should be
    patient-centered and address beneficiaries' affordability issues.
    ---------------------------------------------------------------------------
        \1\ Nationwide Survey of Seniors Shows High Approval Ratings for
    Medicare Prescription Drug Coverage; Beneficiaries Say Their Part D
    Plans Are Affordable, Provide Good Value, Medicare Today (July 28,
    2021), https://medicaretoday.org/2021/07/nationwide-survey-of-seniors-
    shows-high-approval-ratings-for-medicare-prescription-drug-coverage-
    beneficiaries-say-their-part-d-plans-are-affordable-provide-good-
    value/.

    HLC believes that establishing an out-of-pocket cap is a meaningful way
    to help seniors afford the lifesaving prescription drugs they need,
    especially those who are not eligible for supplemental help. The cost
    associated with an out-of-pocket cap needs to be shared among
    stakeholders, including, but not limited to health plans,
    pharmaceutical manufacturers, and the federal government.

    Single Payer Healthcare System

    HLC believes all Americans should have access to affordable, high-
    quality healthcare. Congress and the administration should bolster the
    stability of the health insurance marketplace by encouraging greater
    competition, and providing all Americans enhanced coverage choice by
    guaranteeing issuance of health insurance for those with preexisting
    medical conditions, with no annual, or lifetime coverage limits, but in
    conjunction with continuous coverage requirements and other critical
    safeguards to prevent adverse selection.

    Specifically, HLC opposes Medicare-for-All approaches, including
    permutations such as a public option and Medicare and Medicaid buy-in
    proposals, which could adversely affect care delivery. While HLC
    supports access to universal health coverage, we believe that should be
    done by building on what's currently working. More than 90% of
    Americans had health coverage at some time in 2020.\2\ Polling has
    consistently shown Americans are not seeking a radical overhaul of our
    healthcare system. Further, there is no compelling evidence they would
    be better off if it did occur. The most striking aspect of a single
    payer healthcare system is not what it gives to millions of working
    families and individuals, but what it takes away. It forces everyone,
    no matter how much they value their current health coverage, to give
    that up and enter into a one-size-fits-all system that would require
    significant tax increases to provide adequate financing.
    ---------------------------------------------------------------------------
        \2\ U.S. Census Bureau: Health Insurance Coverage in the United
    States: 2020 Highlights: In 2020, 8.6 percent of people, or 28.0
    million, did not have health insurance at any point during the year and
    the percentage of people with health insurance coverage for all or part
    of 2020 was 91.4.(September 14, 2021), https://www.census.gov/library/
    publications/2021/demo/p60-
    274.html#::text=Highlights,part%20of%202020%20was%2091.4.

    In addition, it is impossible to overstate the extent to which a
    government-run public health insurance option or a Medicare buy-in
    approach could destabilize the health insurance marketplace and
    generate unexpected adverse consequences for consumers and healthcare
    ---------------------------------------------------------------------------
    providers.

    Assuming that a public option or Medicare buy-in are successful in
    attracting a significant number of enrollees--entirely probable because
    the government would have the power to establish below-market out-of-
    pocket costs--private health plans would find it more difficult to
    remain competitive in the individual coverage marketplace and some
    would undoubtedly cease participation. In fact, a recent study by FTI
    Consulting \3\ found that, over the next decade, up to two million
    enrollees in the individual marketplace would lose their private health
    insurance coverage in the event a public option is enacted.
    ---------------------------------------------------------------------------
        \3\ Assessing the Impact of a Public Option on Market Stability and
    Consumer Choice, FTI Consulting (November 19, 2019), https://
    www.fticonsulting.com/-/media/files/us-files/insights/reports/2019/nov/
    impact-public-option-market-stability-consumer-choice.pdf?rev=e91f388
    b1bb543faab36366f95396e4b&hash=3BACC4822BE377790B491D34915B215F.

    Should this occur, not only will we see Americans lose choice in their
    healthcare decision making, but also healthcare providers and
    participants in employer-based private insurance plans could be harmed
    if a public option or Medicare buy-in utilizes Medicare reimbursement
    rates. That would force a destructive level of cost shifting. Thus, HLC
    ---------------------------------------------------------------------------
    strongly urges Congress to oppose these types of proposals.

    Healthcare is currently in a period of evolution, transitioning from a
    fee-for-service system to one that emphasizes value, improved outcomes,
    elevated population health, and greater cost- efficiency. To halt this
    progress in order to create a massive new single payer healthcare
    system would serve the interests of neither taxpayers nor patients. HLC
    believes that Congress should continue improving and building upon the
    current healthcare system. These improvements could include:
    Expand Private Coverage
          Offer employers and consumers more choices for their coverage,
    increasing competition in the market (e.g., value-based insurance
    designs), and removing barriers to innovation.
          Modernize health plans that are linked to health savings
    accounts (HSAs).
              Allow all catastrophic and bronze health plans to
    qualify as HSA-eligible.
              Allow flexibility for high-deductible health
    plans (HDHPs) to reimburse certain services, treatments, or medications
    necessary to treat chronic health conditions before an enrollee has met
    their deductible, which will allow millions of Americans in HSA-
    eligible plans to better afford essential services.
          Expand Health Reimbursement Arrangements by allowing them to
    fund the purchase of short-term renewable health insurance plans, which
    can be much more affordable than traditional plans.
    Health Insurance Exchanges Stabilization
          Provide regulatory relief to allow States to redirect subsidies
    according to the unique needs of healthcare beneficiaries in their
    States.
          Continue the current auto-reenrollment process. Auto-
    reenrollment promotes continuous coverage for enrollees and limits gaps
    in coverage that impede consumers' access to care. Ending or modifying
    auto-reenrollment would have serious, negative consequences for
    consumers, issuers, brokers, and exchanges.
          Continue to defer to States on ``silver loading.'' Silver
    loading refers to when health insurers load premium increases into the
    popular silver-level exchange plans to make up for the loss of cost-
    sharing reduction payments. Removing silver loading would increase the
    number of uninsured and result in significant consumer premium
    increases for both those eligible and ineligible for Advanced Premium
    Tax Credits (APTCs). State regulators are in the best position to
    identify which rating practices will best protect consumers in their
    States.
          Fix the ``family glitch'' in which the cost to add family
    members to an individual's employer-sponsored health insurance is not
    considered when determining ``affordability.''
          Educate stakeholders on how to enroll potential beneficiaries
    using mass communication technology without violating the Telephone
    Consumer Protection Act.

    Medicaid Expansion

    HLC shares your goal of achieving greater healthcare affordability so
    that every American had the opportunity to attain quality coverage. The
    American Rescue Plan Act has helped strengthen healthcare quality and
    access during the COVID-19 public health crisis. However, more is
    needed to close the coverage gap in Medicaid non-expansion States.
    Adults who fall into the coverage gap have incomes above their state's
    eligibility for Medicaid but below poverty, the minimum income
    eligibility for tax credits through the Affordable Care Act
    marketplace. This makes coverage unaffordable for most of these
    individuals.

    Research shows that Medicaid expansion has wide-ranging benefits,
    including reducing overall mortality, as well as cardiovascular disease
    and liver disease. It has decreased racial disparities in coverage
    rates, affordability of care, and in some States, health outcomes
    including maternal mortality. Some 60 percent of people in the gap in
    2019 were people of color, reflecting longstanding racial and ethnic
    disparities in healthcare access that coverage expansions would do much
    to address. Closing the coverage gap, by allowing individuals in non-
    expansion States access to the health insurance exchanges or other
    means, and providing more Americans with quality, affordable,
    healthcare coverage is vitally important to reducing both the uninsured
    rate and health inequities across the United States.

    Thank you again for your efforts to improve healthcare coverage in
    America. HLC looks forward to continuing to collaborate with you on
    this important issue. If you have any questions, please do not hesitate
    to contact Debbie Witchey at (202) 449-3435 or dwitchey@hlc.org.

    Sincerely,

    Mary R. Grealy
    President

                                     ______

           HR Policy Association and American Health Policy Institute

                       1001 19th Street North, Suite 1002

                              Arlington, VA 22209

        HR Policy Association represents the chief human resource officers
    of more than 390 of the largest employers in the United States.
    Collectively, their companies provide health-care coverage to over 21
    million employees and dependents in the United States. The American
    Health Policy Institute, which was created by the Association, serves
    to examine the challenges employers face in providing health care to
    their employees and recommends policy solutions to promote the
    provision of affordable, high-quality, employer-based health care.

        Employer-sponsored health coverage is a critical pillar of the
    American health-care system with significant strengths public programs
    cannot provide. For example, employers can act more quickly than public
    programs to adopt new technologies and plan offerings that improve the
    quality of care and help control costs. Employers can also tailor their
    health benefits to the unique needs of their employee populations and
    can therefore provide more efficient and effective care.

        HR Policy Association members believe all Americans should have
    access to affordable choices for high-quality health care and reforms
    should focus on improving access while reducing unnecessary costs. When
    considering health-care reforms to address coverage issues, Congress
    should follow the following principles:

          Preserve employer-sponsored health coverage: Reforms should
    strengthen employer-sponsored health coverage so that companies are
    encouraged to continue to provide coverage to their employees.
    Employers are in a unique position to advocate for their employees to
    receive value-based care and services and to encourage employees to
    engage in their care and health.

          Foster innovation: Employers and the health care supply chain
    should have the flexibility to design and implement health care benefit
    solutions, payment models, and information exchange to ensure best
    health outcomes through evidence-based treatments and reduced waste.
    Federal policies should leverage and encourage this innovation by
    reducing unnecessary and costly mandates and restrictions.

          Increase transparency: Reforms should enable employees to be
    prudent consumers of health care by fostering patient and employer
    access to appropriate health-care value, price and quality data while
    protecting individual privacy and security. Common data definition and
    standards are required to allow consistent evaluation of value across
    the health-care ecosystem.

          Drive quality improvement: All stakeholders--employers,
    providers, insurers, intermediaries, individuals, and government should
    work towards a common set of quality measures to improve the health of
    consumers and ensure Americans receive appropriate, high-quality care.

        Employers have a great stake in the development and implementation
    of health-care policies. We urge Congress to devote its attention and
    resources toward addressing systematic cost drivers and wasteful
    spending. We stand ready to work with the 117th Congress in a
    bipartisan manner to strengthen and preserve our nation's private-
    sector employment-based health system.

                                     ______

                  National Association of Health Underwriters

                      1212 New York Avenue, NW, Suite 1100

                              Washington, DC 20005

                                  202-552-5060

                                  www.nahu.org

    I am writing on behalf of the National Association of Health
    Underwriters (NAHU), a professional association representing over
    100,000 licensed health insurance agents, brokers, general agents,
    consultants, and employee benefits specialists. The members of NAHU
    work daily to help millions of individuals and employers of all sizes
    purchase, administer, and utilize health plans of all types.

    The health insurance agents and brokers that NAHU represents are a
    vital piece of the health insurance market and play an instrumental
    role in assisting employers and individual consumers with choosing the
    health plan or plans that is best for them. Eighty-two percent of all
    firms use a broker or consultant to assist in choosing a health plan
    for their employees \1\ and eighty-four percent of people shopping for
    individual exchange plans found brokers helpful--the highest rating for
    any group assisting consumers.\2\ Additionally, premiums are 13 percent
    lower in counties with the greatest concentration of brokers.\3\
    Consequently, the NAHU membership has a vested interest in ensuring
    that consumers enjoy affordable health coverage that is the correct fit
    for their clients.
    ---------------------------------------------------------------------------
        \1\ Kaiser Family Foundation. Employee Health Benefits Annual
    Survey. October 2013.
        \2\ Blavin, Fredric, et al. Obtaining Information on Marketplace
    Health Plans: Websites Dominate but Key Groups Also Use Other Sources.
    Urban Institute. June 2014.
        \3\ Karaca-Mandic, Pinar, et al. The Role of Agents and Brokers in
    the Market for Health Insurance. National Bureau of Economic Research.
    August 2013.

    Approximately 156 million Americans, nearly half of the country's total
    population, are enrolled in health insurance coverage from their
    employer. Recent surveys indicate that most adults are satisfied with
    their current health coverage, with those enrolled in employer plans
    the most satisfied.\4\ For those who qualify for Medicare, 96 percent
    of Medicare Advantage beneficiaries are satisfied with their quality of
    care, as are 95 percent of those covered by traditional Medicare.\5\
    This means that employer-sponsored insurance and Medicare are some of
    the most popular forms of health coverage in the United States.
    ---------------------------------------------------------------------------
        \4\ Collins, Sara. What Do Americans Think About Their Health
    Coverage Ahead of the 2020 Election? Findings from the Commonwealth
    Fund Health Insurance in America Survey, March--June 2019. Commonwealth
    Fund. Sept. 2019.
        \5\ Jacobson, Gretchen, et al. Medicare Advantage vs. Traditional
    Medicare: How Do Beneficiaries' Characteristics and Experiences Differ?
    Commonwealth Fund. 14 October 2021.

    Because many people have a positive opinion of Medicare, the world
    ``Medicare'' has frequently been used by those who advocate for a
    greater role for the government in health-care delivery, such as a
    single-payer system. Since beneficiary satisfaction rates for Medicare
    and Medicare Advantage are generally high, using the word ``Medicare''
    or using Medicare as a starting off place for changes often draws the
    attention even of those who otherwise would say they aren't interested
    in a single-payer health-care system. However, public polling indicates
    that most Americans do not support such a shift in our system. While
    most Americans believe the federal government can do more to help
    provide health insurance and believe in the idea of universal health
    coverage, once they learn more about how a single-payer system would
    work, support for such an idea drops dramatically. For example, 60
    percent of consumers oppose any major shift that would threaten the
    current Medicare program.\6\ Because of this and the high level of
    satisfaction in both the current Medicare program and in employer
    sponsored coverage, care should be taken to ensure that any future
    proposals aimed at increasing Americans' access to affordable health
    coverage not jeopardize the employer-sponsored market or the Medicare
    program as they are currently structured.
    ---------------------------------------------------------------------------
        \6\ Kaiser Family Foundation. Public Opinion on Single-Payer,
    National Health Plans, and Expanding Access to Medicare Coverage. 16
    October 2020.

    Some proposals envision new government programs such as a public option
    competing with private coverage in order to increase market
    competition. Unfortunately, these proposals may do just the opposite.
    In order for market competition to work in any market, the market rules
    must be the same for all market participants. When the government
    offers a product that competes with private coverage, it plays by a
    different set of rules, because it can mandate the level of healthcare
    provider payments. This creates an unlevel playing field in the
    insurance market where it is offered, since private plans must
    negotiate the best rates they can but are unable to force providers to
    accept lower rates. Medicare sets reimbursement rates lower than
    private payers and the costs are shifted to the private market; since
    Medicare pays providers an average of 80 percent of the cost of care
    delivered,\7\ and some rate differentials are even higher. Providers
    routinely make up for this shortfall by charging private plans more.\8\
    Since medical expenses are the biggest part of any premium dollar by
    law, this means that the competing plan offered by the government will
    be priced artificially lower than private coverage. Eventually these
    government plans would push private coverage out of existence.
    ---------------------------------------------------------------------------
        \7\ Centers for Medicare and Medicaid Services. How to Use the
    Searchable Medicare Physician Fee Schedule (MPFS). March 2021.
        \8\ Milliman. Why hospital cost shifting is no longer a viable
    strategy. June 2010.

    Some provisions to extend federal healthcare programing, including
    lowering the eligibility age for Medicare would create a comparable
    imbalance in the current individual market because of this unequal
    pricing ability. It creates a similar problem in the employer market
    because, under current proposals, employees in employer-sponsored plans
    would be able to opt out of employer coverage in favor of buying into
    Medicare. Additionally, in the employer market, this opt-out ability
    would create adverse selection in the employer market as those opting
    out of employer coverage in favor of Medicare would likely be most
    attractive to employees who were younger and healthier since Medicare
    benefits are less generous than those found in most employer sponsored
    plans. This would leave those remaining in the employer coverage likely
    to be older and sicker, potentially damaging the viability of the pool
    ---------------------------------------------------------------------------
    of covered individuals in the employer plan.

    On top of the unlevel playing field it would create, lowering
    Medicare's eligibility age would not significantly increase the number
    of people with insurance. Almost two-thirds of the more than 20 million
    people between the ages of 60 and 64 already have private health
    coverage, with 25 percent obtaining public coverage through Medicaid or
    other government programs. And 11 percent purchase plans on the
    individual market, including through the ACA's exchanges. Less than 10
    percent of people in this age group are uninsured. In other words,
    expanding Medicare would simply replace the soon-to-be seniors'
    existing coverage, which is typically private, with publicly funded
    coverage.

    Additionally, Medicare scarcely has enough money to cover the costs of
    its current beneficiaries. According to the latest report from its
    trustees, Medicare's hospital insurance trust fund will be exhausted by
    2026.\9\ At that point, the program will not be taking in enough in tax
    revenue to pay claims. The federal government may have to unilaterally
    cut rates to providers, which would undermine patients' ability to
    access care. With insolvency looming for Medicare, expanding the
    program is not prudent nor fiscally appropriate.
    ---------------------------------------------------------------------------
        \9\ Stewart, Jackie. Medicare Part A Funds to Run Out in 2026.
    Kiplinger. 31 August 2021.

    While lowering Medicare eligibility and creating a single-payer system
    or public option would undoubtedly threaten the Medicare program and
    private markets, there are other proposals that also threaten the
    system as is. One of the most important structures in the health
    insurance market is the barrier between employer-
    sponsored health coverage and the individual market, commonly referred
    to as ``the firewall.'' The firewall prevents employees who have an
    offer of affordable minimum value job-based coverage from receiving
    premium tax credits in the marketplace; this is one ACA provision that
    has been most useful in limiting disruption to individuals already
    enrolled in employer-sponsored coverage. Any proposal that seeks to
    eliminate or significantly weaken this firewall threatens the viability
    of the
    employer-sponsored market and could result in crowding out. High levels
    of crowd-out could encourage employers to drop coverage, causing many
    of those who previously had access to employer plans to search for a
    ---------------------------------------------------------------------------
    new plan or go uninsured.

    ACA premium tax credits are helpful for consumers who receive
    individual market coverage from the ACA Marketplace. Since the passage
    of the American Rescue Plan Act, premium tax credits have been extended
    to those with incomes above 400 percent of the federal poverty level,
    reducing premium contributions significantly for those who purchase
    coverage on the individual market. NAHU supports expanding and building
    upon the ACA in this fashion, as opposed to any sweeping changes to the
    Medicare program that could jeopardize the entire system. However,
    these expanded subsidies are only effective when there is a clear line
    between the individual market and employer-sponsored market. For these
    reasons, any future proposals impacting health insurance must maintain
    the ACA's firewall.

    We appreciate the opportunity to provide these comments and would be
    pleased to respond to any additional questions or concerns of the
    committee. If you have any questions about our comments or if NAHU can
    be of assistance as you move forward, please do not hesitate to contact
    me at either (202) 595-0639 or jtrautwein@nahu.org.

    Sincerely,

    Janet Stokes Trautwein
    CEO, National Association of Health Underwriters

                                     ______

                           National Retail Federation

                      1101 New York Avenue, NW, Suite 1200

                              Washington, DC 20005

                                  www.nrf.com

                                October 25, 2021

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chairman                            Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
    Washington, DC 20510                Washington, DC 20510

    Dear Senators Wyden and Crapo:

        On behalf of the National Retail Federation (NRF), I write to thank
    you for holding your recent hearing on ``Health Insurance Coverage in
    America: Current and Future Role of Federal Programs.'' NRF strongly
    supports employment-based coverage and urges this Committee to guard
    against disrupting this vital base of coverage.

        NRF is the world's largest retail trade association, representing
    discount and department stores, home goods and specialty stores, Main
    Street merchants, grocers, wholesalers, chain restaurants and internet
    retailers from the United States and more than 45 countries. Retail is
    the nation's largest private-sector employer, supporting one in four
    U.S. jobs--52 million working Americans. Contributing $3.9 trillion to
    annual GDP, retail is a daily barometer for the nation's economy.

        More than 181 million Americans get their health coverage today
    through employers. Employer-sponsored insurance provides employers and
    other stakeholders with incentives and opportunities to innovate,
    strengthen and protect the system from threats. This is the single
    largest source of coverage in America today.

        The nationally uniform framework established by the Employee
    Retirement Income Security Act (ERISA) is the backbone of the employer-
    based health-care system because it allows employers to maintain common
    benefit plans, which provide employees comprehensive, affordable plan
    options. Preserving employers' ability to offer and maintain uniform
    and affordable benefit plans across the country is key to preserving
    the employer-sponsored benefits system.

        Policymakers should avoid policies that weaken the pillars that
    support employer-sponsored insurance. Policy proposals that threaten
    ERISA's uniformity or seek to change the tax treatment of coverage will
    decrease innovation and increase costs for employees. These proposals
    threaten the very basis of coverage for most working Americans.

        Public programs like Medicare, Medicaid and the exchanges serve a
    vital and irreplaceable role in our health-care system. Some proposals
    to expand Medicare, Medicaid, or increase Affordable Care Act
    subsidization could disrupt employer-
    sponsored insurance by cannibalizing employees from employer-sponsored
    group coverage. For example, an employee-optional early buy-in to
    Medicare or subsidized enrollment in the individual market could saddle
    the employer plan's risk pool with less healthy employees who prefer
    the richer coverage available in the employer plan. The natural risk
    balance in employer plans between younger, older, healthier or less
    healthy employees helps to keep coverage more affordable for all
    employees and covered dependents in the group.

        The employer-based health-care system would also be harmed by the
    enactment of civil monetary penalties for mental health parity
    violations. Addressing the current mental health crisis will require
    significant efforts in partnership between employers, providers,
    government, patient groups and other stakeholders. The imposition of
    new civil monetary penalties would only poison these efforts.

        Thank you for the opportunity to share these thoughts on the
    importance of the employer-based health-care system. We respectfully
    request this letter be included in the record of the hearing. We look
    forward to working with you to enhance access to health care for all
    Americans.

    Sincerely,

    David French
    Senior Vice President, Government Relations

                                     ______

                            National Taxpayers Union

                                October 19, 2021

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chair                               Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
    Washington, DC 20510                Washington, DC 20510

    Dear Chair Wyden, Ranking Member Crapo, and Members of the Senate
    Finance Committee:

    On behalf of National Taxpayers Union (NTU), the nation's oldest
    taxpayer advocacy organization, I wish to submit a statement for the
    record for the Committee's October 20 hearing, ``Health Insurance
    Coverage in America: Current and Future Role of Federal Programs.''\1\
    NTU strongly believes that lawmakers should narrow their focus and work
    towards closing health coverage gaps in a manner that favors the lower
    costs and increased efficiency of private health coverage over federal
    health programs. Unfortunately, some of the recent proposals from
    lawmakers that would greatly expand Medicare coverage or enhance
    Affordable Care Act (ACA) premium subsidies for six-figure households
    would increase the taxpayer's burden for subsidizing health coverage in
    the U.S. without meaningfully reducing coverage gaps.
    ---------------------------------------------------------------------------
        \1\ Senate Committee on Finance. ``Health Insurance Coverage in
    America: Current and Future Role of Federal Programs.'' October 2021.
    Retrieved from: https://www.finance.senate.gov/hearings/health-
    insurance-coverage-in-america-current-and-future-role-of-federal-
    programs. (Accessed October 19, 2021.)
    ---------------------------------------------------------------------------

    NTU's Stake in Health Coverage Policy

    Given the nation's taxpayers heavily subsidize both private and public
    health coverage, NTU has an important stake in the present and future
    direction of federal subsidies for health coverage. Some context may
    help frame our viewpoints and policy recommendations.

    According to a Congressional Budget Office (CBO) study released in
    2020, federal support for health insurance--for individuals under 65
    alone (i.e., not including the cost of Medicare coverage for
    individuals 65 and older)--was projected to total $921 billion in
    fiscal year (FY) 2021.\2\ Nearly half of that support (47 percent, or
    $433 billion) went to Medicaid and the Children's Health Insurance
    Program (CHIP), programs designed to primarily support low-income and
    disabled individuals. Just under a third of FY 2021 taxpayer support
    for health coverage (32.9 percent, or $303 billion) went to the tax
    exclusion employers and employees receive for employer-sponsored health
    insurance. The remaining 20 percent or so of federal support went to
    ACA marketplace subsidies (in most cases, premium tax credits (PTCs))
    or Medicare coverage for individuals under 65.
    ---------------------------------------------------------------------------
        \2\ Congressional Budget Office (CBO). ``Federal Subsidies for
    Health Insurance Coverage for People Under 65: 2020 to 2030.''
    September 2020. Retrieved from: https://www.cbo.gov/system/files/2020-
    09/56571-federal-health-subsidies.pdf. (Accessed October 19, 2021.)

    Put another way, the federal government currently spends (or foregoes
    taxation on) nearly $1 trillion supporting the health coverage of
    individuals under 65. These combined costs are projected to grow nearly
    48 percent over the next 10 years--outpacing expected inflation--to
    $1.36 trillion in FY 2030.\3\
    ---------------------------------------------------------------------------
        \3\ Ibid.

    Put yet another way--framing these costs over 10 years, as lawmakers
    are doing with their reconciliation and infrastructure plans--federal
    spending and subsidies for health coverage for individuals under 65
    will total a staggering $10.8 trillion over the decade.\4\ This is
    nearly double the reported cost of President Biden's original Build
    Back Better agenda of $5.5 trillion.
    ---------------------------------------------------------------------------
        \4\ Ibid.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Lawmakers' approaches to closing health coverage gaps and/or
    subsidizing health coverage can have substantially larger budget
    implications for taxpayers than the entire reconciliation package being
    fiercely negotiated in Congress, making the Committee's hearing an
    extremely important endeavor.

    NTU Principles for Health Coverage Policy

    As a taxpayer advocacy organization, NTU urges lawmakers to pursue
    health coverage policies that adhere to two broad principles: (1) have
    a narrow focus to closing health coverage gaps that prioritizes low-
    income individuals who do not have access to subsidized care elsewhere,
    and (2) pursue the lower costs and increased efficiency of private
    health coverage over federal health programs.

    NTU Concerns With ACA and Medicare Expansion Proposals

    Unfortunately, several current reconciliation proposals violate both of
    these principles while committing taxpayers to hundreds of billions of
    dollars in additional health coverage subsidies over the next decade.
    Premium Tax Credit (PTC) Expansion
    NTU has warned for years that ACA premium tax credit (PTCs) expansion
    is ill-suited to reducing coverage gaps in a cost-effective manner,
    primarily for three reasons: (1) expansion is expensive (a $212 billion
    deficit impact over 10 years, according to a 2020 estimate from the
    Congressional Budget Office);\5\ (2) targeting generous PTCs to
    households making six figures or more is a poor use of limited taxpayer
    dollars; and (3) PTCs are not designed to bend the cost curve for
    private health coverage, and will only increase in cost as premium
    hikes outpace wage increases.\6\
    ---------------------------------------------------------------------------
        \5\ CBO. ``Estimated Effect on the Deficit of Rules Committee Print
    116-56, the Patient Protection and Affordable Care Enhancement Act.''
    June 24, 2020. Retrieved from: https://www.cbo.gov/system/files/2020-
    06/Patient_Protection_and_Affordable_Care_Enhancement_Act_
    0.pdf. (Accessed October 19, 2021.)
        \6\ Lautz, Andrew. ``What's the Deal With Premium Tax Credits?''
    National Taxpayers Union, September 23, 2021. Retrieved from: https://
    www.ntu.org/publications/detail/whats-the-deal-with-premium-tax-
    credits.

    We have also demonstrated how, under House Democrats' PTC expansion
    plan, an upper-middle class family of four that sees their income
    steadily rise from $125,000 per year to $250,000 per year over a 15-
    year period, earning $2.7 million over that time (or about $180,000 per
    year on average), could receive nearly $60,000 in PTCs under the
    reconciliation expansion plan.\7\ This would be an extraordinary
    misallocation of taxpayer dollars, supporting the premium costs of an
    affluent household that likely does not need taxpayer-funded
    assistance. While a substantial portion of PTC dollars may still go to
    low-income families in the form of refundable credits, we are seeing
    some early evidence that a concerning proportion of PTC recipients
    under the temporary, American Rescue Plan expansion of PTCs are making
    above 400 percent of the federal poverty level (FPL)--over seven
    percent (or 150,000) of 2.1 million HealthCare.gov enrollees from
    February through August 2021.\8\
    ---------------------------------------------------------------------------
        \7\ Ibid.
        \8\ Department of Health and Human Services. ``2021 Final
    Marketplace Special Enrollment Period Report.'' September 2021.
    Retrieved from: https://www.hhs.gov/sites/default/files/2021-sep-final-
    enrollment-report.pdf. (Accessed October 19, 2021.)

    We would add that several design features of the PTC expansion increase
    taxpayer subsidies of health coverage but may not meaningfully reduce
    health coverage gaps, including but not limited to: (1) increasing the
    value of PTCs for existing beneficiaries by reducing the proportion of
    income that households are expected to contribute to insurance
    premiums, including for individuals making above 400 percent of the
    FPL, (2) allowing individuals to access PTCs regardless of income
    level, (3) allowing individuals who received any unemployment benefits
    in a year to access PTCs as if they made only 150 percent of the FPL,
    and (4) limiting recapture of excess PTCs regardless of income. Given
    the Joint Committee on Taxation (JCT) estimated that these provisions
    for 2020-2022 alone would have a $45.6 billion budget impact,\9\ it is
    conceivable that lawmakers seeking to make these policies permanent
    could spend tens of billions of dollars over a decade subsidizing care
    for individuals who already have or otherwise would have coverage.
    ---------------------------------------------------------------------------
        \9\ Joint Committee on Taxation. ``Estimated Revenue Effects of
    H.R. 1319, The `American Rescue Plan Act of 2021,' as Amended by the
    Senate, Scheduled for Consideration by the House of Representatives.''
    March 9, 2021. Retrieved from: https://www.jct.gov/publications/2021/
    jcx-14-21/. (Accessed October 19, 2021.)
    ---------------------------------------------------------------------------
    Medicare Benefit Expansion
    Depending on how lawmakers structure the timing of expanding Medicare
    to dental, vision, and hearing benefits, and depending on how universal
    lawmakers make the benefits, the 10-year costs of Medicare benefit
    expansion may run up to $350 billion.\10\ This potentially significant
    commitment of taxpayer dollars would not provide comprehensive health
    insurance to a single individual in the country, but instead would
    provide ancillary benefits to tens of millions of seniors, many of who
    already have dental, vision, and hearing coverage through Medicare
    Advantage.
    ---------------------------------------------------------------------------
        \10\ CBO. ``H.R. 3, The Elijah E. Cummings Lower Drug Costs Now
    Act.'' December 10, 2019. Retrieved from: https://www.cbo.gov/system/
    files/2019-12/hr3_complete.pdf#page=10. (Accessed October 19, 2021.)

    The reconciliation proposal would provide universal dental, vision, and
    hearing coverage under Medicare Part B, but over 90 percent of Medicare
    Advantage enrollees are in plans that offer some access to dental,
    vision, and hearing coverage.\11\ What's more, of all Medicare
    beneficiaries (in traditional Medicare and Medicare Advantage) the
    median cost in 2018 for hearing care was $60, for dental care was $244,
    and for vision care was $130.\12\ While we would not dispute that
    dental, vision, and hearing care is health care, and while we would not
    dispute the plain evidence that some seniors are in need of dental,
    vision, or hearing care and struggle to afford it, the reconciliation
    proposal misfires in providing a universal, taxpayer-funded benefit to
    millions of beneficiaries who already have coverage for such services.
    ---------------------------------------------------------------------------
        \11\ Freed, Meredith; Cubanski, Juliette; Sroczynski, Nolan;
    Ochieng, Nancy; and Neuman, Tricia. ``Dental, Hearing, and Vision Costs
    and Coverage Among Medicare Beneficiaries in Traditional Medicare and
    Medicare Advantage.'' Kaiser Family Foundation, September 21, 2021.
    Retrieved from: https://www.kff.org/health-costs/issue-brief/dental-
    hearing-and-vision-costs-and-coverage-among-medicare-beneficiaries-in-
    traditional-medicare-and-medicare-advantage/. (Accessed October 19,
    2021.)
        \12\ Ibid.

    Together, the ACA and Medicare expansion proposals envisioned by House
    Democrats could cost $553 billion, according to a recent CBO
    estimate.\13\ While not every dollar therein would go to beneficiaries
    who have access to coverage and care already, the above evidence
    suggests that hundreds of billions of dollars at minimum would not
    meaningfully reduce the coverage gap.
    ---------------------------------------------------------------------------
        \13\ CBO. ``Re: Provisions in Reconciliation Legislation That Would
    Affect Health Insurance Coverage of People Under Age 65.'' October 19,
    2021. Retrieved from: https://energy
    commerce.house.gov/sites/democrats.energycommerce.house.gov/files/
    documents/Letter_
    Honorable_Jason_Smith.pdf. (Accessed October 19, 2021.)
    ---------------------------------------------------------------------------

    Lawmakers Should Focus Coverage Gap Efforts Narrowly

    While numerous headlines and reports focus on the fact that nearly 30
    million people in the U.S. are uninsured, few reports we have reviewed
    provide a narrower focus on what proportion of that uninsured
    population both (a) cannot afford any type of comprehensive health
    coverage and (b) cannot access any subsidized health coverage under
    current law and policy.

    CBO's 2020 report, ``Who Went Without Health Insurance in 2019, and
    Why?'' is instructive.\14\
    ---------------------------------------------------------------------------
        \14\ For more, see: CBO. ``Who Went Without Health Insurance in
    2019, and Why?'' September 2020. Retrieved from: https://www.cbo.gov/
    system/files/2020-09/56504-Health-Insurance.pdf. (Accessed October 19,
    2021.)

    Of 29.8 million Americans uninsured in 2019, two-thirds (20 million
    total) were eligible for subsidized coverage, either through Medicaid,
    CHIP, employment-based coverage, or ACA marketplace subsidies.\15\
    ---------------------------------------------------------------------------
        \15\ Statistics in this section are sourced from CBO's report,
    unless otherwise noted.

    Of the remaining 9.8 million Americans, who were uninsured in 2019 and
    could  access subsidized coverage, around 40 percent (4 million) were
    not lawfully present in the U.S. NTU does not weigh in on immigration
    matters, so we focus our analysis here on the remaining 5.8 million
    Americans: those who are not covered by Medicaid but would be if their
    state expanded Medicaid under the ACA (3.2 million) and those who have
    income that is too high to receive ACA subsidies and also do not have
    ---------------------------------------------------------------------------
    access to employer-sponsored care.

    More recent estimates of the Medicaid coverage gap are closer to 2.2
    million than 3.2 million,\16\ meaning that this is the population
    lawmakers should be focusing on with new initiatives to close the
    coverage gap. There is a major difference between attempting to provide
    coverage to 30 million Americans (one in nine Americans) and 2.2
    million Americans (less than one in 100 Americans). And a far narrower
    problem calls for far narrower solutions.
    ---------------------------------------------------------------------------
        \16\ Garfield, Rachel; Orgera, Kendal; and Damico, Anthony. ``The
    Coverage Gap: Uninsured Poor Adults in States that Do Not Expand
    Medicaid.'' Kaiser Family Foundation, January 21, 2021. Retrieved from:
    https://www.kff.org/medicaid/issue-brief/the-coverage-gap-uninsured-
    poor-adults-in-states-that-do-not-expand-medicaid/. (Accessed October
    19, 2021.)

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

     Lawmakers Should Focus on Cost-Effective Private-Sector Solutions
                        to Closing Coverage Gap

    Some lawmakers are considering a federal Medicaid expansion proposal
    that would cost up to $323 billion over a decade to close the 2.2
    million-person coverage gap noted above.\17\ Unfortunately, substantial
    research indicates that the subsidy cost per person for public health
    coverage is much higher than private health coverage, and that public
    health programs are subject to high improper payment rates that put
    taxpayer dollars at risk. Policymakers may see fewer taxpayer dollars
    do more to reduce the coverage gap by helping low-income Americans
    obtain more cost-
    effective private health coverage instead.
    ---------------------------------------------------------------------------
        \17\ CBO. ``Re: Provisions in Reconciliation Legislation That Would
    Affect Health Insurance Coverage of People Under Age 65.'' October 19,
    2021. Retrieved from: https://energycommerce.house.gov/sites/
    democrats.energycommerce.house.gov/files/documents/
    Letter_Honorable_Jason_Smith.pdf. (Accessed October 19, 2021.)

    The average subsidy per recipient of employer-provided coverage (ESI)
    was $2,000 in FY 2021, according to CBO.\18\ Compare this to $5,640 per
    recipient under Medicaid and CHIP. CBO projects that gap will narrow
    over the next decade, but Medicaid and CHIP subsidies will still more
    than double the average subsidy for ESI.
    ---------------------------------------------------------------------------
        \18\ Congressional Budget Office (CBO). ``Federal Subsidies for
    Health Insurance Coverage for People Under 65: 2020 to 2030.''
    September 2020. Retrieved from: https://www.cbo.gov/system/files/2020-
    09/56571-federal-health-subsidies.pdf. (Accessed October 19, 2021.)

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    In other words, ESI subsidies are far more cost-effective on a per-
    recipient basis than Medicaid and CHIP. While the difference may be
    explained by a number of factors, one worth considering is the
    extraordinarily high improper payment rate in Medicaid.\19\
    ---------------------------------------------------------------------------
        \19\ Improper payments are evidence that fraud or misuse of funds
    may exist, but are not completely indicative of fraudulent payments or
    other misdeeds. As CMS writes: ``Improper payments are payments that
    did not meet statutory, regulatory, administrative, or other legally
    applicable requirements and may be overpayments or underpayments.'' For
    more, see: CMS. ``2020 Estimated Improper Payment Rates for Centers for
    Medicare and Medicaid Services (CMS) Programs.'' November 16, 2020.
    Retrieved from: https://www.cms.gov/newsroom/fact-sheets/2020-
    estimated-improper-payment-rates-centers-medicare-medicaid-services-
    cms-programs#_ftn1. (Ac
    cessed October 19, 2021.)

    According to 2020 data from the Centers for Medicare and Medicaid
    Services (CMS), Medicaid comprised nearly two-thirds of all CMS
    improper payments in Medicare and Medicaid in 2020, $86.5 billion out
    of $134.2 billion.\20\ The Medicaid improper payment rate of 21.36
    percent was 18.6 times higher than improper payments in Medicare Part D
    and 3.1 times higher than improper payments in Medicare Advantage, two
    subsidized health coverage programs that rely primarily on private
    insurers.
    ---------------------------------------------------------------------------
        \20\ Ibid.

    And as health experts like the Galen Institute's Brian Blase have
    pointed out, access to care (and not just coverage) in Medicaid raises
    ---------------------------------------------------------------------------
    concerns for proponents of the program. As Blase wrote in 2020:

            Coverage is not the same thing as care. A 2019 study by the
            Medicaid and CHIP Payment and Access Commission, a
            congressional advisory group, found that one-third of primary
            care physicians and nearly two-thirds of psychiatrists do not
            accept Medicaid patients. Doctors cite difficult Medicaid
            paperwork, administrative burdens, and poor reimbursement rates
            as reasons they do not accept more patients on the program.\21\
    ---------------------------------------------------------------------------
        \21\ Blase; Brian; Adolphsen, Sam; and Turner, Grace-Marie. ``Why
    States should not expand Medicaid.'' Galen Institute, October 6, 2020.
    Retrieved from: https://galen.org/assets/Reasons-Not-to-Expand-
    Medicaid-100620.pdf. (Accessed October 19, 2021.)

    That said, closing the coverage gap is a laudable goal both on public
    health grounds and fiscal grounds, if the problem and the solutions are
    properly defined. Estimates for the cost of uncompensated or charity
    care (the latter a subset of uncompensated care payments) vary, but
    range from anywhere between $14 billion for nonprofit hospitals'
    charity care (2017 estimate) \22\ to $41.6 billion for all hospitals'
    uncompensated care (2020).\23\ CBO has found that ``it is likely that
    being uninsured results in worse health outcomes, at least for some
    people.''\24\ In short, there are societal and taxpayer costs to
    millions of Americans wanting access to affordable health coverage with
    no subsidized options available to them.
    ---------------------------------------------------------------------------
        \22\ Bai, Ge; Yehia, Farah; and Anderson, Gerard F. ``Charity Care
    Provision by U.S. Nonprofit Hospitals.'' JAMA Internal Medicine,
    February 17, 2020. Retrieved from: https://jamanetwork.com/journals/
    jamainternalmedicine/fullarticle/2760774. (Accessed October 19, 2021.)
        \23\ American Hospital Association. ``Fact Sheet: Uncompensated
    Hospital Care Cost.'' January 2021. Retrieved from: https://
    www.aha.org/fact-sheets/2020-01-06-fact-sheet-uncompensated-hospital-
    care-cost. (Accessed October 19, 2021.)
        \24\ CBO. ``Who Went Without Health Insurance in 2019, and Why?''
    September 2020. Retrieved from: https://www.cbo.gov/system/files/2020-
    09/56504-Health-Insurance.pdf. (Accessed October 19, 2021.)

    However, the evidence is clear that the private sector will have more
    cost-effective solutions to reducing the coverage gap. Two avenues
    where lawmakers should explore reforms and, possibly, support for low-
    income Americans are (1) employer-
    ---------------------------------------------------------------------------
    provided care and (2) consumer-directed health savings accounts (HSAs).

    As noted above, taxpayer support for employer-sponsored insurance (ESI)
    is far lower than subsidies for public health coverage. That said, the
    tax exclusion for ESI is far from perfect. Some evidence demonstrates
    the exclusion puts upward pressure on health insurance premiums, at the
    expense of higher wages, and it is worth noting that 37 percent of the
    tax benefit in 2018 went to households making 600 percent or more of
    the FPL.\25\
    ---------------------------------------------------------------------------
        \25\ Congressional Research Service. ``Tax Expenditures: Compendium
    of Background Material on Individual Provisions.'' December 2020.
    Retrieved from: https://www.govinfo.gov/content/pkg/CPRT-116SPRT42597/
    pdf/CPRT-116SPRT42597.pdf#page=901. (Accessed October 19, 2021.)

    Lawmakers could explore reforms to the ESI exclusion that more narrowly
    target the benefit at taxpayers who need support and/or incentivize
    businesses that currently do not offer ESI to low-wage or low-income
    ---------------------------------------------------------------------------
    employees and contractors to do so.

    HSAs are another promising and cost-effective route for lawmakers. JCT
    estimated the costs of HSA tax subsidies for FYs 2020 through 2024 to
    total $66 billion, an average of $13.2 billion per year.\26\ If the
    average number of Americans contributing to an HSA hovers between 10
    million and 12 million people per year,\27\ then the tax expenditure
    cost per person is between just $1,100 and $1,320 per person. NTU has
    outlined numerous ways that lawmakers can expand both access to HSAs
    and the list of health expenses HSAs can cover.\28\
    ---------------------------------------------------------------------------
        \26\ Ibid.
        \27\ Ibid.
        \28\ Lautz, Andrew. ``Ideas to Expand and Promote the Use of Health
    Savings Accounts: An Alternative to Government-Run Health Insurance.''
    National Taxpayers Union, October 21, 2019. Retrieved from: https://
    www.ntu.org/publications/detail/ideas-to-expand-and-promote-the-use-of-
    health-savings-accounts-an-alternative-to-government-run-health-
    insurance.
    ---------------------------------------------------------------------------

    Conclusion

    In short, NTU appreciates that lawmakers are attempting to reduce
    health coverage gaps, and we acknowledge that closing health coverage
    gaps could bring benefits to society and to federal taxpayers. That
    said, Congress should take care to narrowly define both the uninsured
    problem that federal policies can fix and the big-picture solutions
    that lawmakers should pursue to help people that truly need taxpayer-
    funded assistance. Furthermore, those big-picture solutions should
    focus on the cost effectiveness of private health coverage, rather than
    public programs that come with significant cost, access, and improper
    payment concerns. NTU is pleased to work with Committee members on
    policies that adhere to these principles. Should you have any
    questions, I am at your service.

    Sincerely,

    Andrew Lautz
    Director of Federal Policy

    CC: Members of the Senate Committee on Finance

                                     ______

                  Partnership for Employer-Sponsored Coverage
    The Partnership for Employer-Sponsored Coverage is an advocacy alliance
    of
    employment-based organizations and trade associations representing
    businesses of all sizes and the more than 181 million American workers
    and their families who rely on employer-sponsored coverage every day.
    We are committed to working to ensure that employer-sponsored coverage
    is strengthened and remains a viable, affordable option for decades to
    come. We urge caution in considering expansion of public programs to
    safeguard employer-sponsored coverage in the years ahead.

    Employer-sponsored coverage has been the backbone of our nation's
    health system for nearly eight decades. Employers of all sizes
    contribute vast resources to employees and their families through the
    employer-sponsored system. Employers have a vested interest in health
    care quality, value, and system viability. Employers have been on the
    leading edge of health delivery innovation and modeling for decades.

    Benefits offerings and coverage plans in the employer-sponsored system
    are as diverse as employers and employees themselves. With self-insured
    coverage under the Employee Retirement Income Security Act (ERISA), an
    employer can tailor coverage to meet their workforce's specific needs
    across state lines. They pay all health claims and bear the financial
    risk and utilize third-party administrators (insurance carriers) for
    daily plan management. Through the fully-insured state regulated
    insurance market, employers purchase a prescribed benefit insurance
    product sold in a state from an insurance carrier and does not bear the
    full financial risk of claims.

    Employers have led the way in benefits design and innovation for
    decades and will continue to do so for decades to come. There is no
    one-size-fits-all employer health plan, nor should the federal
    government enact or implement laws that stifle an employer's ability to
    develop benefits offerings that meet the needs of their specific
    workforce. All levels of government should work constructively with
    private-sector employers to ensure that employers have the tools and
    flexibility to foster benefits design and innovations that provide
    employees with benefits that are crucial to the well-being of
    themselves and their families.

    The foundation of the employer-sponsored coverage system is rooted in
    workforce policy and business operations. Employers of all sizes offer
    coverage for employee recruitment and retention, and the functionality
    of a business is centered around a productive, thriving, and healthy
    workforce.The ability to offer coverage to employees and the capacity
    to operate a business for its core purposes are not mutually exclusive
    functions. An employer offer of coverage is not merely a transaction in
    which an employee fills out paperwork, enrolls in coverage, and
    receives an insurance card; it is a multi-faceted fiscal and
    operational commitment at the core of any business. As employers are
    making the decision to offer coverage and determine which type of
    coverage to offer their employees, a critical aspect of this
    deliberation is the administrative compliance costs and complexities
    associated with coverage.

    While considering legislative and regulatory policy development and
    implementation, federal lawmakers and regulators must understand and
    appreciate the societal and economic commitments employers make to our
    nation's workforce through the employer-sponsored coverage system. The
    following policy and implementation questions should be carefully
    considered in the context of today's hearing and future deliberations.

          What would ``Medicare for All'' mean for employment? Recruitment
    and retention of employees?
          How would a Medicare or Medicaid buy-in program be an advantage
    or disadvantage to employees and employers?
          How would expansion of Medicare or Medicaid through a buy-in
    effect current program beneficiaries and resources?
          How would a Medicare or Medicaid buy-in program effect timely
    access to providers and services for the influx of new beneficiaries?
          How would the employee-employer relationship change by a
    Medicare buy-in plan? Specifically with regard to working Americans
    between 50-64?
          What is a Medicare buy-in program striving to accomplish? Insure
    a cohort of uninsured? Why not consider a firewall to protect employer
    health plans?
          How would a Medicare/Medicaid buy-in program effect take-up
    rates for fully-insured employer-sponsored plans? How would it effect
    other populations of employees?
          How would the cost of existing employer coverage be affected by
    an employee-option model for Medicare buy-in?

    The Partnership for Employer-Sponsored Coverage opposes ``Medicare for
    All.'' Dismantling our nation's private-sector employment-based health
    system which provides coverage to the largest percentage of the
    population would create utter chaos and massive disruptions to the care
    system for all Americans. We urge Congress to devote its attention and
    resources toward issues to improve our current health-care system, such
    as increasing market competition, providing more coverage choices and
    access to providers for all Americans, and addressing systematic cost
    drivers and wasteful spending. Our public principles include:

          Preserving the current tax treatment of employer-sponsored
    coverage;
          Promoting innovations and diversity of plan designs and
    offerings for employees;
          Providing employers with compliance relief from burdensome
    regulations; and,
          Protecting ERISA.

    As a coalition representing business of all sizes, the Partnership for
    Employer-
    Sponsored Coverage has the unique ability to provide operational input
    across the full spectrum of the employer system--from the smallest
    family-owned business to the largest corporation. Employers have a
    great stake in the development and implementation of health-care
    policies. We stand ready to work with the 117th Congress in a
    bipartisan manner to strengthen and preserve our nation's private
    sector employment-based health system.

                                     ______

                                Patients Rising

                          700 12th St., NW, Suite 700

                              Washington, DC 20005

                 Statement of Terry Wilcox, Executive Director

    Patients Rising is a national nonprofit organization dedicated to
    advocating for the rights of patients with chronic and life-threatening
    illnesses. We work at the community, state, and federal levels to
    activate patients in support of reforms and legislation aimed at
    advancing patient access to and affordability of healthcare.

    The healthcare system in the United States has become complex,
    expensive, and impersonal. To many Americans, it seems that any
    healthcare policy debate has become nothing but a food fight between
    politicians, providers, insurance companies, pharmacy benefit managers,
    and the biopharmaceutical industry. What should be driving motivation
    of this debate--the patient--is being drowned out by special interests
    on all sides of the issue.

    The American healthcare system remains the world's leading market-based
    system that rewards scientific advancement and medical innovation. But
    currently, there are too many barriers and entrenched interests working
    against meaningful change in how healthcare is provided.

    Patients Rising, through the Patient Access and Affordability Project
    (PAAP), is working to empower patients, encourage advances in medicine,
    and disrupt the payment landscape to accommodate innovation not only in
    medicines that save lives, but also finding innovative ways to pay for
    them.

    During the October 20, 2021, Senate Finance Hearing, Health Insurance
    Coverage in America: Current and Future Role of Federal Programs, the
    areas where each party agrees to disagree are stark, but the places
    where change for patients is possible exists. It is our aim to work
    with Congress to advance patient-centered compromises.

    According to the CDC, six in ten Americans live with a chronic disease,
    and four in ten Americans live with two or more chronic diseases. At
    the same time, between 25-30 million Americans are living with a rare
    disease, more than 90% of those diseases have no treatment.

    These are the Americans that Congress should prioritize when discussing
    current and future health insurance coverage issues and reforms.

    When pre-existing conditions were no longer a barrier to accessing
    health insurance, this was a monumental moment for many Americans who
    had been unable to obtain any insurance because of these conditions.
    But now, those same patients are fighting for reasonable and fair
    access. They stand there holding a card, that in many instances denies
    the rightful access to the treatments and services they need. The
    deductible is too high, the out-of-pocket costs are skyrocketing, and
    the access to treatment is often limited.

    When a patient is left with a relatively useless insurance card, the
    pre-existing condition coverage becomes nothing more than a talking
    point. The system has failed, denying those most vulnerable patients
    meaningful healthcare.

    It is true, 90% of Americans agree with negotiating with Medicare.
    Those same Americans also want ready access to treatments when they
    need them. There is no model where price controls would result in
    maintaining world leading innovation and reliable access. For this
    reason, we hope this Committee will fully support the following health-
    care reforms:

        1.  Capping Out of Pocket Costs in Medicare Part D: Cap Medicare
    Part D below $3,100. A $2,000 cap in Medicare Part D would be life
    changing for the patients who find themselves in the catastrophic
    coverage phase. It is a small percentage of patients, but those who
    require this type of coverage often face extreme hardship. We have seen
    caps anywhere between $2,000-$3,100, but all-in-all this is a
    bipartisan solution that will help the patients who need it the most.
    This overall cap coupled with a monthly out of pocket cap referred to
    as smoothing, would go a long way in providing seniors with fixed
    incomes and high drug costs some much needed relief.

        2.  Insulin: All brands of insulin should be available to all
    patients at a fixed low cost. Insulin is a life-saving medication to
    millions of Americans, and no one should be held hostage by the extreme
    supply chain manipulation of the list price. The pharmaceutical company
    net price has been decreasing in recent years, despite list prices
    increases. However, what pharmacy benefit managers are making in
    kickbacks and fees often pay for the insulin itself several times over.
    This is an example of a supply chain that is failing patients because
    of the perverse incentives that exist within it. In this instance--and
    possibly EpiPen's as well--the pharmaceutical industry needs to sell a
    product and the patient needs to buy it from the pharmacy counter. Any
    entity in the middle purporting to save money for the system or
    patients has failed abysmally at their job.

        3.  Benefit Design and Healthcare Finance: Price negotiations will
    leave behind the sickest of patients. Therefore, alternative benefit
    design policies should prioritize doctor-patient relationships. When it
    comes to healthcare finance, there is a lot of discussion about price
    controls and fines to curb pharmaceutical pricing and lower patients
    out of pocket costs. There is no guarantee that this negotiation will
    lower out of pocket costs at the pharmacy counter for anyone. Most
    patients will not even notice. Negotiation is a false promise to the
    sickest among us that polls well with many Americans who are not sick
    or unhappy with their healthcare nor drug worried about their drug
    costs.

    Members of the Senate Finance Committee should be leading the way on
    benefit design policy. Health insurance is a card for coverage. Benefit
    design is a road to providing actual care for the patient. In many
    instances the coverage (whether it is government provided, employer
    provided, an off the shelf insurance plan, or something in between)
    provides insufficient care for those who need it the most. As a nation,
    we should be addressing these insufficiencies.

    Ultimately there are three primary payers: the government, employers,
    and patients. We recognize and acknowledge when a patient lacks access
    to coverage that all the burden falls on them. It is for this reason;
    we must simultaneously address the inequities in coverage. Everyone
    else in the supply chain is providing a product or service or serving
    as a middleman for oversight of benefits. Benefit design has become
    more cumbersome for doctors and patients, leaving many doctors
    prescribing not what is best for their patients, but what is covered.
    And sometimes what is best, is not what is covered, and in many
    instances, it is not even what is the most expensive--but you would
    never know that from the formulary design.

    Benefit decisions are driven by perverse financial incentives in the
    supply chain, with little regard for the patients themselves. Again,
    the doctor-patient relationship should be leading the change in benefit
    design, not the patient-government or the patient-employer
    relationship.

    While medical innovation is unfolding rapidly, our current healthcare
    finance system is not designed to accommodate it. We must change our
    healthcare finance system to become more efficient, nimble, and
    responsive to that innovation.

    As America spends twice as much as other industrialized countries on
    healthcare as a share of our economy. This is due, at least in part, to
    the perverse incentives created by a dated hodgepodge of federal policy
    that eliminates efficiency and creates excessive spending throughout
    the system.

    Patients Rising urges the Committee to consider the following
    solutions:

        1.  Establish a healthcare finance and payment model that rewards
    improvements in long-term care of patients.
              Incentivize innovative insurance and finance
    models that are designed to reward and encourage major breakthroughs in
    therapies and cures, while keeping the costs to patients low.
              Make doctors the primary force behind coverage
    recommendations, and not flawed frameworks with little regard for the
    doctor or the patient.
              Ensure that doctors, nurses, and other healthcare
    providers can make decisions independently to provide optimal patient
    care.

        2.  Promote the market-based healthcare model that encourages
    patient choice and maintains American leadership in life sciences and
    medical innovation.
              Audit policies and practices that can create
    perverse incentives and lead to unnecessary treatments like surgeries
    or other expensive procedures.
              Establish transparency across the health system
    to understand the actual drivers of healthcare inflation.
              Encourage entrepreneurial disruption that leads
    to the health system competing for patients, which would help lower
    costs and improve the use of health resources.
              Patients, not companies like pharmacy chains,
    should benefit financially from the data collected on individuals.

    Chairman Wyden, Ranking Member Crapo, and distinguished members of the
    Senate Finance Committee, it is our pleasure and privilege to present
    written testimony on this vital topic on behalf of Patients Rising. We
    stand ready to serve as a resource and support the work of Congress to
    protect patients.

                                     ______

                      Statement Submitted by Lee Stanfield

          Lies and Distortions at the Senate Finance Hearing 10/20/21

    Apparently, it would be more accurate to call the Center for Medicare
    and Medicaid Innovation the ``Center for Medicare and Medicaid
    Infestation'' since it clearly intends to infest Medicare with the all-
    too-familiar ideology of ``Profit Over Patients'' (the covert slogan of
    the for-profit parasites that are already so rampant in U.S.
    healthcare).

    For Representative Sheldon Whitehouse to imply that there are onerous
    hoops physicians must jump through to be paid a fee for services
    rendered, completely ignores reality, and reveals who he truly
    represents . . . the big corporate vultures who generously fund him to
    rip Medicare apart, so they will have better access to swoop in and
    greedily scavenge yet another social safety net . . . thus securing
    even more U.S. taxpayer money for their private coffers.

    Whitehouse's claims are even more insulting in light of the fact that
    the very ``Managed Care'' models he proposes are notorious for
    requiring medical professionals to fill out onerous forms and jump
    through numerous hoops just to get paid for their services. In fact,
    most physicians prefer to deal with Traditional Medicare (as opposed to
    Medicare Advantage or any other commercial insurance) precisely because
    Traditional Medicare has always been so much more dependable and prompt
    in paying for services rendered than any commercial insurance.

    This is still the case, despite the understaffing due to the decades-
    long yearly cuts to Medicare funding by our corporate-bought Congress,
    and despite the previous appointment of Medicare saboteur Seema Verma.
    Now we have Ms. Brooks-LaSure, whose previous career has been confined
    to the favorite den of the for-profit parasites . . . Medicaid and the
    ACA! Oh, how I long for someone who would just think outside that
    infested box!

    At 78, I have witnessed an ever-increasing number of stealth attempts
    to privatize Medicare via the introduction of parasitic middlemen (as
    in the Advantage plans) and the decades-long funding cuts to the
    program on the part of the corporate-owned politicians in Congress.
    Prior to this onslaught, Traditional Medicare was an excellent program
    that patients and physicians loved!

    Because (like the majority of U.S. residents) I still love Medicare, I
    will not sit by and allow this newest outrage called ``Direct
    Contracting Entity'' to be inflicted on Medicare! DCE is nothing more
    than a thinly veiled attempt to infect Medicare with yet another
    parasite to weaken it to the point where it can no longer adequately
    serve seniors. Once their dastardly goal is achieved, then the same
    corporate-owned politicians who infected Medicare with these fatal
    parasites, will loudly claim that government-run Medicare cannot be
    sustained and must be entirely privatized!

    One of the for-profit concepts that has already been proven to be an
    abject failure is the ``Value-Based Payment'' program (VBP). It has
    failed to do either of the two things it was touted to do . . .
    maintain or increase the quality, or lower the cost of healthcare.
    Instead, the VBP model is nothing but a tool for incentivizing
    providers to avoid taking on cases where the beneficiary is likely to
    be costly to treat (such as those who are seriously, chronically, or
    terminally ill). Of course, this discriminates strongly against people
    of color and the poor in general. And this is the same result that the
    DCE will generate!

    But if Whitehouse wants to talk about onerous ``treadmills'' of
    bureaucratic forms and other hurdles that take time away from actual
    patient encounters . . . all forms of Managed Care and VBP are ``poster
    children'' for that!

    In truth, the unspoken underlying goal of the DCE is to destroy
    Medicare as we know it by transferring financial risk onto providers
    through up-front speculative lump sum payments, which will incentivize
    providers to pay more attention to budgeting and cutting costs than to
    patients' welfare. This is a stealth attack on Medicare! Step by step,
    it will replace Medicare with an egregious system that values and
    incentivizes profit over patients!

    I say ``NO'' to this corrupt commercializing of Traditional Medicare! I
    will be taking this fight to the public to make them aware of this
    attempt to transform Medicare into a set of virtual ``Advantage Plans''
    (or even worse) . . . plans that will little by little limit
    beneficiaries' choice of doctors and other providers, increase the need
    for prior authorizations, incentivize providers to under-treat,
    ``cherry-pick'' and ``lemon drop'' beneficiaries, and to spend less
    time face to face with patients, while the cost of care continues to
    increase every year in order to increase the profits of the already
    ultra-wealthy!

    All these privatized models are cash cows for profit-driven health
    insurance companies at the expense of taxpayers! What you should be
    considering and discussing is how to (as quickly as possible) get
    Congress to pass and implement the most efficient, least expensive,
    highest quality healthcare possible . . . original Traditional Medicare
    expanded to cover ALL medical needs (including mental, dental, hearing,
    vision, and long-term care) for EVERYONE nationwide! And it will SAVE
    the U.S. hundreds of billions, and the average family several thousands
    of dollars every year!

    You should be STRENGTHENING Traditional Medicare instead of sabotaging
    it with the likes of either DCE or VBP!

    Lee Stanfield

                                     ______

                Western PA Coalition for Single Payer Healthcare

                                 P.O. Box 82528

                              Pittsburgh, PA 15218

                 https://www.facebook.com/westernpasinglepayer

                        Statement of Claire Cohen, M.D.

    Countless studies show that the United States healthcare system is too
    expensive and will continue to be without fundamental change. As you
    have noted, American healthcare is a greater percentage of the GDP in
    the US than in any other developed country. And it is growing greatly
    as the costs of private health insurance is greatly growing. The
    Congressional Budget Office (CBO) projects that the premium subsidies
    to private insurance companies over the next 10 years will cost $553.2
    billion. CBO also predicts that a single payer system will generate
    $650 billion dollars in savings per year by 2030. CMS has overpaid the
    private health insurers $143 billion in the last ten years. MedPAC
    projects that Medicare Advantage plans cost CMS at least $8 billion
    more than traditional Fee For Service Medicare in 2020 alone.

    A recent report by the Commonwealth Fund revealed that the most cost-
    efficient and highest quality state Medicaid Programs were the two that
    have public, non-privatized programs; and that contracting Medicaid
    health coverage to private insurance companies lowers quality of
    service and increases cost. The Annals of Internal Medicine report that
    over one third of all healthcare costs in the United States are due to
    insurance company overhead and provider time spent on billing--that is
    the private health insurance bureaucracy. Studies repeatedly find that
    the administrative overhead costs for traditional Medicare is 2-3%, as
    compared to private insurers (including Medicare Advantage and those
    under the ACA) who have administrative overhead costs of 12% to 15%,
    translating into a $400 billion annual savings under a single-payer
    system.

    Finally, an article by Christopher Cai published in PLOS Medicine on
    January 15, 2020, looked at 22 studies that compared 10 year
    projections for the financing of a single-payer healthcare system in
    the United States with the projected 10-year costs for our current
    multi-payer mostly privatized system. Regardless of ideology, no study
    found single payer to be more costly. Twenty of the studies, including
    one by the right wing Mercatus Center, found at least $2 trillion
    dollars in savings; while two studies found the costs to be equal with
    our current system.

    What should be the conclusion from all of this wealth of information?
    If congresspeople and government officials were not blinded by
    neoliberal ideology and biased by the corruption of big-money
    interests, the conclusion would be that the United States needs to get
    private insurance totally out of healthcare and needs to implement a
    single payer health system. Such a system would bring our healthcare
    costs, quality and accessibility rapidly in line with those of other
    developed countries. Such a system would ensure high-quality, low-cost
    health coverage for everyone living in the United States without all
    the administrative bureaucracy that we now have. Healthcare is a human
    right and should be a public good.

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