[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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Au-Yeung, Caroline, and Robert Hest. 2019. ``Comparing Federal 
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Banthin, Jessica, Matthew Buettgens, Michael Simpson, and Robin Wang. 
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Banthin, Jessica, Michael Simpson, Matthew Buettgens, Robin Wang, and 
    Linda J. Blumberg. 2020. ``Changes in Health Insurance Coverage Due 
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Blavin, Fredric, Michael Karpman, and Stephen Zuckerman. 2016. 
    ``Understanding Characteristics of Likely Marketplace Enrollees and 
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Blumberg, Linda J., John Holahan, Matthew Buettgens, Anuj 
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    Robin Wang, Melissa Favreault, and Diane Arnos. 2019. From 
    Incremental to Comprehensive Health Reform: How Various Reform 
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Brooks, Tricia, and Andy Schneider. 2020. ``The Families First 
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    Washington, DC: Georgetown University Health Policy Institute, 
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Buettgens, Matthew. 2021. ``Medicaid Expansion Would Have a Larger 
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Call, Kathleen T., Michael E. Davern, Jacob A. Klerman, and Victoria 
    Lynch. 2013. ``Comparing Errors in Medicaid Reporting across 
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Corallo, Bradley, and Robin Rudowitz. 2021. ``Analysis of Recent 
    National Trends in Medicaid and CHIP Enrollment.'' San Francisco: 
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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 
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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 
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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 
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Holahan, John, and Vicki Chen. 2011. ``Changes in Health Insurance 
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    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 
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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 
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    jamanetworkopen.2021.9463.

Klerman, Jacob A., Michael Davern, Kathleen T. Call, Victoria Lynch, 
    and Jeanne D. Ringel. 2009. ``Understanding the Current Population 
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    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 
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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.

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    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.
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       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.org𝔯_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&currentTimeframe=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.
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                       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 
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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.
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    \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.
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    \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 
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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:
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    \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 
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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.
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    \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.
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    \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.
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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.
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    \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.
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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.
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    \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.
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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.
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    \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.
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 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.
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    \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.
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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.
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    \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.
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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.
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    \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.
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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.
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    \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.
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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.''
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    \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 
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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.
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    \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.
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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.
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    \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/.
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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\
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    \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).
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    \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/.
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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\
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    \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 
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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.
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    \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/.
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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\
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    \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.
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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.
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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.
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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.
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    \12\ https://www.govinfo.gov/content/pkg/FR-2019-11-12/pdf/2019-
24138.pdf.
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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/.
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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

                      [email protected]

                    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: [email protected]

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 [email protected].

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 [email protected].

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 [email protected].

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.

                                [all]